Legendary mutual-fund manager Bill Miller cuts ties with Legg Mason

Bill Miller is leaving Legg Mason, but shareholders of the funds he runs won't notice. Mr. Miller reached an agreement with Baltimore-based Legg Mason (LM) to buy all of its interest in LMM LLC, which provides investment management services to Legg Mason Opportunity Trust (LMOPX), Miller Income Opportunity Trust (LCMNX) and related strategies. There will be no changes to the investment team or portfolio management responsibilities as a result of the transaction, Legg Mason said in a statement. Mr. Miller gained rock-star status running Legg Mason Capital Management Value Trust (LMVTX), which beat the Standard & Poor's 500 index for 15 consecutive years, starting in 1991. Morningstar named him mutual-fund manager of the decade in 1999. The 2007-2009 bear market and financial crisis nearly ruined his reputation. Mr. Miller bought into financials and housing stocks too early. The fund fell 55%, versus 37% for the S&P 500. He stepped down from the fund, now renamed ClearBridge Value Trust, in 2012. Mr. Miller made a comeback with Legg Mason Opportunity Trust in 2012 and 2013. The fund's fortunes have suffered since then, however: It has just one star from Morningstar, and its three-year performance puts the fund in the 70th percentile in its category. So far this year, the fund is down 8.5%, versus a 7.88% gain for the S&P 500. “The fund has had a significant struggle this year," said Samantha McLemore, co-portfolio manager for Legg Mason Opportunity Trust. “The market got concerned about economic weakness earlier in the year, and we saw a massive selloff in cyclical stocks.” Ms. McLemore said the spinoff from Legg Mason had been in the cards since at least 2012. “When the rest of our group was merged into ClearBridge, Bill wasn't interested in being part of that merger,” she said. “We knew something was going to happen here. More recently it was agreed upon how that would work.” Joseph A. Sullivan, chairman and CEO of Legg Mason, noted in a statement that Mr. Miller "has been an important part of the growth and success of Legg Mason over the years and we appreciate his many contributions." Mr. Sullivan added: “We wish Bill and his team continued success in the future. Today's announcement is consistent with Legg Mason's strategy of focusing on our nine diverse managers with size and scale that can be leveraged across global distribution.” LMM has about $1.8 billion in assets. Terms of the sale were not disclosed.