Legg Mason Inc., the money manager best known as home to stockpicker Bill Miller, is folding Miller’s Legg Mason Capital Management division into its ClearBridge Investments equity unit as assets have tumbled.
Bill Miller, the stock picker who rose to fame after beating the Standard & Poor’s 500 Index for a record 15 years, bought J.C. Penney Co. debt for a new Legg Mason Inc. fund that can invest in a mix of equities and bonds.
Legg Mason Inc.’s Mary Chris Gay, a portfolio manager at the division that was home to Bill Miller, has left as her unit is folded into the firm’s ClearBridge Investments equity affiliate after a decline in assets.
The work that earned Eugene Fama the Nobel Prize in economics provided the intellectual foundation for index-tracking funds, which have upended stock picking as investors abandon active money managers.
ClearBridge Investments’ Richard Freeman followed drug company Alza Corp. for 28 years before buying shares in 1999, when a failed acquisition by a larger company sent shares plunging. Two years later, Johnson & Johnson bought Alza for triple the price the fund paid.
Equities that fell farthest last year are surging the most in a decade, reversing the fortunes of mutual funds and signaling developed countries, banks and Asian exporters will extend the global rally.
Bill Miller, the Legg Mason Inc. manager famous for beating the Standard & Poor’s 500 Index for a record 15 years through 2005, will step down from his main fund after trailing the index for four of the past five years.