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Legg Mason to Combine Operations of LMCM, ClearBridge

Who's sticking around--and what does it mean for shareholders?

Robert Goldsborough, 01/16/2013

On Tuesday, Jan. 15, Legg Mason LM announced plans to merge the operations of its Legg Mason Capital Management subsidiary into another of its operating units, ClearBridge Investments.

The move is not expected to have an immediate impact on any existing ClearBridge or Legg Mason Capital Management mutual funds.

With about $60 billion in assets, ClearBridge is Legg Mason's largest stock-fund unit. It was created several years ago when Legg Mason acquired Citigroup's C asset-management group and placed all its stock funds in a new Legg Mason subsidiary called ClearBridge. Meanwhile, Legg Mason Capital Management has about $7 billion in assets. Legg Mason Capital Management probably is known most to investors as the longtime home of its former chief investment officer Bill Miller, the noted fund manager and former Legg Mason Capital Management Value Trust LMVTX portfolio manager.

Now, Legg Mason has decided to bring together the operations of two of its equity-oriented asset-management arms, in an effort to take advantage of operating efficiencies. Legg Mason Capital Management's chief investment officer, Sam Peters, will become a ClearBridge managing director, reporting to the firm's co-chief investment officers, Hersh Cohen and Scott Glasser.

The integration will be complete sometime in the third quarter of 2013. Legg Mason Capital Management's current group of investment professionals will remain based in Baltimore, and its noteworthy mutual funds, Legg Mason Value Trust and Legg Mason Capital Management Special Investment Trust LMASX, will form the core of Baltimore-run investment strategies, with Peters continuing to oversee those strategies.

Miller, by contrast, will not be joining ClearBridge. He will continue to manage the Legg Mason Opportunity Trust LMOPX strategy as a managing member of LMM LLC. Also, Legg Mason Capital Management CEO Jennifer Murphy is not expected to be part of the new organization after the integration is complete.

What changes can investors expect to see? At the moment, probably not many. The parent company will review all aspects of both units' operations throughout a transition period. And no changes to Legg Mason Capital Management's research group are planned at this time.

Associate directors of fund analysis Bridget B. Hughes, CFA, and Shannon Zimmerman and fund analyst Shannon Kirwin contributed to this report.

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Robert Goldsborough is an ETF Analyst at Morningstar.
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