Last Monday, Nelson Peltz, manager of Trian Partners, sent a letter to Mr. Joseph A. Sullivan, Chairman and CEO of Legg Mason Inc (NYSE:LM), informing of his resignation from the company’s Board of Directors. Despite Mr. Peltz’s departure, Trian Partners will continue to be a large shareholder at the company, with 12.88 million shares, which account for approximately 11.29% of Legg Mason’s common stock.
Trian Partners is a New York-based activist hedge fund launched by Nelson Peltz, May, and Ed Garden (Peltz’s son-in-law) in November 2005. According to its website, the firm “seeks to invest in high quality but undervalued and under-performing public companies and to work constructively with the management and boards of those companies to significantly enhance value for all shareholders.” Its equity portfolio, currently worth more than $7.6 billion, is manly focused on consumer stocks (more than 55% of the total value).
Legg Mason Inc (NYSE:LM) is a $6.42 billion market cap asset management company. After five years of service as a Director, Mr. Peltz resigned Legg Mason’s Board to devote more time to other commitments, including service on current and future boards.
According to the letter, Mr. Peltz is very proud of the success achieved by Mr. Sullivan. Legg Mason Inc (NYSE:LM) “has successfully addressed its legacy issues, increased shareholder value, strengthened its balance sheet, is seeing positive net flows and is positioned for future success,” he assured. In fact, the new senior management team and the Board have achieved important cost reductions, and even returned more than $2 billion of capital to shareholders.
According to a press release, Mr. Sullivan said that Nelson has been a great partner to him and an important contributor to the company’s turnaround efforts.
“We greatly appreciate Nelson’s candor, insights and experience and are very pleased with the meaningful progress we have made to reshape the Company since he joined the Board five years ago. We wish Nelson all the best and look forward to continued dialogue with Trian as Legg Mason’s largest shareholder,” he assured.
In addition to Trian Partners, other investors seem quite bullish on Legg Mason Inc (NYSE:LM). For instance, Mario Gabelli’s GAMCO Investors last disclosed ownership of 4.96 million shares (by the end of the third quarter), while David Harding’s Winton Capital Management more than doubled its exposure to the company over the third quarter, and now owns 711,640 shares.
Disclosure: Javier Hasse holds no positions in any stocks or funds mentioned