Nelson Peltz Is Still Scaring Companies

The veteran raider shakes up his latest target, Legg Mason
The billionaire made his first fortune in the 1980s with the help of Michael Milken's junk bonds Photograph by Kevin Lorenzi/Bloomberg

Mark Fetting, chief executive officer of Legg Mason, was out of time. His biggest investor, Nelson Peltz, had watched for three years as Fetting struggled to increase profit at the Baltimore-based money manager—home to onetime star manager Bill Miller—and halt $135 billion in fund redemptions. At Peltz’s behest, Fetting cut costs by as much as $150 million a year and bought back at least $1 billion in stock. Still, Legg Mason shares hadn’t gained much since Peltz’s hedge fund bought its stake in mid-2009. With a standstill agreement set to end in November, allowing Peltz to raise his holdings from 11 percent or propose a slate of directors, Fetting quit on Sept. 11. “Patience was clearly running out,” says Jeff Hopson, an analyst at Stifel Nicolaus. “The odds of a dramatic corporate change have increased at Legg Mason.”

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