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Fund Spy

Can Deep Thinking Lead to Great Investing?

Legg Mason Capital Management hopes so.

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Legg Mason Capital Management may be a shadow of its former self, but it is in no way a shrinking violet.

In just three years, Legg Mason Capital Management has seen its total mutual fund assets plummet. Following a horrific market loss between late 2007 and early 2009 as well as shareholder redemptions, total net assets of the six mutual funds offered by LMCM have dropped precipitously: Net assets have fallen to roughly $8 billion from a peak of around $37 billion in May 2007.

That kind of dive could justifiably rankle even the most stoic of mutual fund executives and investment departments. Consider that between March and September 2007, the advisor earned a $66 million management fee on  Legg Mason Value Trust (LMVTX) alone (the shop's biggest offering then and now), according to its 2007 semiannual report; in that fund's most-recent annual report, though, the advisor recorded a management fee of just $16.8 million for the six months ended Oct. 31, 2009--a 75% reduction. All LMCM funds have experienced a similar pattern.

Bridget B. Hughes does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.