Legg Mason fund investing in venture
Four recent investments by Bill Miller, the legendary value investor at Legg Mason, are pretty interesting. This guys has traditionally picked common publicly traded stock positions and has an incredible record of beating the market in his fund Legg Mason Value Trust.
The investments were in early-stage startups Ning, Zillow, Sermo and online currency trader Oanda. Each was for a significant amount of money $25-$50M at a high valuation.
The investments were made out of the Legg Mason Opportunity Trust which “Invests with a flexible strategy and is not restrained by investment style, type of security, industry sector, location, size or market capitalization, investing primarily in U.S. common stocks” and holds pretty big stakes in Amazon and IAC. About 10% of the 8B fund, or about 800M is in private companies and hedge funds.
I suspect that we will see more non-traditional venture investors investing in technology and consumer web companies in the near future for a few reasons:
- They have lots of money, which only keeps increasing since many institutional investors place large weight on historical returns
- Buyout returns are starting to dry up
- Hedge fund returns have proven to be less predictable than expected (somehow every 10 years investors forget that hedge funds have risk associated with the large negative skew of their returns)
- Venture investments have large positive skew, which makes them appealing as a small part of a large investment portfolio
Too bad Bill Miller doesn’t blog.
Here is the most data-rich story on these Legg Mason investments that I have been able to find.
