Voice of experience: Ernest Kiehne, Legg Mason Capital Management,

Daily Record, The (Baltimore), May 30, 2007 by Andy Rosen

At the head of a conference table in the offices of Legg Mason Capital Management, Ernest "Ernie" Kiehne sits in a meeting room that bears his name. He's talking with a group of visitors and staff members, complimenting their handshakes and discussing markets, current events, baseball and life.

Kiehne doesn't get too vocal about his own opinions. He's more interested in the discussion itself. He references the Roman poet and philosopher Plautus, who wrote in the second century B.C. that "in [everything] the middle course is best."

"I thought his quote was marvelous and sustainable as far as managing money and doing everything in life," Kiehne said. Around the Baltimore offices of Legg Mason Capital Management, Kiehne - a senior vice president - is known as a voice of moderation and experience.

"The key thing is he's very calm no matter what happens," said Bill Miller, the company's chairman, chief investment officer and portfolio manager. "He always takes the long view." Miller said Kiehne has "a long-term, patient orientation with an optimistic outlook."

The middle course, however, may not be the first thing that comes to mind when considering Kiehne's story.

After all, this is a man who turned 89 this month and still comes to work nearly every day; a man who was hired as director of research by Legg & Co. - now Legg Mason Inc. - due in part to a strong recommendation from his personal stockbroker; a man who along with Miller launched Legg Mason Value Trust, the company's first mutual fund that went on to run off perhaps the most impressive market-beating streak of all time. And that's just his history as a financial professional, which began when he was nearly 50 years old.

Kiehne's story is one of achievement. A talented baseball player, he worked his way through Johns Hopkins University at several jobs, jerking soda and conducting Gallup polls to name two. He graduated from business school at the top of his class, and took a job as a lineman with the Chesapeake & Potomac Telephone Co.

Kiehne interrupted his career to serve as a destroyer officer in the Pacific Theater for the U.S. Navy during World War II. His was one of only a few ships in his fleet that escaped major damage, and he was on the USS Missouri when the Japanese surrendered.

He came to Legg & Co. in 1967 from C&P. Kiehne and his stockbroker, John R. Seifert, had become friendly and on Sundays discussed stocks over the phone.

Siefert, 80, still works for that brokerage in Towson, which was transferred to Smith Barney as part of a 2005 deal between Legg Mason and Citigroup. He said Kiehne started out as a novice, but quickly shaped up to be a savvy investor.

"He was very bright and I realized it, and we were looking for people to join us as always," Seifert said. "He just grew. He has a mind like a sponge that soaks up so many things."

Kiehne says he largely subscribes to the "value" approach to investing, which focuses on buying stocks that are beaten up or undervalued by the market and selling them when they have grown in worth. He also likes companies that have improvable sales and the potential to boost their profits.

Still, there is some mystery involved. Kiehne, a pet lover who's active in animal welfare causes, said - as he once told Money Magazine - his cats have helped him pick some of his stocks. He said different cats work in different industries, though never fully explained how they do it. He said he believes many of his experiences have been guided by luck.

While with C&P in 1959, Kiehne oversaw a project intended to modernize the company's billing, installing the system's first large- scale, solid-state computer system. He said he was initially curious as to why he had been chosen for the task.

"I sometimes asked later how in the world I ever got that assignment to head this job - because I had no background," he said. "I couldn't type and I was good at math and all that, but I was told later that they had thought, observing me over the years, that I was lucky."

Kiehne was born on Mother's Day 1918 in Baltimore, grew up here and attended Forest Park High School, where he became a standout baseball pitcher. At his peak, he said he could throw his fastball in the mid-80s and had a strong curveball.

His high school career was not without its tribulations - he said he once threw 19 balls in a row - but Kiehne also remembers a successful pitching stint with a team called the Trenton Democratic Club. That club was run by the powerful political boss Jack Pollack.

"Being a Democratic club," he said, "you'd think they'd play liberal baseball. But they played very conservative baseball and we won 27 in a row."

During that streak, Kiehne recalls pitching seven no-hit games. That showing included two no-hitters in one afternoon against the Pikesville Athletic Club, he said. In another game, Kiehne said he struck out the first 26 batters before he gave the final batter a pitch to hit. The batter swung "heroically," in Kiehne's description, but returned the pitch as a ground ball back to the mound.