Trian Fund Management LP may wage an activist campaign at Legg Mason Inc. and push the money manager to improve its flagging results, according to people familiar with the matter.
Trian recently has held discussions with Legg Mason management about the need to cut costs and improve profit margins, the people said. The two sides may still negotiate a settlement that sidesteps a proxy fight, they added.
Shares of Legg Mason LM, +4.39% , which has about $758 billion in assets under management, have been battered in recent years as the firm struggles to navigate sweeping changes in the investment-management landscape. The surging popularity of low-cost mutual and exchange-traded funds has pushed investment firms to slash the fees they charge clients. Those cuts have thinned profit margins, prompting managers to search for new investment products and ways to shed expenses.
Legg stock, which touched a postcrisis high of more than $58 in early 2015, has fallen sharply since then. The Baltimore firm now has a market value of just under $3 billion.
An expanded version of this report appears on WSJ.com.
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