The Legg Mason Capital Management Value Trust fund is doing something not seen in years: It's beating the stock market.

Under new manager Sam Peters, the fund is up 27.8 percent in the past 12 months, compared with 20.6 percent for the S&P 500 index.

Could the fund, which famously outperformed the market 15 years in a row before losing its footing, be turning the corner to a fresh winning streak?

"Obviously, you always hope, but it is that old adage — take one day at a time," said Peters, who took over the fund's management a year ago in April.

Many investors first learned about Baltimore-based Legg because of Value Trust and its former star stock-picker, Bill Miller. Year after year, the fund outpaced the market by investing in a few dozen stocks that Miller believed were selling significantly below their true value and had potential for a huge upswing.

"It certainly was the talk of the fund industry," said Jeff Tjornehoj, a senior research analyst with Lipper. "Every year we would get near the end, watching whether the streak was alive or not. It absolutely drew a lot of attention to Legg Mason."

But Miller's 15-year streak ended in 2006, and the fund's performance deteriorated as big bets he made in the financial and housing sectors soured in the 2008 economic crisis.

Investors fled the fund, which now has about $2.3 billion in assets from a peak of $20 billion in 2007. Redemptions continue to dog Value Trust — at a rate Morningstar estimates at $487 million in the prior 12 months — although the pace has slowed.

"It's not over yet," Peters said, "but we're no different than the overall active industry for the most part on flows."

After the stock crash in late 2008, investors abandoned funds with active stock pickers and largely fled to bonds for safety.

"They had this disadvantage of being an equity fund," said Bridget Hughes, associate director of fund research at Morningstar. "At the same time, they had some pretty poor performance and that exacerbates it."

Shrinking assets prompted the company to merge much of the Legg Mason Capital Management unit in Baltimore, which includes the Value Trust fund, into a New York subsidiary this month. Peters' team of 22 remains in Baltimore, but he reports to New York.

The Baltimore team saw other changes in mid-May with the departures of longtime manager Mary Chris Gay, who dealt with clients, and Randy Befumo, head of research. Gay is weighing her options, while Befumo joined a California-based Internet company, Peters said. Stock analyst Jean Yu was promoted to assistant portfolio manager of Value Trust.

Peters arrived at Legg in 2005, following a stint as a portfolio manager at Fidelity Investments in Boston. He started co-managing Value Trust with Miller in November 2010 and replaced him a year and a half later. Miller continues to manage Legg's smaller Opportunity Trust fund in Baltimore.

During a recent interview at Legg's Harbor East headquarters, Peters said he and his mentor Miller are much alike in their outlook, both value-oriented, looking for companies whose stock is trading far below their perceived value.

But there are differences. Say, a manager identifies three stocks as undervalued by the market, with one having a huge upside potential and the other two having attractive growth prospects but not as great, Peters said.

"Bill would tend to gravitate on the really big bet, where my druthers would be to try to mix it up a little bit more in the portfolio construction," adding the other stocks for diversification, he said. "Bill, brilliantly, will get a lot of conviction about a certain path that the markets and world are going to take. I tend to be a little more agnostic."

Analysts note other differences.

A decade ago under Miller, the Value Trust's annual turnover in the portfolio was about 4 percent, meaning it would take 25 years before the fund's holdings had entirely changed, Tjornehoj said. Turnover last year was 40 percent, still much lower than other funds, but now Value Trust's holdings change every 21/2 years, he said.

Value Trust continues to own no more than 50 stocks, fewer than its peers. But if Miller was gung ho on a stock, it could make up 7 percent or more of the fund's portfolio or a single sector could comprise a significant chunk of the fund, Morningstar's Hughes said.