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Baltimore-based Legg Mason Inc. (LM - Analyst Report) reported a dip in its assets under management (AUM) as of Apr 30, 2013, compared with the prior month, reflecting the liquidity redemption from a sovereign client. Preliminary month-end AUM came in at $655.4 billion, down 1.4% from March-end. Equity and Fixed Income AUM were up in the month under review, though liquidity AUM declined.
Legg Mason’s equity AUM as of April-end rose 0.6% from the prior month to $162.8 billion, while fixed income AUM increased 1.7% compared with the prior month to $371.3 billion.
The rise in equity and fixed income AUM resulted in long-term AUM of $534.1 billion, reflecting a 1.4% increase against the prior month. Liquid assets, which are convertible into cash, decreased about 11.9% to $121.3 billion.
Among other investment managers, Invesco Ltd. (IVZ - Analyst Report) announced a 2.6% rise in its preliminary month-end AUM for Apr 2013, which stood at $748.5 billion. Another firm - Franklin Resources Inc. (BEN - Analyst Report) - declared preliminary AUM of $847.5 billion by its subsidiaries for the month of Apr 2013, reflecting an escalation of 2.9% over the prior month.
We believe Legg Mason has the potential to outperform its peers in the long run, given its diversified product mix and leverage to the changing market demography. However, in the near term, asset outflows will remain a significant headwind. Yet, owing to the restructuring initiatives and cost-cutting measures, we expect operating efficiencies to improve for Legg Mason and dividend payments to continue to inspire investors’ confidence in the stock.
Currently, Legg Mason holds a Zacks Rank #3 (Hold). Some better performing asset managers include AllianceBernstein Holding L.P. (AB - Snapshot Report) with a Zacks Rank #1 (Strong Buy).