Legg Mason Inc.
) experienced a slight decline in its April 2012 assets under
management (AUM) on a sequential basis, driven by decreases in
equity and liquidity AUM which offset the rise in fixed income AUM.
Preliminary month-end AUM came in at $639.3 billion, down 0.6% from
the prior month.
Legg Mason's equity AUM as of April 2012 declined 2.4% from the
prior month to $159.4 billion, while fixed income AUM moved up 1.0%
to $359.6 billion.
The fall in equity AUM, partially offset by rise in fixed income
AUM, resulted in slightly decreased long-term AUM of $519.0 billion
compared to the prior month. Moreover, liquidity assets, which are
convertible into cash, dipped 2.8% to $120.3 billion from $123.8
billion at the end of March 2012.
On a quarterly basis, as of March 31, 2012, Legg Mason's AUM was
$643.3 billion, up 2.6% sequentially from $627.0 billion as of
December 31, 2011, driven by market appreciation of $24.4 billion,
partially offset by net client outflows of $4.9 billion and
dispositions of $3.2 billion.
Fixed income represented 55% of consolidated AUM as of March 31,
2012, while liquidity and equity represented 19% and 26%,
During the quarter, fixed income outflows for Legg Mason were
approximately $2.8 billion and equity outflows were $4.9 billion.
However, liquidity inflows were $2.8 billion. Average AUM was
$634.9 billion, up 2.1% from $622.0 billion in the prior
One of Legg Mason's peers,
), also announced a marginal decline of 0.7% in its preliminary
month-end AUM for the month of April 2012. The company's AUM for
the reported month was $668.4 billion compared with $672.8 billion
at the end of March 2012.
Invesco's April AUM decline resulted from total net outflows and
market depreciation which consequently offset the inflows from
foreign exchange worth $2.3 billion. Total net outflows included
$2.6 billion worth of payment for Invesco PowerShares QQQ and $0.9
billion active fixed income outflow from the UK.
However, another peer,
Franklin Resources Inc.
) witnessed a slight rise in its preliminary month-end AUM for
April 2012. The company reported preliminary AUM of $726.4 billion
for its subsidiaries, reflecting 0.1% increase from $725.7 billion
as of March 31, 2012.
We believe Legg Mason has the potential to perform better than
its peers in the long run, given its diversified product mix and
leverage to the changing demographics in the market. However, in
the near term, assets outflows will remain a significant headwind.
With restructuring initiatives and cost-curtailing measures, we
expect operating leverage to improve, and dividend payments to
continue inspiring investors' confidence in the stock.
Legg Mason currently retains a Zacks #3 Rank, which translates
into a short-term Hold rating. Considering the fundamentals, we
also maintain long-term Neutral recommendation on the stock.
FRANKLIN RESOUR (BEN): Free Stock Analysis
INVESCO LTD (IVZ): Free Stock Analysis Report
LEGG MASON INC (LM): Free Stock Analysis Report
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