Legg Mason Inc.
) reported a surge in its assets under management (AUM) as of Oct
31, 2013, compared with the prior month. Preliminary month-end
AUM came in at $669.9 billion, up 2.1% from September-end.
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The rise over the prior month mainly resulted from favorable
markets. Moreover, Legg Mason recorded positive long-term flows,
aided by equity inflows, which were mostly offset by fixed income
Legg Mason's equity AUM as of October-end increased 3.5% from the
prior month to $175.4 billion. Moreover, fixed income AUM inched
up 1.2% compared with the prior month to $359.3 billion.
The increase in fixed income and equity AUM resulted in a
long-term AUM of $534.7 billion, reflecting a 1.9% rise against
the prior month. Liquid assets, which are convertible into cash,
jumped 2.8% to $135.2 billion.
Among other investment managers,
) announced a 2.5% rise in its preliminary month-end AUM for Oct
2013, which stood at $763.9 billion. Another firm -
Franklin Resources Inc.
) declared preliminary AUM of $844.7 billion by its subsidiaries
for the month of Oct 2013, reflecting an increase 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. Moreover, a significant
rebound in equity markets in the coming quarters would act as a
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 carries a Zacks Rank #3 (Hold). However, a
better performing company in the same industry with a Zacks Rank
#1 (Strong Buy) is
Waddell & Reed Financial, Inc.