Legg Mason Inc.
) plans to shut down Esempia - a small international equities
investment unit - having an asset base of $500 million under
Over the coming quarters, the asset manager plans to stop
trading activities in the investment unit, which has operations
in London and Hong Kong, and return money to investors. This will
lead to about 25 job cuts, but the employees will be given an
option to apply for vacant positions in Legg Mason.
In 2005, Legg Mason acquired Esemplia as part of the acquisition
) asset management unit.
The plan to wind down Esempia is part of Legg Mason's strategy to
streamline its operations. The restructuring of operations, in
order to improve efficiency has been a primary concern for the
company, given the sluggish economic environment.
Last month, Legg Mason had sold back to the firms' managers
its Naples, FL-based wealth management subsidiary, Private
Capital Management. In January, Legg Mason Capital Management was
merged with NY-based ClearBridge Investment.
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We believe that Legg Mason has the potential to outperform its
peers in the long run, given its diversified product mix and
leverage in the changing market demography. However, asset
outflows will remain a significant headwind in the near term.
Nevertheless, with restructuring initiatives and the cost-cutting
measures, we expect operating efficiencies to improve, and
dividend payments to continue boosting investors' confidence in
Legg Mason currently carries a Zacks Rank #3 (Hold). Some other
investment managers that are worth considering include
The Blackstone Group L.P.
Fortress Investment Group LLC
). Both these stocks carry a Zacks Rank #2 (Buy).