Legg Mason to Shutter Esempia Unit - Analyst Blog

By Zacks Equity Research,

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Baltimore-based Legg Mason Inc. ( LM ) plans to shut down Esempia - a small international equities investment unit - having an asset base of $500 million under management.

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 of Citigroup Inc. 's ( C ) 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.

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 the stock.

Legg Mason currently carries a Zacks Rank #3 (Hold). Some other investment managers that are worth considering include The Blackstone Group L.P. ( BX ), Fortress Investment Group LLC ( FIG ). Both these stocks carry a Zacks Rank #2 (Buy).

BLACKSTONE GRP (BX): Free Stock Analysis Report

CITIGROUP INC (C): Free Stock Analysis Report

FORTRESS INVEST (FIG): Free Stock Analysis Report

LEGG MASON INC (LM): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: BX , C , FIG , LM

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