Legg Mason Inc.
) reported a rise in its assets under management (AUM) as of Jan
31, 2014, as compared with the prior month. Preliminary month-end
AUM came in at $679.9 billion, slightly up from the end of Dec
The marginal rise from the previous month mainly resulted from
net inflows, partially offset by market depreciation. Both
liquidity and long-term flows were positive, with marginal
inflows in equity and fixed income for the month.
Legg Mason's equity AUM as of January-end decreased 2.6% from the
previous month to $177.8 billion. However, fixed income AUM
nudged up 0.8% from the prior month to $358.4 billion.
The fall in equity income was offset by rise in fixed income AUM,
thereby resulting in long-term AUM of $536.2 billion. The figure
marked a drop of 0.4% from the prior month. Liquid assets, which
are convertible into cash, rose 1.6% to $143.7 billion.
Among other investment managers,
) announced a fall in its AUM for Jan 2014, which came in at
$764.9 billion. Also,
Franklin Resources Inc.
) declared preliminary AUM of $857.2 billion by its subsidiaries
for Jan 2014, which marked a decline from the prior month.
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. Moreover, a
significant rebound in equity markets in the coming quarters
would be a catalyst.
However, in the near term, asset outflows might remain a
significant headwind. Nevertheless, owing to the company's
restructuring initiatives and aggressive cost cuts, we expect
operating efficiencies to improve and dividend payments to raise
investors' confidence in the stock.
Currently, Legg Mason carries a Zacks Rank #2 (Buy). A
better-ranked asset manager worth consideration is
Waddell & Reed Financial, Inc.
) with a Zacks Rank #1 (Strong Buy).
FRANKLIN RESOUR (BEN): Free Stock Analysis
INVESCO LTD (IVZ): Free Stock Analysis Report
LEGG MASON INC (LM): Free Stock Analysis
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