Legg Mason Inc.
) reported a rise in its assets under management (AUM) as of Mar
31, 2013, compared with the prior quarter, reflecting the
acquisition of Fauchier Partners. Preliminary quarter-end AUM
came in at $664.6 billion, up 2.4% sequentially. Equity and
liquidity AUM were up in the quarter under review, though Fixed
Income AUM declined.
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Legg Mason's equity AUM as of March-end jumped 11.2% sequentially
to $161.8 billion while liquid assets, which are convertible into
cash, increased about 1.0% to $137.7 billion.
Fixed income AUM dipped 0.5% compared with the prior quarter to
$365.1 billion. The rise in equity AUM, partly offset by a fall
in fixed income AUM, resulted in long-term AUM of $526.9 billion,
reflecting a 2.8% increase against the prior quarter.
Among other investment managers,
) announced a 2.2% rise in its preliminary month-end AUM for Mar
2013, which stood at $729.3 billion. Another firm -
Franklin Resources Inc.
) - declared preliminary AUM of $823.7 billion by its
subsidiaries for the month of Mar 2013, reflecting an escalation
of 1.2% 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. However, in the near term,
asset outflows will remain a significant headwind. Yet, owing to
the restructuring initiatives and the cost-cutting measures, we
expect operating efficiencies to improve for Legg Mason and
dividend payments to continue to inspire investors' confidence in
Legg Mason is expected to announce its fiscal fourth-quarter 2013
results on Apr 29. The Zacks Consensus Estimate for the quarter
is pegged at 59 cents per share. The Zacks Earnings ESP (Read:
Zacks Earnings ESP: A Better Method
) for Legg Mason is +18.64% for the fourth quarter. This, along
with its Zacks Rank #3 (Hold), makes us confident for the company
to report a positive earnings surprise.
Among other asset managers, we are not confident of an earnings
AllianceBernstein Holding L.P. (AB)
with an Earnings ESP of 0.00% and a Zacks Rank #1 (Strong