On Wednesday, Baltimore-based
Legg Mason Inc.
) reported a slight rise in its assets under management (AUM) in
November 2012, compared with the prior month. However, the
company reported a marginal decline in the prior month, followed
by a rise in the last quarter.
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Preliminary quarter-end AUM came in at $648.3 billion, up 0.4%
compared with the prior month. Equity AUM and Fixed Income AUM
were down in the month under review, though liquidity AUM
Legg Mason's equity AUM as of November-end inched down 1.0% from
the prior month to $145.1 billion while fixed income AUM declined
0.7% compared with the prior month to $369.3 billion.
The fall in equity and fixed income AUM resulted in long-term AUM
of $514.4 billion, reflecting a 0.8% decline against the prior
month. However, liquid assets, which are convertible into cash,
surged 5.2% to $133.9 billion.
As of Sep 30, 2012, Legg Mason's AUM was $650.7 billion, up 3%
sequentially from $631.8 billion, driven by market appreciation
of $20.7 billion and net client inflows of $0.2 billion,
partially offset by dispositions of $2.0 billion. Fixed
income represented 57% of consolidated AUM as of Sep 30, 2012,
liquidity represented 20% and equity comprised 23%.
During the quarter, liquidity inflows were about $9.7 billion.
However, equity and fixed income outflows were $5.7 billion and
$3.8 billion, respectively. Besides, average AUM was $639.4
billion compared with $635.5 billion in the prior quarter.
One of Legg Mason's peers,
), announced a marginal 1.0% rise in its preliminary month-end
AUM for the month of November 2012. The AUM for the month came in
at $683.8 billion compared with $677.0 billion at the end of
October. Favorable market returns and total net inflows were
partly offset by negative foreign exchange.
Another peer -
Franklin Resources Inc.
) - declared preliminary AUM of $768.8 billion by its
subsidiaries for the month of November 2012. The company's
results witnessed a rise of 2.0% from $753.9 billion as of Oct
31, 2012. Moreover, it increased 13.8% from $675.8 billion as of
Nov 30, 2011.
We believe that 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, assets outflows will remain a significant headwind. Yet,
owing to the restructuring initiatives and the cost-cutting
measures, we expect operating efficiencies to improve and
dividend payments to continue to inspire investors' confidence in
Legg Mason currently retains a Zacks #3 Rank, which translates
into a short-term Hold rating. We believe the acceleration in AUM
amid volatile markets might lead to positive estimate revisions.
This, in turn, could trigger an improvement in the Zacks