Putnam is not for sale. That message was delivered loud and clear by Marsh & McLennan Cos. CEO Michael G. Cherkasky in the company's regular quarterly conference call with Wall Street analysts. What is not certain is whether his comments will stop the speculation.

Rumors that Marsh would look to sell Putnam are nothing new. During the good times before 2000, the speculation was that then Putnam CEO Larry Lasser was pushing to free the firm from Marsh. At that time, many senior executives at Putnam, including Lasser, outearned the top executives at Marsh.

Since the collapse of the market for growth stocks (the style Putnam fund pros rode hard during the bull run) and the investigations into improper trading by portfolio managers and others in Putnam funds, the shoe is on the other foot. The poor performance combined with the fund scandals put nearly all of Putnam's institutional business in play during 2004. In most cases, those searches are through and the situation appears to have stabilized. Clients pulled a net $105 billion from Putnam in the 15 months since the first report of the allegations, but only $11 billion was pulled in 2004's fourth quarter.

Sandra S. Wijnberg, Marsh's chief financial officer, tried to put a positive spin on those numbers, although she admitted that fourth-quarter outflows were "disappointing." She said that she expects fund sales to pick up in 2005 as the firm increases its institutional and retail marketing and predicted that Putnam’s asset base again grow in 2006.

Yet, there are many observers who wonder how long Marsh will want to hold onto Putnam and whether the brand is too tarnished to quickly rebound. During it struggles, for example, it lost many of its key sales and operational staff.

Still, the skeptics were wrong pre-2000 and they may be wrong again. Cherkasksy used yesterday's call to put any doubts about Marsh's intent to keep Putnam to rest.

"It's not going to happen," he said when asked about a sale or spinoff of Putnam. "This is a business that from both a management and industry position and perspective is set to rebound. It will remain in, and be an important part of, Marsh & McLennan's future," he added.

Despite Cherkasksy's comments, the Boston Globe reported Wednesday that Putnam officials have considered a spinoff. They found that road to independance filled with potentially tough-to-climb hills, the paper added.

A spinoff would create an "enormous" tax liability for Marsh, it reported. Alternatively, if the Putnam senior managers lead a buyout they would have to raise several billion in financing. They would effectively be trading one master for another.  

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