Legg Mason Focuses on Organic Growth, Not Deals
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Friday, October 28, 2011

Legg Mason Focuses on Organic Growth, Not Deals

Legg Mason [see profile] beat earnings expectations with its most recent earnings report, despite falling revenues, net income and assets under management coupled with rising outflows. Yesterday the Balitmore-based mutual fund firm revealed diluted net income of $0.39 per share for fiscal Q2 2012 (ended September 30, 2011), beating the $0.37 estimate from analysts polled by Thomson Reuters [see the earnings call transcript].

The Baltimore Business Journal, Barron's, Bloomberg, Dow Jones, Pensions & Investments, Reuters, the Wall Street Cheat Sheet and Zack's Investment Research all reported on Legg Mason's results.

As markets shook last quarter, Legg Mason's AUM dipped to $611.8 billion on September 30 from $662.5 billion on June 30, thanks to $17.6 billion in net outflows and $32.9 billion in performance pain. The asset manger's revenue dipped to $669.9 million in fiscal Q2 2012 from $717.1 million in Q1 fiscal 2012, and expenses also fell, to $563.0 million from $616.7 million.

For those hawking pitch books from asset managers overseas, now may not be the best time to approach Legg Mason. On the earnings call, Barclays Capital analyst Roger Freeman noted that that "there's been a lot of talk about properties potentially available" for acquisition. Mark Fetting, CEO of Legg Mason, said the firm is "focused on organically growing" for now.

"We'll continue to look down the road on filling holes in kind of, potentially lift-outs, etc," Fetting said.

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