An interesting aside to the Lehman Brother's bankruptcy, the Asset Management subsidiary of the company wasn't included in the filing:
(From the WSJ):"Lehman Brothers' (LEH) decision to exclude Neuberger Berman, its asset management business, from this morning's historic bankruptcy filing didn't come as a surprise Wall Street analysts.
The 69-year-old wealth management company, which became part of Lehman Brothers in 2003, remains a strong business within the asset management industry - a financial services sector that's insulated somewhat from Wall Street's present chaos, according to analysts. Asset management firms, in general, aren't exposed to the direct credit risks that are the basis for recurring market turmoil, says Michael S. Kim, an analyst with Sandler O'Neill & Partners in New York.
Strong, free cash-flow - or earnings adjusted for non-cash expenses and capital expenditures - strong margins and recurring revenue stream from management fees paid as a percentage of assets, all partly insulate asset management companies from Wall Street's credit crisis. "The factors all provide a level of stability with earnings and growth potential going forward," says Kim.
"Neuberger Berman would look to be a franchise that would survive independently," says William R. Katz, an analyst with Buckingham Research in New York. "The money managers have good reputations - they have the relationships with the clients," he says. The fees that clients are paying for money management services will remain in tact, regardless of the business form in which the company ultimately emerges, says Katz."
I wonder if the reason many Asset Management companies haven't suffered from the credit crisis has more to do with their risk management practices/investment choices, then it is an intrinsic part of the way they operate? After all suffering from the credit crisis isn't so much a function of simply being exposed to the credit markets, as it is a function of investment choices and risk management. To say otherwise presents the credit crunch as if it's some sort of disease that banks just "catch", as opposed to it being a calamity of their own making.
To my mind the fact that many asset management firms have escaped the credit crunch relatively unscathed says a lot about the way they approach risk management, even if the intrinsic nature of their business does offer a degree of protection.
You can read more on the subject here.
The WSJ: "Neuberger Berman Investors Have Nothing to Fear" -- Suzanne Barlyn, September 15, 2008
Disclosure: at the time of publishing the author didn't own a position in any of the companies mentioned in this article.