Mar. 26, 2014, 10:29 AM
- In a nice win for money-market fund providers like BlackRock (BLK +1.2%), Federated Investors (FII +4.3%), Invesco (IVZ +0.8%), Legg Mason (LM +2.5%), and Schwab (SCHW +1.1%), there's been a change of heart at the SEC regarding floating asset values.
- The WSJ's Andrew Ackman reports the commission will exempt a majority of funds from a rule requiring them to abandon their $1 share price and float in value like any other mutual fund. Supporters of the rule argue the float would get investors used to their funds "breaking the buck," and thus prevent panicky withdrawals in a crisis. The fund companies have fought hard against the proposal.
- It's also a blow to other regulators, including the Fed, who wanted to expand the floating value idea to more funds, including those catering to retail investors.
- Citi's William Katz on the report: "We believe the trust accounts and non-trading desk liquidity instruments might also get exempt, leaving loosely about $20B in AUM exposure to deeper reform risk. We believe such AUM is far lower than ~15% short interest currently bakes in, setting the stage for a significant short squeeze."
Mar. 4, 2014, 9:25 AM
- Looking to boost its fortunes amid years of net redemptions from its funds, Legg Mason (LM) agrees to the purchase of global quantitative equity firm QS Investors. Based in New York, QS has $4.1B in AUM and nearly $100B in assets under advisory.
- Legg Mason's existing quantitative platform - Batterymarch Financial Management and Legg Mason Global Asset Allocation - will be integrated over time into QS.
- The deal is expected to close in FQ1 of fiscal 2015 and should be modestly accretive in year one. The company expects to incur restructuring and transition costs of about $35M. Terms of the deal were not disclosed.
- Press release
Feb. 10, 2014, 11:00 AM
- American Express (AXP +0.8%) is upgraded to Overweight from Equal weight at Morgan Stanley
- Apollo Global (APO +1.9%) is upgraded to Buy from Neutral at Citi.
- California United Bancorp (CUNB -0.8%) is upgraded to Outperform at RayJay.
- Cape Bancorp (CBNJ +0.9%) is upgraded to Buy at Sandler O'Neill.
- Fifth Third (FITB +0.6%) is upgraded to Positive from Neutral at Susquehanna.
- JPMorgan (JPM) is upgraded to Buy from Hold at SocGen.
- Legg Mason (LM +0.7%) is upgraded to Outperform from Market Perform at KBW.
- Zions Bancorp (ZION +1.6%) is upgraded to Outperform from Sector Perform at RBC Capital.
Jan. 31, 2014, 12:35 PM
- Reiterating their Underperform rating on Legg Mason (LM -2%), analysts David Chiaverini and Richard Fellinger, give the company kudos for improved long-term inflows, but reminds they were still flat on the quarter, negative on the year, and weaker than industry peers.
- "Legg Mason is not as well positioned as peers to capture flows in an equity rotation scenario or rising interest rate environment," they write.
- "While management remains focused on addressing its products gaps, including the recent hire of Thomas Hoops as head of business development, we believe it will take time before products can be developed/acquired that will meaningfully add to the flow picture.'
- Earlier earnings coverage
Jan. 31, 2014, 9:14 AM
- FQ3 adjusted income of $124.6M or $1.03 per share is up from $91.8M and $0.70 a year ago. Operating expenses of $598.4M up 4%.
- AUM of $679.5B up 5% Y/Y with higher markets contributing $13.6B of the increase. Fixed income inflows of $700M, equity outflows of $700M, liquidity inflows of $9.9B.
- Percent of long-term U.S. funds beating Lipper category average was just 36% on a one-year basis, rising to 68% on a 10-year.
- Press release, Q4 results
- LM +1.6% premarket
Jan. 31, 2014, 7:07 AM
Jan. 31, 2014, 12:05 AM
Jan. 30, 2014, 5:30 PM
Jan. 28, 2014, 12:42 PM
- Legg Mason (LM +1.9%) agrees to pay $21M to settle SEC fraud charges, accidental fraud actually. Someone in the back office of Legg Mason's Western Asset Management affiliate in 2007 improperly misclassified some securities, making them eligible to be sold to ERISA plans when they shouldn't have been.
- Brokers ended up putting more than $80M of the paper into ERISA accounts before a former client notified Western Asset of the error. Read the story not for the details of this particular incident, but for Matt Levine's humorous take on the arcane and complex web of regulations governing the securities business.
Jan. 14, 2014, 3:08 PM
- Reviewing December asset-gathering disclosures by AllianceBernstein (AB +1%), Artisan Partners (APAM -0.7%), Franklin Resources (BEN +2.1%), Invesco (IVZ +0.7%), and Legg Mason (LM +1%), Citigroup's William Katz, Neil Stratton, and Steven Fullerton warn the names could be vulnerable to a correction after big runs over the last 6-12 months.
- Behind the moves were hopes of rising organic growth prospects, and a mix shift of investor preferences towards equities. "We believe such thesis may begin to break down - and traditionals may be vulnerable to correction - as underlying organic growth dynamics appear mixed overall and by asset, client, and geographical breakdowns. Furthermore, lead indicators are muddled as market dynamics are less favorable thus far in 2014 and industry data are choppy.'
Jan. 13, 2014, 7:49 AM
- The team's estimates are almost universally higher than Street consensus, averaging 3.1% above over 16 covered names.
- The largest differential is for Gamco Investos (GBL), with BAML now seeing EPS of $1.61 in the December quarter vs. $1.30 previously and $1.30 for the Street. Calamos (CLMS) is lifted to $0.15 vs. $0.12 previously, and consensus of $0.14. Janus Capital (JNS) is seen at $0.20 vs. $0.19 previously and consensus $0.18.
- Among those whose estimates are cut are BlackRock, now at $4.40 vs. $4.55 previously, but still ahead of the Street at $4.34. Legg Mason (LM) is reduced to $0.62 vs. $0.71 previously and consensus $0.61.
- Earlier this morning: Legg Mason guides to $0.65-$0.68 for the Dec. quarter.
- Other names mentioned in the BAML report: BEN, IVZ, TROW, AB, AMG, FII, WDR, APAM, CNS, MN, WETF.
Jan. 13, 2014, 7:27 AM
- Legg Mason (LM) expects to earn an above-consensus $0.65 to $0.68 per share in FQ3, though that amount will be less than it made in the prior quarter thanks to a higher effective tax rate and some downsizing charges, among other items.
- Preliminary AUM at quarter end of $680B is up $24B from FQ2, with $14B of that from market appreciation and $10B from inflows. Equity inflows were $13B.
- Press release
Oct. 25, 2013, 7:05 AM
Oct. 25, 2013, 12:05 AM
Oct. 24, 2013, 5:30 PM
Oct. 8, 2013, 8:31 AM| Oct. 8, 2013, 8:31 AM | 1 Comment
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