Legg Mason profits up a bit in second quarter
Legg Mason reported a profit of $66.4 million for its second fiscal quarter, a 3 percent increase from the July-to-September period last year.
Earnings per share rose 5 cents, to 63 cents, beating Wall Street estimates. Analysts polled by Zacks Investment Research forecast earnings of 58 cents per share on revenue of $752 million.
“Legg Mason delivered solid operating results despite a challenging quarter for active managers,” Chairman and CEO Joseph A. Sullivan said in a statement.
The Baltimore-based money manager reported revenue of $748.4 million in the second quarter.
Though an 11 percent increase from revenue of $673.1 million the same quarter last year, second-quarter revenue fell short of analysts’ expectations, and Legg’s stock tumbled in Friday trading.
At closing Friday, Legg’s stock was down nearly 5.4 percent, at $29.25 a share.
Macrae Sykes, a research analyst with Gabelli & Co., said investors also may have been reacting to equity outflows of $1.5 billion and a dip in average fee rates.
Nationally, actively managed funds have been hurt as investors move toward passive investment options. Legg has fared better than others, but wasn’t immune to the trend, Sykes said.
A U.S. Labor Department fiduciary rule that will require retirement advisers to put clients’ best interests above their own profits has pushed investors away from actively managed funds and drawn attention to the fees investment firms charge.
As of Sept. 30, Legg had $732.9 billion in assets under management, a 9 percent increase from the same time last year.