Legg Ma­son prof­its up a bit in sec­ond quar­ter

Baltimore Sun - - MARYLAND - By Sarah Gantz sarah.gantz@balt­sun.com twit­ter.com/sarah­gantz

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.

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