At a Glance
"Excellent access to senior management"
Pays less than New York-based firms
"Good money managers"
About Legg Mason Inc.
Legg Mason owes its existence to 19-year-old John Legg Jr., who got his start with an entry-level job at a Baltimore brokerage firm named for its founder, George Mackubin. The firm began in 1899; by 1904, young Legg was a partner. Forty-five years later, he gained complete control of the business. In 1970, Legg & Co. merged with Mason & Co., a brokerage founded by Raymond A. “Chip” Mason. Legg Mason went public in 1983. Chip Mason remains at the head of the firm, which has also stayed put in Baltimore. As of August 31, 2009, the firm had $693 billion in assets under management, a 5 percent boost from the end of June. Still, the figure was down from the $1 trillion in assets it had as recently as 2007. Formerly an industry leader, the firm has faltered somewhat in recent years and is currently struggling to retain its place of dominance in the industry.
Legg Mason offers asset management services to individuals, institutions, endowments, foundations, governments and high-net worth investors around the world. The firm’s divisions include institutional, wealth management and mutual funds/managed services. Its asset management subsidiaries include Batterymarch, Brandywine Global, Clear Bridge Advisors, Legg Mason Capital Management, Legg Mason International Equities, Legg Mason Canada and Western Asset. The wealth management division also boasts an impressive roster, including Barrett Associates, Inc., Bartlett & Co., Legg Mason Investment Counsel & Trust Company, The Permal Group, Private Capital Management and The Seifert Group at Barrett Association.
At the close of 2005, Legg Mason announced news that would skyrocket the firm into the upper echelon of American asset and mutual fund managers. Legg Mason had successfully acquired of almost all of Citigroup’s worldwide asset management business, more than doubling its assets under management. Citi transferred over $400 billion to Legg Mason, launching the firm up to more than $860 billion assets under management. In exchange, Legg Mason gave Citigroup its private client brokerage and capital markets businesses, plus hefty chunks of common and nonvoting preferred stock as well as $500 million in cash. In April 2006, Standard & Poor’s recognized Legg’s new clout by adding it to its benchmark S&P 500 stock index, replacing Guidant.
Legg Mason’s earnings took a turn for the worst in July 2006 and have been struggling to recover ever since. The news in 2006 was dire: earnings were far short of expectations, and shares fell nearly 9 percent. Assets also fell for the first time in five years, as clients pulled $6.5 billion from various funds and separate accounts. Superstar fund manager Bill Miller’s venerable Legg Mason Value Trust had its “worst year since 1990” and stock prices plummeted causing investors to lose $2.5 billion in shareholder value. Analysts pointed to the Citigroup swap, which had seemed like such a windfall for Legg, as a source of the problem, since integration of massive business units is never a simple (or cheap) task.
At the fiscal year end of 2007 (the 12 months ended March 2007), Legg Mason had experienced significant losses, but were still building assets under management, reaching $969 million and setting sights on the big $1 trillion goal. During the year, there was some additional turmoil, as Jim Hirschman stepped down as president of Legg Mason while retaining his role as CEO and chairman of Western Assets.
As the recession hit in 2008, and then proceeded to deepen, Legg Mason continued to incur losses (as did many of its industry peers). For fiscal year 2009, the firm posted $3.36 billion in revenue, a decrease from the $4.63 billion in posted in 2008. The firm also posted a net loss for 2009 of $1.95 billion, compared with $267.6 million in net income in 2008.
Low numbers weren’t the end of bad news for the firm, however. Often referred to as “America’s best stock picker,” legendary Legg Mason fund manager Bill Miller has been in a slump for the past couple of years, and things hit rock bottom for Miller during Legg Mason’s fourth quarter of fiscal 2008 (ending March 31st). With equity markets on the decline, Miller’s Legg Mason Value Trust fund experienced its largest quarterly decline since it opened 26 years earlier. (Until 2006, Miller was on a 15-year streak of beating the S&P 500 Index every single quarter.)
100 Light St.
Baltimore, MD 21202-1099
Phone: (877) 534-4627
Employer Type: Public
Stock Symbol: LM
Stock Exchange: NYSE
Chairman, President, and CEO: Raymond A. Mason
2007 Employees (All Locations): 3,820