Legg Mason's July AUM Higher - Analyst Blog

Legg Mason Inc. (LM) reported preliminary month-end assets under management (AUM) of $659.3 billion for the month of July, up 2.0% from $645.4 billion at the end of the prior month having declined marginally in June from May. The company has recorded a rise in AUM after two consecutive months of decline.
 
At the end of July, Legg Mason's equity AUM totaled $165.3 billion, up 6% from $155.8 billion at the end of the prior month.
 
Fixed income AUM was up 2% sequentially to $364.7 billion from $357.9 billion at the end of the last month, while total long-term AUM was $530.0 billion, up 3% sequentially from $513.7 billion. However, liquidity assets, which are convertible into cash, contracted 2% sequentially to $129.3 billion from $131.7 billion at the end of June 2010.
 
For the period ended June 2010, the company’s closest competitor BlackRock Inc. (BLK) reported AUM of $3.15 trillion, which more than doubled from $1.37 trillion in the prior-year quarter, substantially surpassing Legg Mason.
 
In July, Legg Mason reported first-quarter 2011 earnings of 60 cents per share. Including the amortization of intangible assets, deferred income taxes on intangible assets and imputed interest on convertible debt, adjusted earnings came in at 30 cents per share. Earnings lagged the prior-quarter by 9 cents and the prior-year quarter by a penny. Results came down due to higher operating expenses coupled with a decline in total AUM.
 
During the quarter ended June 30, 2010, the financial environment in the United States experienced increased economic turbulence. All through the quarter, there was a continuous decline in the equity markets attributable to persistent high unemployment rates, investor uncertainty and the economic aftershocks of Europe.
 
Legg Mason continues to reel under the acute recessionary environment as most of the company's business continues to face difficult market conditions. Management believes the conditions will remain moderately challenging in fiscal 2011 as well.
 
Legg Mason currently retains its Zacks #3 Rank, which translates to a short-term Hold rating. Considering the fundamentals, we are maintaining a Neutral recommendation on the stock in the long term.
 
BLACKROCK INC (BLK): Free Stock Analysis Report
 
LEGG MASON INC (LM): Free Stock Analysis Report
 
Zacks Investment Research