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$44.52 1.92 (4.51%)
9/5/2008 4:01 PM

Legg Mason, Inc. (LM)

CAPS Rating:
****

The Company and its subsidiaries are principally engaged in providing asset management and related financial services to individuals, institutions, corporations and municipalities.

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Avatar TMFDitty (99.21) Submitted: 5/26/08 2:20 PM : Outperform Start Price: $52.57 LM Score: -5.60

Legg Mason is valued at just 0.75% AUM, but the rule of thumb in investment managers calls for fair value being in the 1% to 2% range. And yet, Bill Miller is one of the best in the business -- so why is the stock trading at such a seeming discount?


Maybe Mr. Market believes continued underperformance by Mr. Miller, and a weak economy generally, will lead to further "capital flight" out of Legg. But another 50% drop in AUM (which the price implies) seems unlikely. More likely -- the stock is just plain cheap. Outperform.

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Avatar Streetkill (90.93) Submitted: 7/24/08 12:16 AM

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I think the atmosphere of fear has left it grossly undervalued. Of course, if there is a new charge tomorrow in its earnings, it will plummet. But maybe not even then, because all the bad news is already priced in. And Bill Miller's funds are starting to turn, although they have a long way to go. I just bought a bit of LM yesterday, and I think it's an excellent value play, even though it's gone up around double digits the last two days. I think the financial sector is turning, and LM will benefit.

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