Baltimore money manager Legg Mason weathered another brutal quarter in which it took a $103 million loss and saw assets under management fall nearly 9 percent, the firm said Wednesday.
The firm’s stock price closed down nearly 20 percent Tuesday before the earnings report came out, on fears that its losses would grow. But Legg stock was up $4.39, or 34 percent, to $17.36 in trading late Wednesday.
Since Jan. 1, the firm’s stock has fallen 82 percent, from $73.25 a share. The report marked the third straight quarter of losses for Legg, which CEO Mark Fetting called, “a very discouraging and disappointing result” amid severe market turbulence.
“While this has been a challenging quarter for all financial services companies, including Legg Mason, I have never been more convinced that we have the right model and strategy to take this company to the next level,” Fetting said in a statement.
The $103 million loss, or 74 cents per share, follows a net income of $177.5 million during the same quarter last year and a $31 million loss last quarter.
Legg also saw its performance fees, the amount charged by money managers for growth of investors’ assets, slide 83 percent to $13.5 million for the six months ending Sept. 30.
But Fetting pointed to the firm’s assets under management, which declined 8.8 percent from last quarter to $842 billion.
He said 75 percent of that decline was due to market depreciation, not investors pulling their money out, and was less than the firm’s competitors.
Last week, rival local investment firm T. Rowe Price reported an 11 percent drop in assets under management to $345 billion.
Legg reported its first-ever quarterly loss in May, driven primarily by the tumbling value of structured investment vehicles it inherited in a 2005 deal with Citigroup Inc. Fetting said the firm had $2.5 billion in excess cash available to cover approximately $2.9 billion in those vehicles.
Despite the quarterly loss, Legg Mason remains generally healthy, said Alan Rambaldini, an equity analyst covering the firm for Chicago-based research company Morningstar.
Legg’s operations still generate solid cash levels, and the amount of investments pulled from the company has remained stable despite the general market’s violent downturn, Rambaldini said.
“They’re going to be taking losses on [the structure investment vehicle] assets for the next couple quarters,” he said. “With revenues coming in from assets under management, we expected that big decline with the market.”
