Merger & acquisition action for Legg Mason?
Credit Suisse, in a report out today, says that "M&A discussion could become a positive catalyst for the stock" of Legg Mason. M&A is merger & acquisition, and, more to the point, CS is talking about potential outside buyers kicking Legg's tires -- and or least people TALKING about potential outside buyers kicking Legg's tires. Buy the rumor, sell the fact, as they say.
Legg's stock is worth about half of what it was a year ago, and the thinking is that at this level some potential strategic partners might start to get interested. However, CS is quick to say: "As we do not expect Legg Mason to be acquired over the next six months, we do believe the company may start to consider strategic investors (Chinese Insurance Companies, Asian Sovereign Wealth Funds, and European Financial Institutions) which could provide distribution leverage, and also prevent the LM stock from underperforming..."
M&A discussion indeed. In Wall Street's self-fulfiling prophecy fantasyland, Credit Suisse has already started it.
Comments
Legg Mason Capital, its subsidiaries and its numerous funds are loaded up with stocks in companies that are already gone, Bear Stearns and Countrywide Financial, or are sinking fast like:
1. Beazer Homes
3. Centex
4. Citicorp
5. Downey Financial
5. Freddie Mac
6. Merrill Lynch
7. Pulte Homes
8. Ryland Group
9. Toll Bros.
10.Wachovia
Legg Mason and/or its funds have lost billions of dollars on just these twleve companies and it appears that they will lose billions more if they don't divest their positions. Each of these twelve companies have siginificant financial problems stemming from the Mortgage Meltdown and Housing Bust. With no recovery in sight.
I would be very wary of investing in Legg Mason stock. I just don't see how it is even trading at $40.00 given the HUGE losses Legg Mason and its various funds have experienced. I think Legg Mason stock is a very good candidate for shorting.
Posted by: Kevin Lamson | July 3, 2008 2:01 PM
LEGG MASON HOLDS 70 MILLION FREDDIE MAC SHARES AND 12 MILLION LEHMAN BROS. SHARES.
It is reported that Legg Mason Capital Management, Inc. holds over 53 Million and Legg Mason Value Trust holds nearly 17 Million shares of Lehman Bros. and Legg Mason Partner Aggressive Growth Fund holds nearly 12 million shares.
Makes one wonder what sort of due diligence 'Investment Guru" Bill Miller and his team actually do before and after investing billions of dollars of other peoples money in a company. Not only have they invested billions of investors money in pumped up home builder and financial stocks but they held them long after smart money should have bailed.
I wonder if Legg Mason keeps tabs on how much money their investors have lost in the last two years. From information gleaned from public sources my guess is that Legg Mason and its various subsidiaries and investment funds have lost 5 times Baltimore's annual budget for 2008. Which means I think Legg Mason's investors have lost over 2.7 billion million in various stocks in the last two years. And this appears to be a conservative estimate.
Legg's investment in Freddie Mac, even up until recently appears to now have lost its investors more than a billion dollars in just the last five months. Which doesn't account for the huge losses on Freddie Mac shares held from Setpember 2006, until April 1, 2008.
I'm not sure why any prudent investor is leaving what money they may have left with Legg Mason. Seriously just look at all the stocks they invested in and still hold that have gone south and I don't mean to Florida. I mean way south!. Just look at what happened to these Legg Mason picks in the past 2 years.
1. Beazer Homes
3. Centex
4. Citicorp
5. Downey Financial
5. Freddie Mac
6. Merrill Lynch
7. Pulte Homes
8. Ryland Group
9. Toll Bros.
10.Wachovia
Posted by: Kevin Lamson | September 14, 2008 10:55 PM
FORGOT TO MENTION THAT:
LEGG MASON’S BILL MILLER ALSO LOST $750 MILLION DOLLARS IN YAHOO IN THE PAST 5 MONTHS.
Stock-picking guru Bill Miller of Legg Mason support of Yahoo!'s (YHOO) efforts to stay independent of Microsoft (MSFT) by refusing to accept its offer to buy the portal company for $29.17 a share has lost Legg Mason investors nearly $750 million dollars as the stock dropped to $19.00 per shares. Legg Mason Capital Management, Inc. and Legg Mason Value trust owned 56,575,000 and 18,754,000 shares in Yahoo respectively as of June 2008.
In April of this year the Wall Street Journal quoted Mr. Miller as saying that "the current value of Microsoft's offer" -- $29.17 per share as of 4 p.m. Nasdaq market trading Tuesday -- "is not something I'm too excited about." Legg Mason owned 7% of Yahoo!'s shares the and still does. I wonder if Mr. Miller is excited about the prcie the shares are worth, $19.00 a share and no one seems to be offering more.
In July og this year Mr. Miller and Legg Mason opposed Carl Ichans later attempt to change the compostions of the Yahoo board.
Posted by: Kevin Lamson | September 15, 2008 12:36 AM