Why Legg Mason's Shares Jumped (LM)

Why Legg Mason's Shares Jumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of asset manager Legg Mason (NYSE: LM ) jumped 11% in intraday trading after announcing financial news.

So what: The company said today it would repurchase $1.25 billion in convertible senior notes from KKR (NYSE: KKR ) . The board of directors has also authorized an additional $1 billion in share repurchases, continuing a repurchase program at the company.

Now what: The company will be selling new senior notes to pay for the debt repurchase so it doesn't change the company's debt level dramatically. As of March 31, 2012, the company had $1.4 billion of cash on hand as well, so there's plenty to fund the stock repurchase. I see this as a positive for shareholders but would like to see the stock come down from its high today before buying in at a premium.

Interested in more info on Legg Mason? Add it to your watchlist by clicking here.

More Expert Advice from The Motley Fool

The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock in our brand-new free report: "The Motley Fool's Top Stock for 2013." I invite you to take a copy, free for a limited time. Just click here to access the report and find out the name of this under-the-radar company.

Jeff Fischer and team have demystified options. And they can rack up income like $1,030... $2,626... and $3,228 on a schedule you can set your watch by!
That's why we're glad to announce every single one of their closely guarded strategies is available to YOU during May and June – 100% FREE, no strings attached! Just enter your email address in the box below...

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment icon found on every comment.