Based on the aggregated intelligence of 115,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, investment manager Legg Mason (NYSE: LM ) has earned a respected four-star ranking. While five-star stocks have been the best performers, our data has shown that four-star stocks still outshine the market by a significant margin and shouldn't be taken lightly; conversely, low-rated stocks have woefully lagged the market average.
With that in mind, let's take a closer look at Legg Mason's business, and see what CAPS investors are saying about the stock right now.
Legg Mason facts
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Headquarters (Founded)
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Baltimore, Md. (1899)
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Market Cap
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$6.04 Billion
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Industry
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Asset Management
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Trailing-12-Month Revenue
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$4.48 Billion
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Management
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CEO Mark Fetting,
CFO Charles Daley Jr.
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Return on Capital (Average, Past Three Years)
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8.9%
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Major Competitors
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Franklin Resources (NYSE: BEN ) ,
BlackRock (NYSE: BLK )
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CAPS Members Bullish on LM Also Bullish on:
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Apple (Nasdaq: AAPL ) ,
Allied Irish Banks (NYSE: AIB )
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CAPS Members Bearish on LM Also Bearish on:
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Merrill Lynch (NYSE: MER ) ,
Citigroup (NYSE: C )
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Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
Over on CAPS, fully 296 of 322 of the All-Star members who have rated Legg Mason -- some 92% -- believe the stock will outperform the S&P 500 going forward. These All-Star bulls include a couple of my Foolish colleagues -- TMFOpie and TMFMattyA, both of whom are ranked in the top 2% of our community.
In May, TMFOpie said of Legg Mason:
One of the best money management firms selling at a reasonable price. The market isn't sure what to think about the near-term prospects but long-term the story is much more attractive. I see shares worth more than $100.
A pitch from TMFMattyA just a month earlier agreed with that bullish line of thinking and broke down the stock's bargain-like valuation:
According to famed-investor Marty Whitman, the usual fair valuation for an asset manager is 2% of AUM [assets under management] plus tangible book value. This approach would value Legg's shares well into the $100s. Even taking a conservative approach, expecting a decline of $100 billion in Legg's AUM due to poor performance by its equity funds, and taking a 1.2% of AUM valuation approach, I value Legg's shares north of $80. ... New CEO Mark Fetting knows what he is doing, and is an honest and able manager. This stock won't remain cheap for long.
What do you think about Legg Mason, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 115,000 investors are waiting to hear what you have to say. CAPS is 100% free, so go ahead and get started.
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