Shares of Legg Mason Inc. fell Tuesday after the investment manager said it lost more than $250 million in the fiscal fourth quarter as it set aside millions for possible bailouts of funds rattled by shaky capital markets.
Shares fell $6.46, or 10.3 percent, to $56.30. Shares have fallen 47 percent from a high of $106.19 last May.
Earlier Tuesday, the Baltimore-based company also announced plans to raise $1 billion through a sale of a special class of stock to support company-run funds. Legg Mason plans to sell 20 million "equity units" for $50 apiece.
Citi Investment Research analyst Prashant Bhatia said he believes the worst is over for Legg Mason, and that the capital raise is more a move to build a margin of safety rather than to cover any imminent loss.
Bhatia reiterated a "Buy" rating and an $85 target price on the stock, noting limited downside.
"The near-term headwinds are now finally being discounted in the stock," he said. "At current valuation levels, Legg Mason stock offers a compelling risk/reward."
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