Last year at this time, money manager Legg Mason
Other things, however, have changed quite a bit since last year, as evidenced by the 114% run-up in the firm's shares. In a foreshadowing of events to come, the company last summer entered into exploratory talks to acquire the managed assets of Merrill Lynch
Legg Mason never abandoned the search. And last month, it announced that it had reached a landmark agreement with financial-services giant Citigroup
As a result of the swap, Legg Mason is now focused exclusively on the manufacturing side of the business -- selling the products is someone else's concern. With the addition of Citigroup's asset-management operations, which include the Smith Barney and Salomon Brothers fund families, the company's managed assets will exceed $830 billion. However, integrating (and turning around) the poor performance at many of the newly acquired funds will not be done overnight, and I would expect to see many of the laggards (and their dismal track records) absorbed into other funds.
Legg Mason should be up to the challenge, though. Despite stiff competition from the likes of Motley Fool Income Investor pick Alliance Capital
All three divisions -- institutional, wealth management, and mutual funds -- registered sharp double-digit growth, which helped rake in fees and drive revenues and net income up 25% and 40%, respectively. Meanwhile, profits generated by the soon-to-be-discontinued private client and capital markets divisions dropped 4%.
With a few standout performers such as Smith Barney Aggressive Growth's (FUND: SHRAX) Richard Freeman teaming up with the legendary Bill Miller, as well as a three-year marketing agreement in place with Citigroup's extensive retail distribution channels, Legg Mason shareholders still have much to look forward to.
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Fool contributor Nathan Slaughter owns none of the companies mentioned.
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