Legg Mason Inc., a Baltimore-based financial-services company, lured away this month one of the top officers of its rival, mutual fund manager T. Rowe Price Associates Inc. Now Legg is looking to horn in on Price's main turf: mutual funds.
When Legg Mason hired Edward A. Taber III, who headed Price's fixed-income and taxable-bond divisions, his charge was to run the company's money-management business. Yesterday, Legg Mason Chairman and President Raymond A. Mason said the company will add to its mutual fund offerings with at least two HTC new funds this year, perhaps as many as five.
The creation of new funds will continue for several years, as Legg Mason tries to expand the scope of its mutual fund offerings and retain customer accounts during this period of low interest rates and low yields, Mr. Mason told about 50 shareholders at the company's annual meeting at the Stouffer Harborplace Hotel.
Although he expects to hire and train 80 to 100 brokers this year, the most fervent activity will come in the fee-based areas, such as money management, Mr. Mason said.
The first products to be launched under Mr. Taber's direction will be a municipal bond fund and an international stock fund, areas in which Legg Mason now has little to offer customers.
The company reported a record profit of $7.6 million, or 83 cents a share, in its first fiscal quarter, which ended June 30. Nonetheless, Legg needs to further flatten out the revenue peaks and valleys that most stock brokerages experience, Mr. Mason said.
Fee-based activities, such as mortgage servicing and money management, account for about 15 percent of Legg Mason's revenues.
Mr. Mason said that once that figure rises to 25 percent or 30 percent, "you would find that the stability of our revenues would be among the highest in our business."
Legg's fee-based revenue share is about double the industry average, according to Dean Eberling, an analyst with Shearson Lehman Bros. in New York.
Mr. Mason's comments followed a carefully scripted 10-minute meeting at which directors were nominated and elected and Coopers & Lybrand was selected as the company's auditor.
The only rough spot came when several audience members, including brokerage analyst Perrin H. Long of First of Michigan Corp., chided Mr. Mason and his board of directors for what they called a paltry dividend increase. The board voted yesterday to increase the quarterly dividend to 10 cents a share from 9 cents.
"Shareholder values have not done a whole lot since you went public," Mr. Long said to Mr. Mason, suggesting that a stock dividend, rather than a cash dividend, would be more appropriate.