Legg Mason seeks to expand Coming off best year, chairman calls for more

Investment brokers

July 25, 1996|By Bill Atkinson | Bill Atkinson,SUN STAFF

Despite coming off its best year ever, Legg Mason Inc. must find ways to expand its business globally if it wants to stay ahead of the competition, Chairman Raymond A. "Chip" Mason told shareholders yesterday at its annual meeting.

The Baltimore-based brokerage company manages $35 billion in assets, and of the top 300 domestic money management firms, Legg Mason ranks 89th, according to the most recent issue of Institutional Investor magazine.

"At $35 billion we probably have to get to $50 [billion] to $100 billion to be competitive in the world we are facing," Mason said. "It gives us no time to stand still."

The company's board of directors yesterday approved a new dividend of 52 cents a share annually, up from 48 cents.

Legg Mason's stock closed down 25 cents yesterday at $28.875.

After the meeting, Mason said the company must become a "global manager to go forward into the future."

"I think you are going to have to be bigger than we are to be a real worldwide player," he said. "I don't know if you have a choice."

That doesn't mean Legg Mason will scramble for acquisitions, Mason said.

"We will continue to look. When you start forcing it you are later sorry. It would be worse to make a mistake," he said.

Legg Mason has made several acquisitions in recent years to diversify the company away from the brokerage business, which is cyclical and accounted for 46 percent of the company's $516 million in total revenues for its fiscal year ended March 31, 1996.

The company acquired Bartlett & Co., a Cincinnati-based money management firm, in January and Lehman Brothers Global Asset Management Limited in February.

Mason said he is looking for ways to continue to diversify the company. He told shareholders that he wants to build the company's investment banking business, which made up just 8 percent of total revenues at the end of the fiscal year, down from 18 percent in 1990.

The group, however, has acted as financial adviser for several high-profile deals, including advising the Washington Bullets professional basketball team, the Washington Capitals professional hockey team, USAir Arena in Landover and the MCI Center, which is a professional sports arena under construction in Washington.

"The diversity of what we do makes us a very strong company," Mason told stockholders.

Like many other brokerage and money management firms, Legg Mason's earnings surged last year and for the first part of 1996 because of huge gains in the stock market. But the market has experienced two dramatic dips in the past week and a half on fears that inflation may be picking up and interest rates may rise further.

Mason said that the company hasn't yet seen redemptions from clients who invest in Legg Mason's mutual funds, which manage about $5.5 billion in assets, but he anticipates some.

He also isn't overly concerned about the economy because he sees the Federal Reserve maintaining a steady hand on growth and either raising or lowering interest rates by small percentages.

"I think the economy is probably fine," he said.

Pub Date: 7/25/96

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