Mason raises the bar for his soaring firm

Shareholders told goal is to rank among top 25 asset managers

`A great first quarter'


July 28, 1999|By Bill Atkinson | Bill Atkinson,SUN STAFF

Raymond A. "Chip" Mason, chairman and chief executive of Legg Mason Inc., raised the performance bar for the brokerage and money management firm yesterday.

He told shareholders at the company's annual meeting that the priority is to become among the nation's top 25 asset managers, and among the top 50 in the world.

The company was 46th in the United States last year, and ranked about 100 globally, the company said.

"Our opportunity to grow from here is pretty strong," Mason told about 100 shareholders and employees at the meeting, which was held at the Center Club downtown. "This is an industry that's growing by leaps and bounds."

Legg Mason, too, has had its share of growth. Yesterday, it rewarded shareholders by increasing its dividend 23 percent to 8 cents per share, up from 6.5 cents. The dividend is payable Oct. 25 to shareholders of record on Oct. 7, 1999.

"We had a great first quarter and we would like the rest of the year to continue that way," Mason said.

Indeed, Legg Mason's performance has been remarkable, especially during the past three years.

Assets under management, which includes money managed for pension funds, corporations, individuals, and money contained in its mutual funds, has grown at an average annual rate of 36 percent over the past three years, outpacing the industry.

In addition, net income has grown at an annual average of 33 percent over the same period, while earnings per share have grown 29 percent, and total revenue has grown 25 percent.

"Strong numbers by any standard," said Michael Flanagan, a brokerage analyst at Philadelphia-based Financial Service Analytics. "We have been saying for the past five years that this trend couldn't continue, and we have been surprised each year."

Of course, history's longest-running bull market has helped. Yet, Legg Mason has grown rapidly while revamping its business.

In 1990, 52 percent of the company's revenue came from its brokerage business, while 19 percent came from asset management operations. Today, 37 percent of revenue comes from asset management, and 36 percent comes from brokerage.

"You have had a dramatic shift in the base of our revenue," Mason said.

Legg Mason managed $93 billion in assets at the end of its fiscal first quarter June 30, up 26 percent from a year ago. Mason expects growth to continue and to reach $100 billion this year if the stock market keeps rising.

The growth of the asset management business has helped the firm remain independent, Mason said after the meeting.

The brokerage business is a "business under a lot of pressure," he said.

When the meeting ended, Mason received rousing applause.

"We will continue to try to run this as a quality institution," he told the shareholders. "Certainly, it has been a tremendous ride."

Pub Date: 7/28/99

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