Legg is "getting hurt twice as much" because of concerns related to its performance and money market funds, said Morningstar analyst Alan Rambaldini.
Legg clients have been taking their investments elsewhere in the past year. In the most recent quarter ended June 30, investors pulled $18.4 billion from Legg funds.
Overall, investors took out a record $52.1 billion from U.S.-managed stock and bond mutual funds during the past week alone, according to data complied by TrimTabs Investment Research. The pullout followed $72.3 billion in outflows in September, the most in the single month. Citing U.S. Federal Reserve data, TrimTabs said investors deposited $185.5 billion into bank accounts last month through Sept. 22.
"Certainly with asset managers like Legg Mason and others, there's been more speculation that the fund-flow story will be increasingly more challenged with large outflows coming," said Daniel T. Fannon, an analyst at Jefferies & Co., in explaining Legg's stock decline. "Given the track record of performance at Legg Mason, there's concern there will be significant outflows."
Legg, which went public in 1983 and has 4,220 employees, manages assets of $923 billion. It has about 1,000 workers in Baltimore.
But performance woes at Legg and other asset management firms amid the financial turmoil have stirred recent buyout talks.
Legg Chief Executive Officer Mark R. Fetting has repeatedly rejected the idea of selling any of Legg's businesses.
Bloomberg News and the Associated Press contributed to this article.
