Shares of Baltimore money manager Legg Mason seesawed on Thursday as more speculation emerged about billionaire activist investor Nelson Peltz's intentions
The Wall Street Journal reported Thursday that the corporate agitator has not acquired more shares in the firm, citing a person familiar with Peltz's investments, one day after Legg's stock rose 11 percent on a British newspaper story that Peltz is accumulating a higher stake and may push for a sale or breakup.
Peltz's Trian Partners held 727,142 shares, or 0.5 percent, of the company as of March 31, according to regulatory filings.
Legg's shares climbed as much as 9 percent and then traded down in midday trading before gaining 9 cents to close at $24.57 on Nasdaq.
Legg CEO Mark R. Fetting declined Thursday to comment on the Daily Telegraph's report.
After news reports about Peltz, Legg was upgraded Thursday by Deutsche Bank AG and Merrill Lynch & Co. analysts.
Deutsche Bank analyst Michael Carrier wrote that "while it could turn out not to be true, even the possibility of an activist getting involved and/or a strategic transaction occurring will likely limit the downside in the near term."
Carrier said margin improvement, selling divisions or creating a new asset management firm are three reasons for an activist to target Legg, whose subsidiaries generally operate as separate businesses. But each direction has significant risks, and "fixing a widget-based firm is very different game than a talent-based firm," he said.
A spokeswoman for Trian also declined comment.
Peltz is known as an agitator who targets companies with good brands and assets that are underperforming. Peltz pushed for the sale of fast-food restaurant Wendy's to Triarc Companies Inc., the parent company of Arby's owned by Peltz, and pressured candy maker Cadbury to split itself in two.
For more than a year, Legg's profit and stock price have been weighed down by costs to shore up some of its money market funds invested in toxic securities, which were wiped out in March. Its key mutual funds have suffered from dismal returns. And Legg's assets under management fell 9 percent to $632.4 billion during the first three months of the year.
The Telegraph's report is not the first time Legg has been targeted for buyout talks. Analysts have speculated about merger and acquisition possibilities for Legg and other asset management firms amid the financial turmoil.
Earlier this month, money manager BlackRock agreed to buy Barclays Global Investors to create the world's largest asset management firm in a $13.5 billion deal.
Fetting has repeatedly rejected the idea of selling any of Legg's businesses, saying the company is stronger together than apart.
Baltimore Sun reporter Ed Gunts contributed to this article.
