Money Managers

With all the upheaval in the eurozone and the promise of more to come, what's an investor to do? Kick anything vaguely European out of the 401(k)? Baltimore money managers T. Rowe Price and Legg Mason say they both have relatively low levels of exposure to the eurozone: 4 percent of assets under management at Price, 5 percent at Legg. But they haven't pulled back in a big way from the region, which is struggling — to varying degrees, depending on the country — with debt and fears of a sharp recession.

T. Rowe Price lost another one of its fund managers, the third this year. Friday was the last day for Joseph M. Milano, 40, who has been the manager of Price's New America Growth Fund since 2002, said spokesman Brian Lewbart. Milano, who joined the Baltimore-based money manager in 1996 as an associate analyst, only recently informed Price of his plans to leave. "He let us know he was leaving the firm to pursue other investment management opportunities, most likely on his own," Lewbart said.

They seem like perfect complements. Paul D. Corbin is a right-handed native of Washington. M. Elliott Randolph Jr. is a left-handed Baltimorean. Each spent more than 10 years at First National Bank of Maryland, and they have spent their careers managing other people's money.Indeed, the five years they have played on the tennis court apparently represents their biggest chance to compete."Paul's a strong singles player," Mr. Randolph said, avoiding the answer to a question about who wins their tennis matches.

Legg Mason Inc. reported Tuesday that it earned $29.2 million in its fourth quarter, down about 62 percent from a year earlier due to added real estate expenses. The Baltimore-based money manager's results still beat analysts' expectations, and its stock ended the day up 48 cents at $31.86 per share. On a per-share basis, Legg earned 23 cents, exceeding analysts' expectations by 3 cents per share for the three months ended March 31. A year earlier, Legg earned $76.1 million, or 54 cents per share.

AT 8: 30 A.M. ON Friday, David M. Citron is bargain hunting.The portfolio manager with Baltimore-based Wagner Citron Management Corp. is quickly calling bond dealers to see if he can shave a point on treasuries or government agency bonds on sudden news that the economy lost jobs in September -- the first time in eight months."

Last year was so tough on investors, wrote one securities firm research director, "that even the liars are telling you how much they're down on the year!"That helps explain, if not ameliorate, the subpar results of most Maryland investment managers in 1994, as measured by Rockville-based CDA/Cadence, a division of CDA Investment Technologies Inc.TTC The dozen or so money managers whose performance CDA tracked last year managed a 1.02 percent return, including stock dividends. That compares with a 1.3 percent gain by the Standard & Poor's 500 Stock Index.

After last year's stock market rout, managing money may not seem like such a glamorous pursuit. But executives who run brokerages and mutual fund companies are hoping for a bit of luster to return to their businesses with rebounds in the market and the economy this year. They are betting that, with Federal Reserve Board interest rate cuts, the economy will pick up in the second half of the year and that the stock market will at least stabilize. "We go into the year pretty optimistically," said Raymond A. "Chip" Mason, chairman and chief executive of Legg Mason Inc., a Baltimore-based brokerage and asset management company.

In the wake of Enron Corp.'s collapse, local money managers say reforms are needed, ranging from fuller disclosure by companies to greater independence of auditors and analysts who recommend stocks. But even then, some say, reforms can't guarantee that companies won't mislead investors. "If they want to break the rules, they will break the rules," said Donald J. Hoelting, a principal with Investment Counselors of Maryland in Baltimore. The Securities and Exchange Commission held a round table last week with investment professionals and others on how to improve financial disclosure and auditor oversight as a result of Enron's implosion.

Two money managers selected by Baltimore investment banker Nathan A. Chapman Jr. to invest funds for the state pension board used that money to buy $5.1 million worth of shares at $13 each in a Chapman-controlled company - stock that is now worth 17 cents a share. Unless the company's stock stages a remarkable recovery from a price lower than that of the bankrupt Enron Corp., the fund is in danger of losing more than $4 million on that investment. Chapman, chairman of the University System of Maryland's Board of Regents and an ally of Gov. Parris N. Glendening's, said he didn't receive a dime as a result of the purchases - though his company did. But he acknowledged that the transactions are under investigation by the federal Securities and Exchange Commission - as The Sun reported last month.

Leading legislators said yesterday that they were troubled about questionable transactions by managers chosen by Baltimore investment banker Nathan A. Chapman Jr. when he was investing money for the state employees' pension fund. Some called for his resignation as chairman of the University System of Maryland's Board of Regents because of the purchase of shares in a company he controlled using pension money - a transaction they called a conflict of interest. Chapman, the board's chairman since 1999, said yesterday that he plans to remain in the post and sees no link between that position and his business activities.

Legg Mason Inc. on Tuesday announced a quarterly divided of 13 cents per share, an 18 percent increase. The Baltimore-based money manager said the dividend will be paid on July 8 for those who are shareholders as of June 11. Text BUSINESS to 70701 to get Baltimore Sun Business text alerts

Legg Mason Inc. said it agreed to pay $80 million for European fund manager Fauchier Partners, plus as much as an additional $56 million in the next four years if certain financial targets are achieved. Though Legg announced in December its plan to acquire Fauchier from BNP Paribas Investment Partners, the Baltimore-based money manager only disclosed the terms of the deal in a regulatory filing Wednesday. Once the acquisition is completed in the current quarter, Fauchier will be merged into Legg's Permal Group affiliate in New York.

Legg Mason Inc. reported Friday a $453.9 million loss for the third quarter, following a previously announced $734 million writedown of certain assets. On a per-share basis, the Baltimore-based money manager lost $3.45. For the corresponding quarter a year ago, the company earned $28.1 million or 20 cents per share. Legg, which has been operating without a permanent CEO for four months, continued to see investor dollars flow out of its funds in the quarter ended Dec. 31. The stock fell more than 3 percent Friday, closing at $26.79 per share, down 86 cents.

T. Rowe Price Group on Tuesday reported a $232 million profit for the fourth quarter, a 23 percent increase from a year earlier. The Baltimore-based investment firm earned 88 cents a share for the quarter ended Dec. 31. That's up from 73 cents a share a year earlier, but still a penny less than analysts expected. Revenue reached $787.3 million for the quarter, compared with $671.6 million the year before. This, too, was slightly below analysts' expectations. Price shares fell sharply in early trading, but recovered somewhat to close Tuesday at $71.61, down 57 cents a share.

Legg Mason Inc. is looking to sublease 78,000 square feet on three floors at its headquarters in Harbor East. The Baltimore-based investment management firm is consolidating its space, partly due to the recently announced merger of Legg Mason Capital Management into a larger Legg affiliate, ClearBridge Investments in New York, said spokeswoman Mary Athridge. Legg leases 372,000 square feet in the building. Since 2009, Legg has subleased 82,000 square feet of that to Johns Hopkins Carey Business School and McGladrey, a tax consultant, Athridge said.

Baltimore-based money managers T. Rowe Price and Legg Mason Inc. may offer actively managed exchange-traded funds after receiving a thumbs up from regulators. The Securities and Exchange Commission approved Price's application earlier this month to be allowed to issue active ETFs - the first, and most difficult, regulatory hurdle to entering the market. Legg received similar approval in mid-November, and now awaits the second step: the green light from the SEC to launch a specific fund.

Baltimore-based money managers T. Rowe Price and Legg Mason Inc. may offer actively managed exchange-traded funds after receiving a thumbs up from regulators. The Securities and Exchange Commission approved Price's application earlier this month to be allowed to issue active ETFs - the first, and most difficult, regulatory hurdle to entering the market. Legg received similar approval in mid-November, and now awaits the second step: the green light from the SEC to launch a specific fund.

Think of Baltimore's financial nerve center, and many picture the gleaming skyscrapers downtown, where Legg Mason Inc., Deutsche Banc Alex. Brown Inc., T. Rowe Price Associates Inc. and Mercantile Bankshares Corp. call home.But about a mile north of the Inner Harbor is another cluster of companies that are also involved in high finance. They are tucked away in a grittier, more eclectic part of the city -- Mount Vernon.Best known for its quaint shops, restaurants, tree-lined streets, and even occasional gunbattle, Mount Vernon has become the city's other hub to a growing number of money managers who collectively oversee $10.4 billion in assets.

The second CEO in Legg Mason's history announced last week he was stepping down, raising the question: What's next for the Baltimore-based money manager? Only the board — or more precisely, activist shareholder and Legg director Nelson Peltz — may know. And for now, Peltz isn't talking, at least publicly. But the abrupt resignation of CEO Mark R. Fetting after fewer than five years at the helm has fueled speculation that Legg is headed for a breakup. Legg has nine major money-management affiliates, some of which would be attractive acquisitions for other asset managers needing to fill out their lineup, analysts said.