Legg Mason CFO says reviewing business strategy, open to change

Tue Nov 13, 2012 4:34pm EST

* CFO says executives, board "prepared to modify" strategy

* Nachtwey speaks as firm seeks CEO to set direction

Nov 13 (Reuters) - Money manager Legg Mason Inc, which has eight main investment subsidiaries, is reviewing its business strategy and is "prepared to modify it as appropriate," Chief Financial Officer Pete Nachtwey said on Tuesday.

Legg Mason, which is the fourth-largest publicly traded U.S. fund manager, has been roiled by customer outflows and mixed investment performance over the past few years and is currently searching for a new chief executive. Some of Legg Mason's subsidiaries have been displeased with the parent company's sales efforts.[ID: nL1E8LOMN4]

"We are reviewing and evaluating our current business strategy with our affiliate leadership and our board and are prepared to modify it as appropriate," Nachtwey said at the Bank of America Merrill Lynch Banking and Financial Services Conference in New York, which was webcast.

Still, the Baltimore-based firm, with $646 billion under management at the end of October, is well-positioned to grow and has "significant strengths we think are sometimes under-appreciated," Nachtwey said.

Shares of Legg Mason closed down 0.6 percent at $25.00 on the New York Stock exchange on Tuesday. The shares have lost 5.2 percent so far this year.

The firm's previous CEO, Mark Fetting, stepped down at the start of October amid internal disagreements over the relationship between the parent and its affiliated investment managers, such as its Western Asset Management bond unit and its ClearBridge Advisors equity unit.

Some have urged a breakup of the company, though it is not clear that would benefit shareholders who own stock that has been stuck around a quarter of its value in 2007, before the financial crisis.

Legg Mason's board also includes the activist investor Nelson Peltz, who owns a roughly 10 percent stake in the company under ownership restrictions that end on Nov. 15. He has not commented on his intentions toward Legg Mason after that date.

Nachtwey did not address Peltz's ownership or the CEO search.

Nachtwey defended current arrangements in which Legg Mason owns its affiliates outright but has different revenue-sharing agreements with each.

Asked if the company might make the arrangements all the same, Nachtwey said a more likely path would be for an affiliate to sell the parent company a higher percentage of its revenue instead.

The company is still focused on growth, he said, and reiterated past comments that Legg Mason would be most interested in acquiring shops that specialize in international assets, equities or alternative investment areas.

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California state worker Albert Jagow (L) goes over his retirement options with Calpers Retirement Program Specialist JeanAnn Kirkpatrick at the Calpers regional office in Sacramento, California October 21, 2009. Calpers, the largest U.S. public pension fund, manages retirement benefits for more than 1.6 million people, with assets comparable in value to the entire GDP of Israel. The Calpers investment portfolio had a historic drop in value, going from a peak of $250 billion in the fall of 2007 to $167 billion in March 2009, a loss of about a third during that period. It is now around $200 billion. REUTERS/Max Whittaker   (UNITED STATES) - RTXPWOZ

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