- The Washington Times - Monday, November 20, 2000

Legg Mason Inc. and its stockholders are confident of continued success, as long as the economy doesn't enter a recession and Americans continue dumping their savings into mutual funds.

The Baltimore investment management firm, which has been selling its stock in the mid-$50 per share for much of the year, should continue to do so, barring any economic catastrophe, analysts said.

"It isn't a sexy story, but it is a steady good story," said Robert Hoban, analyst with S&P; Ratings Services in New York. "And, it makes money."

The company's stock suffered its 52-week low on Jan. 7 at $30.68 per share, while it bounced over its norm, selling its shares for $60.25 a piece on Sept. 11, for its 52-week high.

The stock closed on the New York Stock Exchange Friday at $49.81 per share.

Though the company reported third-quarter earnings slightly below expectations, the general consensus among analysts is to hold the stock.

Net income for the company's second quarter ended Sept. 30 rose 23 percent to $37.2 million, or 55 cents per share, a measure of the company's profit per share, from net income of $30.3 million or 46 cents per share, for the like quarter last year.

"It's third quarter was a little bit less than expected for earnings per share," said Alyssa G. Sibley, senior stock analyst at Morningstar in Chicago. "But, I still think it looks pretty attractive."

Legg Mason is not losing investor sentiment because, in part, it isn't cyclical like construction stocks. Nor is it a dot-com. It is a steady consistent performer in a sector that has held its own over the past several years, Ms. Sibley said.

Legg Mason's chairman, Raymond "Chip" Mason, said the third-quarter earnings were a little disappointing, but reflect a somewhat volatile marketplace.

"While they were the third highest in our firm's history, [the earnings] were somewhat disappointing as the unsettled market conditions during the quarter contributed to an unexpected decrease in investment banking revenue," Mr. Mason said in a statement.

When investors started moving away from technology stocks earlier in the year, Mr. Hoban said, the money had to be put into something.

"When you have sector rotation, you've got a lot of money, and there's only so many places you can put it."

Financials have been outperforming the market, Ms. Sibley said. "Financials had an excellent first quarter, the IPO (initial public offering) market was very strong, and mergers and acquisitions continue to be on the rise."

The second quarter saw a normal summer slowdown for financial stocks. Now financial stocks should stabilize for the remainder of the year with continued growth in savings accounts.

"Financial companies that offer a broad array of products are going to be the ones that should be able to garner a higher amount of assets," Ms. Sibley said.

September was also a month for numerous acquisitions in the financial sector, a trend that has worked in Legg Mason's favor. Paine Webber merged with Union Bank of Switzerland, and Donaldson Lufkin & Jenerette merged with Credit Suisse First Boston.

Legg Mason, one of the few regional asset management firms, itself became a target and its stock price jumped amid merger speculation.

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