Hi Paul - posted this on Crossy's board but decided it really didn't fit over there, so I deleted and posted here.
I found this insider buy on one of Legg Mason's fund. May just be a matter of normal business - new manager may be expected to own a piece of the pie. But the divi and PE look attractive and Gendelman's history sounds interesting.
Name: LMP Capital and Income Fund Inc
Ticker: SCD
Current Price: $18.20
Market Cap: $572.75 million
Insider Action: Buying
Date of Trade: 10/25/2006
Average Price: $18.17
Comments:
A decade ago, Legg Mason was the number-two brokerage firm in Baltimore. Now it is one of the top two listed asset managers in the world by many measures and perhaps the most successful. As of June 30th this year, its assets under management added up to around $855 billion. The transformation has had a bit to do with luck, a lot to do with Bill Millers stock-picking record and most of all to do with Raymond Chip Masons company-building strategy. Over the past 20 years he has acquired a string of ever larger asset-management companies. Last December Chip Mason, whose success, like Millers, has been based on making unusual and optimistic bets, inked his biggest deal to date: the swap of Legg Masons 1,500-strong traditional brokerage unit for Citigroups investment-management arm, which at the time oversaw assets worth $400 billion.
The asset swap suited both sides. Legg Masons retail distribution network was fairly small; Citigroups was vast. Legg Masons asset-management results have been superb; Citigroups mostly undistinguished, as often happens with brokers in-house products. After all, when a financial adviser can recommend a proprietary fund to a client, a clear conflict of interest arises. Following investigations that swept through Wall Street, the giant bank was anxious to get out of the regulatory glare and re-establish a reputation for objectivity. It initiated the deal.
Chip Mason, who has been concerned about such conflicts for years saw his chance and took it. His move, however, amounted to more than opportunism. One of the attractive listed investment vehicles acquired by Legg Mason was Salomon Brothers Capital and Income Fund, now renamed LMP Capital and Income Fund Inc (Ticker: SCD). Last July $572.75 million (market cap) SCD got a new manager, Robert I. Gendelman, who since his appointment has been a steady buyer of the stock. Gendelman, who knows better than anyone how the fund is performing, most recently spent $181,672 of his own money buying 10,000 shares at $18.17 each.
He came to SCD, which at the last count had total assets of around $618 million, after a three-year stint running a long-short hedge fund at Cobblestone Partners, LLC. Before that Gendelman spent nine years with Neuberger, managing Neuberger Berman Partners from 1994 to 2000 and Neuberger Berman Regency between 2000 and 2003. He has an adventurous streak, seeking out opportunities across all asset classes and in any variety of allocations he sees fit. Gendelman, who has a superb track record, looks for companies generating lots of free cash with a high probability of meeting or beating his three-year capital-appreciation projections.
At $18.20 SCDs trailing p/e is 5.36, with the stock bolstered by a 6.60% yield. Given the strength of the market and Gendelmans stock picking prowess, SCD is worth tucking away for a long and profitable ride.
The Weekly Roundup is a free newsletter published delivered to your inbox each week. If this newsletter was forwarded to you, you may subscribe via our website at:
insidermoves.com |
