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Legg Mason: Patience, Grasshopper.

Posted by: Lauren Young on October 26, 2006

Fund junkies know that Legg Mason’s star Bill Miller is underperforming the S&P 500, which may put an end to his amazing 14-year streak. At the same time, Legg Mason is grappling with a major acquisition of Citigroup’s asset management arm. Since the company preannounced that it would not meet earnings estimates, the stock has fallen dramatically.

But Tom Perkins, manager of the $6 billion Janus Mid Cap Value Fund, isn’t concerned. Perkins has owned Legg Mason stock several times, but most recently sold when it hit $115. (He also bought Miller’s fund for his son 20 years ago.) Now Perkins is buying Legg Mason again. “We are always suspect of acquisitions,” he says. And while there may be a few hiccups, Legg Mason is well-positioned for the long term, he says. Plus, at 17 times 2007 earnings, Perkins thinks it is a reasonable bargain. “The stock has come down harder than the earnings estimates, so it represents a pretty good value…with patience,” Perkins says.

Patience, grasshopper.

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Bloomberg Businessweek’s Ben Steverman focuses on the latest moves in financial markets and emerging trends in stocks, bonds, and funds, always with an eye toward giving readers a better understanding of the sometimes confusing and often chaotic world of money. Standard & Poor’s senior index analyst Howard Silverblatt will also provide his take on companies’ finances and the markets. Voted one of the “Top 100 Finance Blogs” in 2007.

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