Legg Mason (LM Quote) shares were also sliding after the money-management firm reported a wider quarterly loss on expenses related to reducing its exposure to risky investment vehicles. Read more here.

Legg Mason(LM) -- With its 5.3% yield and a brand name that must still hold some cachet, you would like to snap it up until you realize that the company's got about $3 billion in long-term debt. How can that company compete with T. Rowe Price (TROW), which has no debt?

good annual track record

Asiello and Nelson saw the collapse of Legg Mason 's (LM) shares over the past two years, creating a compelling buy. But Sloan was skeptical, as he is with most financials. His co-managers, however, were far more confident about the stock, which by the spring was selling at a ratio of enterprise value to assets under management of just 0.60% (enterprise value is market capitalization plus net debt). "That was nearly a three-quarters discount to the rest of an already beaten-down industry average of 2.25%," says Asiello, who saw this as adequate cover for Legg's potentially troubled structured-investment-vehicle liabilities, client outflows and the performance problems of its once-star portfolio manager, Bill Miller. With $920 billion of assets under management, Legg remains a major, highly respected, well-managed industry player. And it has unrealized synergies, say Asiello and Nelson, from the swap that gave it Citigroup's asset-management business and its acquisition of hedge-fund manager Permal Group. So far, Legg has traded off more than 30% from the fund's average cost of more than $54. But the group hasn't blinked, still believing in its two-year price target of $86.

Some private-equity firms are taking a page from sovereign-wealth funds and putting money into struggling financial companies. Texas Pacific Group bet on Washington Mutual (WM) and KKR on Legg Mason (LM). Neither has fared well.

Hold - Price 43.57 on July 1
by Jefferies & Co.

LM [recently] announced its fourth round of charges resulting from capital support for struggling SIV [structured-investment vehicle] holdings. Total after-tax charges are expected to equal $154.5 million in F1Q09....Our 48 price target [down from 57] is based on an 10.5 times multiple of our new calendar-year '09 E-EPS, a discount to peers. We believe current challenges in LM's mutual-fund business and SIV exposure will limit near-term multiple expansion. Risks to our estimates include ongoing equity outflows and further SIV-related charges. Market cap: $6.3 billion.

I’m seeing unusual options action, reveals Pete Najarian. Traders are buying the July 45-40 put spread. That suggests this stock could go lowe

Legg Mason (LM) was upgraded to Market Perform, Wachovia said. Valuation call, as value funds should attract more funds in the current environment. CEO change should also be a positive, and Citigroup has already placed most of its shares on the market.

Credit Suisse said it is downgrading Legg Mason (LM) to Underperform from Neutral. Cites poor absolute/equity performance combined with reliance on third party distribution. Lowered target price to $68 from $73.

Legg Mason has a forward P/E of just 10 based on so-called cash earnings, which adds back goodwill amortization and a tax benefit. With a $9 billion market value, Legg is valued at just 1% of its $1 trillion of assets under management, versus 2% to 5% for most if its peers. One 2008 catalyst could be the naming of a successor for longtime CEO Chip Mason, 71.

old heeb, no new heebs

not ready

financial in my portfolio

Chip Mason: Indigestion from Citi purchase