Wednesday, May 07, 2008

Costing an asset and a Legg

This might be more sexy if titled "Private Equity does Private Capital".

Legg Mason Writes Down Private Capital as Assets Fall (Bloomberg)

Legg Mason Inc. wrote down the value of Private Capital Management LP by $151 million after poor returns and investor outflows cut assets in half since 2004 at the money- management unit run by Bruce Sherman.

The write-off contributed to Legg Mason's fiscal fourth- quarter loss of $255 million, the Baltimore-based company said yesterday. It was the first quarterly deficit in 25 years as a public company....

Legg Mason acquired Sherman's firm in 2001, agreeing to pay as much as $1.38 billion to add $8 billion in assets managed for wealthy investors. Assets overseen by the Naples, Florida-based division rose almost fourfold to $31 billion by 2004, before falling in the past three years on bets on newspaper companies and Bear Stearns....

His $763 million North American Value Fund, registered in Luxembourg, has declined 16 percent this year, while the Standard & Poor's 500 Index has fallen 2.8 percent. The fund invests in companies Sherman believes are undervalued when measured against current profits or revenue.


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