Legg Mason Inc. (NYSE:LM) Q3 2015 Earnings Conference Call - Final Transcript

Jan 30, 2015 • 08:00 am ET

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Legg Mason Inc. (NYSE:LM) Q3 2015 Earnings Conference Call - Final Transcript

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Q & A
Operator
operator

Thank you. We'll begin the question-and-answer session. (Operator Instructions). Bill Katz, Citi.

Analyst
William Katz

Okay, thanks, good morning, appreciate all the extra disclosure in your supplement as well. Joe, just to do the math, a $1 billion on your current market cap is about 15-16%. Just sort of curious and Pete mentioned that you decided to keep that $90 million pace going. Any constraints here in terms of denominator on the share counts, obviously we know the news with Mr. Pall [ph] but just your perspective on anything that would detract from that ratable return of the cash?

Executive
Joseph Sullivan

Bill, no we don't see anything. Our discussion with our Board this past week was that, we continue to see our shares as undervalued and as long as we do we will continue to buy back at that same pace. Pete, any adds?

Executive
Peter Hamilton Nachtwey

Yeah, Bill the only constraint we always said is around markets or other investment opportunities. So if we saw something that had a higher IRR, we believed to the long term shareholder that would be the only reasons we would be slowing this down at this stage and as you can see we have been pretty consistent over the last two years to that $90 million a quarter.

Analyst
William Katz

All right thank you, Pete. Maybe a two part question as a follow-up. Part one is could you talk about just so the implications of passive encroachment relative to the value proposition of QS? And on the other side how quickly can you push some products of Martin Currie through the incremental platforms?

Executive
Joseph Sullivan

So Bill, I think you are getting three questions in there, but that's all right, we still love you. As it relates to the implications of passive to QS, I don't think it is any more

Executive
Joseph Sullivan

or less than any of our affiliates. I think it is all about performance over time. Now in the case of QS I mean this was not performance related. It was really just a move, an allocation move on the part of the client to passive but I see actually there opportunities growing. As I mentioned we have seen significant uptick from our global distribution platform, particularly with respect to the insurance sub-advise base. We got on six different platforms this past quarter.

We mentioned LPL, we got on prudential Transamerica, Lincoln National, NPH. We are making great progress and there is good uptick. We also had positive net flows in our retail distribution platform for QS. So, I am not particularly concerned or any more concerned about the passive threat to QS than I am about anyone else.

As it relates to Martin Currie, this just takes time and it's a grinding kind of thing. We have to get -- we are working to get Martin Currie in to the U.S. space in 40 Act vehicles as well as UCITS vehicles, obviously across the pond. You know it might be six and nine months candidly before we get them in. It just takes time