After a five month search for a CEO, Legg Mason, Inc. (NYSE:LM) announced Wednesday that it had made the critical choice. The large asset manager named Joseph Sullivan as the new CEO.
Sullivan is Legg’s interim CEO and the former head of global distribution. The move was lauded by activist investor Nelson Peltz who, in an interview with Barrons, said that Sullivan was the clear winner. “I'm thrilled with the choice, and I'm not just saying that. This guy is aces,” he remarked. Peltz's Trian hedge fund played a role in implementing some of the changes at Legg Masson.
Nelson Peltz, a board member of Legg Mason, Inc. (NYSE:LM) with a 10 percent stake in the firm, gave deeper insight on the selection process. He argued that most of the people who had stepped forward to say that they did not want the job did so knowing that they would not sail through the first round. He also reveals that the search ultimately boiled down to four finalists. Thereafter, the board conducted a private ballot and settled for Sullivan.
Board chairperson W. Allen Reed revealed that although the search commenced with a long list, the four finalists were not among the personalities who received the most press coverage throughout the five-month period. He added that some of those interested in the position were repeat candidates who failed to get the job in 2007 - the time when Mark Fetting, the former CEO, was employed. Fetting was encouraged to step down late last year following his prolonged lackluster performance.
Announcement pushes Mario Gabelli to increase his stake
Peltz’s approval was accompanied with similar remarks from key investors allied to the fund. In addition, renowned investor Mario Gabelli increased his stake in Legg Mason on the announcement. Gabelli, who recently conducted an in-depth interview with CFA Institute, was notably positive on Legg. “I want to buy more,” he remarked. He sees Legg, which is currently trading at around $27, being a $50-$60 stock in three to five years.
In addition to Gabelli, ClearBridge CEO Terrence Murphy was also pleased with the move. There is a widespread conviction among business leaders affiliated with Legg that Sullivan is the guy for the job. Although they don’t expect Sullivan to instantly restore Legg’s lost glory, they are convinced that Sullivan will be instrumental in pulling Legg out of its current state.
Legg Mason, Inc. (NYSE:LM) closed on Friday at $27.52, far behind the $137 share price that it had once reached. Similarly, the company, which once managed an excess of 1 trillion in assets, currently manages $654 billion.