Invesco Ltd. (IVZ), Legg Mason, Inc. (LM), Lazard Ltd (LAZ): Investing In Investment Managers

Page 2 of 2

Hedge-fund trade


At year’s end, Invesco had the most hedge fund interest among companies listed, with a total of 23 long the stock. Richard Pzena’s Pzena Investment Management had the most valuable position, worth some $226 million and making up 1.9% of its 13F portfolio. Billionaire Ken Griffin was in second with a $194 million position (check out Griffin’s dividend picks).

In second place was Legg Mason, Inc. (NYSE:LM), with 20 hedge funds long the stock at the end of 2012. Billionaire Nelson Peltz’s Train Partners was the top hedge-fund owner with a $331 million position, making up an impressive 14% of its 13F portfolio (see Peltz’s newest picks).
Although it was a 14% increase from the third quarter, the 14 hedge funds long Lazard Ltd (NYSE:LAZ) were the smallest among the three investment-management companies listed. Top hedge funds included John Rogers’ Ariel Investments and Train Partners, as well, as billionaire Ken Fisher (see which other hedgies were going long).

Don’t be fooled

So which investment management company should investors jump in to? Lazard Ltd (NYSE:LAZ) appears to be one of the best buys from a valuation perspective, while also holding impressive growth prospects. The other key benefit for Lazard shareholders is its 3% dividend yield. Lazard trades at 13.1 times forward earnings compared to Invesco Ltd. (NYSE:IVZ)‘s 13.2 times and Legg Mason’s 14.6 times.

What’s most impressive is analysts’ expectations for future EPS growth:  Lazard is expected to grow EPS at an annualized 36% over the next five years compared to Invesco’s 14.7% and Legg Mason’s 16.4%. The outlook for Lazard Ltd (NYSE:LAZ) looks to be solid and I take the recent strong performance by Invesco as a sign of things to come for Lazard.

The article Investing in Investment Managers originally appeared on Fool.com and is written by Marshall Hargrave.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Page 2 of 2