3. Lazard Ltd (NYSE: LAZ)
Hawkins’ Stake Value: $206,587,000
Percentage of Mason Hawkins’ 13F Portfolio: 4.41%
Dividend Yield: 4.22%
Number of Hedge Fund Holders: 19
Lazard Ltd (NYSE: LAZ) functions as a financial counselor and fund management firm. The company was incorporated in 1848 and is placed third on the list of 10 best dividend stocks to buy according to Mason Hawkins’ Southeastern Asset Management. Lazard stock has offered investors returns of 68.93% over the course of the past twelve months.
On April 7, Manan Gosalia, an analyst at Morgan Stanley, initiated coverage on Lazard Ltd (NYSE: LAZ), rating the stock as “Overweight,” with a price target of $61.00. On April 29, Lazard declared a quarterly dividend of $0.47 per share, in line with the previous. The forward yield is 4.22%. On June 10, Lazard announced its May preliminary AUM of ~$278.6 billion, which was 1.5% more than its prior month’s preliminary AUM of $274.4 billion.
Southeastern Asset Management holds 4.75 million shares of the company worth $206.59 million. Ariel Investments is the company’s most significant stakeholder, with 6.95 million shares worth $302.35 million.
Third Avenue Management, in their fourth quarter 2020 investor letter, mentioned Lazard Ltd (NYSE: LAZ). Here is what the fund said:
“Lazard Ltd. (“Lazard”) – During the quarter, the Fund initiated a position in Lazard, which houses two distinct businesses – financial advisory and asset management. Lazard is one of the formidable competitors in the global financial advisory industry, though Lazard is not involved in investment banking lines of business which are balance sheet-intensive or those which take on credit risk. Lazard’s advisory business is the world’s fifth largest by revenues, putting the company’s advisory business on par with those of far larger companies, such as Bank of America and Citi. Meanwhile, Lazard’s advisory revenues are meaningfully larger than the likes of Credit Suisse and UBS. While advisory revenues represent a low single-digit percentage of revenues for those peers, the figure is slightly more than 50% for Lazard. One further point of attraction for Lazard’s advisory business is its sterling reputation in restructuring advisory, which often shines in challenging environments in which insolvencies and near-insolvencies rise. The remaining portion of Lazard’s revenue is derived from the company’s asset management business, which operates completely independent of the advisory business and at last report had approximately $248 billion of assets under management. Lazard’s assets under management are focused on several niches in active management commanding management fees at the higher end of the industry, and the performance of its strategies has been sufficiently strong to have generated inflows of late, an unusual accomplishment for an active manager. The company in total is very well-capitalized and has a long history of controlling the relationship between compensation, its primary expense, and revenue. We believe that our purchase price implies a modest multiple of current operating earnings and that the operating environment can certainly improve, most likely as M&A activity continues to accelerate, but from other sources as well. External to the company however, it is clear that there are a number of companies that would almost certainly be very eager to purchase one or both of Lazard’s businesses. Consolidation is rampant in the asset management industry and several purchases of asset management companies of similar size to Lazard, though arguably of lower quality, have been announced recently. Separately, several European investment banks, including ones named earlier in this paragraph, have publicly declared a desire to grow their advisory businesses, especially in cross-border M&A capabilities, which is a core competency within Lazard. Using conservative estimates of prices we believe could be realized in the sale of Lazard’s businesses, the current share price appears to meaningfully undervalue the company.”
