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Billionaire Nelson Peltz Sells 9.9% Stake in Legg Mason Inc. (LM) to Singapore Investment Firm, Plus Three Other Hedge Fund Moves

Hedge funds are alternative investment vehicles available only to high-net-worth individuals, so most retail investors cannot afford the luxury of investing in a hedge fund. However, retail investors may attempt to smartly imitate some moves made by noteworthy hedge fund managers. Various SEC filings such as 13G, 13D, Form 4 and 13F filings enable retail investors to monitor and mimic most moves implemented by hedge fund vehicles. Although the overall hedge fund industry has disappointed investors in recent years, knowing what the industry thinks about certain stocks may be very valuable for the investment community. For that simple reason, this article will examine four SEC filings submitted by several investment firms monitored by Insider Monkey.

Through extensive research, we determined that imitating some of the picks of hedge funds and other institutional investors can help generate market-beating returns over the long run. The key is to focus on the small-cap picks of these investors, since they are usually less followed by the broader market and are less price-efficient. Our backtests that covered the period between 1999 and 2012, showed that following the 15 most popular small-caps among hedge funds can help a retail investor beat the market by an average of 95 basis points per month (see more details here).

Activist Nelson Peltz Sells 9.9% “Legg Mason”-Share Block to Singapore Firm

According to a newly-amended 13D filing, Nelson PeltzTrian Fund Management sold 10.53 million shares of Legg Mason Inc. (NYSE:LM) to Singapore-based investing holding company Shanda Group at $32 apiece. The 10.53 million-share block represents 9.9% of the company’s outstanding common stock. Following the implementation of the freshly-reached stock purchase agreement, Trian Fund continues to own 513,743 shares of Legg Mason, which account for a mere 0.48% of the company’s total number of outstanding shares. A fresh announcement released by Legg Mason says that Trian Fund has offloaded shares for portfolio management reasons.

Legg Mason Inc. (NYSE:LM) is a global asset management firm that offers investment management and other related services to institutional and individual clients, company-sponsored mutual funds, as well as other investment vehicles. The company’s total operating revenues for the nine months that ended December 31 totaled $2.04 billion, which decreased from $2.12 billion reported for the same period of the prior year. The decrease was mainly driven by a lower operating revenue yield, excluding performance fees, and lower performance fees. It should be mentioned that Mr. Peltz served on Legg Mason’s Board of Directors since October 2009 through the end of 2014, and forced former Chief Executive Officer and Chairman Mark Fetting to step down in October 2012. The company experienced 19 consecutive quarters of investor outflows between June 2007 and December 2011, with Mr. Peltz playing a positive role in smashing down that trend. Shares of Legg Mason are down 42% in the past year. A total of 33 hedge funds tracked by Insider Monkey had stakes in the asset management firm at the end of 2015, amassing nearly 28% of the firm’s outstanding shares. Andreas Halvorsen’s Viking Global owns 2.47 million shares of Legg Mason Inc. (NYSE:LM) as of the end of the final quarter of 2015.

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Let’s head to the next pages of this article, where we will discuss three separate filings recently submitted with the SEC.

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