Wednesday, June 20, 2007

Nuveen Takeover-Think about Legg and Federated

Nuveen Investments (JNC) announced this morning that it was being taken over by Madison Dearborn for $65 per share. JNC has assets under management (AUM) of about $165 billion roughly half of which is equities. The takeout valuation is 16 times trailing EBITDA and about 3.4% of AUM.

I think other asset management companies look starkly cheap in the light of this transaction.

Readers are aware of our positive views on Legg Mason (LM) It is trading at only 11 times TTM EBITDA and about 1.4% of AUM.

Janus Capital (JNS) though frequently rumored as a potential takeover looks fairly full at 16.6 times TTM EBITDA and about 3.2% of AUM.

Another fairly cheap asset manager is Federated (FII) which despite its 5% move this morning is trading at 11.3 times EBITDA and 1.8% of AUM.

Some previous posts on Legg Mason:
Falling Out the First Storey Window

Legg Mason-Is It Time to Start Looking?

LM manages just under $one trillion in assets consisting of about 35% in equities, 49% in fixed income and the balance in money market (lower margin) assets. Federated, with about $240 million in assets is much lighter in the higher fee equity proportion with only about 16% of AUM in equities and about 74% of assets in fixed income.

Disclaimer: I, my family, or clients have a current position in Legg Mason and Federated Investors.


At 9:56 PM, Blogger Jay Walker said...

So do you think these makes the Great West Lifeco purchase of Putnam for $3.9B at about 2.0% of assets look good?

Or was that too troubled a business for a comparable?

Jay Walker
The Confused Capitalist


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