Market Overview

Barron's Recap (4/7/12): A Look at Legg Mason, and Are the 1% Paying Their Fair Share?


This weekend in Barron's online: this quarter's mutual fund feature is on Legg Mason, the chances of Q3 dwindle, data suggest the 1% are paying their fair share of taxes, Icahn is beating the S&P 500 again, and could the U.S. become the world's largest exporter of liquid natural gas?

Cover Story

"Can Legg Mason Bounce Back?" by Beverly Goodman. Legg Mason (NYSE: LM) was built in boom times, and then hit especially hard when things turned tough. When chief executive Mark Fetting took up the reins of Baltimore-based global asset management firm in January 2008, he inherited a number of challenges, including the aftermath of a difficult acquisition, the struggles of a high-profile fund, and the cultural transition of a firm that had only ever had one CEO before, Raymond A. "Chip" Mason. And that was all before the recession. This article looks at where things stand now for Legg Mason, and it reviews the company's five key asset-management groups: Legg Mason Capital Management, Western Asset Management, Royce Funds, Permal and Clearbridge Advisors.

See also: Legg Mason BW Global Income Opportunities Fund Raises $459M

Feature Stories

In "Surprise! The 1% Are Paying Their Fair Share" by Gene Epstein, the focus is on attempts to address income inequality in the United States between the top 1% of Americans and the remaining 99%. The White House released a statement in January that said that the so-called Buffett Rule would "ensure everyone making over a million dollars a year pays a minimum effective tax rate of at least 30%." However, this article points out, data on the top 1% indicate that by and large the rule already applies. That would seem to be a blow to the president and his Democratic allies in Congress.

In "What the Bard Would Ask Ben," Randall W. Forsyth discusses Wall Street's contemplation of the possibilities of further Federal Reserve securities purchases, generally known as "quantitative easing." The first round of quantitative easing, or QE1, was launched at the depth of the financial crisis in March 2009. QE2 followed in November of 2010. There is no QE at the moment, and judging by the minutes of last month's FOMC meeting, the chances are dwindling. Only a couple of Fed members now support a third round of quantitative easing. The question that the bard would ask Chairman Bernanke: QE or not QE?

"Still Master of the Game" by Kenneth Squire takes a look at Icahn Enterprises (NASDAQ: IEP). The New York-based conglomerate run by activist investor Carl Icahn is beating the S&P again this year, more than doubling the S&P 500's gain. "When you are lucky enough to get control of a company and clean it up and grow it, that is when you make the big profits," says Icahn, and that's the goal of Icahn Enterprises. Companies it currently controls include American Railcar Industries (NASDAQ: ARII), auto parts maker Federal-Mogul (NASDAQ: FDML) and casino operator Tropicana Entertainments. The mere mention of Icahn investing in a public company can boost its stock materially. Barron's bottom line is that IEP shares appear modestly valued but the stock may be best-suited for patient, long-term investors.

See also: Icahn on Selling Lions Gate: "You Can't Win 'em All"

"A Prescription for Success" by Lawrence C. Strauss turns the CEO spotlight on Larry Merlo of CVS Caremark (NYSE: CVS), the second-largest pharmacy chain in the United States and the number two prescription-benefit manager. Merlo, a former pharmacist, has been with CVS for more than 30 years and became president in May 2010 and CEO a little over a year ago. The article looks at how, under Merlo's leadership, CVS Caremark is doing its part to improve health care options and costs for its customers.

See also: JP Morgan Comments on CVS's Integrated Offering

The U.S. could be the world's largest exporter of liquefied natural gas by 2017, suggests John R. Siegel's "The World's Largest LNG Supplier?" But that depends on whether America can produce more gas, export a surplus, improve the trade deficit, create jobs, generate taxable profits and reduce its dependence on foreign energy. Then the U.S. may surpass leading LNG exporters Qatar and Australia.

See also: Profit with Undiscovered Oil and Gas Plays

Also featured:

  • "Time for a Slice of Japan -- but Not Too Big, Please" by Kopin Tan
  • "Steady Eddies" by Jack Willoughby
  • "A Practical Politician," an editorial commentary by Thomas G. Donlan

Market Week

  • "Stocks Skid From 52-Week Highs on Fed News" by Vito J. Racanelli.
  • "What Would Warren Buy in Europe?" by Jonathan Buck.
  • "Grocery Shopping in China" by Kopin Tan.
  • "Aiming at a Continuing Recovery" by Steven M. Sears.
  • "Weak Jobs Data Sparks QE3 Hope" by Michael Aneiro.
  • "Another Slow Quarter Looms" by Tatyana Shumsky.

See also: Harry Dent Thinks QE3 Will Come Late in the Summer


Columns in this weekend's Barron's discuss:

  • Who is to blame for the unemployment rate
  • Google's (NASDAQ: GOOG) uncommunicativeness with shareholders
  • Nokia's (NYSE: NOK) and Microsoft's (NASDAQ: MSFT) Lumia 900
  • Buying lottery tickets online
  • And more ...

See also: Google 2012 Update from CEO Larry Page

Posted-In: American Railcar Industries Barron'sBarron's Politics Management Markets Media Trading Ideas Best of Benzinga


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