Legg Mason's [profile] top brass are keeping their minds open on buying smaller mutual fund managers. What they are not interested in is any big deal. So reports Reuters based on comments made by Legg Mason CFO Peter Nachtwey at an investor conference spoonsored by conference sponsored by Keefe, Bruyette & Woods.

Nachtway told analysts that the financial strength of the Baltimore-based mutual fund manager has taken a turn for the better as reflected in its agreeing to buy back notes from KKR & Co. The notes had been sold in a private equity deal that also put Scott Nuttall on its board. Nuttall has left the board and his seat will not be filled.

The flexibility and newfound peace with activist investor Nelson Pelz and a war chest of roughly $700 million in capital does not mean that Mark Fetting team is seeking a major deal.

"You won't see us do a transformational type of deal at this stage," Nachtwey said.

Rather, Legg may use the war chest to seed new funds or make strategic buys of smaller shops, specifically ones investing in international investments, equities or alternative assets. Rather than buying firms outright, Legg would be more interested in taking a majority stake of 80 percent in smaller asset managers. 

Edited by: HFD


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