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Five analysts and top management from nineteen sector firms examine the Brokers & Asset Managers sector in this special 98-page issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info383.htm

TWST: Mark, is there anything that you would like to add?

Mr. Constant: I’ve always viewed these stocks as an emotionally-driven group, particularly because the investors in this sector are so intimately involved in the business — you tend to get a lot of the extremes of perception (and some overreactions) when people look at this industry. A year ago, there were a lot of people with the belief that the trees grow to the sky and I was fielding questions such as, “Look at your flat earnings estimates for next year for the brokers. Are you forgetting that this is a growth industry? You’re always too pessimistic!” It’s a bit ironic that, a year later, the conversations I have with most investors revolve around the question of whether or not estimates are low enough. I think Amy raises a good point. People have been rudely reminded that this is a growth-cyclical business. That is making them more and more appreciative of what remains of my favorite business in the entire financial services world — asset management (I have always been a big fan of recurring fee income and consistent cash flow growth). Now that’s being reflected in the reassessment of valuations across sectors.

TWST: Mark, you indicated earlier that you have a more bullish bias.

Mr. Constant: Actually, in many ways, I’m not really that far off from Dean in that my bullish Buy call is really long-term oriented. Just as a matter of discipline, I try to make less of a market call in my recommendations, and that’s probably the biggest area of difference between us. My bias, or investment strategy as a contrarian, is to take advantage of instances where I see the market taking an extreme (often emotional), fear- or euphoria-driven position with these stocks, and to spend the time in between focusing on more subtle fundamental differences and opportunities. I’m always looking for great companies at great prices, or extremely highly valued companies that are highly overrated. But as I suggested a few minutes ago, I don’t actually believe that we’re at either one of those extremes right now, which means you’re looking at investors’ stocks, not trading stocks. These are names you buy because you want to own them three years from now, and they may not be at a great price but at a reasonable price. I think you do have at least a few instances where you have attractive investment opportunities, just not necessarily a lot of great trading opportunities.

TWST: Mark, what’s your single best investment idea in the group today?

Mr. Constant: Using the literal definition of the word “investment,” my favorite investment is still probably Affiliated Managers Group (NYSE:AMG) on the asset management side, or Federated Investors (NYSE:FII), if you are more in Dean’s camp and looking for great defensive growth.

TWST: Will you tell us something about Affiliated Managers and what your rationale is for the recommendation?

Mr. Constant: AMG is a holding company that makes majority investments in a number of small and mid-sized money management firms, which, in my view (without going into the details of their incentive structures), allows them to capitalize on the growth opportunities and free cash flow that a lot of these very focused small and mid-sized firms enjoy, while maintaining (or even enhancing) the incentives that are sometimes destroyed in acquisitions (100% acquisitions in particular). They capitalize on the diversification of their affiliates, and efficiently recycle the cash flow generated in this business, and also add some real value (in subtle, but important ways). Plus, I think this is still an undervalued cash flow stream, and that’s central to my valuation analysis.

This special issue includes:

1) Brokers & Asset Managers - In an in-depth (11,900 words) Analyst Roundtable, Amy Butte, Managing Director at Bear, Stearns & Company, Mark Constant, Senior Vice President/Executive Director at Lehman Brothers and Dean Eberling, Senior Vice President at Keefe, Bruyette & Woods, examine the outlook for the sector including, brokerage stocks performance, money fund flows and share specific stock recommendations.

2) The TWST confidential Off-The-Record survey of management performance at twenty sector firms asked market insiders about the ability of management teams to create shareholder value.

3) Outlook for Brokers & Asset Managers - In an in-depth (2,700 words) Analyst Interview, Joan Solotar, Senior Brokerage & Asset Management Analyst at Credit Suisse First Boston, examines the outlook for the sector and shares specific stock recommendations .

5) Electronic Brokers - In an in-depth (3,600 words) Analyst Interview, L. Russell Keene III, Vice President at Keefe, Bruyette & Woods, Inc., examines the outlook for the sector and shares specific stock recommendations.

4) CEO interviews (average 2,500 words). Top management of nineteen sector firms examine the outlook for their firm and the sector.