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Rating:October 18, 2000 Not Rated 3.0 Email Routing List Email & Route  Print Print
Wednesday, October 18, 2000

October 18, 2000

Reported by Sean Hanna, Editor in Chief

Dutch Bank to Buy Alleghany
From Wall Street Journal
U.S. asset managers continue to fall to Europeans. Netherlands-based ABN Amro Holding NV delivered the latest news when it announced its intent to purchase Alleghany Corp's Alleghany Asset Management, a subsidiary for $825 million. Alleghany is the parent to both Atlanta-based Montag & Caldwell and the Chicago Trust Company. The deal is expected to close in the first quarter and will likely be for stock. The unit manages $45 billion while ABN Amro's manages $110 billion.

It is Allianz for Nicholas-Applegate
From Wall Street Journal
The second announced deal was Allianz confirming long-standing rumors that it will purchase Nicholas-Applegate Capital Management. The price tag will start at $980 million, and rises when all of the optional features are thrown in. Allianz will add $1.09 billion to the price if Nicholas-Applegate grows revenues at an average compound rate of 25 percent between 2001 and 2006. It will also pick up $150 million in retention fees. To receive any of the fees the fund company must grow revenues at least 10 percent for two years and average 10 percent growth over the next five.

Amvescap Eyes Perpetual
From Wall Street Journal
Amvescap, the parent to both AIM and Invesco is close to purchasing British fund manager Perpetual PLC that manages some $17 billion in unit investment trusts. People familiar with the negotiations say they price will be about $1.59 billion, according to the paper. Amvescap and Perpetual starting talking as early as last spring when the company started looking for a buyer. At that time, Amvescap thought the price too high, according to the report. The effective price of the deal has dropped for Amvescap since its own share price has doubled since that time. Martyn Arbib, who owns 45 percent of the Perpetual, has also been talking to several big European financial-services companies.

Neuberger Buys Fasciano
From Wall Street Journal
Neuberger Berman is buying the small cap specialist Fasciano Fund. Owner Michael Fasciano will continue to manage the $240 million fund. As recently as last year the fund had $420 million in assets but lost the money when its cash position rose to 50 percent of assets. Fasciano said he is looking for stability from Neuberger. The estimated price on the deal was between $5 million and $10 million.

Founder Seeks Stability
From Chicago Tribune
The Tribune takes a local perspective on the sale of Fasciano to Neuberger, noting that the sale comes just four months after Wanger Asset Management sold to Liberty Financial. It reports that Fasciano "lacked the administrative and research support to handle" its operations efficiently. It also quotes Neuberger's Peter Sundman, executive vice president, as saying Neuberger plans to free Fasciano from his administrative duties to "allow him to get his performance back on track".

Can the Web Save Social Security?
From San Jose Mercury News
Can the Web save Social Security? Social Security Online has been up five years and has been through a crisis of its own -- in 1997 the site shut down to address privacy concerns. The Silicon Alley paper of record interviews Deputy Commissioner William Halter on how Social Security Online will take advantage of the Web. The interview reveals that Halter met with Schwab during a recent San Francisco visit turn learn how the broker is using the Internet to provide "customer services more efficiently and effectively".

Schwab & Merrill Report Earnings
From Wall Street Journal
The big brokers have weighed in with earnings, and the news from Merrill was better than the word from Schwab. The San Francisco broker reported a 15 percent drop in trading revenue. Merrill grew earning 53 percent to $885 million in the third quarter while Schwab's net dropped 1.3 percent to $142 million. Both firms brought in similar amounts of new assets with Merrill gathering $34 billion and Schwab taking in $41 billion (including $11 billion from a mutual-fund clearing account). The local take on Schwab's results is provided in the San Francisco Chronicle.

Fidelity Cuts Tech Exposure
From Boston Globe
Fidelity has been cutting back on tech stocks for its funds since the summer. Magellan, for example, eliminated both Intel and Microsoft from its top 10 holdings. Added to the list was American International Group.

More on Fund Liquidations
From Invstor's Business Daily
The paper reports on Wiesenberger's study that fund liquidations are on pace for a record year. The article focuses on the pain experienced by investors when a fund liquidates and uses Legg Mason Market Neutral Fund as an example. Between the time the firm decided to close the fund and the time it was liquidated, assets in the fund fell to $900 thousand from $9 million. The article explains that the remaining shareholders would have been left holding the bag on any of the fund's capital gains.

More on Funds-of-Funds
From Investor's Business Daily
Funds of funds get a look from the paper. There are now 200 of these funds, according to Morningstar. The article provides an overview from the major fund families.  

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