MutualFundWire.com: Fund Firm Mulling Purchases

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Wednesday, July 24, 2002

Fund Firm Mulling Purchases

Federated Investors is ready to salvage fund firms foundering in the stock market hurricane. J. Christopher Donahue, Federated's chief executive officer, told analysts that the firm is eye-balling acquisitions like the one it made of the Kaufmann Fund nearly two years ago.

Fund firms with products that Federated could roll into its existing funds are attractive, said Donahue, as are fund firms with strong track records that are struggling in the current market.

"Obviously they need a grand home like Federated Investors...so we're looking at a number of those opportunities," he explained.

Donahue made his remarks as part of the firm's quarterly conference call with stock analysts.

Yesterday the firm reported bottom line earnings of $0.45 for the quarter ended June 30, 2002, up from $0.36 a year ago. That figure matched analyst's expectations.

Federated also reported that its average managed assets during the quarter rose to $190.8 billion from $183.6 billion during the first quarter.

Donahue cited "product diversity and competitive investment management capabilities" as reasons for the strong result.

The firm reported combined equity and fixed-income fund gross sales of $4.6 billion for the quarter, an increase of 57 percent from a year ago. Fixed-income net sales climbed to $768 million during the quarter, while equity fund net sales rose to $139 million.

Federated said its top selling funds for the quarter included:

Federated Ultrashort Bond Fund;

Federated Government Ultrashort Fund;

Federated Capital Appreciation Fund;

Federated Kaufmann Fund; and