Finance: MUTUAL FUNDS
IS MIKE PRICE CASHING OUT?
The buzz: He wants to go from funds to direct investments
Superstar Michael F. Price may be looking to exit the mutual-fund business. Investment banking sources say Price has hired Goldman, Sachs & Co. to find a buyer for his firm, Heine Securities Corp., parent of the $13 billion Mutual Series Funds. Price declined to comment, as did Goldman.
But several bankers who work with financial companies say Heine Securities is on the block. The word is that Price, 44, wants his money out so he can personally make investments that rattle stodgy companies. His most recent success: Chase Manhattan Corp. Last spring, Price's funds acquired a 6.1% stake in Chase and prodded the company into a merger with Chemical Banking Corp. So far, his funds have earned more than $300 million on Chase alone. Such investing has logged superior results. For the 5- and 10-year periods ending Dec. 31, Price's returns are in the top 10% of all funds.
Heine's revenues come mainly from fund advisory fees, which could run as high as $80 million this year. A. Michael Lipper of Lipper Analytical Services Inc. says that based on revenues, Price's price could be well in excess of $100 million--perhaps more than $200 million if the payment is stretched out over a number of years, tied to performance incentives and revenue growth. Several investment bankers think Heine could fetch 50% to 100% more.
Price may have a hard time getting out the door. His eclectic investment style, which includes investing in bankruptcies and mergers, is hard to duplicate. Price has a strong research team in his Short Hills (N.J.) headquarters, but it isn't certain if the results would be the same without him. Worse yet, shareholders might bolt if Price leaves. Says one banker: "I'm not sure you could get top dollar for the funds unless Mike Price signed a very long contract to manage the funds."By Jeffrey M. Laderman, with Kelley Holland, in New York