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Wednesday, January 18, 2017

Alger Buys in Beantown

Reported by Neil Anderson, Managing Editor

A New York City-based mutual fund boutique is buying another boutique in Boston.

Dan Chung
Fred Alger Management
Dan Chung, CEO and chief investment officer of Fred Alger Management [profile], confirms that parent company Alger Associates is buying focused small-mid cap growth equity institutional asset manager and mutual fund subadvisor Weatherbie Capital. Watch for Weatherbie to power some Alger strategies going forward. And the Alger team remains open to making other strategic alliances and acquisitions, too.

The pricing and terms of the deal were not disclosed. The deal is expected to close next month. Westwood Partners worked with Alger on the deal.

Jim Tambone, executive vice president and chief distribution officer of Alger confirms that the nine people at Weatherbie Capital, including founder Matt Weatherbie, are sticking around after the deal.

"They will remain in Boston as a cohesive unit and as a subsidiary of Alger Associates," Tambone tells MFWire.

Though Alger already offers small cap strategies, such strategies often face capacity constraints, Tambone notes, so bringing another team in house with different strategies can increase that capacity.

"What we're expecting them to do is take on investment management capability as a subadvisor for a couple of Alger strategies," Tambone says.

Weatherbie is also a subadvisor for the closed-end Liberty All-Star Funds and for the open-end Persimmon Long/Short Fund.

"We're hopeful that they will continue," Tambone says. "We would like them to."

Tambone and Matt Weatherbie both once worked together at Putnam, where Weatherbie PMed the then-famous Putnam Voyager Fund. Weatherbie left Putnam in 1995 and founded his eponymous firm later that year.

"Weatherbie wasn't for sale when we approached them," Tambone says, but the Alger team won Weatherbie over.

Tambone notes that the Weatherbie deal comes less than two years after Alger allied with La Francaise by selling a 49.9-percent stake in the Alger international distribution arm. Perhaps additional strategic moves are in the cards, too.

"The firm is always open to considering strategic alignments," Tambone says. "If there are opportunities we think can strengthen Alger ... we would be keenly interested."

As of December 31, 2016, Alger had $19.5 billion in AUM and more than 160 employees. Weatherbie had $819 million as of September 30. 

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