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Monday, October 11, 2010|
Chris Donahue Defends Federated's February Move
SmartMoney magazine had a chat with Federated Investors [see profile] CEO Chris Donahue in which he talked about money market funds, acquisitions, and the special dividend paid out earlier this year.
Asked about Federated's "controversial" special dividend of $1.26 a share, which some analysts said should have gone to share repurchases or acquisitions, Donahue replied: "I don't view it as controversial. Since we went public in 1998, we’ve spent $785 million on acquisitions, around $1 billion in repurchases and over $1 billion in dividends. Paying a special dividend rewards long-term shareholders."
As for acquisitions, Donahue said Federated is focused on the international side. He pointed out that in 28 percent of the population in Germany owns funds, and other countries across the globe share similar stats.
"That's a big opportunity -- plus, it'll be a lot of fun," Donahue said.
Of course, no interview with Donahue is complete without a discussion of money market funds.
Asked whether the SEC rules will drive down yields, he responded: "Yes, in a normal rate environment. But the new rules are not a big deal for us. It enhances the consolidation opportunities in the business.
On a lighter note, Donahue revealed that fly-fishing is a "mind-cleansing" exercise.
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