AG Edwards Deal Boosts These Funds
A major deal in the financial services sector is proving to be a boon to mutual funds that hold regional brokerages.
Wachovia's (WB) announcement Thursday that it plans to buy A.G. Edwards (AGE) in a $6.8 billion cash-and-stock deal, creating the second-largest U.S. brokerage firm after Merrill Lynch (MER) sent the St. Louis firm's stock up 14.3% to $88.16.
The big move benefited investors in funds that hold a lot of AGE. As of March 31, the (ARGFX) Ariel fund had 3.3% of its assets in A.G. Edwards, and the (IMSCX) IMS Capital Value fund had 2.7%, according to Morningstar. Ariel closed Thursday up 0.7% at $58.44 while IMS Capital Value gained 0.6% to finish at $23.16. (CVAAX) Calamos Value A , which held 2.37% as of January 31, picked up 0.5% to close at $14.17.
The deal sparked a rally among small regional brokerages, as traders snapped up shares of other companies that might get swept up in an industrywide wave of consolidation. Raymond James (RJF) was up 7.3%, while Jeffries (JEF) gained 4.7%. The (HASCX) Harbor Small Cap Value Fund held 2.4% of its assets in Raymond James and 2.3% of its assets in Jefferies as of March 31. It finished Thursday ahead 0.8% at $22.76. Shares of Wachovia were down 0.7% Thursday to close at $54.19.
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