AG Edwards Deal Boosts These Funds

Ariel, IMS Capital Value have biggest stakes in the St. Louis brokerage.

Author:: Travis Altman
Publish date:: Jun 1, 2007 10:10 AM EDT

A major deal in the financial services sector is proving to be a boon to mutual funds that hold regional brokerages.

Wachovia's

(WB) - Get Report

announcement Thursday that it plans to buy

A.G. Edwards

(AGE) - Get Report

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) - Get Report

Ariel fund had 3.3% of its assets in A.G. Edwards, and the

(IMSCX) - Get Report

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) - Get Report

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) - Get Report

was up 7.3%, while

Jeffries

(JEF) - Get Report

gained 4.7%. The

(HASCX) - Get Report

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.