Updated from 11:17 a.m. EST


Lehman Brothers


technology analyst Dan Niles is defecting to the buy side.

Niles, a Lehman managing director and head of technology and semiconductor research, is moving over to the recently acquired Neuberger Berman to head up hedge fund operations for the asset manager's technology investing business.

The 36-year-old Niles will become the chief executive of Neuberger Berman Technology Management, which will run long-short equity strategies. He'll report to Robert Matza, president of Neuberger Berman.

Lehman bought the asset management firm in July for a reported $2.62 billion in a move to bolster the volume of assets it manages for rich and institutional clients. Neuberger was running $54 billion at the time of the merger, in hedge funds, mutual funds, wrap accounts, institutional managed accounts and other alternative investments. The merger gave Lehman at least $100 billion in client assets under management.

Based on both companies' calculations at the time of the merger, pro forma asset management revenues for the merged entity would have nearly doubled in 2002, giving it an estimated 21% of client services revenues.

At Lehman, Tim Luke will take over as senior coverage analyst for semiconductors. Harry Blount will become the senior analyst for information technology hardware, the firm said.

Niles joins the ranks of analysts who've headed to hedge funds in the last year, including Goldman Sachs hedge fund analyst Casey Noel, who headed to fund of funds manager Capital Management Advisors North America in September.

In May, Tremont Advisers hired a trio of analysts, bringing in Sanjay Tikku from Fortune Asset Management, Edward Wright from LJH Global Investments and Brad Johnson from Meyerson & Co.

Bear, Stearns Co. analyst Thomas Trowbridge made the move to hedge funds in April, when he joined fund of funds firm Arden Asset Management as a research associate.

Niles' internal shift echoes a talent retention strategy by Boston Mutual fund manager Fidelity Investments, which two years ago created Geode Investors LLC, an in-house hedge fund started to keep portfolio management talent. Fidelity spun the $300 million fund off into independent ownership in August, concerned that federal regulators would come down hard on asset managers that ran both mutual funds and hedge funds, which could create conflicts of interest.