ForstmannLeff in, Liberty Ridge Capital out

Old Mutual Asset Management (U.S.) will buy a controlling interest in ForstmannLeff, which will become subadviser for the PBHG family of funds currently advised by Liberty Ridge Capital, another Old Mutual subsidiary, according to a news release from Old Mutual.

According to an SEC filing, ForstmannLeff LLC is a new entity that will comprise the assets of Forstmann-Leff Associates and "certain assets" of Liberty Ridge Capital. Old Mutual will buy the "majority" stake in Forstmann-Leff now held by REFCO Group Holdings, while ForstmannLeff employees will boost their ownership stake in the firm to 40%, the news release said.

Old Mutual affiliate Old Mutual Capital will replace Liberty Ridge as adviser of the PBHG fund family, and ForstmannLeff will subadvise those funds. Current subadvisers of certain PBHG funds will be retained, including Analytic Investors, Dwight Asset Management and Thompson Siegel & Walmsley.

Forstmann-Leff, which has a staff of 23 investment professionals, managed $4.7 billion for clients as of June 30, and Liberty Ridge Capital ran approximately $3.2 billion at the same date.

Liberty Ridge veteran Jerome Heppelmann will establish a new large-cap and all-cap core team for ForstmannLeff in Wayne, Pa., while Sam Baker will establish a specialty small-cap team, according to the news release.

Old Mutual spokesman Tucker Hewes declined to elaborate beyond the news release. According to the PBHG funds website, however, the fund family's trustees explained the changes as a means of improving fund performance and lowering fund fees.

The latest developments mark a final chapter in the history of Liberty Ridge Capital predecessor Pilgrim Baxter & Associates, a high-flying growth equity shop that managed more than $25 billion at its height. The collapse of growth stocks after March 2000 and the market-timing lapses of the firm's founders amounted to body blows from which the firm never recovered.