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Michael Price, who saw value in companies’ struggles, dies at 70

(Bloomberg) — Michael F. Price, a noted value investor known for his emphasis on change in underperforming companies, has passed away. He was 70 years old.

Price died peacefully in his sleep Monday after a prolonged illness, according to Timothy E. Ladin, general counsel and vice president of MFP Investors LLC, his New York firm.

“He was a great investor, philanthropist and a great mentor to all of us,” Ladin said. “He will always be remembered as a kind and generous man who always put other people first and made a difference in this world.”

Price boasted one of the best records in mutual fund management in the 1980s and 1990s and was known for a brand of activist investing that was unusual in mutual funds. He instigated the merger of Chase Manhattan Corp. and Chemical Banking Corp. in 1995, a $10 billion transaction that made it the largest US bank at the time. He also helped bail out CEOs of companies including Dial Corp. and equipment manufacturer Sunbeam Corp.

He discovered value among beaten-down companies. “We prefer to buy a security if we believe it is selling for at least 25% below its market value,” he told Fortune magazine for a 1996 profile.

“When a company runs into trouble and starts missing out on its earnings, analysts drop coverage because they don’t want to embarrass their firm with a bad call,” he told Fortune. “So mainstream Wall Street isn’t visible anymore. Which pond would you prefer to fish in, with lots of fishermen or only a few?”

Price began his career in the 1970s as a research assistant to Max Heine at Heine Securities in New York, which Forbes magazine called “one of the most successful of medium-sized mutual fund groups” in 1986. At the time of the Forbes story, Heine, 75, was preparing to hand over the reins of the firm to Price, 34.

three funds

Two people managed three funds, all of which invested in undervalued stocks. As Forbes reports, the oldest, mutual stock, “has not declined over the past decade, and has delivered an average annual return of 24% since 1976.”

After Heine’s death in 1988, Price bought the company. As a tribute to his mentor, Price joined the Max L. Donated $1.25 million to New York University’s Graduate School of Business to establish the Heine Professorship. He moved the firm out of Manhattan and closer to his home in Short Hills, New Jersey.

Seth Klarman, founder of Boston-based hedge fund BeauPost Group and himself a well-known value investor, said Price helped teach him the craft of buying low-priced assets.

“Michael was very smart and quick. He was deeply keen and he would dig and dig,” said Klarman, who worked with Price and Heine in 1978 as a summer intern, and then in 1979 and After graduating from college in 1980.

‘vague and ambiguous’

In those days Price and Hine were active in railroad bonds, Klarman said, which were complex investments. Klarman said it taught him that “the more vague and ambiguous the security, the more interesting it is.”

Under Price’s leadership, the firm grew to over $17 billion under management until he sold it to Franklin Resources in 1996 for over $600 million. According to the Bloomberg Billionaires Index, he had an estimated net worth of $1.3 billion.

His alma mater, the University of Oklahoma, named its business school for Price in recognition of an $18 million gift in 1997. In 2005, the university acquired the Michael F. Dedicated a new learning space in the form of Price Hall.

In a statement Tuesday, the university’s president, Joseph Harrows Jr., called Price “an extraordinary friend and philanthropist.”

“His generosity transformed OU—both in the college of business that bears his name, and our entire campus,” Haroz said. “He has left an indelible impact that will benefit generations of sooners. We grieve with the Price family today, but we know Michael’s remarkable legacy will not be forgotten anytime soon at OU.

first stock

Price was born in 1951 and grew up in Roslyn, Long Island, New York.

Peter J. In an interview for Tanus’ 1999 book “Investment Gurus: A Road Map to Wealth from the World’s Best Money Managers”, Price said he was in junior high school when he bought his first stock, Bandag, through his father. Was. Broker, and saw it almost triple in value.

He said another friend of his father showed him interest in risk arbitrage, or investing in companies, before potential mergers and acquisitions.

“I spent a summer observing a small arbitration department – ​​a woman and three men sitting around two desks joined together by wires on the floor of the stock exchange and proxies at their desks,” he told Tanus. “They were trading only in the shares of companies that were about to merge, taking advantage of small discrepancies in prices between the two companies. I said, there’s three people here – and I knew one of them was making a million dollars a year, and this is the late ’60s – and I said, ‘If these guys can sit on their butts and You can earn a lot of money by studying different things, there is something in it.’”

After graduating in business administration from Oklahoma in 1973, he joined Hein Securities.

He left the day-to-day management of Franklin Mutual Advisors in 1998 when he started MFP Investor, primarily to oversee his own fortune. He also ran money for the endowments of Yale University and Middlebury College. He remained as the chairman and director of Franklin Mutual until 2001.

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