November is turning out to be a momentous month for Mark Hurley, chairman and CEO of the $600 million Undiscovered Managers LLC and a member of the IA 25 list of the most influential names in financial planning. On Nov. 14, Hurley’s wife, Mary, gave birth to the couple’s first child, Johanna Frances. Then, four days later, Hurley announced that JPMorgan Fleming Asset Management, a unit of banking giant JPMorgan Chase, had acquired Undiscovered Managers and that he would join JPMorgan Fleming as part of the deal.
For Hurley, teaming up with a global money manager with $527 billion in assets answers a longstanding quandary: “We always felt we’d have a better opportunity if we only had more resources.” JPMorgan Fleming, for its part, sees the acquisition as a way to plunge deeper into the registered investment advisor market, where Hurley, through his conferences and widely circulated industry studies, is a well-known figure. “We have always been interested in this channel,” says JPMorgan Fleming Managing Director Sharon Weinberg. “But this [acquisition] is a renewed commitment.”
Hurley’s march to the altar with JPMorgan Fleming was a long time coming. It began last spring, when Undiscovered Managers launched a search to replace Bay Isle Financial as sub-advisor to its REIT mutual fund. After Janus Funds bought Bay Isle, the Denver asset manager no longer wanted to continue Bay Isle’s relationship with Hurley’s firm, he says. So he turned to JPMorgan Fleming, which manages some $500 million in real estate investment trust assets for institutional clients and had a similar record and investment philosophy to those of Undiscovered Managers.
That contact, in turn, led to JPMorgan Fleming proposing a takeover. Recalls Hurley: “They turned to us and said, ‘We’re in the advisor channel, but we’re very interested in expanding. Rather than do something with the REIT fund, we’d like to buy your organization and make you part of our team.”
Undiscovered Managers and JPMorgan Fleming have more in common than REITs, however. Both firms run funds based on the principles of behavioral finance. And while Hurley has launched a hedge fund of funds, JPMorgan Fleming’s parent has been a huge player in hedge funds and other alternative investment areas for decades. “Advisors are increasingly looking for non-correlated asset classes,” Hurley says. “This is an opportunity for me, who has been messing around with duct tape and wire inventing new things, to play in their candy store.”
Hurley, who sold three mutual funds in January to Wachovia Corporation’s Evergreen Investments, declined to disclose financial details of the acquisition. Undiscovered Managers and its four remaining funds will continue to be based in Dallas.
Undiscovered Managers: www.undiscoveredmanagers.com
JPMorgan Fleming: www.jpmorganfleming.com