Ramius Activist Funds In Spin-Off As Parent Reports Stronger Earnings

Mar 7 2011 | 11:47am ET

Hedge fund Ramius will spin-off its activist unit this month, it said on Friday.

New York-based Ramius, now part of Cowen Group, the boutique investment bank Ramius bought at the end of 2009, will retain a "significant" minority stake in the new firm, to be known as Starboard Value. The current heads of Ramius' value and opportunity funds, Jeff Smith, Peter Feld and Mark Mitchell, will remain at the helm, with Smith serving as the new firm's CEO.

"Due to the nature of the strategy, we are confident that the Value and Opportunity business will be in a better position, managed as a stand-alone entity, to attract additional capital from institutional investors seeking an experienced, accomplished and professional team with a  proven methodology using shareholder activism," Ramius chief Thomas Strauss said.

The split is also expected to help Cowen, which may have feared that having an in-house activist unit would scare off potential investment-banking clients. The spin-off should be completed by March 31.

Cowen on Friday also announced that it turned a profit in the third quarter, taking in $4.1 million in net income. In the year-earlier period, it had posted a $23.4 million loss, even though its revenue in both quarters was the same: $69.7 million.

Cowen said its assets under management rose to $9 billion from $8.2 billion on the quarter. Management fee income rose 31%.

For the full year, Cowen said its loss was $45.4 million, down from $55.3 million in 2009. Revenue soared to $233.8 million from $123.9 million.

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