Growth manager takes another stab at getting out of Refco’s shadow. Alternatives manager Angelo Gordon has bought a majority stake in asset manager ForstmannLeff. The deal comes about six months after ForstmannLeff’s management had bought the firm back from Refco, a scandal-ridden derivatives trading firm.

Details of the transaction weren’t disclosed.

Understanding

Though New York and Boston-based Forstmann gets a new CEO in Dana Troxell, Angelo Gordon’s erstwhile head of corporate development, the plan is for Forstmann to keep its name and continue running growth and core domestic equity portfolios for institutional investors and very wealthy private clients – and to do so independently of its new parent.

“[Angelo Gordon] has built a sterling reputation based on rigorous fundamental research and consistent investment returns for their clients,” says Beth Dater, Forstmann’s senior managing director. “They understand the need for investment autonomy and risk control.”

Meanwhile Troxell says he’s looking forward “to working with the team at Forstmann to continue their focus on disciplined, research-driven portfolio management.”

Angelo Gordon’s CEO John Angelo says Forstmann is a good fit with his firm since both have a “disciplined investment process and rigorous risk controls.” And, he adds, the combination of a traditional manager with an alternative player “meet the needs of the most sophisticated institutional investors.”

Old suitor

Back in October 2005, Old Mutual Asset Management, the U.S. asset management group of London-based Old Mutual plc, said it had agreed to acquire a controlling chunk of Forstmann. Days later, however, the Refco scandal hit the headlines, and Old Mutual quietly dropped its plan to buy Forstmann.

Refco got into trouble last October when its CEO Phillip Bennett disclosed that he’d hidden about $30 million in debt on the company’s books. Within a week the company had filed for protection from its creditors. Man Financial, another U.K. company, subsequently acquired the Refco brand name along with the bulk of its assets.

Forstmann was founded in 1968. It had about $2.7 billion in assets under management at the end of 2005. –FWR

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