Bear Stearns Cos Inc said on Thursday it expects that departing star money manager will take about $8 billion of its asset management division's $44 billion of assets with him.
But Jeff Lane, newly appointed president of Bear Stearns Asset Management, in an analyst presentation on Thursday, said the impact on financial performance will be less severe because Bear will have a minority stake in and a revenue-sharing arrangement with O'Shaughnessy's new firm.
O'Shaughnessy, who joined Bear Stearns in 2001 and is well respected as a strategist and author of best-selling business manual What Works on Wall Street, previously disclosed he would leave the firm to open his own investing business, O'Shaughnessy Asset Management.
O'Shaughnessy, who will continue to serve as a sub-adviser for several of Bear Stearns Asset Management clients, also is taking some other members of his money-management team along to his new firm.
The new firm expects to begin doing business in late 2007, according to the Web site of O'Shaughnessy firm.
As of May 31, O'Shaughnessy's team had about $12.7 billion in assets under management, most of which will continue to be managed at the newly formed firm, according to the Web site.
The departure comes at a time when Bear Stearns is suffering from a loss in credibility after the failure of two of its hedge funds earlier this year, costing investors as much as $1.6 billion and leading some clients to take their business to rivals.
Lane, a former Neuberger Berman executive hired from Lehman Brothers Holdings Inc to join Bear about three months ago, said at the firm's investor day, that the asset management division plans to build out its wealth-management business for high net-worth investors.
Despite the recent troubles, Lane said the firm continues to see positive fund flows, Lane said.
Bear Stearns Asset Management is also considering acquisitions of long-only, hedge fund and private equity managers to jump-start expansion of its money-management business, Lane added.