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Artisan Partners Goes Public

Plus, T. Rowe Price manager passes torch, Fairholme fund raises fees, and more.

Kailin Liu, Morningstar Analyst, 04/07/2011

Artisan Partners Asset Management, a boutique fund company that gets an A for corporate culture according to its Morningstar Stewardship Grade, opens itself up to new potential conflicts by planning to go public.

The Milwaukee-based family said in an initial public offering filing with the SEC earlier this week that it plans to raise as much as $250 million with the stock offering to pay down existing debt and provide ownership incentives for employees, among other uses. After the IPO is complete, Artisan Partners Limited Partnership will continue to advise mutual funds and other investment vehicles. Current employees will also own a portion of the firm.

Artisan is known for closing its funds to new investors at modest asset levels, a practice that has made it easier for the managers to generate strong long-term returns. The firm has also kept its fund lineup lean, avoiding trendy and narrowly focused funds. The company has been quite profitable with this philosophy. It has filed reported operating margins of around 40% in each of the past three years. Going public, however, could create pressure to keep funds open longer and launch more funds in order to attract more fee-generating assets, protect the firm's margins, and generate more growth.

Artisan Partners began in 1994 and runs domestic and internationally focused stock funds. The firm currently has five investment teams that run 12 strategies. As of year-end 2010, the firm held $57.5 billion in assets under management.

So far Artisan has been a good steward of fund investors' capital. It will be interesting to see how, as a public company, it handles the sometimes competing interests of outside shareholders and fund owners.

T. Rowe Price Manager Passes Torch
Asset-allocation manager Edmund Notzon will retire from T. Rowe Price on Dec. 31 of this year. Notzon will pass his portfolio-management responsibilities to Charles Shriver. Consistent with T. Rowe Price's careful succession planning, this transition has been under way for many months.

Notzon started at T. Rowe Price in 1989 and manages T. Rowe Price Balanced RPBAXT. Rowe Price Personal Strategy Balanced TRPBXT. Rowe Price Personal Strategy Growth TRSGXT. Rowe Price Personal Strategy Income PRSIXT. Rowe Price Spectrum Growth PRSGX, and T. Rowe Price Spectrum Income RPSIX. Shriver will take over Notzon's funds on Oct. 1, 2011. Shriver started at T. Rowe Price in 1991, joined Notzon's asset-allocation group in 1999, and has worked with Notzon on his funds since 2005.

As chairman of the asset-allocation committee, Notzon also helps run the T. Rowe Price target-date series (T. Rowe Price Retirement 2035 PARKX). The asset-allocation committee directs strategic decisions for the series. Rich Whitney will replace Notzon as chairman of the committee. Current manager Jerome Clark will continue to have day-to-day portfolio-management responsibilities for the target-date series.

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