Michael F. Price, a renowned value investor known for pushing for change at underperforming companies, has died. He was 70.
He died peacefully in his sleep on Monday after a lengthy illness, according to Timothy E. Ladin, general counsel and vice president of Price’s New York firm, MFP Investors LLC.
“He was a legendary investor, philanthropist, and a great mentor to us all,” Ladin said. “He will forever be remembered as a kind and generous person who always put other people first and made a difference to this world.”
Price boasted one of the best records in mutual fund management in the 1980s and 1990s and was known for a brand of activist investing that was uncommon at mutual funds. He instigated the merger of Chase Manhattan Corp. and Chemical Banking Corp. in 1995, a $10 billion transaction that created the largest U.S. bank at the time. He also helped push out the chief executives of companies including Dial Corp. and appliance maker Sunbeam Corp.
He searched for value amid beaten-down companies. “We like to buy a security only if we think it is selling for at least 25% less than its market value,” he told Fortune magazine for a 1996 profile.
“When a company gets into trouble and starts to miss its earnings, analysts drop coverage because they don’t want to embarrass their firm with bad calls,” he told Fortune. “So mainstream Wall Street isn’t looking anymore. Which pond would you rather fish in, one with a lot of fishermen or only a few?”
Price began his career in the 1970s as a research assistant to Max Heine at Heine Securities in New York, which Forbes magazine in 1986 called “one of the most successful of the medium-size mutual fund groups.” Heine, 75 at the time of the Forbes story, was preparing to hand the firm’s reins to Price, then 34.
Three Funds
The two men managed three funds, all of which invested in undervalued stocks. The oldest one, Mutual Shares, “hasn’t had a down year in the past decade, and it has averaged returns of 24% a year since 1976,” Forbes reported.
Following Heine’s death in 1988, Price bought the company. As a tribute to his mentor, Price donated $1.25 million to New York University’s Graduate School of Business to establish the Max L. Heine professorship in finance. He also moved the firm out of Manhattan and to Short Hills, New Jersey, closer to his home.
Seth Klarman, founder of the Boston-based hedge fund Baupost Group and a renowned value investor himself, said Price helped teach him the craft of buying undervalued assets.
“Michael was very smart and quick. He was deeply curious and he would dig and dig,” said Klarman, who worked with Price and Heine as a summer intern in 1978, and then in 1979 and 1980 after he graduated from college.