Published January 13, 2015
Online brokerage E*Trade Financial Corp. (ET) said on Tuesday it would buy mutual fund adviser Kobren Insight Management (search) to bolster its wealth management business and become a full-service financial services firm.
Terms of the transaction, which E*Trade expects to close in the fourth quarter, were not disclosed.
Kobren Insight manages about $1 billion for private clients and is run by Eric Kobren, who built a reputation by publishing Fidelity Insight, a monthly newsletter about the more than 200 mutual funds offered by Fidelity Investments.
The 20-year-old newsletter, and another newsletter that focuses on 200 mutual funds sold through Charles Schwab (SCH), TD Waterhouse and Fidelity, are not part of the transaction, an E*Trade spokeswoman said.
Kobren, Managing Director Rusty Vanneman and six analysts who conduct more than 600 interviews with mutual fund managers in a year, will join E*Trade, the company said in a statement. Other Kobren analysts will remain with the newsletters, the spokeswoman said.
E*Trade said it was looking for other similar acquisitions and expects the Kobren deal to contribute close to $10 million in revenue and $2.3 million in net income in 2006.
The deal was announced a day after E*Trade said it would buy rival U.S. online broker HarrisDirect from Canada's BMO Financial Group (search) for $700 million in cash to strengthen its position in the consolidating online brokerage industry.
The HarrisDirect transaction and the January acquisition of Howard Capital Management, signal E*Trade's expansion from a trading-focused organization to a fully-integrated financial services firm, the company said in a statement.
E*Trade said it wants to acquire established wealth management firms in major U.S. cities and large suburban areas, such as Orange County and the Silicon Valley region in California.
Shares of E*Trade rose 30 cents, or 1.86 percent, to $16.40 after touching a 52-week high of $16.70 earlier in the session on the New York Stock Exchange (search).