The Bank of New York Mellon Corporation
) recently entered into an agreement with HedgeMark
International, LLC to acquire 65% ownership stake in the latter.
The remaining 35% stake is already held by the company since
The deal is expected to close in the second quarter of 2014.
However, it is still subject to regulatory approval.
Now, what prompted BNY Mellon to buy the additional stake?
The market scenario is currently witnessing the shift of
institutional clients' preference from conventional modes of
investment to alternative arenas. Investors are now willing to
take calculated risk to maximize their return.
As an alternative investment solution, hedge funds are gaining
popularity as they allow investors to hedge risks and yield
comparatively higher. Moreover, these funds are largely
unregulated, as clients of net worth more than $1 million with
considerable investment knowledge are allowed to deal with these.
HedgeMark International specializes in hedge funds and offers
services related to structuring, oversight and risk monitoring of
hedge funds. Hence, once the acquisition is completed, the
acquired units will complement BNY Mellon's hedge fund business
and consequently improve profitability in the long run. Moreover,
HedgeMark International's expertise will enable BNY Mellon to
deliver enhanced services and better risk management to its
BNY Mellon's stock price movement following the news release
depicted a positive market response. The shares closed at $31.80
on Feb 24, up 1.4% from the previous day.
BNY Mellon currently carries a Zacks Rank #3 (Hold). Some
better-ranked major regional banks include
Fifth Third Bancorp
The PNC Financial Services Group, Inc.
). All these stocks have a Zacks Rank #2 (Buy).
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PNC FINL SVC CP (PNC): Free Stock Analysis
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