BUY! BUY! CRIES LIBERTY AFTER TWO YEARS ON THE SIDELINES: CRABBE HUSON DEAL EXPECTED TO BE JUST ITS FIRST OF THE YEAR

Liberty Financial Cos. is back on the shopping circuit.

The once-acquisitive Boston money manager this month announced plans to buy Crabbe Huson Group Inc., a Portland, Ore.-based company known for its contrarian investing style. The $147.5 million-deal may be the first of many as Liberty scrambles to build equity assets.

“We have the capability to do multiple transactions this year,” says Kenneth Leibler, chief executive of Liberty, which hasn’t made an acquisition in nearly two years. “We’re definitely out there looking.”

With the Crabbe Huson deal, about 53% of Liberty’s $54 billion in managed assets will be in equities. Mr. Leibler’s goal is to push that figure up to 60% by way of acquisitions. He notes he is particularly interested in acquiring international assets right now.

Liberty’s last deal came two years ago with the purchase of Independent Financial Marketing Group, a third-party marketing firm in Purchase, N.Y. The year before, it had picked up Boston money manager Colonial Group Inc. and Newport Pacific Management, which specializes in Asian equity markets.

Liberty essentially found itself priced out of the market for most of 1996 and all of 1997 and recently dropped out of the bidding for New York’s Kaufmann Fund Inc., presumably because the price was too high.

“We’re fairly disciplined on price,” says Mr. Leibler. “We will pay what the market requires, but we have not been the top bidder in the market for a while.”

Liberty may also want to consider being a little more disciplined in terms of the companies it acquires, say some experts. Over the last decade, it has assembled a diverse group of money managers — ranging from Keyport Life Insurance, which sells annuities, to diversified no-load mutual fund firm Stein Roe & Farnham Inc. to Colonial Group, which is heavily into fixed-income funds. Such diversity has made it difficult for Liberty to brand its image in the minds of consumers.

The acquisition of Crabbe Huson, which has $5.3 billion under management, would add a whole other investment style to the mix: contrarian. None of Liberty Financial’s 75 mutual funds use the strategy, which involves buying stocks that are out of favor.

In making the acquisition, Liberty — which has mainly retail customers — also gets $4 billion in institutional assets.

“Liberty has been product poor, and this does address that; the part that it doesn’t address is what Liberty needs most, and that’s distribution,” says Louis Harvey, president of Dalbar Financial Services, a Boston-based consulting company.

“They have been trying to cross-market,” Mr. Harvey adds, noting that the Stein Roe funds are sold through the Colonial system — which also would be a channel for the nine funds to be acquired in the Crabbe Huson deal.

Lloyd Sawchuk, treasury manager at the $475 million East Bay Municipal Utility District Employees’ Retirement System in Oakland, Calif., views the deal positively.

“We have no reservations about it at all,” he says. The plan sponsor hired Crabbe Huson in October for a $35 million small-cap value fund.

“It’s our understanding that all the peripheral administrative activities surrounding asset management will be picked up by Liberty. That will allow the Crabbe Huson folks to do what they do best, which is manage money.”

Mr. Leibler says the deal will add breadth to Liberty’s product base. Many of Crabbe Huson’s nine funds, all of which are no-load, would become load funds after the deal closes, he adds.

Making the deal even more intriguing is the fact that Crabbe Huson’s track record has been anything but exceptional of late.

That’s mostly because the contrarian style tends to avoid the blue-chip stocks so popular with investors. The flagship Crabbe Huson Equity Fund ranked in the bottom 10th of growth funds tracked by Lipper Analytical Services for the 12 months through June 18, with a return of 8.41%

“That doesn’t really bother us,” says Mr. Leibler. “We are quite comfortable with the fact that this is a style that has its day.”