Money manager Keeley takes stake in Pzena

By Svea Herbst-Bayliss

BOSTON (Reuters) - Keeley Asset Management, which made its name by selecting small and forgotten companies, said on Wednesday that it took an 18 percent stake in beleaguered money manager Pzena Investment Management (PZN.N: Quote, Profile, Research).

Keeley now owns 1.09 million Pzena shares, making it one of the company's biggest owners, according to a regulatory filing.

"They have been through some pretty tough times in the last 12 months, but we still think they are a pretty good shop," said Mark Keeley, who oversees marketing for Chicago-based Keeley, a 26-year-old, family-owned investment firm.

New York-based Pzena, which has also followed a value-oriented style since it opened in 1996, listed its shares in October as the credit crisis and a slowing economy took a toll on financial sector stocks.

Still it found favour with big Wall Street investors. Morgan Stanley Investment Management ranked as its largest owner at the end of March and Fidelity and Vanguard ranked among its top 20 holders.

On its first day of trading on the New York Stock Exchange, the company's share price gained more than $2 (1 pound) to close at $20.09. It is now trading at half that.

On Wednesday, a day many financial stocks were battered and the Standard & Poor's Index fell into bear territory, Pzena lost 11.03 percent, or $1.34, to close at $10.81.

Since its debut, Pzena's troubles have been largely related to the financial sector. Assets under management shrivelled 13.5 percent in three months to $20.4 billion at the end of March amid investment losses and as clients took their money out.