Activist Investor Voce Takes 5.1% Stake in Securities Firm FBR

FBR & Co. has landed in the cross hairs of Voce Capital Management LLC, a small activist hedge fund that has been privately urging changes at the investment-banking firm.

Voce has recently built a 5.1% stake in FBR and in meetings with the company's management has pushed for changes including the liquidation of an investing division, people familiar with the matter said. FBR, which is based in Arlington, Va., had a market value of $176 million as of Thursday afternoon.

FBR officials didn't immediately respond to requests for comment.

FBR generated revenue of $203 million last year, about half of it from helping companies raise money through stock and bond offerings. It's a big player in the market for private, unregistered securities offerings known as 144As. The firm also has smaller merger- and restructuring-advisory, brokerage and research operations.

Among Voce's recommendations are that FBR unwind its proprietary-investing division, which allocates more than $100 million to stocks, U.S. Treasuries and other assets. Much of that money is parceled out to outside managers including hedge funds, and last year the unit contributed about 10% of FBR's revenue, net of interest expense, securities filings show.

FBR in 2007 was spun out of Friedman, Billings, Ramsey & Co., then a nearly two-decade-old trading and research firm, and went public the same year. Like many other financial firms, it struggled during the recession, with its stock losing nearly 90% of its value by early 2009. The shares have recovered only somewhat since then.

Write to Liz Hoffman at [e-mail]

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