LPL board member’s investment firm offloads shares for $71.4M
A major early investor and board member of LPL Financial has sold more than 60% of his investment firm’s stake in the nation’s largest independent broker-dealer.
Funds managed by Marco “Mick” Hellman, a senior advisor to one of the private equity firms that took LPL public, disposed of 1.15 million shares for $71.4 million, according to an insider filing this week by LPL. His San Francisco-based firm, HMI Capital, retained 740,310 shares after the Feb. 22 transaction.
In a separate transaction the following day, LPL CEO Dan Arnold trimmed his holdings to 230,967 shares by selling 4,004 of them for roughly $260,000. Arnold, the largest individual direct holder of LPL stock, also received an award of options worth more than $5 million, exercisable over the next three years.
TPG Capital and Hellman & Friedman, a PE firm co-founded by Hellman’s father Warren, acquired ownership stakes in LPL in 2005 and controlled about 32% each after the firm’s $469.7 million IPO five years later, Reuters reported at the time. Shareholders elected Hellman to the board in 2016.
HMI and its hedge funds — HMI Capital Partners and Merckx Capital Partners — sold the shares at a price of $62.12 per share. The three entities last February offloaded roughly a third of their previous holdings for $36 million. Hellman co-founded HMI and sits on its three-member investment committee.
A spokesman for LPL declined to comment and Hellman didn’t respond to inquiries at HMI.
More than $34 billion in client assets moved into the No. 1 IBD’s fold in the first part of the acquisition.February 2
Former head Mark Casady, new chief Dan Arnold and board member Marco Hellman each netted millions.February 17
Hellman’s directly held LPL stock grew 62% to 5,167 shares under an award in May 2017, though his holdings represent a fraction of Arnold’s. LPL’s CEO sold part of his shares under a trading plan adopted in August while picking up options for 77,606 shares valued at $65.50 apiece under the award.
The LPL holdings of Hellman’s managed funds include 10,369 shares for HMI and 729,941 for the two hedge funds, where HMI acts as a general partner and investment advisor. Hellman assigned HMI its direct portion of the holdings after receiving them under LPL’s 2010 equity incentive plan.
As managing member of HMI, Hellman is an indirect owner of the shares. The hedge funds also list him and fellow HMI founding partners Justin Nyweide and Emily Brakebill as related persons in SEC Form D filings.
Hellman serves on the nominating and governance committee of LPL’s board. The firm’s stock has more than quadrupled in value to roughly $65 per share this week from a low of $15.38 in February 2016.
“In a complex and often volatile world, independent advice should be a key element of financial planning for investors,” Hellman said in a statement at the time of his board nomination. “I believe strongly in LPL's business model and its mission to help financial advisors be more effective.”
LPL spent $114 million to buy back 2.6 million shares at an average price of $43.42 while paying dividends of $90 million in 2017, according to its fourth quarter earnings report. The firm has also boosted its repurchase authorization to a total of $500 million of its issued and outstanding stock.
The firm’s earnings soared 54% year-over-year to $64.1 million in the fourth quarter. Arnold said on the company’s earnings call that executives expect to gain about 2,000 advisors with up to $75 billion in client assets from National Planning Holdings after acquiring the assets of the four IBDs in August.