Bloomberg News

BOSTON —Shares of Liberty Financial Cos. soared 33% Wednesday, their biggest gain ever, after the asset management arm of Liberty Mutual Insurance Co. said it had hired Credit Suisse First Boston to explore selling the company.

Before the surge, Liberty’s stock price was unchanged from early 1997. The company, which oversees $77 billion, owns a grab bag of money managers, including Stein Roe & Farnham Inc., Colonial Group Inc., and Crabbe Huson Group.

Liberty’s shares rose $9, to $36, in heavy trading. They had been trading at 10 times earnings, compared with rival Hartford Financial Services Group Inc., which sells for about 18 times earnings.

“It’s el cheapo,” said Martin Whitman, manager of the Third Avenue Value Fund, which owns 2.5 million Liberty shares, or 5% of the company.

Liberty’s president, Gary Countryman, had told investors that if the stock did not perform better he would sell the company. In a statement, he said Liberty hired Credit Suisse because “the plain fact is that the market has not fully recognized the value that has been created.”

Boston-based Liberty reported preliminary third-quarter earnings Wednesday of $32.3 million, or 66 cents per share, beating the consensus estimate by 3 cents. The company also said it is overhauling its business to improve profit margins, including merging some of the mutual funds run by Stein Roe.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.