Macquarie Allegiance Capital LLC, a bond investor that manages nearly $5 billion in assets, has left Huntington Beach.
The move comes after Australia’s Macquarie Group Ltd. acquired a majority stake in Allegiance Investment Management LLC in 2008.
Most Allegiance employees were relocated from Allegiance’s office in Huntington Beach to Macquarie’s U.S. headquarters in Los Angeles, while others went to a Philadelphia office, according to company officials.
Allegiance had about 40 employees in Huntington Beach when it was acquired by Sydney-based Macquarie, Australia’s largest investment bank with $200 billion under management and 11,000 employees across the world.
Consolidating Allegiance with Mac-quarie’s U.S. headquarters in downtown Los Angeles made economic and logistical sense, according to the company.
Mark Torline, Allegiance’s managing director and chief executive, confirmed the relocation but declined to answer questions beyond that.
Allegiance had run a Huntington Beach trading room during the past two decades, with dozens of computer screens that flashed bond quotes throughout the day as the surf rolled outside.
Torline formed the company in 1988 with investment chief Bill Mawhorter and sales director Kurt Phares.
The trio had worked together at Govaars and Associates, a bond investment manager that handled $3.7 billion for institutional investors.
In most other markets, Allegiance would have been king. But in Orange County, it was in the long shadow of Newport Beach-based Pacific Investment Management Co.
Pimco is the world’s best-known bond fund manager with $1 trillion under management.
Like Pimco, Allegiance’s investing strategy is geared at getting a “total return,” Torline told the Business Journal in an earlier interview.
That’s an industry term for making money on the interest bonds produce and on price swings generated by buying low and selling high.
Allegiance typically turns over its investments several times a year, buying and selling bonds to try to gain an edge over its benchmark, the Barclays Capital Aggregate Bond Index, which is made up of U.S. Treasury bonds, corporate bonds, and mortgage-backed and asset-backed securities.
According to a 2008 Business Journal story, Allegiance has some 200 institutional clients, including Sweden’s Volvo AB and France’s Societe Bic, maker of Bic pens.
After the Macquarie deal, Allegiance was seen expanding into commodities, currencies, private equity, global real estate and stocks.
It had primarily invested in government and corporate debt tied to mortgages and other assets on behalf of pension funds, endowments and foundations.
For Macquarie, buying Allegiance gave its institutional and everyday investors more options, Ben Bruck, head of Macquarie’s funds management group, said at the time of the deal.
Before the buy, Allegiance only traded bonds issued in the U.S., putting it at a disadvantage to Pimco and New York’s BlackRock Inc., the industry’s other big player.
Allegiance had been employee-owned, with 33 of its 40 workers controlling about 60% of the company. Institutional invest- or Rosemont Partners LLC of West Conshohocken, Pa., had owned about 30%.
When the acquisition was completed, Macquarie owned 65% of the company—Rosemont’s entire minority share and half of Allegiance’s stake.
