Merrill investor Davis follows value tradition

NEW YORK, Dec 24 (Reuters) - Investor Christopher Davis, whose firm is buying $1.2 billion of stock in Merrill Lynch & Co Inc (MER.N: Quote, Profile, Research, Stock Buzz) at a substantial discount, is known as a long-term value player who sometimes does years of research before making a portfolio decision.

On Monday Merrill said Davis Selected Advisers LP and Singapore's Temasek Holdings planned to buy as much as $6.2 billion of Merrill stock at $48 a share, or more than 13 percent below where the stock closed on Friday. The shares dropped 3 percent at the end of Monday's trading.

New York-based Davis Advisors was started by Christopher Davis' father, Shelby Davis, in 1969 and now manages more than $100 billion. His grandfather, Shelby Cullom Davis, also was a well-known investor.

In addition to the Davis and Selected funds, the firm manages the Clipper Fund, which owns 1.61 million shares of Merrill, according to data from fund research firm Lipper Inc, a subsidiary of Reuters Group PLC RTR.L RTRSY.O.

Christopher Davis, who is 42, was not available for comment.

About 35 percent of Davis' holdings are in financial services companies. Kenneth C. Feinberg, a co-portfolio manager for Davis, said his company contacted Merrill Lynch about two weeks ago, inquiring if it would be interested in getting an outside investor.

Feinberg said Davis believes in Merrill Lynch's franchise value, citing the strength of its more than 16,000 brokers and its 49 percent stake in asset manager BlackRock Inc.

"We think (Thain) has very high integrity," Feinberg said. "We have the right fellow at the top."

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