The WSJ Fund Track ties a cute headline to Federated's deal to purchase the Prudent Bear Fund. Yet, the meat of the story runs against the prudent headline.

While implying that Federated made a prudent purchase, the article quotes a stock analyst who suggests Federated paid a steep price (our calculations showed it paid 8.4 percent of AUM for the funds).

The "Prudent" purchase of Prudent Bear is part of an effort to build on its $38 billion of equity AUM (Federated also manages $280 billion of money market funds).

For analysis, the paper turns to Friedman, Billings, Ramsey analyst Matt Snowling, who notes that Federated has implemented a "best of breed" purchasing strategy to boost growth in its fund family.

"The problem with that strategy is that it is paying up," Snowling told the paper. "The Prudent Bear funds did not come cheaply."

The price comes at an initial $43 million followed by four years of follow-up payments that could reach $99.5 million. The two Prudent Bear funds come in at $1.707 of assets. That translates into a hefty 8.4 percent of assets. Federated must be betting on a bear. 

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