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Net Fund gets new team
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June 24, 1999: 12:48 p.m. ET
Manager Ryan Jacob of the $654M Internet Fund leaves to form own firm
By Staff Writer Martine Costello
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NEW YORK (CNNfn) - Ryan Jacob, the youthful manager whose stock picks helped build the Internet Fund's assets to $654 million with triple-digit returns, is leaving to form his own Internet-related investment company.
Jacob, 29, said Thursday Jacob Asset Management will offer a variety of retail and institutional investing products, both onshore and offshore. He declined to say whether he plans to introduce new funds.
"I think there are good opportunities with large and small (Internet) companies," Jacob said. "There are numerous opportunities and we intend to capitalize on all of them."
Peter Doyle, a co-founder of the fund and the fund's adviser, Kinetics Asset Management, said he wasn't surprised by Jacob's decision to "strike out on his own."
"We had plans in place to expand the management team and he felt he needed to do something on his own," Doyle said.
Jacob will continue to run the fund until his resignation takes effect July 2.
The new Kinetics management team will include Doyle, Steven Tuen and two research analysts. Kinetics plans to add at least one more analyst.
Doyle, 37, is managing director at Horizon Asset Management, a New York investment firm where Jacob worked before taking the helm at the Internet Fund. Doyle will be named chairman of Kinetics in the next week or so, Doyle said.
Tuen, 30, has been director of research at IPO Value Monitor, a research service of initial public offerings owned by Horizon.
"I think Ryan got the entrepreneurial itch," Tuen said. "The only changes we're making are to build up the infrastructure of the fund and make it more of a team-oriented approach."
Jacob had just returned from giving a presentation to a group of financial analysts in the Cayman Islands, but he declined to say whether the trip was related to his new company. Steven Dubrow, an analyst at the fund, will go with Jacob to the new company.
"Interest (in his new company) has been tremendous, and the support I've received has been very gratifying," Jacob said.
Doyle said Kinetics has called off any plans to sell the fund.
Kinetics had planned previously to sell the fund to New York investment firm Lepercq, de Neuflize & Co. A June 17 filing with the U.S. Securities and Exchange Commission said the sale to Lepercq had been called off.
Jacob said he was "deeply disappointed" the deal with Lepercq fell through.
"I felt given the circumstances this was the best move to make," Jacob said of his new plans.
The fund is up 97.26 percent as of Wednesday and earned 196.14 percent in 1998, according to Chicago fund-tracker Morningstar. The fund is the largest of six Internet funds.
Among the top 25 holdings in the fund is About.com (BOUT), @home (ATHM), Banyan Systems (BNYN), and Broadcast.com (BCST).
"I don't expect any changes to the portfolio," Doyle said. "We're pretty comfortable with the names Ryan has in the fund."
But Tuen said the new team may eventually add some new names to the fund.
"We're still going over the holdings," Tuen said. "There may be some possible additions, but nothing is planned at this point."
Tuen comes from the same "talent pool" as Jacob, Doyle said. Tuen and Jacob worked together at Horizon, and Tuen replaced Jacob at the IPO Value Monitor. Tuen has eight years of experience in portfolio management and investment research, Doyle said.
Doyle will lead efforts to expand the "infrastructure" of the fund to accommodate expected future asset growth. He will be senior investment adviser and focus on risk management. He has 14 years of experience as a portfolio manager and securities analyst.
Scott Cooley, an analyst at Morningstar, said it's difficult to say what the impact of the changes will be at the Internet Fund. He said he found it difficult to get information from Jacob about individual stocks or his research.
"I've had more trouble getting a handle of what's going on at that fund than any fund I've covered," Cooley said.
But Cooley said Jacob's decision to sell positions in America Online (AOL), Amazon.com (AMZN) and Yahoo! (YHOO) paid off. The three stocks all got hit hard in the recent sell-off.
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