More on the Jacob Fund from TheStreet.Com...also, I THINK the symbol is WWWFX:
Jacob Fund's First Task: Putting the Cash to Work
By Joe Bousquin
Staff Reporter
12/13/99 8:29 PM ET
Ryan Jacob had 92 million reasons to come to work Monday morning. By the end of the day, he had 58 million more.
The 30-year-old former manager of the Internet fund raised about $150 million for his new fund, Jacob Internet, which launched Monday.
The sum included $92 million raised in a two-week subscription period and another $58 million that came in Monday, when online brokerages started accepting money for the fund. Though impressive for a fund and a management company with no track record, it was less than the $200 million-plus Jacob had anticipated.
"That's OK -- that's just less cash that I need to put to work right away," he said. "I was beginning to scare myself a little bit."
On Monday -- his first day of trading -- Jacob's task was to squeeze the $92 million that investors had sent directly to him into just 21 Internet stocks.
But with two notable exceptions, he wasn't buying the name-brand Internet stocks other portfolio managers have been chasing. Instead, he focused on, among other things, unloved media content plays and barely discovered e-commerce companies. He also stayed loyal to several stocks he favored at the Internet fund.
"The more I get in today, the better," he said, pacing in front of his corner office window 16 floors above Broadway in midtown Manhattan. "I have a feeling we're going to get crushed tomorrow."
Jacob was calm as he got to work Monday and surprisingly inactive at the 9:30 a.m. EST opening bell. With the ticker symbols for his 21 stocks printed in blue ballpoint on a plain white piece of paper, he eyed his ILX quote monitor and took a deep breath.
"We have all day," he said quietly, almost to himself. "We don't have to jump in like an eager beaver." Then, dressed in a blue shirt and gold tie, he sidled up to his green felt-covered desk, picked up the phone and started calling his brokers.
Ryan Jacob
While his phenomenal success at the Internet fund -- he became a mutual fund celebrity overnight when his 196% return made him 1998's best-performing fund manager -- has given him the image of a swashbuckling Internet investor, his method for picking and buying stocks was surprisingly subdued, far from the frenzied daytraders with whom he is often compared.
By 11 a.m., he had placed limit orders -- orders with a specified ceiling price -- for at least a small position in each of his 21 names, not wanting to spook the market into trading higher on him.
TheStreet.com agreed not to immediately reveal his fund's holdings. But he has said that his strategy is to invest in four broad sectors -- media, e-commerce, infrastructure and communications plays.
Judging from the portfolio he was building Monday, the Jacob Internet fund will be as much of a pure-play portfolio as the Internet fund was under his stewardship.
"If you don't have the conviction, this is not the place to be," he says, somewhat critical of money managers who try to buy so-called back-door Internet plays. "Some guys actually feel guilty owning these names."
He obviously didn't, as he slowly filled his orders throughout the day in 10,000-share increments. But he has to be careful in placing his orders. After all, he said, his name carries a lot more recognition now than when he first started buying Internet stocks in late 1997.
Jacob took over the fledgling Internet fund when it had $200,000 in assets. By the time he left 18 months later in June 1999, it had $642 million.
What a difference a year can make. By lunchtime -- he ordered tomato bisque from a nearby soup shop -- he had put about $30 million to work. But that's more money than he had under management a year ago.
At that time, his was one of only four pure-play Internet funds. Now there are at least 29 Internet funds either active or in registration.
"I'm sorry I'm not more of a rapid-fire trader -- for your sake," he said apologetically while shooting at the air with his index fingers. "I'd rather buy things that are getting knocked around. You have to be prudent. You'll get your chance."
He got his chance on one media stock he was looking to pick up midafternoon. Jacob wanted 120,000 shares and was trying to build his position gradually, 10,000 shares at a time.
But another bidder lurked beyond his ILX terminal, putting in a market order for 50,000 shares of the stock.
"Who is this idiot? He's being belligerent," Jacob said, looking at his screen. He didn't bite on the stock, concentrating instead on a commerce play and an infrastructure stock.
When he returned to the media company, the adversarial buyer was between bids.
"Advantage, Jacob," he said, dialing his broker quickly. "This guy's taking a break. Let's see if we can't slip in there." Another 30,000 shares down. He would end up owning 110,000 on the day.
At 3 p.m., he still didn't have a position in two of his 21 targeted stocks -- an infrastructure play and another media play -- and he had put just two-thirds of his $92 million to work. He ended up getting 10,000 shares in the infrastructure company and didn't get any shares of the media company. But he knew from the start it was thinly traded because he once held it in the Internet fund.
"We got real positions in about 16 names. And just toeholds in four others," he said five minutes before the close of trading.
That's OK, though. Jacob knows that with the volatility of the Internet, stocks that were hard to trade today will likely loosen up tomorrow, and the stocks that he bought will show some life. Or at least he hopes. That, after all, is why he's managing Jacob Internet.
That, and about 150 million other reasons. |
