Hedge fund SpringOwl starts new activist fund after Viacom battle

BOSTON (Reuters) - An activist investment firm that helped oust Viacom’s chief executive this year plans to launch a new fund in the fourth quarter, one of its co-founders said on Tuesday.

Jason Ader, co-chief executive officer at Owl Spring Asset Management, speaks at the Reuters Global Investment Outlook summit at the Thomson Reuters building in New York, November 20, 2013. REUTERS/Mike Segar

SpringOwl Asset Management, the three-year-old firm founded by Jason Ader and Andrew Wallach, plans to invest in real estate, financial services, consumer and technology companies.

Ader, Wallach and their team currently invest roughly $140 million in managed accounts for wealthy families, earning returns between 20 percent and 40 percent this year alone. That beats the average activist fund’s 5.6 percent return.

Ader, who earned his reputation on Wall Street as a gaming analyst, said SpringOwl has more ideas than cash. His goal is to raise several hundred million dollars and cap the fund at $2 billion.

“We’ve written lots of white papers on our ideas and then we go talk to our investors, and with the structure of a new fund, we can commit that much more quickly,” Ader said.

But raising money for an activist fund may be tough. Newcomers crowded into the activist space over the last few years to rattle corporate cages alongside industry veterans like Nelson Peltz and Bill Ackman.

Assets allocated to these funds shrank about 8 percent in the first half of 2016 to $112.4 billion, according to Hedge Fund Research data. Some pension funds, including the New York City Employees Retirement System, are exiting all hedge funds, calling them costly and confusing.

“Activist strategies are out of favor right now because funds got too big, were mostly investing in the United States, had poor liquidity terms and are volatile. We tried to address all of that,” Ader said.

Many of SpringOwl’s investments are international including one against the British housing market where Ader’s targets have lost some 40 percent to 60 percent in value.

Ader's firm scored headlines at Viacom VIAB.O this year. SpringOwl has waged eight campaigns, including last year's crusade to replace Yahoo YHOO.O Chief Executive Marissa Mayer. In 2015 when many activists lost money, SpringOwl's accounts returned between 10 percent and 20 percent, Ader said.

SpringOwl wrote a 99-page white paper criticizing Viacom - the owner of Paramount Pictures, MTV and Nickelodeon - for poor governance and a sagging stock price. After CEO Philippe Dauman exited in August, SpringOwl sold at a profit, Ader said.

“Taking on Viacom was an experiment to see if we could be effective activists in a controlled company and we are happy the board changed,” he said.

Reporting by Svea Herbst-Bayliss; Editing by Leslie Adler