10/23/2013

Former Soros Manager Takes Activist Route

A portfolio manager whose credits include Soros Fund Management and Viking Global has started a fund that takes activist positions in small-cap companies.

Jeff Eberwein launched Lone Star Value Investors on Oct. 1 with $50 million of “friends and family” money, including a significant chunk of his personal wealth. Working from his Lone Star Value Management in Old Greenwich, Conn., Eberwein targets U.S. and Canadian companies with market capitalizations below $1 billion.

For now, the firm is taking a low-key approach to marketing, soliciting capital mainly from Eberwein’s industry contacts. Early backers are being offered a so-called founders’ share class with discounted fees. Starting early next year, the fund will charge a 1.5% management fee and keep 20% of the profits earned by limited partners.

At Viking from 2005 to 2008, then Soros from 2008 to 2011, Eberwein managed long/short equity portfolios but didn’t pursue activist plays. However, since leaving Soros he has taken an activist approach in managing his own money. Through his investments, Eberwein has taken board seats at companies including Aetrium, Digirad, Goldfield Corp., NTS Communications and On Track Innovations.

Lone Star’s chief financial officer is Kyle Hartley, who previously held a similar role at Greenheart Capital, an equity shop run by Matt Crakes that shut down at the end of last year.

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