ON-THE-BLOCK BUZZ ABOUT JACOBS’ FIRM: NO-LOAD FUND INVESTOR NEWSLETTER EXPECTED TO BE SOLD AT SAME TIME
Veteran mutual fund newsletter publisher and editor Sheldon Jacobs may be looking to sell BJ Group Inc., the…
Veteran mutual fund newsletter publisher and editor Sheldon Jacobs may be looking to sell BJ Group Inc., the $453-million mutual fund investment advisory business he owns with market-timer Robert Brinker.
Though Mr. Jacobs, 68, says the Irvington, N.Y., money management business isn’t for sale, a knowledgeable source says Mr. Jacobs has met with potential suitors — including fellow newsletter writer Eric Kobren — over the last year.
“For the past five to six years, people have come up to me and broached the subject,” says Mr. Jacobs. “People look at my age and ask if I’m thinking of retiring. I have every intention of working at least five more years.”
Still, Mr. Jacobs confirms that he met with Mr. Kobren, whose Kobren Insight Management Inc. manages $950 million in mutual funds and separate accounts.
“Eric and I had little conversations that didn’t go anywhere,” says Mr. Jacobs, president of the 13-year-old advisory business.
Mr. Brinker, 57, who serves as chairman of the business, also publishes Marketimer newsletter and is host of a weekly radio talk show from southern Florida. He didn’t return a telephone call seeking comment.
Any sale of the duo’s advisory business would likely coincide with the sale of Mr. Jacobs’ 20-year-old monthly No-Load Fund Investor newsletter, which has 18,000 subscribers and often ranks among the top fund newsletters in terms of investment advice.
Mr. Kobren, who reportedly put his own business up for sale briefly last year, declined to elaborate on his discussions with Mr. Jacobs. “Sheldon and I are good professional acquaintances, but I really can’t comment on his personal business direction,” he says.
BJ Group is thought to be highly profitable. It employs just four professionals and charges customers an annual 1.5% of assets under management to maintain individual portfolios using no-load funds available through fund supermarket operator Charles Schwab Corp. The company’s minimum account size is $100,000.
worth, oh, $25 million
Based on current market conditions, and an estimated $6.8 million in 1999 fees, BJ group could fetch as much as $25 million, says John O’Shea, a vice president in the mergers and acquisition group of Investment Counseling Inc. in West Conshohocken, Pa.
Yet it is unclear what price Mr. Jacobs and Mr. Brinker could command for their business if they were no longer there to attract clients. Virtually all BJ Group’s 2,200 accounts were drawn to the business because of its two newsletter writer-owners.
“Certainly when you have a good reputation like Sheldon, that could work for you,” says Mr. Kobren, “but it could also potentially work to your detriment.”
Similarly, others are wary about the long-term prospects of a business like BJ Group, which charges a relatively steep fee for fund-picking advice. “Right now it is entirely viable,” says Investment Counseling’s Mr. O’Shea. “But it is questionable if it will last through the next generation of money” as investors seek out lower-cost, tax-efficient alternatives.
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