Key Takeaways
- • SpringOwl Asset Management plans to launch a new activist investment fund in Q4 2016, targeting capital raises of several hundred million dollars with a $2 billion cap, following the firm's high-profile role in ousting Viacom's chief executive earlier in the year.
- • The firm's current managed accounts for wealthy families generated returns between 20–40 percent in 2016, significantly outperforming the activist fund industry average of 5.6 percent, positioning SpringOwl as a high-conviction operator despite headwinds in the sector.
- • Activist hedge fund assets contracted approximately 8 percent in H1 2016 to $112.4 billion, reflecting investor skepticism toward the strategy as funds grew too large, concentrated in U.S. markets, and offered poor liquidity terms—challenges SpringOwl co-founder Jason Ader claims the new fund structure addresses.
- • SpringOwl currently manages roughly $140 million across managed accounts and maintains an international investment posture, including positions against the British housing market where targets have declined 40–60 percent in value.
- • Co-founded by Jason Ader and Andrew Wallach in 2013, SpringOwl combines Ader's reputation as a Wall Street gaming analyst with broader activist infrastructure to capitalize on what management describes as a pipeline of underexplored investment opportunities.
Summary
SpringOwl Asset Management, the activist hedge fund co-founded by Jason Ader and Andrew Wallach, announced plans to launch a dedicated activist fund in the fourth quarter of 2016 following a successful campaign at Viacom that resulted in the ouster of the media company's chief executive. The three-year-old firm intends to raise several hundred million dollars with a target fund size of $2 billion, positioning itself as a differentiated player in a crowded and contracting activist landscape.
The firm's track record provides compelling justification for the capital raise. SpringOwl's existing managed accounts for high-net-worth families delivered returns between 20 and 40 percent in 2016, substantially exceeding the activist hedge fund industry average of 5.6 percent according to Hedge Fund Research data. The firm currently deploys approximately $140 million across these managed accounts and maintains a diversified geographic footprint, including contrarian positions against the British housing market where some targets have posted declines of 40–60 percent.
The timing of SpringOwl's fund launch arrives amid significant headwinds in the activist sector. Total assets allocated to activist strategies contracted roughly 8 percent in the first half of 2016 to $112.4 billion, reflecting broader investor skepticism. Large institutional allocators, including the New York City Employees Retirement System, have begun exiting activist strategies entirely, citing high fees and opacity. Ader attributed the sector's underperformance to structural issues: funds had become too large, concentrated their investments in U.S. markets, offered poor liquidity terms, and exhibited volatility inconsistent with institutional mandates.
SpringOwl's strategy aims to address these critiques directly. The new fund will target real estate, financial services, consumer, and technology sectors while maintaining the international exposure that has characterized the firm's earlier successes. Ader noted that SpringOwl has developed extensive proprietary research and white papers on investment opportunities but lacked sufficient capital to act on all ideas simultaneously. The new fund structure, he argued, would enable faster deployment and more efficient capital allocation than the managed account model. The firm faces competition from established activist veterans like Nelson Peltz and Bill Ackman, though SpringOwl's demonstrated returns and high-profile corporate wins position it competitively for institutional capital in an otherwise difficult fundraising environment.
The firm's track record provides compelling justification for the capital raise. SpringOwl's existing managed accounts for high-net-worth families delivered returns between 20 and 40 percent in 2016, substantially exceeding the activist hedge fund industry average of 5.6 percent according to Hedge Fund Research data. The firm currently deploys approximately $140 million across these managed accounts and maintains a diversified geographic footprint, including contrarian positions against the British housing market where some targets have posted declines of 40–60 percent.
The timing of SpringOwl's fund launch arrives amid significant headwinds in the activist sector. Total assets allocated to activist strategies contracted roughly 8 percent in the first half of 2016 to $112.4 billion, reflecting broader investor skepticism. Large institutional allocators, including the New York City Employees Retirement System, have begun exiting activist strategies entirely, citing high fees and opacity. Ader attributed the sector's underperformance to structural issues: funds had become too large, concentrated their investments in U.S. markets, offered poor liquidity terms, and exhibited volatility inconsistent with institutional mandates.
SpringOwl's strategy aims to address these critiques directly. The new fund will target real estate, financial services, consumer, and technology sectors while maintaining the international exposure that has characterized the firm's earlier successes. Ader noted that SpringOwl has developed extensive proprietary research and white papers on investment opportunities but lacked sufficient capital to act on all ideas simultaneously. The new fund structure, he argued, would enable faster deployment and more efficient capital allocation than the managed account model. The firm faces competition from established activist veterans like Nelson Peltz and Bill Ackman, though SpringOwl's demonstrated returns and high-profile corporate wins position it competitively for institutional capital in an otherwise difficult fundraising environment.
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