By Svea Herbst-Bayliss
BOSTON, Jan 22 (Reuters) - An analyst handling investment research for Warren Buffett, perhaps the world"s most admired investor, plans to strike out on his own with a new fund in the next weeks, people familiar with his plans said.
Ian Jacobs, who has worked at Buffett"s Berkshire Hathaway Inc (BRKa.N: Quote, Profile, Research) (BRKb.N: Quote, Profile, Research), since August 2003, is expected to launch his 402 Fund LP on March 1, according to the people, who declined to be named because they are not authorized to speak publicly about the fund.
The new fund will select eight to 12 primary holdings, mostly of publicly traded U.S. businesses whose share prices it considers cheap.
Berkshire, which is based in Omaha, Nebraska, is also known for concentrated investments, despite owning tens of billions of dollars of stock. It also has close to 80 businesses that sell such things as car insurance, carpeting, clothing, food, kitchen utensils, and manufactured housing.
Jacobs will concentrate on the type of value investing style that made his current boss the second-wealthiest American according to Forbes magazine.
The new fund aims to preserve capital and achieve long-term compounded annual returns superior to the broad market averages, the people familiar with Jacobs" plans said.
A call to Berkshire Hathaway was not returned.
Unlike many other funds that have sprung up in recent years and relied on short selling and borrowed money to attract investors, the 402 Fund LP plans to pursue a more traditional investment path.It will make long-only investments and use leverage only in rare exceptions, the people said.
Jacobs boasts a strong resume, having earned a business degree at Columbia University and having worked at Wall Street powerhouse Goldman Sachs (GS.N: Quote, Profile, Research) before joining Buffett in Omaha.
He is starting his business at a difficult time, however, when many large and small investors are nursing heavy losses and are skittish about committing new money.
The average stock mutual fund lost 38 percent last year while the average hedge fund declined by 19 percent.
Investment managers have said that hundreds of small fund managers are being forced to liquidate their portfolios amid a huge industry shakeout and that some $4 trillion is sitting on the sidelines in cash awaiting improved investment conditions.
At the same time, investors are searching for potential new star managers and may find a taste for the traditional plan Jacobs has described, several investment industry analysts said. (Editing by Phil Berlowitz)
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