Kinetics Asset Management has taken a gut punch from the bear, but the firm isn't getting antsy. In fact, the White Plains, New York-based firm has started shopping!

"Definitely, there are other fund companies out there that are looking for other opportunities," said Brooke Connell, senior vice president of business development. "We're actively looking. We're talking to two fund companies right now that would be more of the value-type managers."

So, what is Kinetics looking for in a value shop?

"We're looking for companies where we don't have to pay top dollar for them," said Connell. "There are a lot of small companies out there that have great products but may not have the distribution."

Connell added that a likely firm "will have a few hundred million under management and be more of a pure mutual fund organization." Furthermore, while many value shoppers are trying to pick up the investment know-how, Kinetics is mainly keeping its eye on the product.

"We're looking for a company that has some very good products with some potential for growth," explained Connell. "If the portfolio managers would clearly like to stay, we would entertain that, but we have a very large portfolio and research staff and their backgrounds are value. We have the necessary staff in-house."

At the end of March of last year, Kinetics had more than $1.5 billion under management, a figure that had fallen to $576 million by the end of January: a drop of more than 60 percent and nearly a billion dollars, according to Financial Research Corporation. Such a fall might make watchers guess that Kinetics is having trouble keeping on all its staff, much less consider an acquisition.

"We are a very lean organization here, so at an organization level, it hasn't really affected us," countered Connell. "We've cut back a lot on advertising. We don't see a lot of sense advertising in the market the way it is."

Can Kinetics fork up the dough when it gets to the register?

"We think we're in a pretty good position," said Connell. "The market's been pretty bad but we've been able to save some capital and are looking for opportunities."

 

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