Top Value Hound Hangs Out His Shingle

Veteran value manager Doug Eby is set to return to the mutual fund industry. Pending final approval from the board of trustees, the 17 Mile Value Fund will launch in September 2009 with Eby at the helm. Eby has formed 17 Mile Capital, a Carmel, Calif.-based adviser that is currently registering with the SEC.

Eby built a strong record as comanager of the  Torray (TORYX) fund during a 15-year run. He parted ways amicably with Torray LLC in November 2007. He has since run a long-standing private partnership and served on the boards of directors of several firms, including  Markel (MKL), where he works with CIO Tom Gaynor, a top investor.

Eby says he will employ the same Buffett-esque style as in the past, focusing on superior businesses trading at fair prices. The fund can buy stocks of any size, but Eby says it will lean toward large caps. He says he will also purchase securities elsewhere in the capital structure if they present the best risk/reward profile.

Eby had great success at Torray participating in convertible-debt deals with  Fairfax Financial (FFH) and  Level 3 Communications , where he is now on the board of directors. Eby remains a long-term investor who favors a concentrated portfolio. He says the fund will hold 30 to 50 positions, and annual portfolio turnover should clock in at 20% or less.

The fund will offer retail and institutional share classes. Both will be a tad pricey until asset scale is achieved. The adviser's 1.00% management fee is reasonable, and waivers will cap the total expense ratios for a three-year period at 1.75% for the retail class and 1.40% for the institutional. Expenses can come down if assets rise.