Mini KKR hedge fund

April 8, 2005

When Michael Price triples his stake and takes a 5% interest in a company, you pay attention. In this case, MVC Capital is the charred remains ($178 million net asset and market value) of a fund that invested in technology issues and lost 55% of its book net worth in the three years ending in 2003 when management was replaced. Now, as a totally revamped closed end fund, MVC invests in mezzanine debt, private equity and leveraged buyout deals. Leading the charge is Michael Tokarz, who for 17 years was a principal at KKR. Tokarz has reduced yearly expenses from $7 million to $4 million by limiting the staff to 4 people, but also, by not paying himself a dime of salary. In return, the boss gets a carried 20% interest in the firm’s profit, which deserves a gold star in our book for aligning management and shareholder interests.

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