Capitalizing on Special Situations
It's easy to get bombarded with information on over-followed stocks. Stocks that are covered so heavily in today's media intensive environment are more likely to be affected by market swings. But how do you locate hidden opportunities? How do you find solid companies that are under-followed? The answer: proprietary, bottom up research and a well-defined set of selection criteria. That's how Kinetics manages The Small Cap Opportunities Fund.
The Fund is unique in that is seeks to capitalize on special situations. In each of our investments, we look for companies that are undervalued for a special reason -- but which also reveal a catalyst that will unlock the hidden value that exists. The catalyst may be a corporate restructuring like a spin-off, a change in management focus or the introduction of an exciting new product.
With its contrarian, research-intensive approach and its focus on special situations, this fund "follows a different drummer," offering investors a real opportunity for portfolio diversification.
Current investment themes are:
Special Situations: Companies that have sound fundamentals but have experienced revenue and earnings shortfalls which are not likely to persist.
Undiscovered or Overlooked: Companies with a solid foundation and business strategy that haven't attracted strong analyst coverage.
Strategic Expansion: Companies poised to enhance their growth by entering previously untapped markets.
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Because smaller companies often have narrower markets and limited financial resources, they present more risk than larger more well established companies. As a non-diversified fund, the value of its shares may fluctuate more than shares invested in a broader range of companies.
Disclosure
Past performance and does not guarantee future results. Due to market volatility, current performance may be more or less than for the rankings shown. Investment return and principal value will vary, and an investment in the fund can lose money.
Because the Funds [other than The Paradigm Fund and The Small Cap Opportunities Fund] invest in a single industry, their shares do not represent a complete investment program. Internet and biotechnology stocks are subject to a rate of change in technology, obsolescence and competition that is generally higher than that of other industries, and have experienced extreme price and volume fluctuations.
International investing [for The Global Fund] presents special risks including currency exchange fluctuation, government regulations, and the potential for political and economic instability. The Fund's share price is expected to be more volatile than that of a U.S.-only fund. Because smaller companies [for The Global and Small Cap Opportunities Fund] often have narrower markets and limited financial resources, they present more risk than larger, more well established companies.
Non-investment grade debt securities [for all Funds], i.e., junk bonds, are subject to greater credit risk, price volatility and risk of loss than investment grade securities. Further, options contain special risks including the imperfect correlation between the value of the option and the value of the underlying asset. Small and medium-size companies often have narrower markets and more limited managerial and financial resources than do larger, more established companies. As a result, their performance can be more volatile and they may face a greater risk of business failure.
As non-diversified and single industry funds, the value of their shares may fluctuate more than shares invested in a broader range of industries and companies.
Unlike other investment companies that directly acquire and manage their own portfolios of securities, the Funds pursue their investment objectives by investing all of their investable assets in a corresponding portfolio series of Kinetics Portfolios Trust.
Distributor: Kinetics Funds Distributor, Inc. is an affiliate of Kinetics Asset Management, Inc., and is not an affiliate of Kinetics Mutual Funds, Inc.
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