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 distinctive 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.
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