CAPITAL INVESTMENT FUND
- -0.51% (Class A)*
- -0.42% (Class F)*
- *November NAV restated Jan 20/17
- +3.07% (Class A)
- +2.95% (Class F)
A very positive month for the Opportunities Fund and the Investment Fund. While the broad market continues to move to all time highs, OPEC jumped into the mix by promising an agreement to cut production and crude prices responded by moving up aggressively. Markets appear to be getting borderline euphoric.
Tracking the broad market and the associated returns is NOT what market neutral funds like ours do. Market neutral funds strive to produce returns regardless of market conditions - including attempting to avoid the pain that is associated with market corrections.
After periods of euphoria, markets correct, and it’s challenging for anyone to see it coming. I’ve been a finance professional through several market corrections and I don’t think I’ve had the foresight to predict one of them with any real accuracy.
To us, low stress investing means losing money hurts more than making money feels good, and we continue to manage our funds with that in mind.
Happy Holiday’s everyone.
Please see Julian’s comments on November performance below.
Capital Investment Fund
The Capital Investment Fund’s structured product arbitrage strategy gained 0.9% on the profitable crystallization of spreads as we exited certain positions. The merger arbitrage portfolio added 0.2% on spreads tightening as key deals approached completion. The multifactor and volatility strategies were flat for the month.
The Opportunities Fund’s monthly increase was driven by the merger and special situations strategies. The merger strategy increased 1.4% from our exposure to Sirius XM Canada, LinkedIn and QLT, offset by a decline in InterOil due to a deal delay. The special situations strategy increased 1.5% on gains in spin-offs Knight Therapeutics and FTD, in addition to sum-of-products stock Melcor, offset by declines in sum-of-products stock HBC and former Pfizer target (and voracious share repurchaser) Allergan. The high yield strategy added 0.1% while the liquidations and relative value strategies were flat.
Julian Klymochko, CFA