| Strategy Narrative [Text Block] |
Gator
Capital Management, LLC’s (“Gator,” the “Manager” or “We”) philosophy in managing the Fund
is to focus on risk as well as return. Our principal investment strategy involves active asset allocation among long, short and cash
positions in an effort to mitigate market risk (the risk of broad market declines), while employing fundamental and technical analysis
in an effort to mitigate stock selection risk (the risk that particular equities underperform due to company-specific issues).
We
generally divide the Fund’s portfolio among three broad categories of assets:
| ● | Long
Portfolio – The Long Portfolio is comprised of securities (primarily
common stocks and exchange-traded funds (“ETFs”)) that we believe will increase
in price. We select individual equities of companies that we believe will appreciate, and
ETFs that track the performance of markets, market sectors or industries that we believe
in. When we are “bullish” (when we believe the overall equity markets will rise),
we generally increase the size of the Long Portfolio relative to the size of the overall
Fund portfolio. |
| ● | Short
Portfolio – The Short Portfolio is comprised of securities (primarily
common stocks and ETFs) that we have borrowed and sold short because we believe they will
decrease in price, since the Fund makes money on a short position whose price decreases by
an aggregate amount greater than the trading fees, taxes, and other expenses associated with
the transaction before it is closed. We generally sell securities short to manage or hedge
our exposure to perceived market risk, preserve capital and potentially profit during a falling
stock market and/or make money when we think a particular security’s price will decline.
To this end, we take short positions in stocks of companies that we believe are overvalued
or otherwise face issues that will cause their prices to fall, and ETFs that track markets,
market sectors or industries that we believe will decline. When we are “bearish”
(when we believe the overall equity markets will fall), we generally increase the size of
the Short Portfolio relative to the size of the overall Fund portfolio. |
| ● | Cash/Bond
Portfolio – The Cash/Bond Portfolio includes cash, cash equivalents (e.g. money
market funds and/or U.S. treasury notes) and bonds (i.e., corporate or government bonds),
although we generally emphasize cash and cash equivalents over bonds. |
We
typically allocate the Fund’s assets by and among our Portfolio “sleeves” by targeting a net exposure to the market
that may vary between 100% net long and 60% net short depending on our assessment of market risk and our current portfolio. To achieve
the target exposure, we typically invest between 30% and 100% of the Fund’s net assets in common stocks and ETFs, and between 0%
and 30% in cash, money market investments or fixed income securities. We may also hold cash for margin coverage purposes.
When
selecting securities for our Long and Short Portfolios, we employ a flexible investment style based on fundamental analysis, while also
considering technical factors.
| ● | How
do we pick positions for the Long Portfolio? We select our individual long stock
positions by identifying companies that we believe are experiencing positive changes that
may lead to a rise in their stock prices. Factors considered may include: acceleration of
earnings and/or profits; positive changes in management personnel or structure; new product
developments; and/or positive changes in variables that indicate strengthening in a company’s
industry. |
| ● | How
do we pick positions for the Short Portfolio? We select our individual short positions
by identifying companies that we believe are experiencing negative changes that may cause
their stock prices to fall. We evaluate factors similar to those evaluated for our long positions.
Factors considered may include: deceleration of earnings, profits or acceleration of losses;
negative changes in management personnel or structure or failure to address management problems;
new product developments by a company’s competitors; and/or negative changes in variables
that indicate weakening in a company’s industry. |
| ● | How
do we pick positions for the Cash/Bond Portfolio? We primarily invest this Portfolio
sleeve in money market and cash-equivalent investments, such as U.S. government-backed securities,
or agency securities. However, we may also invest in municipal or corporate bonds of issuers
that we believe offer the opportunity for income at an appropriate level of risk. In this
regard, we may invest in corporate bonds of any maturity, rating or quality. |
In
selecting investments, we may invest in companies of any size. We may also invest in securities that are issued by foreign issuers, including,
without limitation, those in emerging markets. Foreign investments may be made through direct investments on foreign exchanges or through
American Depository Receipts or other securities that give the owner rights in equities issued by foreign issuers. While the Fund may
invest in companies in any sector and the Fund does not concentrate its investments in any industry or group of industries, the Fund
may from time to time invest a significant portion of its assets in issuers within the financial or real estate sectors, or in technology
companies that service, in particular, financial and/or real estate industry companies. Such investments may include, without limitation,
investments in banks and other depository institutions, insurance firms, credit and payment processing companies, investment banks and
investment advisory firms, real estate investment trusts (“REITs”), real estate brokers, developers and lenders, companies
with substantial real estate holdings (which may include, without limitation, companies whose businesses focus on lumber, hospitality,
entertainment or other areas, but own substantial real estate related to their business focus) and companies in the information technology
industries that are primarily engaged in providing products or services to the types of companies listed above.
In
managing the Fund for risk as well as return, our goal is to make money over a full market cycle, which includes both bull market (rising)
and bear market (falling) cycles, but with less volatility.
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