The Fund believes that general market predictions rarely offer valuable insight as to the direction or timing of a market move. Accordingly, the Fund’s positions will be determined through a bottom-up analytical process, with little judgment made on an overall market outlook.
 
The Fund also believes that the equity markets have become more institutionalized in recent years, with large investment and mutual fund companies tending to follow similar trends and investment strategies. Their large size shepherds their investment efforts toward larger companies, often with Wall Street sponsorship of suspect objectivity. This phenomenon suggests that the most attractive investment opportunities lie in smaller, undiscovered and underfollowed companies.
 
This investment strategy is research intensive, focusing on the fundamentals of a company’s business, financials, and management. It is the primary intent of the Fund to undertake longterm investments in companies that fit the profile discussed herein. However, the Fund also believes that short-term excess return opportunities are often available in a volatile stock market, and the Fund expects to take advantage of these opportunities.
 
The Fund’s investments will consist of rigorously researched, opportunistic “bargains” analyzed through conversations and interviews with management, customers, and competitors. Research will include thorough reading of relevant trade publications and SEC documents. Investment attributes will focus on cash flow(especially “free” or excess cash flow), enterprise value, and opportunities for growth.
 
With the Fund’s concern for capital preservation, it is expected to take advantage of short sale opportunities uncovered in the course of its research. Short positions will consist of fundamentally deteriorating situations where significant downside exists in the security. Due to the unique nature of short selling, special attention will be given to control the risk profile of the short positions.
 
The Fund may buy securities on margin and arrange with banks, brokers, and others to borrow money against a pledge of securities in order to employ leverage when the Fund deems such action appropriate.