Horizon Spin-off & Corporate Restructuring Fund
LSHAX, LSHCX, LSHUX
Holdings Horizon Spin-Off
|as of 9/30/17||% of Portfolio|
|Texas Pacific Land Trust||19.92%|
|The Howard Hughes Corp||8.44%|
|DREAM Unlimited Corp||5.88%|
|Cable One Inc||5.56%|
|Associated Capital Group Inc||5.43%|
|Graham Holdings Co||4.50%|
|Icahn Enterprises LP||4.32%|
|Halyard Health Inc||3.79%|
|PayPal Holdings Inc||3.74%|
The Horizon Spin-off and Corporate Restructuring Fund seeks to achieve long-term growth of capital.
What are Spin-offs and Corporate Restructurings?
The Fund considers a spin-off company or a company subject to a corporate restructuring to be any company that has experienced one of the following events within five years of the Fund’s investment in the company: a spin-off distribution of stock of a subsidiary company by its parent company to parent company shareholders; an equity “carve-out” or “partial initial public offering” in which a parent company sells a percentage of the equity of a subsidiary in a public offering; or the parent company of any such company after the public disclosure of the corporate restructuring. The Fund may invest in a parent company of a spin-off company or a company subject to a corporate restructuring, or a publicly traded shareholder activist holding company which has caused such other companies to undergo the spin-off or corporate restructuring, after the public disclosure of the planned spin-off or corporate restructuring, during the spin-off or corporate restructuring process, or after the actual spin-off or corporate restructuring.
Why Invest in Spin-Offs and Corporate Restructurings?
- For a variety of reasons, initial regular way trading of spin-offs is subject to selling pressure, which may provide a more attractive point of entry
- Initial selling pressure can be a factor of parent and spin company characteristics, including relative size and differences in industry between spin-off co and parent
- Distribution of returns varies widely, so a focus on positive fundaments is critical to avoid large decliners or potential bankruptcies
- Stock selection is important: increased returns may be possible through transaction selection and strategic entry points
Horizon utilizes its in-house research to identify inefficiencies in the pricing of companies that are at transitory points in their business cycles with a particular focus on corporate spin-offs, other forms of corporate restructurings, and the parents of such companies. In many instances, companies that have been “spun-off” from their corporate parents by way of corporate restructurings may not be followed as closely by Wall Street analysts. Corporate restructurings can often lead to discounted valuations for either the parent or the spin-off entity as shareholders, traditional analysts and investor research may overlook new operating companies or rely on less transparent historical fundamentals. The Fund seeks to capitalize on such investing opportunities.
IMPORTANT RISKS & DISCLOSURES:
Before investing you should carefully consider the Fund’s investment objectives, risks, charges and expenses. This and other information about the Fund is in the prospectus and summary prospectus, a copy of which may be obtained on this website by clicking here or by calling 1-800-207-7108. Please read the prospectus or summary prospectus carefully before you invest.
As of 2/11/2014 the Fund changed its name and its principal investment strategy. The Fund’s investment objective, to seek to achieve long-term growth of capital, did not change.
An investment in the Fund is subject to risk, including the possible loss of principal amount invested and including but not limited to the following risks, which are more fully described in the prospectus:
- The value of your investment depends on the judgment of the Sub-advisor. The Sub-advisor’s evaluation of the outcome of a proposed spin-off or corporate restructuring may prove incorrect and the Fund’s return on an investment may be negative. The value of the equity securities held by the Fund may fall due to general market and economic conditions.
- The Fund’s investments in small- and medium- sized companies involve greater risks than investing in larger, more established companies such as increased volatility of earnings and prospects, higher failure rates, and limited markets, product lines or financial resources. Larger companies in which the Fund invests may be unable to attain the high growth rates of successful, smaller companies during periods of economic expansion.
- The Sub-advisor and an affiliate of the Advisor author and collaborate on research reports regarding spin-off related companies for institutional subscribers. Consistent with its compliance policies and procedures, the Sub-advisor may impose for a period of time an internal trading restriction on such companies. As a result, the Fund may be prevented from trading in such securities at their optimal value or time as might otherwise have been permitted if such restrictions were not in effect.
- The Fund may invest in preferred stock. The market value of this stock is subject to company-specific and market risks applicable generally to equity securities and is also sensitive to changes in the company’s creditworthiness, the ability of the company to make payments on the preferred stock, and changes in interest rates, typically declining in value if interest rates rise.
- The Fund may invest in convertible securities, which are subject to market and interest rate risk and credit risk and are typically issued by smaller capitalized companies with stock prices that may be more volatile than those of other companies.
- The Fund may invest in warrants, which may lack a liquid secondary market for resale. The prices of warrants may fluctuate as a result of speculation or other factors. Warrants can provide a greater potential for profit or loss than an equivalent investment in the underlying security.
- The Fund may invest in foreign and emerging markets securities, which involve special risks, including the volatility of currency exchange rates and, in some cases limited geographic focus, political and economic instability, and relatively illiquid markets.
- The Fund may purchase IPOs and distressed securities. IPOs have special risks as there may be a limited number of shares available, unseasoned trading, lack of investor knowledge of the company and a limited operating history.
- Distressed securities involve considerable risk and can result in substantial or even total loss on the Fund’s investment. These companies are more likely to become worthless than securities of more financially stable companies.
- The Fund may invest a larger portion of its assets in one or more sectors than other mutual funds, and thus will be more susceptible to negative events affecting those sectors. For example, as of the Fund’s fiscal year end April 30, 2017, 28.8% of the Fund’s assets were invested in the financial sector. Performance of companies in the financial sector may be adversely impacted by many factors, including, among others: government regulations of, or related to, the sector; governmental monetary and fiscal policies; economic, business or political conditions; credit rating downgrades; changes in interest rates; price competition; and decreased liquidity in credit markets. In addition, as of April 30, 2017, 27.0% of the Fund’s assets were invested in the communications sector. Performance of companies in the communications sector may be adversely impacted by the costs of complying with governmental regulations; delays or failure to receive required regulatory approvals; and the enactment of new adverse regulatory requirements.
- As a non-diversified fund, the Fund may focus it assets in the securities of fewer issuers, which exposes the Fund to greater market risk than if its assets were diversified among a greater number of issuers
The Fund may not be suitable for all investors. We encourage you to consult with your financial advisor before considering an investment in the Fund.