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Catalyst To Convert Fourth Hedge Fund, Acquire SMA Business

By DailyAlts Staff Catalyst Funds has already converted three hedge funds into mutual funds, including the Catalyst Hedged Futures Strategy Fund (MUTF: HFXAX ), which was in the top 12% of funds in Morningstar’s Managed Futures category for the first half of 2015. On July 31, the firm will add a fourth former hedge fund to its lineup of liquid alts, when it converts Auctos Capital Management’s managed futures strategy into a ’40 Act fund. The new fund will be called the Catalyst/Auctos Managed Futures Multi-Strategy Fund. “With this transaction, Catalyst is bringing a successful managed futures strategy to the retail market,” said Catalyst CEO Jerry Szilagyi, in a July 28 press release. “This strategy is another example of our ‘intelligent alternative’ investment approach and we’re proud to add the accomplished Auctos investment team to the Catalyst family.” The fund conversion comes as the result of Catalyst’s acquisition of Auctos, which not only includes its managed-futures strategy hedge fund, but also its separately managed accounts (NYSE: SMA ) business. Catalyst will take on the SMA business as a wholly owned subsidiary and continue to operate it under the Auctos name. The firm will also take on five Auctos employees, including Auctos president Kevin Jamali, who will continue to be portfolio manager of the new mutual fund and head of the SMA subsidiary. “We are thrilled to join the Catalyst team and to bring our investment strategy to the retail marketplace,” said Mr. Jamali. He and his four colleagues, which include two PhDs, will continue to work out of Auctos’s Chicago office. Both firms stand to benefit from the acquisition. While Auctos will benefit from what Mr. Jamali calls a “vast operational and distribution infrastructure,” Catalyst will expand its investment management and research capabilities, according to Mr. Szilagyi. For more information, visit catalystmf.com . Share this article with a colleague

Asia Pacific Fund: A Conservative And Extremely Undervalued Option

Summary The Asia Pacific Fund currently has extremely low valuation and is trading at a discount of 12.28%. The fund’s investment approach is extremely diversified, making it a conservative means to profit from economic growth in the Asia Pacific Region. The fund’s valuation is more attractive than other exchange traded funds that invest into high growth Asian countries. The Asia Pacific Fund (NYS APB ) is current a very attractive buy, and perhaps one of the best opportunities for investors seeking to take advantage of opportunities offered from discounted closed end funds. The fund invest in listed equity in the Asia Pacific region and is managed by Value Partners Hong Kong Limited. Historical performance of the fund has been positive, and the liquidity risk is negligent; the fund has an average trading volume of 18,562. One current unique opportunity that this fund presents is that it is currently trading at a discount of 12.28% , providing opportunity for those willing to take a long term investment approach. For a fund that invests into Asia, the valuation is extremely low at the moment; the fund currently has a P/E of 7.5. This is exceptionally lower than other exchange traded funds that invest in high growth countries in Asia, such as the Philippines , Vietnam , and Indonesia . The fund takes a very diversified approach to Asia, as the top 10 holdings for the fund only make up 34.1% of the fund. Moreover, geographical diversification within the Asia Pacific region is very strong; the fund invests in China, Hong Kong, South Korea, Taiwan, Singapore, Thailand, Indonesia, The Philippines, and Malaysia. High geographical diversification in a region that is on track to prosper in the future, further attributes to the logic of investing in this fund. These facts, coupled with the fund having low valuation and trading at a discount, provides a conservative and ideal investment opportunity. Fund Performance The fund seeks to track the performance of the MSCI All Countries Asia Ex. Japan Index, and was able to outperform the MSCI Europe and the S&P 500 Composite this year. Performance this year has been substantial, and is on track to continue based on growth projections for the Asia Pacific region. Investors who are willing to take a long term bullish view of Asia can benefit from investment in this fund. 1 Year % 3 Year % 5 Year % 10 Year % Asia Pacific Fund 12.4% 9.9% 16.37% 131.1% MSCI AC Asia Ex Japan 11% 22.9% 37.2% 161.2% S&P 500 Composite 10.4% 46.8% 76.8% 75.2% MSCI Europe -4.4% 33.2% 40.4% 70.1% Source: The Asia Pacific Fund March 31, 2015 Industry Approach The fund invests its assets into a variety of industries, and the majority of its assets are invested in the following industries: Real Estate: 17.6% Banking: 16.8% Consumer Discretionary: 16.1% Industrials 10.1% Consumer Staples: 7.4% Telecommunication Services: 6.2% The industry approach is very diversified, provide a conservative means to access growth in the Asia Pacific region. Holistically, growth in the Asia Pacific region is set to outperform the rest of the world, with 5.5% Per Annum GDP Growth projected for 2015-2016. Specific opportunities can be found in the consumer products industry, as consumption will inevitably increased with the increased economic growth in this region. Moreover, increased economic activity will also be a major catalyst for the real estate industry, particularly in the increased demand for office rentals. Conclusion This fund provides a unique and simplistic opportunity for investors to leverage off of growth in the Asia Pacific Region. The following factors make this fund relatively favorable to other investment approaches in Asia. The fund is trading at a 12.28% discount and has a P/E of 7.54, which is much more attractive than other alternatives in Asia. The only area of concern is the timeframe required to reconcile the fund’s trading price. The fund’s investment approach is extremely diversified, based on the variety of holdings and industries it invests into, as well as its high geographical diversification. Based on my observation of closed end funds and exchange traded funds that invest in Asia, closed end funds often provide more opportunity for investors. A similar case can be found in a previous article mentioning the benefits of the Aberdeen Indonesia Fund (NYSEMKT: IF ), which is trading at a discount of 10.05% . While both funds present ample opportunity, a diversified investment approach may be more suitable, as Indonesia’s growth is also met with inflation and exchange rate movement risks. Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More…) I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

EDF – Cover Your Short For Now On Areva Deal, But Long Term Prefer Engie

EDF has outlined the terms of its acquisition of Areva’s nuclear reactor business. There will be relief on confirmation that EDF is sheltered from legal risk on legacy projects and on confirmation the deal will be cash flow neutral. Investors should consider covering shorts on EDF for the short term, but for long term exposure to the nuclear theme, I prefer Engie. There will be relief on the news: EDF (OTC: OTC:ECIFF ) has sheltered itself from the major risks related to Areva’s reactor business. Strong nuclear performance in H1, in line results and reiterated guidance will also contribute to some improvement in sentiment. One of my big concerns, overhang from the Areva (OTCPK: OTCPK:ARVCY ) deal, is removed. Still, execution risk has increased without a doubt. Some short covering may be advisable, but for long exposure under the nuclear theme I prefer Engie (OTCPK: GDFZY ). In a politically orchestrated transaction, EDF is stepping in to rescue Areva, the loss making integrated French nuclear company. Areva is active in mining, nuclear fuels and nuclear engineering. Amongst other issues, delays and execution issues on new build projects have led to a situation where Areva needed re-capitalisation. EDF’s offer was announced some weeks ago. EDF’s core business is power generation and supply. It runs France’s nuclear power generation. The two companies have been in an uneasy partnership for new nuclear development for a long time. I have previously argued that the EDF’s acquisition of Areva’s reactor business substantiates the market’s perception of government intervention in EDF’s strategy, strains the company’s finances and does not provide synergies but rather risk to the core business. I stand by all of these points, albeit there is some relief on the financial issues from the detail of the terms of the deal (see below). EDF has now outlined the terms of the Areva deal . It will acquire 75% of Areva’s reactor business for Eur 2.7bn (USD 2.96bn). As per the previous numbers, this implies a take-out multiple of 0.75x sales. EDF will submit a binding offer in Q4 15 and is looking to close the deal in H1 2016. According to EDF, the deal will be cash flow neutral in 2018. A new dedicated joint venture to be held 80% by EDF and 20% by Areva will be set up for new reactor exports. I see that as a positive for streamlining and efficiency of the international business. EDF is looking to bring in partners so that eventually it may own 51% of the business. Note, however, that there will be a three way management situation. EDF’s majority ownership gives some comfort in terms of efficiency as far as control goes. Management has said it has already received indications of interest . We would not be surprised for such interest to come from potential Chinese partners. The big relief is that EDF is completely immune from all risk relating to the Finnish project. It is also a positive that it will be in full control of the Flammantville and Chinese projects. That should help with execution, which I see as the key element for success in new nuclear. Along with results in line with guidance (net income Eur 2.5bn (USD 2.7bn), flat y/y) and reiterated guidance (nuclear output 410-415TWh), all of the above should lead to a relief reaction on the share price. If indeed Chinese partners were to enter the EDF/Areva venture this could bring the global nuclear sector down a path that I have anticipated for a while: Chinese project execution skills could reduce risk and with it the cost of new nuclear. Chinese managers and developers would become more important in the nuclear sector globally. New nuclear might become more viable from a cost perspective. Investors might be well advised to consider some short covering over the short term. I do not see the fundamentals strong enough for long exposure, though. For those looking for a true beneficiary of the theme of Chinese involvement in nuclear and long term cost reduction, I prefer Engie (see my previous article, ” Long Engie/Short GDF On More Fundamentals Of Engie “). Engie, the integrated gas and power company, has a very strong engineering arm and a proven track record of large scale power plant development of all fuels. Editor’s Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks. Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More…) I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.