Spotlight Funds Seeks Out Value Catalysts

May 13 2010 | 3:28am ET

A new event-driven hedge fund is aiming to shine a light on value stocks.

Spotlight Funds Management launched its maiden hedge fund, Catalyst, last month with $5 million. The new long/short vehicle seeks out value stocks “with catalysts at a discount to intrinsic value,” firm co-founder Terry Lally told HFMWeek.

“It is a stockpicker’s market in 2010 which fits our track record of finding neglected companies with catalysts at a discount to intrinsic value,” he said.

The California based-fund was set up by Lally, formerly of Cramer Rosenthal McGlynn, and Stephen Riccio, founder of Buyside Custom Research & Consulting and a former Bear Stearns Asset Management portfolio manager. It also features analysts David Landry and Michael Wright.

The Catalyst fund’s portfolio includes between 20 and 30 core long names and a roughly equal number of small- and mid-cap shorts. The vehicle has a capacity of $500 million.

Catalyst charges 1.5% for management and 20% for performance. There is a $100,000 minimum investment requirement for individual investors and a $1 million minimum for institutions. The fund features monthly liquidity.

Jefferies & Co. is the firm’s prime broker.


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