Catalyst Launches Share Buyback Alt. Mutual Fund

Jan 2 2014 | 11:07am ET

Huntington, New York-based Catalyst Funds has teamed with investment advisor EquityCompass Strategies to launch an alternative mutual fund focused on share buybacks.

The open-ended Catalyst/EquityCompass Buyback Strategy Fund, billed by Catalyst as the first of its kind, is based on an event-driven investment strategy run by Baltimore-based EquityCompass. The strategy seeks to capture the potential short-term excess returns associated with public share buyback announcements and invests primarily in U.S. equities.

“We are thrilled to announce the launch of the Catalyst/EquityCompass Buyback Strategy Fund,” said Jerry Szilagyi, chief executive officer of Catalyst, in a statement. “EquityCompass’ quantitative-based approach to investing and their expertise and track record in investing in share buybacks is a great match for Catalyst’s commitment to developing best-in-class alternative mutual fund products.”

Key to the strategy is the belief that stock buybacks often signal management's belief stocks are undervalued and that such stocks may perform well in the short term. Catalyst said investment decisions would be based on several factors, including the size of the buyback announcement, the length of time since the announcement, price reaction to the announcement and the volume of underlying shares.

Catalyst portfolio manager Michael Schoonover will manage the new fund while Timothy M. McCann, a senior portfolio manager at EquityCompass Strategies, will serve as portfolio management consultant.

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