Centaur Mutual Funds

About Centaur Total Return Fund

The Centaur Total Return Fund was originally launched in March 2005 as the Tilson Dividend Fund. In October 2013, following the assignment of the investment advisory contract to Centaur Capital Partners, the fund was renamed the Centaur Total Return Fund.

The Centaur Total Return Fund is currently managed by DCM Advisors, LLC, led by portfolio managers Vijay Chopra and Gregory W. Serbe.

Strategy Description

The Centaur Total Return Fund seeks maximum total return through a combination of capital appreciation and current income.

The portfolio managers invest in equity securities that they believe are undervalued in the securities markets, but which also offer high dividend yields relative to the yield of the broad market averages such as the S&P 500 Total Return Index.

In addition to investing in stocks that offer high dividend yields, the portfolio managers expect to generate income from selling covered call options on existing securities. ( Definition of covered call ) The use of covered call options, in combination with the purchase of equity securities, allows for the inclusion of undervalued, non-paying dividend stocks in the fund’s portfolio while still satisfying the fund’s goal of generating investment income. Securities so purchased will be selected based upon the attractiveness and security of the underlying stock as well as the income potential of the covered call options. The fund may also invest in non-dividend paying stocks without selling covered call options if the portfolio manager believes the stocks can produce significant appreciation.

To select equities for the Centaur Total Return Fund, the managers seek to identify companies they understand well and that possess one or more of the following characteristics:

  • Positive (or projected positive) revenue or profit trends;
  • Healthy balance sheet, characterized by ample cash relative to debt, efficient working capital management, high or increasing liquidity, or other metrics that the Advisor believes indicate the company’s ability to withstand unexpected shocks, reinvest in the business, and improve its business prospects and circumstances;
  • Strong free cash flow generation;
  • Powerful and sustainable competitive advantages;
  • Management team that: (i) operates the business well and has a sound strategy to build it over time; (ii) allocates capital wisely to enhance shareholder value; and (iii) has high integrity; or
  • Policies (e.g., compensation structures) that do not significantly dilute shareholders’ ownership.

The Centaur Total Return Fund typically invests in common stocks and other equity securities but at the discretion of the portfolio manager, the fund may allocate its capital to bonds, short-term money market instruments or other instruments. The fund may purchase bonds of any credit quality, maturity, or yield. The fund may also invest in investment-grade fixed income securities and securities that are below investment-grade (i.e., “junk bonds”) or short-term, highly liquid investments, such as money market instruments, U.S. government obligations, commercial paper, repurchase agreements, and other cash or cash equivalent positions. The fund primarily invests in securities of U.S. companies, but may also invest in foreign companies or taxable municipal bonds. Please review the prospectus for further details.

Covered Call:

An option strategy whereby an investor holds a long position in an asset and writes (sells) call options on the same asset in an attempt to generate increased income from the asset. This is often employed when an investor has a short-term neutral view on the asset to generate income from the option premium.