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Fund name: Gaming and Casino Fund (GACFX)
Objective: The fund will invest in about 40 equity securities issued by gaming and casino companies, up to 25% foreign. The
primary universe of equity securities will consist of casinos including hotel, resort and cruise ship casinos; gaming
manufacturers; pari-mutuel companies; lottery support systems; and electronic/video game developers, manufacturers, and
distributors.
Adviser: Ahrens Advisers L.P., Northern Lights Fund Trust
Manager: Dan Ahrens, author of the book, Investing in Vice, The Recession-Proof Portfolio of Booze, Bets, Bombs, and
Butts. He managed the Vice Fund (VICEX) and Generation Wave Fund (GWGFX) from inception in August '02 through
September '05.
Opening date: March 31, 2006
Minimum investment: $5,000
Expense ratio: 1.7% (after expense waiver)
David's comments: For folks who don't want to mix up their sins by investing in Ahrens' former charge, the Vice Fund
(smoking and drinking, guns and gambling), Mr. Ahrens provides a desperately needed pure-play on gambling. Ahrens swears
that "[a] lot of investors . . . said they were looking for this kind of pure play in gaming and casino stocks,"* and that's a definite Red Flag: This fund is a marketing-driven investment opportunity.
*Investment News, January 16 2006
Mr. Ahrens previously managed the Vice Fund (VICEX) for mutuals.com, which he left under mysterious circumstances in
September 2005, most likely because he was unhappy with something that was happening at the firm. Mr. Ahrens has never been implicated in any wrongdoing, but mutuals.com was part of an organization that had
more than its share of trouble and scandal allegations.
Here's another Red Flag: There's no argument for a focused gambling fund. Mr. Ahrens argues that "sin" stocks, as a group, are
profitable and recession-resistant. And he claims that he doesn't "see this fund as being any more unusual than the first tech
fund or the first health-care fund" (Investment News, Jan. 16). That statement overlooks a couple differences. One is the type
and number of investment opportunities available. A tech fund that limits itself to computer software and hardware has over
1000 publicly-traded companies from which to choose. A healthcare fund has nearly 1000.
A gambling and casino fund has 40, which is approximately the number of positions that Mr. Ahrens plans to hold in his
portfolio. And very few of those 40 are compelling investment opportunities: half have market caps under $200 million -- that is,
they're smaller than the average microcap -- and only 25 have a price/earnings ratio (presumably because only 25 have
reported earnings). While Ahrens' fund can invest beyond the realm of gambling and hotel casinos, frankly it can't get very far
beyond them.
Mr. Ahrens' book is described by the publisher as "light-hearted in tone." It's described by Amazon.com as its 128,951st best-selling book over the week, just inching past Give Me My Father's Body: The Life of
Minik, the New York Eskimo.
Bottom line: it's hard to see what unique opportunities this fund offers to offset its considerable risks.
SEC link: http://www.sec.gov/Archives/edgar/data/1314414/000091047206000105/f485acover.htm
Company link:
www.gamingandcasinofund.com
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April 1, 2006