Rady Assets

SAN DIEGO, March 22 /PRNewswire/ -- Rady Asset Management, an investment management firm specializing in mutual funds with sophisticated hedge-fund like strategies for advisors and high net worth investors, today announced that its Contrarian Long/Short Fund (RADIX) was ranked as a Lipper Leader for total return, preservation and tax efficiency. In addition, its Opportunistic Value Fund (ROVIX) ranked in the top 1% of its category by PSN for multiple periods ending June 30, 2009.

"Our contrarian and opportunistic approach to investing is rooted in the pursuit of capital preservation, risk management and excess returns," said Harry Rady, Chief Investment Officer and Portfolio Manager of Rady Asset Management. "We are very proud to be ranked as a Lipper Leader, which is a testament to our mission of consistently delivering superior risk adjusted performance."

The Rady Contrarian Long/Short Fund invests primarily in mid- to large-capitalization U.S. companies and seeks to achieve positive and consistent returns while limiting exposure to general stock market downside risk. It combines long positions in undervalued stocks and short positions in overvalued stocks to pursue excess returns in both long and short holdings. It received Lipper's highest ranking in total return, preservation and tax efficiency in order to be named as a Lipper Leader.

In addition, the Rady Opportunistic Value Fund ranked in the top 1% of its category by PSN for the one-, two-, three-, five- and 15-year periods ending June 30, 2009. The fund uses a long-only investment strategy and seeks to invest in companies with hidden intrinsic value according to strict valuation parameters.

"We believe that short-term market volatility presents long-term investors with a unique opportunity to take advantage of price inefficiencies," Rady said. "Our driving focus is to provide mutual funds with sophisticated, hedge-fund like strategies. Through our contrarian and opportunistic strategy, we provide individual investors with access to alternative and tactical strategies that were previously difficult for investors to participate in."

To request more information or to speak with Harry Rady, please contact Katrine Winther-Olesen at 973-400-1341 or katrine@jcprinc.com.

About Rady Asset Management

Rady Asset Management is an investment management firm specializing in providing mutual funds with sophisticated hedge-fund like strategies for advisors and high net worth investors. With a contrarian approach to investing, Rady seeks to achieve positive and consistent returns while limiting exposure to general stock market downside risk. The Rady Contrarian Long/Short Fund (RADIX) and Rady Opportunistic Value Fund (ROVIX) combine quantitative modeling with deep fundamental analysis in order to pursue capital preservation, risk management and excess returns. Rady also offers institutional and mutual fund sub-advisory services.

Mutual Funds involve risk including possible loss of principal. Investors should carefully consider the investment objectives, risks, charges and expenses of the Rady Contrarian Long-Short and Rady Opportunistic Value Funds. This and other important information about the Funds is contained in the prospectus, which can be obtained by calling 877 302 7239. The prospectus should be read carefully before investing. The Rady Contrarian Long-Short and Rady Opportunistic Value Funds are distributed by Northern Lights Distributors, LLC member FINRA/SIPC.

The data quoted above represent past performance and do not indicate future returns. The value of an investment in the Funds and the return on investment both will fluctuate and redemption proceeds may be higher or lower than an investor's original cost. Total return is calculated assuming reinvestment of all dividends. Total returns would have been lower had the Adviser, the Distributor, the Administrator, and Custodian not waived or reimbursed a portion of their fees. For more performance numbers current to the most recent month-end please call 877 302 7239.

The Rady Contrarian Long/Short and Rady Opportunistic mutual funds are now open to all investors. These funds offer access to hedge fund portfolio management, without any of the typical partnership restrictions. The Long/Short strategy has been managed since 2007 and is focused on long term risk management, using a contrarian investment approach. The portfolio management team has in excess of 45 years of industry experience. The team also manages the value oriented Long‐Only Rady Opportunistic Value Fund. The portfolio manager has overseen Long‐Only portfolios since 1995. This strategies performance can be viewed in PSN database and is managed in a substantially similar format to the Rady Opportunistic Value Mutual Fund. Both the long‐short Contrarian (RADIX, RADYX, RADCX) and long‐only Opportunistic (ROVIX, ROVYX, and ROVCX) are open to new investors.

 Prior to October 2009, these portfolios were only available to qualified investors in a partnership format. The two strategies are similar to one another, in that most of the equities on the long side are included in both funds, however the long‐short fund has the flexibility to manage risk and seeks to generate alpha (the measure of risk‐adjusted performance) by shorting stocks. Historically, the fund has generated alpha (the measure of risk‐adjusted performance) on both the long and the short side of the portfolio. The management team has extensive operational and investment experience which differentiates it from other firms. Harry Rady, the Chief Investment Officer spent 9+ years as the CIO of a multi‐billion dollar financial/real estate/investment conglomerate, which gives him a unique perspective on investing.

The two mutual fund strategies utilize a contrarian/opportunistic investment approach. Management can tactically allocate cash within the portfolios offering the flexibility to redeploy capital, unlike many other mutual fund strategies. Management believes this may provide potential for alpha (the measure of risk‐adjusted performance) generation in volatile markets.

 These two Mutual Fund investments offer investors daily liquidity, daily pricing, and transparency not found in the hedge fund marketplace. We believe that this opportunistic approach to investing should be a core strategy for most investors. We also believe the long/short tactical management style has the potential to smooth out returns over time. Having the flexibility to invest both long and short may lower the downside risk while potentially generating attractive long term returns in different market conditions. Rady Asset Management utilizes quantitative modeling and an intensive bottom‐up, fundamental approach to its research. The team typically looks for stocks that are out of favor and trading at or near their 52‐week lows. This strategy has been developed and honed for over 15 years.

Both strategies can be viewed as potential core components to most investors’ portfolios. We believe individual investors will benefit from access to these strategies, previously only available to accredited investors. The Rady Opportunistic Value Fund provides investors with a tactical, contrarian investment vehicle focused on mid/large cap stocks. The Rady Contrarian Long/Short mutual fund offers investors the benefit of a strategy that can take advantage of market declines and provide relatively uncorrelated returns.

To learn more about Rady Asset Management and the portfolios they manage please contact them directly at 877.302.RADY and visit their website at www.radyassets.com

Dear Partner,
We are pleased with our 2009 performance. The Rady Opportunistic Fund returned 32.46% and the Contrarian Long Short portfolio returned 14.61%.

Description                                       2009                   2008
Contrarian Long/Short, LP            14.61%            -12.85%
Rady Opportunistic Long-Only      32.46%            -23.14%
Standard and Poor's 500 Index     26.47%           -37.00%

The year began with investors unable to escape the gravitational pull of the economic black hole of 2008. As the year progressed, a number of the government stimulus plans began to gain traction as hundreds of billions of federal dollars flooded the markets. This enormous amount of liquidity provided investors with a backstop/safety net that gave them increasing confidence to raise their appetite for risk. The second half of 2009 can well be characterized by "The Risk Rally"; the riskiest, lowest quality stocks appreciated the most.

It was interesting to observe the transition of investor sentiment that occurred after the March lows. During the first quarter of 2009 investors felt as if the world was coming apart at the seams and the appetite for risk had almost completely disappeared. Then, as the Fed continued pouring liquidity into the market, investor confidence was buoyed as they took more risk, thus adding fuel to this rally.

While we are relieved that a global economic depression seems to have been averted, we are not entirely convinced that it is smooth sailing from here. In recent quarters corporate profitability has largely been driven by the availability of cheap money and severe cost cutting measures. High unemployment and underemployment, stricter consumer credit, the battered housing market and a more cautious consumer will continue to pose challenges to companies in their quest for revenue growth. As the Federal Reserve liquidity programs begin to be reined in, companies may struggle to meet the now higher Wall Street expectations. Therefore, we feel it is our responsibility to be as diligent as ever and not become complacent. We continue to take on appropriate levels of risk and only increase exposure when we believe that we are being adequately compensated for it.

We firmly believe that the best offense for 2010 will be largely driven by a laser focused defense. When looking back at 2009 it is very important to realize that junk is what led this rally, which is not the type of companies that RAM typically focuses on or invests in. We have always placed the greatest emphasis on dominant/best in class companies, with strong balance sheets, and great management teams. During this "Risk Rally" many of these high quality companies underperformed lower quality companies

We are not willing to compromise our strategy or investment philosophy to participate in this type of rally and will continue to stick to our knitting of investing in high quality companies. We are getting more and more excited about the opportunities we see unfolding on the short side. Many of these lower quality companies have now rallied, in many cases more than two standard deviations beyond their historical valuation multiples. We therefore believe that it is becoming increasingly likely that, as 2010 progresses, the markets will become increasingly volatile. This means that our diligent focus on risk management will become increasingly vital.

We continue to see opportunity in certain segments of healthcare and have been increasing our exposure to Utilities. Utilities have been left for dead, but provide the benefit of extremely resilient business models and solid dividend yields which provides income while we wait for the stocks to recover (click here for our recent CNBC appearance regarding Utilities)

As we have stated in prior letters our primary goal is risk management. We take this responsibility very seriously and for this reason if the market continues to trade in these very lofty ranges we may underperform. However, as the market begins to focus more on the fundamentals, our investors should benefit from our portfolio holdings, short positions and tactical flexibility.

While we will not be surprised if the current rally continues into 2010, we expect increased volatility and significant sector rotation. We believe that we will be rewarded for owning high quality, best of breed companies, as investors realize that there are consequences to taking on too much risk. Also, we continue to be concerned about the potential for future inflation and have therefore positioned a portion of the portfolio to potentially profit from this.
We don't want to be perceived as being dominated by doom and gloom, especially since we see a great deal of opportunity. You hired us to manage risk and create long term value and the only way we can do that is by constantly watching for potential opportunities while keeping a keen eye out for potential pitfalls.
As many of you may be aware, investors can now track the daily performance of our strategies through our publically traded mutual funds (The Rady Contrarian Long/Short Fund "RADIX" and The Rady Opportunistic Value Fund "ROVIX".) In addition, lower minimums are also available with these vehicles.
As Warren Buffett says, "You don't know who's swimming naked until the tide goes out". Well, the water was extremely cold as the tide went out in 2008 and too many investment managers were left exposed with only their tiny excuses.

We are very excited about the outlook for both of our portfolios and look forward to 2010 and beyond.

As always, we thank you for your continued support.

Sincerely,

Rady Asset Management, LLC Harry Rady-CIO

Jordan Greenhouse-COO
Ramu Singh-Director of Research

While it hasn’t been surprising to us; the first six months of 2009 have been extremely volatile. The good news is that this volatility continues to create extraordinary opportunity. During the first quarter we witnessed the DJIA drop to the mid 6000’s along with a decrease of 24% for the S&P 500 driven by legitimate concerns we could be headed into an economic depression.

Banks are faced with a no win situation with the federal government and investors. The regulators are using a doomsday scenario to stress test the banks balance sheets when doomsday has already occurred. It’s kind of like calling the fire department after the building has been burnt to the ground.

We are becoming increasingly concerned that the fed is running out of ammunition and rates will continue to move up in the face of an aggressive government debt buyback program to push borrowing costs and mortgage rates down.

The CDS market for US Treasuries is relatively new because treasuries were considered "risk-free" prior to our current financial crisis. As you can see from the chart below, CDS prices are up more than 10X in the last 8 months. This price movement represents a clear message from the CDS market: over the last 8 months the risk of our government defaulting on its debt obligations has increased 10X.