"The Palos Income Fund took advantage of the selloff in Keyera Corp., establishing a long position after the company reported lower-than-expected numbers on soft propane prices resulting from the warm winter. Keyera’s other businesses, such as Gathering & Processing and NGL Infrastructure, were very strong..."

"The Palos Income Fund closed one of its risk-arbitrage trades on February 9, 2012. On December 8th 2011, Veresen Inc., acquired two gas processing plants from Encana. In order to finance the deal, Veresen issued subscription receipts, which were listed on the TSX on December 16, 2011. The subscription receipts initially traded at a compelling discount to the common stock, offering a spread of $0.27. The fund accumulated the subscription receipts and shorted the common stock. On February 9, 2012 Veresen announced the closing of the acquisition. The subscription receipts converted into common stock, and the fund realized a gain of $0.27 per receipt, with minimal deal risk and no market risk, generating an annualized rate of return of 12%..."

Highlights:

• Two new bought deals in the Palos Income Fund 
• Trends in energy, orange juice and gold  
• Gale Force, a core investment of the Palos Merchant Bank, makes a further acquisition 
• Implications of proposed oil sands pipeline, Keystone 
• New moves by the US Fed and how they can affect investors

"This week, the fund had a success story that demonstrates its core portfolio investment strategy at its best. In December 2010, management initiated a core position in the real estate investment trust (REIT) sector. The fund bought Boardwalk Real Estate at $40.21..."

"The Palos Income Fund LP is included in the Scotia Capital Canadian Hedge Fund Performance Index, which recently released performance numbers from 2011. We are proud to report that our fund outperformed this index, which reported a year end performance of -9.17% for the equal weighted returns and -3.77% for the asset weighted returns. In comparison, the Palos Income Fund LP had -3.64 year end return..."