Many stock funds have very little cash on hand right now to buy stocks "on sale". This is due in part to investors selling out of these stock funds drying up the "redemption cash" position that these funds hold. Also, few stock fund managers make holding cash a priority. ICMAX = Intrepid Small Cap has a 37% cash position right now. Do any of your mutual fund managers hold lots of cash?
From the article:
"Many managers wish they could be in Mark Travis' position. One of the funds he co-manages, Intrepid Small Cap (ICMAX) had a 37 percent cash stake as stocks sank this week. Other funds at Travis' company, Intrepid Capital Management, were 10 to 28 percent in cash.
When the Dow Jones industrial average plunged 635 points on Monday, Travis bought shares of Collective Brands — the operator of Payless ShoeSource stores — after they sank below $10 a share. They had traded around $22 in April, when Travis considered the stock too pricey. He kept an eye on it because he figures Payless' low prices will bolster sales in a tough economy.
Stocks like that are one of the reasons Travis and his co-managers rarely let their cash slip below 10 percent.
"If we had been fully invested on a day like Monday, it would have been next to impossible to sell one of our stocks so we could buy another that we liked better," Travis says.
Their tendency to keep plenty of cash has also helped limit losses when stocks fall — one of the reasons why three of Intrepid's four funds have 5-star ratings from Morningstar."
http://www.thestreet.com/_yahoo/story/11168438/1/3-companies-that-are-potential-buyout-targets.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NAAnyone putting their cash (fund redemptions) to work with fund managers who hold higher cash positions?
bee
Comments
You might want to look at Aston River Road Independent Value (ARIVX), run by Eric Cinnamond. Cinnamond ran ICMAX for years and did a splendid job. Since starting the Independent Value fund, in the style of ICMAX, he has maintained a very high cash position and has substantially outperformed for their peer group and ICMAX.
For what interest it holds,
David
Thanks David...this look worth checking out
bee
Hi David. Your commentary on ARIVX swayed me to buy this fund last week. I sold my mid-cap fund, WTSLX, about a month ago when all this debt ceiling stuff started looking to be a good excuse for the market to correct. I was going to buy back into WTSLX after it dropped ~20% from when I sold. After reading your input on ARIVX, I decided to put that money back to work in Cinnamond's fund instead of going back into WTSLX. It is certainly a fund that allows you to sleep better at night.
Thank you very much for the insight.