Invesco Canada blog

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Rob Mikalachki | July 22, 2013

Question: High cash levels make me nervous. When will you start buying again?

It makes me nervous when a Trimark manager has an unusually high amount of cash. In the past this has been a good indication that a pullback of some kind is coming. What catalyst do you need to start putting the cash to work? Are you waiting for a pullback or are there other scenarios that would result in you becoming a buyer again?       –Andrew

There is no catalyst we’re waiting upon in order to start deploying cash. 

Virginia, Jason, and I continue to work through a number of promising ideas and have probably introduced more new investments into the Trimark Global Small Companies Class over the past 18-24 months than any other time since its founding. So, we are not starved for businesses that meet our requirements of differentiation at a sober price. 

This progress has been masked by a mix of continuing takeovers of our holdings (Lender Processing Services Inc.*, the latest) and voluntary turnover as we trim ideas where the valuation is getting stretched. 

That said, many of these holdings are going in at 3% weighting instead of a more typical 4-5% share of the fund. This is a result of prices being good but not great and is perhaps reflective of a less risk-sensitive market at the moment. 

Should sentiment change, we are in an enviable position to put cash to use at favourable returns.

*The above company was selected for illustrative purposes only and is not intended to convey specific investment advice.

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One response to “Question: High cash levels make me nervous. When will you start buying again?

  1. I am quite happy to see high cash levels, would have been nice to have them in 2008 before the markets tanked!

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