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.