The market has been incredibly strong so far this year and we have posted good returns in our funds. While market timing is nearly impossible from an index perspective (you have to be right twice – not just getting out at the right time, but also getting back in), when you follow a specific group of names from a bottom-up perspective, you can add value by trading around positions.
In this vein, our funds' cash levels have been rising recently from both new money coming in and from our decision to trim the size of some existing positions. At the same time, we maintain a "shopping list" of companies that we would like to own or that are current holdings for which we would increase our position. Today, many companies look extended from a price and/or valuation perspective, and so we are allowing cash levels to grow until the right opportunities are available. This occurs from time to time and by no means indicates we are becoming negative on the outlook for equities. We are simply remaining disciplined to our philosophy of only taking on risks when we feel we are adequately compensated for those risks, to deliver our goal of capital growth with downside protection.