Among the news items coming across my desk early this afternoon is this Dow Jones Newswire report on Tim McElvaine. Regular readers know McElvaine is a highly-respected value manager of this blog. The report is about the cash level currently held in the value fund he's managing for Mackenzie, a large mutual fund company in Canada.
Cash is about 30% of the portfolio:
"It's not a prediction of the market," he told Dow Jones. "There's more stuff hitting my target price on the sell side than on the buy side."
He has a "broad band" of what he thinks a stock is worth, and while he's been guilty of selling too soon, he'd rather be "approximately right" than wrong. Though good ideas are harder to come by now than during the market turmoil at the beginning of the year, if he finds a couple of opportunities every month, that's fine with him.
A value investor, McElvaine looks for "accidents," or situations where a seller doesn't care about price and simply wants out because of an event such as poor earnings or an analyst downgrade. He also likes to see that a company has something of value that makes it worth more than its current share price, and that there's a "strong foundation" beneath the problems troubling the market. Finally, he wants a clear understanding going in about the company's strategy to prevent any unwanted "surprises" down the road.
Media companies aren't exactly in vogue these days, but McElvaine owns a couple of them - Corus Entertainment Inc. (CJR) and Torstar Corp. (TS.B.T). He bought Corus in the summer after its results raised concerns about its radio business, but he says its specialty-television channel division alone is worth more than what he paid for the stock, which gave him the Nelvana childrens animation unit and radio free.
There's more when you click on the link above (assuming you're a WSJ.com subscriber). Note this fund is managed by McElvaine for Mackenzie Financial. This is a different vehicle from his McElvaine Investment Trust.
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