Top fund manager Charles de Lardemelle isn’t finding much to buy in the stock market these days, holding about 30% of his two portfolios’ funds in cash.
“There is a dearth of opportunities in the stock market today in our opinion,” de Lardemelle tells WealthTrack. “So it’s very difficult to find quality companies with large discounts to intrinsic values — what a knowledgeable buyer would pay in cash for the whole business. It’s in part due probably to quantitative easing and the fact that interest rates are so low.” While ultralow interest rates mean his funds are losing real purchasing power on their high cash positions, he says he looks at the cash as options on future bargains. When valuations look better and opportunities are more abundant, he says he’ll put that cash to work. He also talks about his position in gold — which is about 3% right now, about the lowest he’ll go. He says he thinks it’s good to have gold as a hedge on cash and equities in a money printing environment, but his low equity position means a high gold position is not needed right now. De Lardemelle also talks about his firm’s willingness to avoid hot, popular areas of the market. Up until recently, for example, it had been staying away from BRICs — Brazil, Russia, India, and China. But that has begun to change, as he’s begun to invest in Chinese companies trading in Hong Kong.