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Posted

These guys have a good track record.

 

IVA Funds Annual Report - September 30, 2014

 

We certainly do not intend to be “long term owners of cash” (Dylan Grice) but we are

happy to wait patiently for genuine bargains to surface. We do not have a bunker

mentality, we are always trying to identify cheap stocks and we do get excited when

markets experience corrections (late January and early February 2014, late July and early

August 2014, and during September 2014, the last month of the Funds’ fiscal year). These

periods gave us a chance to do some “nibbling,” either finding a few new securities or

adding to some existing positions. Our cash levels remain elevated in both Funds (36% in

Worldwide and 25% in International). While we understand the drag on performance

resulting from that cash, we are also mindful that cash has some “defensive” value as it

can act as a buffer when markets correct while it also has “offensive” value as it is the

ammunition that will allow us to hopefully pounce when financial assets get cheaper.

Someone was recently explaining the significant optionality value of cash, by arguing that

“cash is a perpetual call option on every asset class with no strike price and no

expiration.” We would reason that in the case of the IVA Funds it is even more; i.e. cash

is a perpetual call option on every security in the world, small or large, stock or bond, that

would qualify as being, at the appropriate price, a good investment.

IVA_Funds_Audited_Annual_Report_-_September_30_2014.pdf

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