Cash as a Strategic Asset

 Cash as a Strategic Asset

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In my 13 years of investing I've almost always been fully invested or thereabouts. I have ridden down all the crashes and corrections during that time and was ultimately rewarded for hanging on when the market recovered and took me back up regaining all of my losses and eventually posting more gains as well. It was in keeping with my strategy of not having to make a lot of decisions about investing in the stock market. 

The frustrating thing though was watching the market put all the good quality companies (that were always too expensive to buy)  on sale and having no cash to take advantage of it. Still over the long haul this approach of always being fully invested has worked out for me.

Now I know a lot of fund managers always hold some cash as a 'strategic asset' to be employed during market down turns. And as an avid reader of Brookfield's letter to the shareholders I have read about their strategy of 'capital recycling'...

So as the market has continued to rise (albeit less robustly) over the summer I have for the first time started to trim some of my holdings. Mostly holdings that don't pay a high dividend nor grow it too much);.

So i trimmed my positions in Analog Devices (ADI on the NYSE), Open text (OTEX on the TSX) and Altus Group Ltd (AIF on the TSX)...When AIF announced great quarterly earnings last week and went up 14 percent in a day, I sold the rest of my holdings.

So now I'm 10 percent in cash and waiting for some market weakness. 

In keeping with this theme I have put together a watchlist of some Canadian companies that I may be interested in purchasing in case the market brings them down to a more acceptable price level...

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Watchlist as of August 22, 2021

AIF...ALTUS GROUP LIMITED...$65.45

TOI...TOPICUS.COM INC...$114.20

TIXT...TELUS INTERNATIONAL (CDA) INC...$39.65

DSG...DESCARTES SYSTEMS GROUP INC...$94.04

TIH...TOROMONT INDS LTD...$108.85

ATA...ATS AUTOMATION TOOLING SYSTEMS INC...$44.05

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I have owned TIH, DSG, ATA in the past and sold them too soon (part of the learning process I suppose) and of course I've just sold my remaining position in AIF. Actually I sold both TIH and DSG when they going for fifty-something...ouch!

All of these companies have good smart management teams along with well thought out business models.

In the upcoming days I will do a brief blogpost highlighting some of these companies...Maybe my intuition will be sparked and I will have a chance to add some of these names to my portfolio.