--Robert Murray
T.I.P. Wealth Manager, a C$60 million Toronto firm focused on North American equities, has adopted a ‘barbell’ approach by emphasizing cyclical stocks in the energy, materials and technology sectors while keeping a large proportion of its remaining assets in cash.
Jim Huang, president and portfolio manager, told AIN he has raised the cash holding of his T.I.P. Opportunities Fund rapidly to around 43% of the portfolio, from just 5% in mid-May. Long positions account for roughly 55% of exposure—including a 10% allocation to special-situation plays, which Huang considers to be effectively a cash substitute. The fund only has around 5% exposure to short positions.
“We’ll take cash up a lot if we think there’s a correction,” said Huang, adding that he believes the recent rally was “too much, too soon.” He would raise his cash holding to around 75% if his outlook became suitably bearish. “I expect the market to go sideways until the fall, at which point the rally might resume,” he said.
Huang believes the natural-resources sectors will prosper long-term, and recent sharp declines in commodity prices will only exacerbate the imbalance between supply and demand.
T.I.P. Opportunities invests across Canada and the U.S. The fund lost 33% in 2008 but has returned 14.8% this year to the end of May. Huang told AIN he regretted the loss and is “focusing more than ever” on protecting capital.
T.I.P. launched its hedge fund in October 2006. The firm received financial backing in mid-2007 from billionaire Murray Edwards (totalalternatives.com, Aug. 10, 2007). It also runs long-only money on behalf of several institutions.
This article was originally published in Alternative Investment News.