October 17, 2014

For most investors, both amateur and professional, the primary goal of investing is to make money. However a handful of our guests have another top priority – capital preservation. IVA Worldwide Fund’s co-portfolio manager Charles de Lardemelle is one of them. On this week’s WEALTHTRACK he explains why he is now holding more cash and fewer stocks in his value seeking portfolios.

CONSUELO MACK: This week on WEALTHTRACK, a value investor who is willing to sit on large piles of cash while others invest in what he considers to be overvalued markets. IVA Worldwide and International funds’ Co-Portfolio Manager Charles de Lardemelle explains why patience is a virtue, next on CONSUELO MACK WEALTHTRACK.

Hello and welcome to this edition of WEALTHTRACK, I’m Consuelo Mack. There is no question that the world’s economy is slowing down. The international monetary fund recently trimmed its estimates for this year and next due to more weakness in Europe, Japan, and Russia, as well as a modest deceleration in China. The biggest exception? The us, where the IMF forecasts the expansion will pick up.

The IMF also warned about rising geopolitical tensions and a potential correction in the financial markets, describing stock prices as “frothy.”

That is also the view of some of our guests, who look forward to a market correction so they can buy securities at lower prices.

For most investors, both amateur and professional the primary goal of investing is to make money. However there are a handful in the WEALTHTRACK universe who have another top priority: capital preservation.

The most famous among them is Jean Marie Eveillard, the legendary former portfolio manager of the First Eagle Global fund, which is now ably steered by WEALTHTRACK regular Matthew McLennan. This week’s guest is an alumnus of the Eveillard school of investing, having worked at First Eagle for many years before leaving with a colleague to launch their own firm, International Value Advisors in 2007.

He is Charles “Chuck” de Lardemelle Co-Founder and Co-Portfolio Manager of the IVA Worldwide fund and IVA International fund which he launched with Co-Portfolio Manager Charles de Vaulx in October of 2008, the depths of the financial crisis and it turns out the month the market bottomed. Both funds closed to new shareholders in early 2011 after the firm surpassedg $15 billion in combined assets. Since inception the flagship IVA Worldwide fund is in the top quartile of its world allocation category with 11% annual returns beating both its benchmark and its competitors by a sizable margin. De Lardemelle says capital preservation is his firm’s first priority. I began the interview by asking him to explain why he is holding so much cash, more than 30% in both fund portfolios.

CHARLES DE LARDEMELLE: Well, because there is a dearth of opportunities in the stock market today in our opinion, so it’s very difficult to find quality companies with large discounts to intrinsic values where a knowledgeable buyer would pay in cash for the whole business, and it’s in part due probably to quantitative easing and the fact that interest rates are so low, but we’re not willing to take the bait, and we’re not willing to play the game.

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