AAA-rated Nimmo seeks refuge in cash

Citywire AAA-rated Harry Nimmo is sitting on a cash position of 6% as he waits for the credit crunch in markets to unfold.

Nimmo’s cash position rose to this level at the start of August, when his biggest holding Datamonitor (DTM), which accounted for 3.8% of his Standard Life UK Smaller Companies (Standard Life UK Smaller Companies-Life) fund, was acquired by Informa.

Nimmo said: ‘I am a bit cautious at the moment, even though we have seen central banks do their utmost to alleviate the crisis. Issues like Northern Rock going to the Bank of England for support will hurt, ‘Joe Public’.

‘I can’t remember the last time he had to worry where he had to put his cash, and this will feed into the real economy.

We will have to wait and see whether there is more bad news coming from the banking and hedge fund sectors over the next few months.’

The crisis has prompted Nimmo to sell Paragon (PAG), the UK’s third largest buy-to-let mortgage lender. Nimmo has held the stock for a number of years and it accounted for 0.7% of the fund.

He said: ‘Paragon came out with a reasonably good trading statement, but we had to take the view that 2008 will be more difficult for their type of business.’

Nimmo believes the market is in the later stages of the economic cycle and said
Standard Life’s Matrix stock-screening tool is identifying opportunities in areas of the market that are not heavily exposed to the cycle, such as healthcare.

He has invested 1.3% of the fund in healthcare equipment provider CareTech (CTH) and has also recently bought a 2.3% position in Corin Group (CRG).

Nimmo said: ‘In the mid-1990s there was an overbuilding of nursing homes, which meant local authorities controlled pricing and nursing homes got into difficulties.