Cash is no longer a four-letter word for some mutual fund managers, especially as stocks continue marching to new highs and bargains become few and far between. But few funds are as fond of the green stuff as Weitz Value (WVALX). At the end of the first quarter, the fund had nearly 30% of its $1.2 billion in assets in cash.

Why so much? One word: discipline. “Fear of missing out in up markets can lead to an erosion of price discipline,” says co-manager David Perkins. “We’re trying to be prepared for the emergence of more meaningful discounts.” Perkins is wise to prepare—U.S. stocks haven’t had a correction (defined as a downturn of 10% to 20%) since October 2011 and haven’t experienced a full-fledged bear market (a decline of at least 20%) since the last one ended in March 2009. Because corrections occur roughly every two years, on average, it’s safe to say that the market is due. The fund owns only 29 stocks, and its contrarian managers-Perkins works alongside Wallace Weitz and Bradley Hinton—seek to buy out-of-favor stocks that sell at a discount to what they think the business is worth.

The managers aren’t concerned about holding a diverse mix of stocks or industries, or hewing to a particular asset allocation. Instead, they favor a stock-by-stock approach, searching, according to fund documents, “for companies that are in control of their own destiny that have honest, intelligent management.”

For the most part, the formula works for patient investors. The fund’s long-term record is solid. Over the past 15 years, Weitz returned 6.3%, beating Standard & Poor’s 500-stock index by an average of 1.7 percentage points (all returns are through June 2). More recently, it has lagged the index, perhaps hurt by all that cash. Over the past year, Weitz earned 16.6%, lagging the S&P 500 by 4.0 percentage points.

For now, the bull market has shrunk the pool of stocks that appeal to the bargain hounds at Weitz Value. “Many of the stocks we follow appear to have baked in perfect operating scenarios over the next few years,” Perkins says. “That’s a difficult backdrop.” Don’t get him wrong; Perkins isn’t calling for a bear market from making short-term predictions,” he says. “We’re not bearish on the economic prospects for the U.S. or for the globe.” But if trouble comes—be it company-specific or to the broader market—
“we’re not afraid to move quickly or decisively.”

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