Nov 21

Portfolio Manager Commentary — Paychex Corp. (PAYX)

We have completed the sale of Paychex Corp. (PAYX) from the Fund’s portfolio at an average sales price of $41.04 per share. As with many of our holdings we gradually move into a new position, build it to a meaningful weighting (if warranted by the company’s stock price and business fundamentals), and then begin moving out of the position should its stock price approach our estimate of fair value. Paychex Corp. (PAYX) was an original position in the Fund initiated on July 1, 2010. We accumulated shares between July 1, 2010 and February 15, 2012 at prices between $25.36 and $33.45. The Fund’s average price for these purchases of PAYX was $28.51.

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Although we still find the company’s business model attractive, the company’s stock price began to sharply exceed our estimate of fair value based on the company’s fundamentals and our view of realistic future growth prospects. Is the market discounting sharply stronger future cash flows for Paychex based on a significantly stronger economy? Or is it that maybe the company’s stock price is part of a rising tide of central bank liquidity that is lifting all boats? Regardless of the reason, we defer to our investment discipline and prefer to exercise prudence when making portfolio decisions. As allocators of capital, we continue to search for well-managed companies with free cash flow, strong balance sheets, common-sense business models AND whose stock is trading at attractive discounts to our estimate of fair value. Absent these conditions, we are content to allow our cash position to grow.

The opinions expressed are those of the Castle Focus Fund’s portfolio manager and are not a recommendation for the purchase or sale of any security.

Paychex Corp. (PAYX) represented 3.63% of fund assets on July 26, 2013, the business day prior to the funds first sale of PAYX. As of September 30, 2013, PAYX represented 2.40% of the funds assets. As of November 21, 2013, the fund did not own any shares of PAYX.

The Castle Focus Fund’s prospectus contains important information about the Fund’s investment objectives, potential risks, management fees, charges and expenses, and other information and should be read and considered carefully before investing. The investment return and principal value of an investment in the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. You may obtain a current copy of the Fund’s prospectus by calling 1-877-743-7820. Distributed by Rafferty Capital Markets, LLC-Garden City, NY 11530, Member FINRA.

The risks associated with the Fund, detailed in the Prospectus, include the risks of investing in small and medium sized companies and foreign securities which may result in additional risks such as the possibility of greater price volatility and reduced liquidity, different financial and accounting standards, fluctuations in currency exchange rates, and political, diplomatic and economic conditions as well as regulatory requirements in foreign countries. There also may be risks associated with the Fund’s investments in exchange traded funds, real estate investment trusts (“REITs”), significant investment in a specific sector, and non-diversification. Technology companies held in the Fund are subject to rapid industry changes and the risk of obsolescence.

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