The cash allocation of the Nakoma Absolute Return Fund, a long-short fund, will appear high due to the allocation methodology for short positions.  In a short sale transaction, we borrow the security from another investor, sell it and receive cash, and then are obligated to buy it back at some point in the future.  As a result, short sale transactions generate cash, which is included in our total cash position.

For example:

If a fund has $100 in net assets and allocates $60 to long positions (60% of net assets) and $40 to short positions (40% of net assets), the funds total cash position would be about $80 (or 80% of net assets).  The fund is using $60 of net assets for long positions while the remaining $40 remains in cash.  The short sale transaction actually generates $40 in additional cash which increases the total cash position to $80 (or 80% of net assets).  Funds must provide their broker with cash collateral for the short positions, so funds that short often have large cash positions.  In addition, the fund can appear to have a negative cash position, which can reflect short positions in ETF's which have been disaggregated between asset classes.