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[Thread] Portfolio Management:
1. A 15-25 stock portfolio has enough concentration to allow a skilled investor to really stand apart from the market, but is not so concentrated that bad luck, bad timing, or one or two mistakes can sink an otherwise competent investor.
1. A 15-25 stock portfolio has enough concentration to allow a skilled investor to really stand apart from the market, but is not so concentrated that bad luck, bad timing, or one or two mistakes can sink an otherwise competent investor.
2. Ultra-concentrated:
Fewer than 10 stocks
Large position sizes usually ~20-25% and larger
Practitioners: Chieftain, Eddie Lampert, Tom Brown
Fewer than 10 stocks
Large position sizes usually ~20-25% and larger
Practitioners: Chieftain, Eddie Lampert, Tom Brown
3. 10-stock model:
Standard position size of 10%, with 1 or 2 larger positions, and a handful of smaller positions.
Total of 12-20 positions.
Practitioners: Clipper
Standard position size of 10%, with 1 or 2 larger positions, and a handful of smaller positions.
Total of 12-20 positions.
Practitioners: Clipper
4. 20-stock model:
Standard position size of 5%, best 2-3 ideas modestly larger, many ideas are smaller.
Total of 25-40 positions.
Practitioners: Robert Hagstrom, Bill Miller, Wally Weitz, Longleaf Partner, Tweedy Brown Value
Standard position size of 5%, best 2-3 ideas modestly larger, many ideas are smaller.
Total of 25-40 positions.
Practitioners: Robert Hagstrom, Bill Miller, Wally Weitz, Longleaf Partner, Tweedy Brown Value
4.1 20-stock model (super-sized):
Same as 20-stock model but best 2-3 ideas are super-sized to 10-15%. Fewer sub-5% positions.
Total of 20-30 positions.
Practitioners: Tilson Focus, Fairholme, Sequoia, Oakmark Select
Same as 20-stock model but best 2-3 ideas are super-sized to 10-15%. Fewer sub-5% positions.
Total of 20-30 positions.
Practitioners: Tilson Focus, Fairholme, Sequoia, Oakmark Select
5. Centaur Long Portfolio- Zeke Ashton:
7.5%: Outstanding idea, 1-2 best ideas per year, compelling valuation with significant margin of safety.
4 – 6%: Standard great idea, top 8-10 ideas.
7.5%: Outstanding idea, 1-2 best ideas per year, compelling valuation with significant margin of safety.
4 – 6%: Standard great idea, top 8-10 ideas.
5.1
4%: Solid idea with one or more minor risk factors (e.g. valuation, industry quality, liquidity, political risk)
0 – 2.5%: Interesting idea but may be illiquid, bet with a good reward-to-risk ratio, or a very cheap low quality business.
4%: Solid idea with one or more minor risk factors (e.g. valuation, industry quality, liquidity, political risk)
0 – 2.5%: Interesting idea but may be illiquid, bet with a good reward-to-risk ratio, or a very cheap low quality business.
6. Centaur Short Portfolio:
> 4%: Shorts or hedges using market or sector specific indices.
3 – 4%: Most compelling individual short idea with very low risk.
> 4%: Shorts or hedges using market or sector specific indices.
3 – 4%: Most compelling individual short idea with very low risk.
6.1
2 – 3%: Standard great idea, no more than 2 or 3 usually.
1 – 2%: Solid idea with one or more risk factors (e.g. high short interest, low float, low market cap)
0 – 1%: Typically a put option. Probability of good outcome is low but magnitude is significant.
2 – 3%: Standard great idea, no more than 2 or 3 usually.
1 – 2%: Solid idea with one or more risk factors (e.g. high short interest, low float, low market cap)
0 – 1%: Typically a put option. Probability of good outcome is low but magnitude is significant.
