Concentrated Investing: Strategies of the World's Greatest Concentrated Value Investors

Markets can remain irrational a lot longer than you and I can remain solvent.

We used to have a thing that any time Goldman recommended a stock, I would sell it, and every time they recommended a sell, I would buy it. I knew if they put out a sell, they wanted it to go down so they could buy it, and I knew if they recommended a buy, it was going to go down because they wanted to sell. And it practically always worked. And pe

If you are a professional and have confidence, then I would advocate lots of concentration. For everyone else, if it’s not your game, participate in total diversification. If it’s your game, diversification doesn’t make sense. It’s crazy to put money in your twentieth choice rather than your first choice. . . . [Berkshire vice-chairman] Charlie [Mu

Greenberg doesn’t limit himself to one kind of valuation metric, but he always looks at free cash flow yield.

Do a few things well: Rosenfield built a billion-dollar portfolio not by putting a little bit of money into everything that looked good but by putting lots of money into a few things that looked great. Likewise, if you find a few investments that you understand truly well, buy them by the bucketful.

Once again, placing bets of significant size depends on appropriately skewed probabilities, and these types of probabilities are uncommon, but both the mathematics and the investors argue for large bets when situations with unusual risk/return arise. It is important to note that the risk referred to here is the risk of permanent loss of capital and

“If I have the Bloomberg on, I find I am looking at what the market is doing,” he said. “I really like to be the one who is parsing the information, rather than having a lot of irrelevant information thrown at me.”

He doesn’t search for investments in analyst reports, or by speaking to sell-side researchers. “People on Wall Street tend to be very articulate, highly educated and intelligent, and can be very persuasive,” he says. “It’s best to just stay away.”

If you are a professional and have confidence, then I would advocate lots of concentration. For everyone else, if it’s not your game, participate in total diversification. If it’s your game, diversification doesn’t make sense. It’s crazy to put money in your twentieth choice rather than your first choice. . . . [Berkshire Vice-Chairman] Charlie [Mu