Thoughts on Diversification vs. Concentration

Posted on 6 CommentsPosted in General Thoughts, Investment Philosophy, Portfolio Management

I am thinking about concentration vs diversification. On the one hand, I don’t want to own a bunch of cheap stocks that aren’t very good businesses. I will own a few with asset backed protection, but I will diversify in these cases. I would be willing to concentrate my portfolio (10, 15, or even 20%) into one stock if I truly understand the business and I determined that it had a competitive advantage and a durable position in the market […]

Walter Schloss 1973 Forbes Article & Two Ways to Outperform the Market

Posted on 8 CommentsPosted in Investment Philosophy, Superinvestors, Think Differently, Walter Schloss

I just read an old Forbes piece on Walter Schloss: Making money out of junk. As many regular readers know, Schloss is one of my all time favorite investors. Read more about Schloss on my resource page and also check the Walter Schloss category. He made 21% per year for 47 years, investing in a simple, methodical, low stress manner working 9-4:30 with no other employees or assistants other than his son Edwin. Here are some key takeaways from the […]

Case Study-The Story of GEICO, Graham, and Buffett

Posted on 8 CommentsPosted in Ben Graham, Case Studies, Investment Philosophy, Superinvestors, Warren Buffett

Geico is a company that is owned by Warren Buffett’s Berkshire Hathaway. It’s an incredibly interesting company to study. I recently read an outstanding presentation on the company by David Rolfe of Wedgewood Partners. This post is my take… a short summary of the story of GEICO from the notes of that presentation. I recommend studying the presentation for more details on the company itself-I learned a lot by doing so. It’s a great case study. Now… for the story, […]

Markel (MKL) is a Compounding Machine

Posted on Leave a commentPosted in Investment Ideas & Company Research, Investment Philosophy, Shareholder Letters & Reports, Superinvestors

A couple weeks back I wrote a quick post on Tom Gayner, who is an outstanding investor and head of Markel (MKL), one of my favorite companies in America. Markel is a well run insurance company that has been compounding shareholder equity consistently at about 16% per year over the past 20 years. MKL operates with a similar business model to that of Berkshire Hathaway: Write insurance policies to collect premiums Invest the float Insurance companies make money in those […]

How To Determine a Good Investment

Posted on 1 CommentPosted in General Thoughts, How to Improve Results, Investment Philosophy, Investment Quotes, Superinvestors, Warren Buffett

I just wrote this post on my investment process and the idea of using screens. I found it interesting that Buffett doesn’t even consider screens as a tool. I think most of the reasoning is that he doesn’t use technology much, but other reasons include the sheer size of his investment portfolio and the fact that since the 1980’s he has become much more of a business investor interested in the qualitative aspects of a business. He is much more […]

Idea Generation: Reading vs Screens

Posted on 4 CommentsPosted in General Thoughts, Get Better by Reading, How to Improve Results

I thought I’d write down some quick notes regarding my investment process today… This is a topic I write and think about a lot. Having a defined investment process is essential to staying focused and being able to methodically generate long term investment results. Buffett Reads, He Doesn’t Screen I read a lot about the Berkshire meeting last weekend, and I have a few friends that attended (I’m anxiously awaiting their first hand accounts). At the meeting, Buffett discussed how […]

Human Behavior and Stocks Selling Under $1

Posted on 3 CommentsPosted in Investment Quotes, Superinvestors, Think Differently

Preston Athey runs the T. Rowe Price Small Cap Value Fund. He’s produced around 12% annual returns for the past 22 years, making him one of the top mutual fund managers in his category. I would imagine it’s hard to run $8 billion (the size of his fund), and have to invest in small caps only, so although 12% isn’t shooting the lights out, given his mandate and the constraints that come from the size of his fund, I’d say […]

DELL and EBIX, Heads, I Win Now; Tails, I Win Later

Posted on Leave a commentPosted in Uncategorized

Yesterday I wrote a piece where I listed the three categories that my investments typically fall into: Franchises, Cheap and Good Stocks, and Cheap Asset Stocks. I also described a 4th category called Special Situations that I occasionally participate in when I find an interesting idea. The vast majority of my investments fall into the first three categories, but recently, I’ve looked at two interesting special situations that have a few similarities. Dell and Ebix are two stocks that I’ve […]

Cheapness is an Excellent Catalyst

Posted on 1 CommentPosted in Investment Philosophy

I group my equity investments into three main categories: Compounders (These are Warren Buffett “forever” stocks, or franchise businesses with durable competitive advantages that I’m willing to hold for a long time as long time as long as the business continues to compound cash flow, dividends, and intrinsic value.) Cheap and Good (These are stocks that are not as high quality as the compounders, but are still above average businesses producing good returns on capital but are for some reason […]

Notes on Thrifts and 4 Stocks to Watch

Posted on 6 CommentsPosted in Uncategorized

Last week I went through the Value Line section on thrifts and wrote down some notes and thoughts I have on the industry. Thrifts and small community banks have had a rough few years, but many have survived and repositioned themselves to prosper going forward. Many of them have cleaned up their balance sheets. Many of the bad loans that were written in 2005-2007 were 5-7 year balloons. Time will help heal these banks. More importantly, the residential real estate […]