Concentrated Investing – A SavvyReview

Concentrated InvestingConcentrated Investing: Strategies of the World’s Greatest Concentrated Value Investors

Hardcover: 256 pages

Publisher: Wiley; 1 edition (April 25, 2016)

Highlighting the history and approaches of four top value investors, authors Allen Benello, Michael van Biema, and Tobias Carlisle tell the story of the investors who dare to tread where few others have, and the successful track records that result from their efforts.

The book unveils the strategies that make concentrated value investing profitable, while at the same time showing how to mitigate risk over time.

Diversification

Turning the notion of diversification on its head, concentrated value investors pick a small group of undervalued stocks and hold onto them through even the lean years. The approach has been championed by Warren Buffett, the best known value investor of our time, but a small group of lesser-known investors has also used this approach to achieve outstanding returns.

Economists and Investors

The book’s first eight chapters, the ninth provides the conclusion, highlight an individual and their relationship to concentrated investing. As examples, Chapter 2 offers John Maynard Keynes: Investor Philosopher – The Economics of Concentration while Chapter 6 gives us Kristian Siem: The Industrialist – The Importance of Permanent Capital to the Long-Term Investor.

For those that have studied investing, particularly value investing, it’s likely some of the names in the book will be familiar, while it’s likely that most will not be.  However, each investor offers a unique story, skill set, and philosophy. While you may not radically change your approach to investing, Concentrated Investing will provide food for thought with respect to the conventional wisdom related to diversification.

Available at Amazon, readers can choose between Kindle and Hardcover formats.

Blogger-in-Chief here at RetirementSavvy and author of Sin City Greed, Cream City Hustle and RENDEZVOUS WITH RETIREMENT: A Guide to Getting Fiscally Fit.

2 Comments

  1. I am a huge proponent of this and my role model was Charlie Munger who when he ran his investment partnership thoroughly exceeded the market index. Munger – “Why put money into your tenth best idea instead of more into your best idea?” The entire focus of your time is spent learning, very deeply, about a core group of stocks. Many many investors focus instead on portfolio activity whether it be buying and selling, rebalancing, allocating etc. etc. Portfolio activity creates friction costs – taxes and fees – which must be subtracted from your returns. Munger and Buffett believe in getting it right at the beginning and then ideally leaving them alone forever. That way compounding does its magic without being destroyed by taxes. But to get it right at the beginning means a lot of research to properly define the so-called “moat.” I’ve personally done it the Munger way since 1998 and it’s worked well for me but I don’t think that most people should try this. I’m a bit of a nutcase in terms of this being a passion so I spend a lot of time on it.

    • I believe you hit on two key points: getting it right at the beginning and lots of research. As you note, it is likely that most are not well suited for this style as they are not willing and able to dedicate the necessary time.

      Thanks for stopping by and adding your insight, my friend.

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