CONCENTRATE OR DIVERSIFY? 集中还是分散？

 

If I didn’t have partners, the concentration [65% of the portfolio in the top seven stocks] would be even higher. A company compounding capital at way above average rates, when I have great confidence that will continue and the valuation is modest, I want to own a lot of that. The rationale is that simple.

Charles Akre, 11.30.06

如果我没有合伙人，我的投资集中度（65%的资金于前七只股票上）会更高。公司的复合资本（收益率）在平均水平之上，当它能保持在如此水平、估值也比较适度，会给予我更大的信心让我大量持有。原理就是如此简单。

 

We believe in constructing the portfolio so that we put our biggest amount of money in our highest-conviction idea, and then we view the other ideas relative to that. We find things that we think are exceptional only occasionally. So if we find something that is really set up, where we think it’s mispriced, where we have a good understanding of why it’s mispriced, where we think the mispricing is very large and the overall risk is very small, we take an outsized position to make sure we give ourselves the chance to be well compensated for getting it right.

David Einhorn, 3.23.05

我们对建立一个组合有信心，这样我们就会投大量资金于我们具有最大信念的点子上，然后我们对相关的其它点子给予关注。我们会找到那些我们认为偶尔例外的东西。如果我们找到了一些真正的好东西，而我们认定它定价错误，我们同时认为它错得离谱，且总的风险很小，而且对于它为什么定价错误也也深刻的理解，我们就会超大量持仓等待其得到修正。

 

What works for us is between 10 and 20 positions. Owning more than 20 stocks, it’s too hard to follow the companies very closely, and a big winner won’t move the needle enough. I’m uncomfortable with the risk of owning fewer than 10, because we live in a dynamic world and you do make mistakes. I don’t want to make a mistake in a 15% position.

Ed Wachenheim, 2.29.08

我们通常持有10-20只股票。超过20只股票，对于详尽地跟踪公司是非常困难的，一个大的赢家不会move the needle enough。当我持股少于10只时，我对风险的感觉就非常不舒服，因为我们生活在动态的世界中，犯错误是必然的。我不希望在持仓量15%的水平上犯错误。

 

Because my style is so research-dominated, I should run a very concentrated portfolio and force myself to wait – which can go against human nature – for only the fattest pitches.

Aaron Edelheit, 1.31.08

因为我的风格是基于研究基础的，我通常保持非常集中的仓位，然后强制自己等待——这是违反人类本性的。

 

We want each decision we make to have a meaningful impact on our results and to be rewarded when we’re right, so our portfolio is concentrated in only 10-15 stocks. We believe that the more companies you own, the more mediocre your results will be and the more exposed you are to market risk.

Atticus Lowe, 4.30.07

我们希望我们做的每一个决策都对我们的结果有一个好的影响，当我们正确的时候得到回报，所以我们的组合集中在10-15个股票上。我们相信，你持有的公司越多，你的结果也越平庸，而就更大地暴露在市场风险之下。

 

Our ideal is 25 roughly 4% positions, though the reality varies around that. We believe concentration is tied to outperformance, but many institutional investors don’t have the stomach for our being much more concentrated than that. The way we look at it, if we can find five new ideas to replace previous winners or mistakes, that’s an honest year’s work.

Jeffrey Bronchick, 1.31.08

我们的理想是25只各4%的仓位，虽然现实让我们不得不随之改变。我信相信集中度关系到更好的业绩回报。

 

We just don’t see the sense in putting money in our 30th-best idea. We do pay attention to end-market diversification, within our companies and across the portfolio. Our goal is to own businesses with uncorrelated enough end markets that we can continue growing the intrinsic value of the portfolio in any kind of market.

Brian Bares, 9.30.08

 

One reason focused investing works is that you box yourself into what I think is a very positive corner. You force yourself into the position where you can’t afford to be wrong, so you’d better do all your homework. My goal is to buy a stock at such an attractive price that even if we’re wrong, we get more than our bait back. Sometimes that comfort comes from hard assets. Sometimes it’s the private-market value of the business. We also manage risk by going in when the company is already starting to do the right things. If you’re in a concentrated, illiquid situation, the last thing you need is to have to convince somebody to do something.

Matthew Feshbach, 5.22.05

 

We think concentration is the key to big performance, but we also have no desire to have our year depend on one or two things working out, so we have generally kept our largest positions at 5-8% of total capital and make sure those big positions are not particularly speculative or highly levered.

Gary Claar, 3.30.07

 

You can understand why many succumb to the pressure to “hug” the index, so to speak. But we believe if you go down the road of trying to make sure you’ll never do much worse than the index, you’re almost insuring that you’ll never do well enough to justify your compensation as an active manager.

Bill Nygren, 7.28.06

 

Early in my career I had 20% of my portfolio in Johnson & Johnson just before Tylenol was laced with poison. My objective is to produce an above-average long term return, and I think I can do that without taking that kind of concentration risk. Things happen. If I really knew the best stock in my portfolio I’d put 100% of the portfolio in it, but I don’t. [Financial columnist] Dan Dorfman once asked me in an interview what the best and worst stocks were in my portfolio. I told him the worst stock was Converse, the shoe company, which he dutifully reported in his column. It got taken over two days later, up 50%.

Robert Olstein, 9.28.05

 

Diversification is a big part of our risk management. An important percentage of Omega’s total capital is our own money and we’re just trying to do what we think is intelligent in a highly uncertain world. Our level of diversification reflects our unwillingness to make giant bets or to give up liquidity. We could liquidate our portfolio in 48 hours.

Leon Cooperman, 11.30.06

 

We want to have enough good ideas at work that if we’re wrong or unlucky on one or two, we haven’t lost a significant amount of capital. It’s not unusual for us to make a good decision that has a bad outcome – this is a probabilistic business. If you’re really concentrated and have two bad outcomes out of ten perfectly good decisions, 10% of your portfolio can blow up. I’ve heard the argument that if you have your top ten best investments, why would you want to dilute it with your 11th best investment? But if I

had to order my top ten ideas by how much I thought they’d go up, I guarantee you that wouldn’t end up being the top ten in actual performance. So we’re just more  comfortable being somewhat more diversified.

Zeke Ashton, 2.22.05

 

People tend to assume that the only form of active portfolio management is through relatively concentrated portfolios. We think there's an equally legitimate form of active money management in running a diversified portfolio that has nothing to do with the benchmark. Our mandate is first and foremost the return of capital, which has also so far resulted in above-market returns. With that mandate, we don't want a concentrated portfolio that bets the farm on a few stocks. This year has been an excellent reminder of how valuable diversification can be as a risk-management tool.

Charles de Vaulx, 11.26.08

 

We have fairly strict diversification rules so that we don’t get overexposed to any one sector or industry. We state those limits in absolute terms, not relative to a benchmark. Being slightly underweight financials when financials had grown to such a large  portion of the market a year ago wouldn’t have served you very well.

Ric Dillon, 6.30.08

 

We typically have 50 to 60 positions. It’s not more concentrated out of prudence and humility. There’s always a chance we’ll be wrong on any given idea.

Spencer Davidson, 6.30.08

 

I’ve never had the confidence to make precise distinctions about which of the stocks we own will go up more than the others. It’s hard enough at any one time just to find 40 stocks that won’t kill you and another ten that will make you money.

Susan Byrne, 1.31.08

 

The knock on diversified funds is that they’re index-huggers, which given the geographic breadth of where we invest, is not at all the case for us. I know the argument that you should only own your best 30 or 40 ideas, but I’ve never proven over time that I actually know in advance what those are.

Jean-Marie Eveillard, 5.30.08

 

While we’ve generally avoided being hurt by underhanded executives, that risk is always there and it’s far more pronounced if you’re running a concentrated global portfolio. A second reason we’re more diversified is because I believe a lot of our alpha comes from being in the right sets of companies rather than the right specific companies. If we get the themes right, we’ll do as well, with lower volatility, owning more names rather than fewer.

Oliver Kratz, 6.29.07

 

Having a broadly diversified portfolio is just a more prudent way to invest in small companies. The myriad of unexpected things that can happen, which might be short-term glitches for a bigger company, can take a small company down. We don’t want to be overexposed to that.

William Nasgovitz, 9.30.08

 

Our flagship mutual fund today has 300 stocks. Buying things when they meet the valuation characteristics that have worked for us in the past is our selection methodology, period. It’s not about picking the “best” 5%, 10% or 20% of those

– I don’t know which ones those are.

John Buckingham, 8.31.07