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Chou-Eveillard-Miller in Barrons


MrB

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One quote interested me

 

Temperamentally, he wouldn’t dare to own a concentrated portfolio, because he was “too worried that it

could just blow up” and was “too skeptical about my own skills.” Few professional investors so frequently utter the words “I don’t know.”

 

Never thought of it like this, but is diversification the ultimate sign of modesty?

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One quote interested me

 

Temperamentally, he wouldn’t dare to own a concentrated portfolio, because he was “too worried that it

could just blow up” and was “too skeptical about my own skills.” Few professional investors so frequently utter the words “I don’t know.”

 

Never thought of it like this, but is diversification the ultimate sign of modesty?

 

I don't think so. I think diversification is just a sign of particular character. :)

 

Disclaimer: I can't make myself to own a concentrated portfolio, but more because I like too many companies. I just can't say "no".  :-*

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Per morningstar, the only funds of Legg Mason Value Trust that beat the S&P 500 over his tenure were the institutional classes ...which, I don't believe, were even available in 1982!

 

LMVTX under-performed the s&p 500 during his tenure by a small account (even more after taxes).

 

 

I think it's odd that he's "proud" of something that didn't happen.

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According to Charlie Munger. Diversification is insurance against ignorance. He sure has a way with words.

 

Easy to say, hard to do I would think...  Last I looked he was invested in insurance, newspapers, utilities, railroads, a million kinds of manufacturing, another million kinds of junk food, and another 40 or 50 assorted service and retail businesses. 

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According to Charlie Munger. Diversification is insurance against ignorance. He sure has a way with words.

 

Easy to say, hard to do I would think...  Last I looked he was invested in insurance, newspapers, utilities, railroads, a million kinds of manufacturing, another million kinds of junk food, and another 40 or 50 assorted service and retail businesses.

 

Don't you think that's because of the size problem they have at this point? I believe there were times in his career that Charlie Munger was pretty concentrated. At some point, for an arbitrage opportunity, he invested all his money into one name only even...

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If we look at the portfolio Charlie is managing @ Daily Journal Corp, it is extremely concentrated:

 

WFC - 67%

BAC - 28%

USB - 5%

 

In regards to Berkshire, size is the 'only' reason IMO they are diversified. 

 

Tks,

S

 

According to Charlie Munger. Diversification is insurance against ignorance. He sure has a way with words.

 

Easy to say, hard to do I would think...  Last I looked he was invested in insurance, newspapers, utilities, railroads, a million kinds of manufacturing, another million kinds of junk food, and another 40 or 50 assorted service and retail businesses.

 

Don't you think that's because of the size problem they have at this point? I believe there were times in his career that Charlie Munger was pretty concentrated. At some point, for an arbitrage opportunity, he invested all his money into one name only even...

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Also legacy positions make them diversified. They aren't going to sell See's just because as the book value has grown, See's become more negligible. But when you look at new positions, they are making big concentrated positions. I believe Coke was about 30% of book value and Burlington was about 20% of book value at the time of purchase.

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Agreed. Does anyone think Buffett will try to take IBM private? 

 

Tks,

S

 

Also legacy positions make them diversified. They aren't going to sell See's just because as the book value has grown, See's become more negligible. But when you look at new positions, they are making big concentrated positions. I believe Coke was about 30% of book value and Burlington was about 20% of book value at the time of purchase.

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For that to happen, the large widely-owned businesses almost have to come knocking on Berkshire's door. I just don't see IBM getting there. USG on the other hand seems like a good candidate at some point down the road (I've owned it for years, although not specifically for that reason).

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Yup, but IBM is currently in transition similar to DELL and to get out of the limelight by going private would be extremely valuable for the transition to make large moves under the cover of Berkshire.  Buffett's cash position is growing day by day and he would love to bag an elephant and this is one BIG elephant.  Berkshire is IBM's largest shareholder and he continues to add aggressively at around this price.  At the same time, IBM is repurchasing stock at a slower clip then before but this continuing to increase Buffett's ownership in the company. 

 

There is always the off beat chance a PE firm comes knocking due to the poor stock performance and Ginni will have no choice but to call buffett.  We can always pray!  :)

 

 

For that to happen, the large widely-owned businesses almost have to come knocking on Berkshire's door. I just don't see IBM getting there. USG on the other hand seems like a good candidate at some point down the road (I've owned it for years, although not specifically for that reason).

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Agreed. Does anyone think Buffett will try to take IBM private? 

 

Tks,

S

 

Also legacy positions make them diversified. They aren't going to sell See's just because as the book value has grown, See's become more negligible. But when you look at new positions, they are making big concentrated positions. I believe Coke was about 30% of book value and Burlington was about 20% of book value at the time of purchase.

 

Uh no.... IBM's market cap is $165 billion with a "b". Buffett's largest purchase to date is less than a quarter of that. If the market value dropped by 50-75% then maybe...But at $165 billion, its a definite "no".

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Guest longinvestor

There is  no desire @BRK to "diversify" like everyone  means / likes to. Only to concentrate.

 

If "size" means they have cash coming out of their ears then this statement is correct. Last I checked, what they own, they own 100% of; Yes, in Insurance, Railroad, Utilities, Manufacturing, Retail etc. Even some of the junk food, Heinz, Sees, DQ. This is no diversification.

 

What they partially own, they don't have the size to buy 100%. KO, WMT, IBM etc. Looks like they have a plan for that!

 

 

If we look at the portfolio Charlie is managing @ Daily Journal Corp, it is extremely concentrated:

 

WFC - 67%

BAC - 28%

USB - 5%

 

In regards to Berkshire, size is the 'only' reason IMO they are diversified. 

 

Tks,

S

 

According to Charlie Munger. Diversification is insurance against ignorance. He sure has a way with words.

 

Easy to say, hard to do I would think...  Last I looked he was invested in insurance, newspapers, utilities, railroads, a million kinds of manufacturing, another million kinds of junk food, and another 40 or 50 assorted service and retail businesses.

 

Don't you think that's because of the size problem they have at this point? I believe there were times in his career that Charlie Munger was pretty concentrated. At some point, for an arbitrage opportunity, he invested all his money into one name only even...

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According to Charlie Munger. Diversification is insurance against ignorance. He sure has a way with words.

 

Easy to say, hard to do I would think...  Last I looked he was invested in insurance, newspapers, utilities, railroads, a million kinds of manufacturing, another million kinds of junk food, and another 40 or 50 assorted service and retail businesses.

 

Berkshire is different due to size, take a look at his DJCO portfolio.

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