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Concentrated Investing


Synopsis


Discover the secrets of the world's top concentrated value investors

Concentrated Investing: Strategies of the World's Greatest Concentrated Value Investors chronicles the virtually unknown-but wildly successful-value investors who have regularly and spectacularly blown away the results of even the world's top fund managers. Sharing the insights of these top value investors, expert authors Allen Benello, Michael van Biema, and Tobias Carlisle unveil the strategies that make concentrated value investing incredibly profitable, while at the same time showing how to mitigate risk over time. Highlighting the history and approaches of four top value investors, the authors tell the fascinating story of the investors who dare to tread where few others have, and the wildly-successful track records that have resulted.

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.

  • Discover the success of Lou Simpson, a former GEICO investment manager and eventual successor to Warren Buffett at Berkshire Hathaway
  • Read about Kristian Siem, described as "Norway's Warren Buffett," and the success he has had at Siem Industries

Concentrated Investing will quickly have you re-thinking the conventional wisdom related to diversification and learning from the top concentrated value investors the world has never heard of.

Allen C. Benello, Michael van Biema, Tobias E. Carlisle

Summary

Chapter 1: The Power of Compounding

* Explains the importance of long-term investing and compound interest.
* Example: An investment of $100 growing at 5% annually becomes $265 after 20 years.

Chapter 2: Why Concentrated Investing?

* Discusses the benefits of concentrating investments in a few high-quality companies.
* Example: Warren Buffett's strategy of investing in a small number of exceptional businesses.

Chapter 3: Identifying the Right Companies

* Provides criteria for evaluating potential investments, including financial strength, market position, and management.
* Example: Investing in companies with strong cash flow, high profit margins, and a dedicated customer base.

Chapter 4: The Margin of Safety

* Emphasizes the importance of investing at a discount to intrinsic value to provide a margin of safety.
* Example: Purchasing a stock at $100 when its intrinsic value is estimated to be $120.

Chapter 5: Patience and Discipline

* Stresses the need for patience and discipline in investing.
* Example: Holding onto well-performing investments through market fluctuations.

Chapter 6: Managing Risk

* Provides strategies for managing investment risk, including diversification, hedging, and risk tolerance assessments.
* Example: Balancing a portfolio with investments in different industries and asset classes.

Chapter 7: The Psychology of Investing

* Explores the emotional challenges of investing and provides advice on avoiding common mistakes.
* Example: Overcoming fear and greed during market volatility.

Chapter 8: Building a Concentrated Portfolio

* Explains how to construct a concentrated portfolio based on the principles discussed in the book.
* Example: A portfolio with 10-20 investments in high-quality companies with strong growth potential.

Chapter 9: Monitoring and Adjusting

* Emphasizes the importance of regularly monitoring investments and making adjustments as needed.
* Example: Rebalancing a portfolio to maintain the desired asset allocation.

Chapter 10: The Joy of Investing

* Concludes the book by highlighting the satisfaction and fulfillment that comes from successful investing.
* Example: The joy of building wealth while contributing to the growth of innovative companies.