Concentrated Investing: Strategies Of The World’s Greatest Value Investors – Book review by Tobias Carlisle, Greenbackd
Concentrated Investing: Strategies of the World’s Greatest Concentrated Value Investors (Wiley Finance, 2016) chronicles many 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.
From the Inside Flap
If you’ve studied value investing, some of the names in this book may be familiar, but the majority probably won’t be. Nonetheless, they are a who’s who in concentrated value investing, each with their own unique story, skillset, and philosophies that have gained them tremendous wealth and accomplishment while flying below the radar—until now. Concentrated Investing: Strategies of the World’s Greatest Concentrated Value Investors takes you inside the ledgers and playbooks of this select group of history’s elite value investors to uncover their secrets for the new generation of wealth builders.
Turning the practice of diversification on its head, concentrated value investors purchase a small group of undervalued stocks and hold them through the highs and lows of the long term. You will read a lot about the juggernaut of value investing, Warren Buffett, who amassed the legendary Berkshire Hathaway with this approach. But this motivating book shows you he wasn’t the first or only one. This eye-opening examination will have you re-thinking conventional wisdom on asset allocation and emulating such concentrated value investors as:
- A former GEICO investment manager whom Buffett has named “a cinch to be inducted into the investment hall of fame”
- Kristian Siem, who grew Siem Industries at 25.6% annually over the past twenty- five years by following two key principles
- Edward Thorp and the formula he trusted to risk $662.5 million on to collect just $2.5 million in a rare opportunity
- Trends, momentum, volatility, and volume all change day to day and create opportunities to pick up the undervalued stocks that grow into fortunes, as you’ll see in Concentrated Investing.
From the Back Cover
Praise for Concentrated Investing
MARIO GABELLI, CEO and founder, Gabelli Asset Management:
Concentrated Investing may not be for all fiduciaries but the principals highlighted in this book—such as Lou Simpson whose career I have tracked since his days at Shareholders Management to Berkshire Hathaway—underscore this proven approach to long term investing. Pick your best stocks and have concentrated holdings—just as Warren Buffett has done at Berkshire Hathaway.
JEAN-MARIE EVEILLARD, Senior advisor and former PM of the First Eagle Funds:
I used to run mutual funds, so I did not have permanent sources of capital (in the late 1990s, I lost 7 out of 10 shareholders in less than 3 years). Too bad, because I agree that risk is not volatility, it is the risk of permanent loss of capital. And, yes, it is hard to move away from the herd, but hey, most good things in life come hard. So, as this book suggests, in my next life, I will run a closed-end fund and have a concentrated portfolio.
CHARLES ROYCE, CEO and founder, The Royce Funds:
This is more than a book…it is a detailed compendium of the life and temperament of the greatest concentrated investors…the Simpson and Keynes stories are terrific testimonies to both their practice and their learnings over time…the stories of Simpson and Keynes alone…are worth the book price X 100.
CHARLES BRANDES, CEO and founder, Brandes Investment Partners:
The pervasive investment world definition of ‘risk’ today is price volatility. This book reminds us that this definition is a fallacy for true investors. It demonstrates that intelligent concentration is the ideal investment philosophy.
ALAN KAHN, CEO and cofounder, Kahn Brothers & Co. (Retired):
We all know of ‘the World’s greatest investor,’ Warren Buffett, but how many of us know the man whom Mr. Buffett chose to do HIS portfolio investing, Lou Simpson, who managed the vast portfolio of Berkshire Hathaway’s insurance subsidiary GEICO? The brightest stars, like Benjamin Graham, can be seen with the unaided eye. But this book trains the telescope on the less explored parts of the investment skies and provides us with the secret to success: run concentrated portfolios with permanent capital to prevent against capital withdrawals just at the depressed times when bold investment action is called for. Read! Enjoy! And get richer!