U.S. Markets closed

Maintaining a Concentrated Portfolio Without Disavowing Diversification: An Expert Portfolio Manager Discusses Investing in Berkshire Hathaway (BRK-A)

67 WALL STREET, New York - April 2, 2013 - The Wall Street Transcript has just published its Investing in Gold and Value for Downside Protection Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Value Investing - Long-Term Investing - High Quality Companies - Global Investing - Investment Strategies - Large Cap Investing - Longer-Term Investing - High Quality Companies - Investing in Gold - Long-Term Value Conservation - Precious Metals

Companies include: Berkshire Hathaway Inc. (BRK-A), Newmont Mining Corp. (NEM), Barrick Gold Corporation (ABX), Kinross Gold Corporation (KGC), Mercury General Corp. (MCY), Pepsico, Inc. (PEP), Johnson & Johnson (JNJ), General Electric Co. (GE), Microsoft Corporation (MSFT), The Coca-Cola Company (KO), Citigroup, Inc. (C), Leucadia National Corp. (LUK), Exxon Mobil Corp. (XOM) and many more.

In the following excerpt from the Investing in Gold and Value for Downside Protection Report, an expert portfolio manager discusses his investment philosophy and his portfolio-construction strategy:

TWST: You said you maintain a concentrated portfolio. What about diversification?

Mr. Bloomstran: We really think the unoriginal but unconventional notion of putting all your eggs in one basket and watching that basket closely makes a lot of sense. We don't at all set out with an intention to take on risk by not diversifying. Risk to us is permanent loss of capital. The adage of risk and return being correlated is misguided. Most that take on our definition of risk invariably lose money. Occasionally, and not frequently, opportunities arise that have huge upside reward and no or little downside risk, using permanent loss as the measure of risk.

You need to be in a position to take advantage of that. Sometimes you build a big position slowly as the price drifts downward but the fundamentals remain positive. Other times, big low-risk, high-reward opportunities appear all at once. Only from experience and cumulative learning can you be ready for those.

While we don't disavow diversification, Berkshire would be a rare exception as a really, really big position, simply because we think the assets within the business itself already are diversified and because they are of such high quality in terms of positive returns on capital, the capital structure of the business itself and the discount to fair value.

By discount to fair value, I mean price is really important. Really high business quality coupled with a price below fair value, which the stock market does tend to give you from time to time. That dual margin of safety lets us sleep at night, and lends itself to a lack of diversification. There are not that many opportunities to put a lot of money into an asset or a situation where you have both of those margins of safety working for you. When you get the dual margins, you need to take advantage. More often than not you do get a chance to buy things because there is a problem and our job is to discern whether the problem is...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

  • Russian Olympian Who Wore an 'I Don't Do Doping' Slogan Shirt Just Failed Her Drug Test
    World
    Time

    Russian Olympian Who Wore an 'I Don't Do Doping' Slogan Shirt Just Failed Her Drug Test

    Nadezhda Sergeeva, pilot of the two-woman bobsled team representing the Olympic Athletes from Russia, proudly proclaimed her anti-doping stance when she appeared in a YouTube video wearing a sweatshirt with the slogan “I don’t do doping” stamped brightly across the front. The federation says that the bobsledder does not have a prescription for the drug.

  • Buffett says Berkshire can handle $400 billion mega-catastrophe
    Finance
    Reuters

    Buffett says Berkshire can handle $400 billion mega-catastrophe

    Warren Buffett says: Bring it on. In his annual letter to shareholders of Berkshire Hathaway Inc , Buffett said "no company comes close" to his conglomerate in its ability to financially withstand even a mega-catastrophe that causes $400 billion of insurance losses. Buffett said the odds of such a catastrophe in any year is just 2 percent, but that Berkshire would lose only about $12 billion, a sum more than offset by annual profits from its non-insurance businesses.

  • Bitcoin Cash, Litecoin and Ripple Daily Analysis – 25/02/18
    Business
    FX Empire

    Bitcoin Cash, Litecoin and Ripple Daily Analysis – 25/02/18

    A promising start to Saturday’s session ended in yet another tumble for Bitcoin Cash, which has had a dire start to the year. Last weekend, the Bitcoin Cash rally kicked in late Saturday and came to an end in just a few hours, with Bitcoin Cash hitting a weekend high $1,630, an intraday gain of 7.77%, before tumbling to $1,392.3 just a few hours later. This Saturday’s moves were certainly shallower, Bitcoin Cash moving to a Saturday high $1,298.9, an intraday gain of 3.75%, before falling to a low $1,129.4.

  • Trump officials fight eviction from Panama hotel they manage
    Finance
    Associated Press

    Trump officials fight eviction from Panama hotel they manage

    One of President Donald Trump's family businesses is battling an effort to physically evict its team of executives from a luxury hotel in Panama where they manage operations, and police have been called to keep the peace, The Associated Press has learned. Witnesses told the AP they saw Trump's executives carrying files to a room for shredding. Representatives of the hotel owners' association formally sought to fire Trump's management team Thursday by hand-delivering termination notices to them at the Trump International Hotel and Tower, according to a Panamanian legal complaint filed by Orestes Fintiklis, who controls 202 of the property's 369 hotel units.

  • New tax scam can cause entire refund to vanish
    World
    KGO – San Francisco

    New tax scam can cause entire refund to vanish

    The IRS told the I-Team that people are being targeted by scams from all directions. Not only are there fake IRS calls, but there are new tax scams gaining popularity, including one where your entire tax return can vanish.

  • Here's How Much Bitcoin Elon Musk Owns
    Business
    Fortune

    Here's How Much Bitcoin Elon Musk Owns

    Musk revealed this week on Twitter how much Bitcoin he owns—and it’s not much. Musk shed light on his bitcoin ownership in response to a question from a Twitter follower asking why there were so many bots impersonating him to push cryptocurrency scams. “What’s with all the ETH spam?” the Twitter user asked, referring to the cryptocurrency Ethereum.

  • Retiring at 62 vs. 70: Pros and Cons
    Lifestyle
    Motley Fool

    Retiring at 62 vs. 70: Pros and Cons

    When most people think of retirement planning, they think about how much money they need to save. Social Security benefits play a major role in deciding your retirement age, though it's important to remember that claiming benefits and actually retiring don't always go hand in hand. The earliest you can claim Social Security benefits is age 62, but you'll receive a cut in benefits for every month you claim before your full retirement age (FRA), which is between 65 and 67, depending on the year you were born.

  • Flu Killed 13 Children Last Week But May Be Winding Down, CDC Says
    Health
    Time

    Flu Killed 13 Children Last Week But May Be Winding Down, CDC Says

    This year’s sweeping flu season may be starting to wind down, but activity is still high throughout the country, according to the CDC’s latest update. With weeks of flu season potentially still to go, that number is likely to climb higher. Illness and hospitalization rates also remain high, with most of the continental U.S. reporting widespread flu activity.

  • Citigroup to refund $335 million of credit card interest charges
    Business
    Reuters

    Citigroup to refund $335 million of credit card interest charges

    Citigroup Inc (C.N) said on Friday that it had failed to properly reduce interest charges on some 1.75 million credit card accounts since 2011, prompting a $335 million (239.65 million pounds) refund to customers later this year. The refund, which will average $190 per account, stems from the bank's discovery that it had not used a proper method for reducing interest charges for cardholders who resumed timely payments after having had to pay penalty rates for lapses. The errors amounted to about 10 percent of the interest reductions cardholders were due, the bank said.

  • 3 Reasons Traditional IRAs Are Better Than Roth IRAs
    Business
    Motley Fool

    3 Reasons Traditional IRAs Are Better Than Roth IRAs

    Saving for retirement is important, and someone making the most of the savings they're able to set aside will make a huge difference in how comfortable their retirement is. The federal government offers many tax-favored retirement savings vehicles, and one of the most popular is the IRA. One question millions of people face every year is whether to use a traditional or Roth IRA.

  • Latest Mueller indictment spells trouble for bankers, too
    Finance
    Associated Press

    Latest Mueller indictment spells trouble for bankers, too

    Recently filed federal charges against President Donald Trump's ex-campaign chairman Paul Manafort could also pose legal and regulatory risks for the banks that loaned him millions of dollars against his New York real estate in recent years. The most serious exposure may be for a Rhode Island-based bank that employed a "conspirator" in Manafort's scheme to obtain a loan he couldn't afford, according to the 32-count new indictment unsealed this week. Dubbed "Lender B" in court papers, Citizens Bank not only lent Manafort $3.4 million based off of fraudulent documents but, in another case, appeared to help Manafort avoid being caught by sending back a crudely falsified financial statement that had been sent to them from a Manafort associate, according to federal prosecutors.

  • These Companies Still Do Business With the NRA
    Business
    Esquire

    These Companies Still Do Business With the NRA

    From Esquire National Rifle Association members, who pay annual dues, are eligible for discounts at a variety of companies, from hotels to insurance firms. Gun-control activists have put out calls to boycott companies that do business with the NRA.

  • US asks judge to approve seizure of Pharma Bro's assets
    Finance
    Associated Press

    US asks judge to approve seizure of Pharma Bro's assets

    NEW YORK (AP) — "Pharma Bro" Martin Shkreli appeared in court Friday for the first time since a judge locked him up for his online antics, and the brash former pharmaceutical CEO had a new look since his bail was revoked in September: a scruffy beard that made his appearance less boyish. "Under the circumstances, I think he's doing remarkably well," his attorney, Ben Brafman, told reporters when asked about his client's stint in a fortress-like federal jail in Brooklyn. U.S. District Judge Kiyo Matsumoto didn't immediately rule on the government's demand that Shkreli should have to forfeit $7.3 million in assets, including a one-of-a-kind Wu-Tang Clan "Once Upon a Time in Shaolin" album that he has boasted he bought for $2 million.

  • Trump Said to Weigh 'Red Flag' Orders to Take Guns Away Quickly
    Politics
    Time

    Trump Said to Weigh 'Red Flag' Orders to Take Guns Away Quickly

    The White House is considering the idea of using restraining orders to take firearms away from people considered dangerous as part of its response to last week’s massacre at a Florida high school, two people familiar with the matter said. Under extreme risk protection orders, which are also known as red flag laws or gun violence restraining orders, firearms can be confiscated from people found to be at risk. The White House is studying an Indiana version of the law, and is considering other measures as well, according to the people, who requested anonymity to discuss policy deliberations.

  • Michael B. Jordan Had a Hilarious Response to an Internet Troll's Judgmental Opinion
    Celebrity
    Time

    Michael B. Jordan Had a Hilarious Response to an Internet Troll's Judgmental Opinion

    Michael B. Jordan’s charismatic turn as villain Erik Killmonger in Black Panther has commanded the collective attention of the Internet, some of who have taken it upon themselves to do extensive research into how Jordan lives his life off-camera, which has prompted a response from the actor himself. In an interview last year with Vogue, Jordan revealed that he shares a home with his parents and that he’d love to visit Tokyo, Japan because he loves anime, two facts that a Twitter user slyly pointed out might not be as endearing if they hadn’t come from the charming Fruitvale Station actor. As might be expected, the tweet went viral, catching the attention of Jordan himself, who had a pithy clap back to the tweet of his own.

  • This Growth Stock Looks Like an Incredible Bargain After Getting Pummeled This Week
    Business
    Motley Fool

    This Growth Stock Looks Like an Incredible Bargain After Getting Pummeled This Week

    This week was a rough one for U.S. oil and gas giant Devon Energy (NYSE: DVN). Devon Energy's stock might be down now, but the recovery looks to be just ahead. Two related factors drove Devon Energy's sell-off this week.

  • Democrats distance themselves from Nancy Pelosi
    Politics
    Fox Business Videos

    Democrats distance themselves from Nancy Pelosi

    Former President George W. Bush Deputy Assistant Brad Blakeman discusses why Democrats are starting to disengage from Senate Minority Leader Nancy Pelosi.

  • 3 Cheap Dividend Stocks That Helped Warren Buffett Earn $3.7 Billion in Dividends in 2017
    Business
    Insider Monkey

    3 Cheap Dividend Stocks That Helped Warren Buffett Earn $3.7 Billion in Dividends in 2017

    Warren Buffett, the revered billionaire investor and Chairman and CEO of $500 billion holding company Berkshire Hathaway, just released his annual shareholder letter in which he discussed a number of intriguing topics. Perhaps the most noteworthy one was the revelation that Republican tax cuts contributed $29 billion to Berkshire Hathaway Inc. (NYSE:BRK.A)‘s bottom-line last year. That clearly proved irksome to Buffett, who supported Hillary Clinton during the 2016 Presidential Elections and was not fond of the idea of tax cuts for the wealthy. As Buffett made clear in the letter, the windfall “did not come from anything we accomplished at Berkshire.” The letter also revealed that Berkshire earned

  • These 3 Dividend Stocks Offer Shares at a Discount
    Business
    Motley Fool

    These 3 Dividend Stocks Offer Shares at a Discount

    Dividend stocks can help investors benefit from the power of compounding. By reinvesting dividend payments to purchase additional shares of stock, you'll see the amount of income you receive grow over time, building on itself and creating a positive-feedback loop that can eventually produce huge amounts of income. In particular, Aqua America (NYSE: WTR), Franco-Nevada (NYSE: FNV), and Student Transportation (NASDAQ: STB) are three stocks that you can buy more cheaply through dividend reinvestment than you'll get on the open market.

  • Why Nvidia (NVDA) Stock Is the Cheapest It's Been in Nearly a Year
    Finance
    Zacks

    Why Nvidia (NVDA) Stock Is the Cheapest It's Been in Nearly a Year

    It is no secret that Nvidia NVDA is one of Wall Street’s most popular stocks. The graphics chip maker is a dominant force in the global gaming industry, and its tireless investments in self-driving cars, machine learning, and artificial intelligence all but guarantee the company a spot among the tech industry’s leaders for years to come. Nvidia’s leadership and innovation have also led to a massive surge in the company’s stock.

  • President Trump Still Hasn't Forgiven John McCain for Killing Obamacare Repeal
    Politics
    Time

    President Trump Still Hasn't Forgiven John McCain for Killing Obamacare Repeal

    President Donald Trump has again blasted Sen. John McCain for voting against the repeal and replacement of the Affordable Care Act last summer — but did not once call him by name. “We’re having tremendous plans coming out now, healthcare plans, at a fraction of the cost, that are much better than Obamacare,” Trump said Friday at the Conservative Political Action Conference. “Remember — one person walked into a room when he was supposed to go this way,” Trump added, giving a thumbs up sign, “and he walked in and went this way [thumbs down] and everyone said, ‘What happened?

  • In Your 60s? 3 Stocks You Should Consider Buying
    Business
    Motley Fool

    In Your 60s? 3 Stocks You Should Consider Buying

    OK, those of us in our 60s know this already, but I'm going to say it anyway: We are not old. The Pew Research Center conducted a study of aging and found that the definition of old age depends on who you ask. Well, I admit that how we feel about aging might not matter much in investing, but what does matter is longevity.

  • Adam Schiff's Memo Has Been Released. Here's What It Says
    Politics
    Time

    Adam Schiff's Memo Has Been Released. Here's What It Says

    Democrats on the the House Intelligence Committee on Saturday released a memo prepared as a counter to the one overseen by the committee’s chairman Devin Nunes that was publicized earlier this month. Overseen by Rep. Adam Schiff, the ranking Democrat on the committee, the memo from the Democrats attempts to contextualize the Nunes memo, which argued that the FBI displayed bias in obtaining a FISA warrant for former Trump campaign adviser Carter Page. That memo alleges that the FBI failed to disclose Christopher Steele, who compiled the notorious Steele dossier, was working for Fusion GPS or the firm’s founder Glenn Simpson, and that Deputy FBI Director Andrew McCabe — who is stepping down —said the FBI would not have sought a warrant without the dossier.

  • President Trump Went Way Off Script and Turned His CPAC Speech into a Campaign Rally
    Politics
    Time

    President Trump Went Way Off Script and Turned His CPAC Speech into a Campaign Rally

    When President Donald Trump took the stage at the Conservative Political Action Conference (CPAC) Friday morning, he clearly wanted to have some fun. For more than an hour, Trump held court, largely eschewing a teleprompter filled with prepared remarks on North Korea sanctions and remembrances for Billy Graham and the victims of the Parkland, Fla. shooting, instead choosing to ramble enthusiastically about familiar themes in his typical campaign style. Early in his CPAC speech, Trump caught a glimpse of himself in a TV monitor and joked, “I try like hell to hide the bald spot,” turning around to show the audience the back of his head.

  • Buffett says 'terrible mistake' for long-term investors to be in bonds
    Business
    Reuters

    Buffett says 'terrible mistake' for long-term investors to be in bonds

    Billionaire Warren Buffett prodded ordinary investors on Saturday to stay invested in U.S. stocks, ignoring price swings, guidance from people with fancy credentials and the temptation to load up on bonds. Buffett said it is a "terrible mistake" for investors with long-term horizons - among them, pension funds, college and endowments and savings-minded individuals - to measure their investment "risk" by their portfolio's ratio of bonds to stocks. The long-time bull on U.S. companies and the economy issued his latest letter to Berkshire Hathaway Inc shareholders on Saturday.