Most of the concentrated investors had portfolios consisting of nearly iron clad moats or hard asset values. FFH should be fine, but I have no idea of the moatiness of the rest of your portfolio. Do you think the rest have solid moats?
Vinod
You can look up all my holdings in the Investment Idea section. NRW.AX and the japanese stocks are mainly asset plays (thats the reason that these stocks are all smaller holdings), the rest have something in place that protects the cashflows for the next years. PKX is the lowest cost steel producer (though i am not sure if the currency wars deteriorate that one).
When Buffett is doing concentrated investing he is finding deep values with a very large margin of safety:
1. Western Insurance - it earned $22 and $29 the previous two years and he is buying at something like $3 to $13 per share.
2. National American Fire Insurance - Good capital allocator at the helm, with book value of $135 and earning $29 and he is buying in the stock in the $30s.
That is margin of safety.
Or he is buying Coke and Amex with near impregnable moats.
In either case margin of safety is pretty high. That is when he concentrates his portfolio.
This kind of concentrated portfolio does not work if applied to marginal businesses. Being recession resistant is not really the key, as there are many ways to lose, it is not just to economic cycle.
Again, just a note of friendly caution to a fellow board member.
Vinod
