I wanted to share two passages that touch on a recent post, and add some heavy-hitter commentary advocating contrarian thought and concentrated investing. The first is one of Howard Marks’ favorite interview questions (or riddles), which he claims has never been answered correctly:
As an investor I believe value investing is the only kind worth any trouble, that highly concentrated portfolios provide an advantage, and that time horizon should be massively flexible with a long-term focus. Generally, however, I find that these principles are rarely mentioned in the context of investing in Internet-related businesses or other technology-focused sectors. For that reason I enjoyed a recent article in Barron’s that profiled Mario Cibelli, the founder of Marathon Partners. According to the article, Cibelli “likes companies with disruptive, usually Internet-based business models that have the potential to change industries.”
Great investors tend to be excellent at asking the right questions. In his book The Warren Buffett CEO, Robert Miles tells the story of the CEOs responsible for Berkshire’s history. The material is incredible, and much of it collected through first-hand research. Within these accounts, it is also fascinating to read how the CEOs came to meet Buffett and become part of the Berkshire family. What I wanted to share from the text is the question he posed to himself in deciding to acquire the Nebraska Furniture Mart from founder Rose Blumkin (Mrs. B):
The Wall Street Journal reported that a new craze is spreading in Japan: books featuring photographs of hamster buttocks. The article elaborates:
Two books devoted to images of hamsters’ posteriors have already sold nearly 40,000 copies combined in Japan, according to the publishers, with a third book set for release later this month. Fans of the craze have coined the term “hamuketsu,” which combines the English word “hamster” with “ketsu,” the Japanese word for buttocks.
Event-driven investors look for potential mispricings in the market before or after corporate events. One example is M&A activity. Within this strategy the most common objective is to identify companies that would be attractive as takeover targets. The reason being that a takeover bid is generally substantially greater than the current market price. So as an investor you would be interested in the forces driving M&A activity and the characteristics of a business most attractive to potential acquirers.