Todd & Ted, Concentrated Portfolios and Some Links

I recently tweeted out some of my favorite 13F’s and figured I would make a more expansive post for future reference. I personally like looking over select 13F’s, especially if there are a significant amount of new buys. Some people dismiss it as useless, but I think if you follow great investors that have concentrated portfolios with relatively long term holdings then it can be extremely useful for idea generation. I mean really with and it hardly takes anytime to notate new buys, adds, sells of gurus you’re interested in. At worst it’s simply entertaining to see what they’re are up to.

My personal favorites:

Arlington Value Capital (Allan Mecham)
Akre Capital Management (Chuck Akre)
SQ Advisors (Lou Simpson)
Berkshire Hathaway (WEB, Todd and Ted)
Markel Corp (Tom Gayner)

The first three are extremely concentrated and tend to favor great businesses (compounders). They all have had great long term success; although Mecham is relatively new/young he has done very well. I think Mecham and Akre have some great under followed ideas that are interesting for deeper dives.

Lou Simpson is great. As most of us know he was in charge of GEICO’s portfolio for decades under Buffett until he retired. Lot’s of high quality companies. His 10th position is ~5% of the portfolio! Love it. Lots of interesting names… from Liberty Global and VRX to UPS and Wells Fargo.

I’m biased on Berkshire and Markel. I own significant amounts of both, so selfishly I want to see what these guys are buying. Gayner has a great track record of beating the market, but honestly I don’t find many ideas from his 13F (although, maybe I should). He has quite a few holdings that are very small percentages of the portfolio. He calls these his “minor league team”, which i thought was interesting. Basically he’ll buy a business he’s interested in but doesn’t quite understand (like Amazon) and own it for awhile forcing him to pay closer attention. After awhile he’ll either bump them up to the majors or just get rid of the stock if he still doesn’t understand it.

With Berkshire I’m more interested in Todd and Ted’s picks. Buffett’s are so large and rarely change (although when they do change it’s fun to speculate/debate his reasoning, ie. IBM).

After looking at the Berkshire 13F I wanted to see what the portfolio allocations looked like without Buffett’s giant holdings lumped in. So as you can see below I did just that. It’s both Todd and Ted’s picks together. I took out Buffett’s Big 4 (WFC, AXP, IBM, KO), also PG, USB, WMT, GS, MCO, DE, MTB, USG, COST and QSR. There might be others I’m missing or maybe one of these isn’t actually his picks but it should give us a fairly accurate picture.

Screen Shot 2015-12-15 at 8.42.16 PM

Anyway, combined they have ~50% of the portfolio in the top 5 holdings and ~68% in the top 10 with a total of 34 holdings. The DTV/AT&T deal is going through and the recent PCP acquisition will free up quite a bit of cash for the T’s to allocate (I think DTV was a joint pick; PCP a Combs pick). One of the T’s made a new buy in Axalta Coating Systems (AXTA), which I’m not familiar with. Notable due to it being 3% of their portfolio off the bat. I’d be very interested to hear their thoughts on multiple media companies they own, especially the various Malone entities.

Ok enough Berkshire. There are a few newer 13F’s I’ve been following (new to me) that I like quite a bit:

Bares Capital Management (Brian Bares)
Abrams Capital (David Abrams)
Giverny Capital (Francois Rochon)
AltaRock Partners (Mark Massey)

These guys are EXTREMELY concentrated (anywhere from 7 to 25 holdings).
Bares specializes in Small-cap compounders so I really like to keep a close eye on his holdings for ideas possibly in the early innings. Currently Colfax (CFX) is his largest holding at 19.75% of the portfolio. Ouch.

Brian Bares Interview MOI
Interview MOI (video)
Abrams is a former Baupost guy. Very concentrated. Has a good mixture of ugly/cheap/hated and great businesses. One thing to keep in mind is like Klarman the equity portfolio is only a portion of the whole fund. Abrams owns some private held companies and debt investments from what I remember.

Screen Shot 2015-12-15 at 8.46.43 PM

In Boston, Secretive Hedge-Fund Billionaire Stays in Shadows
Hedge Fund World’s One Man Wealth Machine

AltaRock owns 7 stocks:

Screen Shot 2015-12-15 at 8.46.56 PM

Hedge Fund AltaRock’s Investing Principles

Giverny is run by Francois Rochon. Fully invested at all times, 25 positions and focuses on great businesses.

Top 10 Picks:

Screen Shot 2015-12-15 at 8.49.26 PM.png

Rochon Interview
Rochon Gurufocus Interview

Honorable Mentions:

Pershing Square (Ackman)
Weitz Investment Mgmt (Wally Weitz)
Pabrai Funds/Dalal Street (Mohnish Pabrai)
Aquamarine Capital Mgmt (Guy Spier)
Wedgewood Partners (David Rolfe)
Smead Capital Mgmt (Bill Smead)
Yacktman Asset Mgmt (Don Yachtman)
ValueAct (Jeff Ubben)
MFP Investors (Michael Price)
FPA Crescent (Steven Romick)
FPA Capital (Bob Rodriguez)
Oakmark (Bill Nygren)
Tweedy Browne
Third Avenue (Marty Whitman)

A couple more interesting extremely concentrated funds: (h/t to @bluegrasscap who brought these to my attention and btw is probably my favorite follow on Finance Twitter)
Tesuji Partners
Lavasseur Capital Partners

And finally the most useless 13F for me:
Baupost (Seth Klarman)

I have no clue… Half are Bio names I won’t even try to figure out. He changes positions frequently sometimes, so I can’t gauge his timeframe/convictions. Plus the equity portfolio is just a part of his whole portfolio. Too hard pile. Probably the reason he’s one of the best.

Feel free to suggest any other good funds in the comment section (especially concentrated, long term value funds).


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