Concentrated Investing: Strategies of the World's Greatest Concentrated Value Investors chronicles the virtually unknownbut wildly successfulvalue 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.

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.

ALLEN C. BENELLO, CFA, is the chairman of White River Investment Partners, LLC, a private investment firm in San Francisco.

MICHAEL VAN BIEMA is the founder and managing principal of van Biema Value Partners, LLC, and coauthor ofValue Investing.

TOBIAS E. CARLISLE is a partner at Carbon Beach Asset Management, LLC, and author of the booksDeep Value and Quantitative Value and the Greenbackd.com blog.

Preface ix

Acknowledgments xiii

Introduction Concentrated Investing 1

Chapter 1 Lou Simpson: The Disciplined Investor 5
A Portrait of Concentration

Chapter 2 John Maynard Keynes: Investor Philosopher 35
The Economics of Concentration

Chapter 3 Kelly, Shannon, and Thorp: Mathematical Investors 71
Concentration Quantified

Chapter 4 Warren Buffett: The Kelly-Betting Value Investor 89
Portfolio Concentration for Value Investors

Chapter 5 Charlie Munger: Concentrations Muse 109
Quality without Compromise

Chapter 6 Kristian Siem: The Industrialist 131
The Importance of Permanent Capital to the Long-Term Investor

Chapter 7 Grinnell College: The School of Concentration 159
Concentration and Long-Term Investing for Endowment

Chapter 8 Glenn Greenberg: The Iconoclast 177
Simple, Common Sense Research, and Tennis Shoes

Chapter 9 Conclusion 203
The Concentrated Investors Temperament

About the Authors 221

Index 223