Here’s a great interview with Beeneet Kothari on Real Vision with Chris Alexander. During the interview Kothari discusses the two biggest lessons he learned from investing legend Stanley Druckenmiller, when he was portfolio manager at Duquesne Capital. Here’s an excerpt from the interview:
CHRIS ALEXANDER: What’s your average holding period?
BEENEET KOTHARI: It tends to be measured in years, about three years. As an example, during the month of March, we had hardly any trades and I believe March in 2020 was one of the most volatile months in 25 or maybe 50 years. Duquesne was very different. This isn’t a good or bad thing because that track record is nothing but the best… but it was very different.
Yet, the way we have structured Tekne and the way we invest comes out of what I thought was the single most important lesson from Stan. That lesson was you make 80% of your returns in a given year from a handful of things. What are you doing with everything else? Pick a few things and bet big and that’s exactly what we decided to do. There is no merit in your 16th best idea.
CHRIS ALEXANDER: It’s like Occam’s razor philosophy to investing almost.
BEENEET KOTHARI: The second big thing I learned from him was focus on the big things and if you get the big things right, the little things won’t really matter. We’ve talked about this a lot, I think about this a lot.
You’re often wondering, am I sized correctly in this position? Should it be an 8% position or a 9% or 10% position? To me, those have become the small things, the little things. The big thing is, should I be in this position or not? Should I own this company? Should I be short this stock? That’s the big thing, you get that right, everything else will matter a whole lot less.
When a stock goes against you, you can’t be small enough. 8%, 10%, 12%. All of those are the wrong answers. When a stock works, you can’t be big enough. Those two big ideas, which is focused on a few things, and get the big thing right, the big picture, that the yes or no question right, over the long term, everything else will become much less important.
You can watch the entire interview here:
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