In his recent interview with the Graham & Doddsville Newsletter, Chris Bloomstran explains why investors should not screw around with a 1% position if they know the business and its valuation. Here’s an excerpt from the interview:
Bloomstran: I got 1% of our capital in each and didn’t expect that the oil price was going to recover quickly. We wound up tripling our money on each of those positions, but I did it with only 2% of our money, which barely moves the needle.
We’re a lot better now about getting more money in early. You know the business. You know the valuation. When the two mesh and it’s the best idea in front of you, don’t screw around with 1%. There’s no rule, but I like to at least get at least 2% in general with a new idea.
We’re happy investing up to 3% or 4% very quickly, oftentimes in the first week of trading, because now I’ve spent 30 plus years doing this. And we’ve got a pretty good sense about the investment universe.
There are a few hundred companies that we follow pretty closely. We’re obviously going to follow any of the competitors of the businesses that we own. I’ve got a wish list of companies that we’d always like to buy at certain prices.
Oftentimes what happens is you get a March 2020 or you get a 2008-2009 when everything gets cheap. There you’ve got to figure out if you really want to bring in a wish list company or are you good with what you’ve got. And more often than not, you’re good with what you’ve got because you’ve done all the work on the portfolio names and especially the ones you want to own forever.
You can read the entire interview here:
Chris Bloomstran – Graham & Doddsville Newsletter (Fall 2022)
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