When it comes to position sizing, I think it’s best to think in terms of percentage of net worth instead of just brokerage account portfolio allocation. BAM is my second largest asset, after Berkshire, and is currently at 11 percent of my net worth.
I revisited the 2021 Investor Day Presentation. All execs basically said that the size of the business would double in 5 years. That’s an almost 15% annual rate of return. They were all extremely confident about it which leads me to believe that the actual return might turn out to be even higher.
I would like to buy more, but wondering about position sizing. Please share, as a percent of your net worth, the maximum you would allocate to BAM. More generally, an exception like Berkshire aside, what is the maximum you would allocate to an individual stock, again as a percent of net worth.
I will allow Berkshire to be 20%,BAM 10%,other positions 5% max. Sometimes I find a stock like Enphase which I opened a position a number of years ago at 6.50 per share and I will let it run to 8 or 9 percent, but then sell calls against 1/2.
BAM is my second largest asset, after Berkshire, and is currently at 11 percent of my net worth. … Please share, as a percent of your net worth, the maximum you would allocate to BAM.
Less.
Round numbers, I don’t think I’d feel good over 5%.
They are just a little too slick. Every time I think I spot something meaningful in the numbers, they change the basis of presentation and also do another big M&A transaction.
Which shell is the pea under? No, pick this card.
Maybe the pea is there. Maybe it’s the card I picked. I dunno.
I definitely can’t nail their Jello to the wall and say something is fishy. I can cite no smoking guns.
But, if something is that hard to nail to the wall, that itself is fishy enough for me not to back up the truck.
(enough bad metaphors for you?)
I’m reasonably bright and reasonably good at reading financial statements.
If I can’t quite follow what they’re saying or doing then there’s a passable chance I’m not meant to.
The numbers I think I can follow seem fine.
I’ve made a lot of money on the positions I’ve had when valuation looked attractive.
And hey, rising inflation is good for them, so it’s their time to shine.
But I have almost none at the moment.
I like Alphabet much better at the moment, among other things.
BAM might well be the best horse out there in the asset-and-asset-management space, but I’m happy switching to another mode of transport.
I just want to get where I want go to, with the greatest speed available within my requirements for a low chance of a detour or breakdown.
<< If I can’t quite follow what they’re saying or doing then there’s a passable chance I’m not meant to. >>
Jim,
I can totally appreciate your sentiment.
Does the fact that Howard Marks decided to merge Oaktree Capital with
Brookfield carry any weight? I can’t imagine that he would have agreed
to this marriage if he wasn’t 100% comfortable with the financials and
the management.
<< If I can’t quite follow what they’re saying or doing then there’s a passable chance I’m not meant to. >> … I can totally appreciate your sentiment. Does the fact that Howard Marks decided to merge Oaktree Capital with Brookfield carry any weight? I can’t imagine that he would have agreed to this marriage if he wasn’t 100% comfortable with the financials and the management.
No.
Partly because I have no particular knowledge of Mr Marks’ judgment ability in this area.
But more pertinently, I believe he got paid for that deal.
So he would not exactly have been a disinterested observer.
There are people I wouldn’t invite to dinner, but would still sell my house to.