Some allocation questions for you. You had/have a 10% rule. You don’t put more than 10% in a single stock. I’ve noticed that over the past 13 months that you have been increasing the concentration of your positions in your portfolio. I think you now have 3-4 companies over 10% each. So my questions are the following:
Is going over 10% more common for you now than it was during the period between 1992 and 2013? I guess I’m asking did you previously adhere to this rule more strictly? If yes, why?
I own your top 4 companies (BOFI, SWKS, CELG, SKX) also so I’m very familiar with them and they are discussed here frequently.
2a) I believe that of these 4 companies SWKS and SKX offer the best 2-3 year risk adjusted return potential. The earnings growth, P/E, and 1-3 year outlook for growth in these companies products, and the outlook of management on the latest conference calls are just so incredible so I can see why someone would put a high allocation in them. However, the stock prices have gone up a bunch since Jan 1 and you had 14% and 10% in them then so your allocations are probably higher than that now. Are you planning on trimming? If not, why not? And as you look back over the years, do you think a younger Saul (between 1992 and 2013) would have been more likely to trim than now?
2b) CELG is a great company but the valuation is not cheap. Why do you think a 14% allocation is reasonable?
2c) Of your largest holdings, I think BOFI is the riskiest because it’s loans are concentrated in one region. Yet this one is your biggest holding. I wondering why you’ve allowed this one to go 4% over your 10% limit.