Individualized Concentrated Value Portfolio

First, individualized means that all my clients’ accounts are kept separate with their investments. You may think that your broker does the same thing by keeping your portfolio separate, but what I am talking about is the actual investments.

When you hold investments in mutual funds or ETFs with your broker, your money is combined with other investors and your performance can be hurt by the other investors adding or deleting from their accounts. When my firm invests in, say, ABC company, each client actually holds the shares of ABC company.

For example, when we buy $10 million of ABC company, each one of my clients that meet certain investment criteria will receive a certain number of shares based on a 6 percent value of their account.

In other words, my clients actually own small pieces of the companies that we buy as opposed to shares in a mutual fund. My team and I have devised a comprehensive system so that each client’s account is invested very close to my own personal account.

I also make a concentrated portfolio for my clients. The portfolio is considered concentrated because I will not invest in more than 15 to 18 different companies.

This may seem risky to the average investor, but there is actually a financial formula that states 15 companies give the investor the best return with the least amount of risk. If you would like this formula, please contact my firm and we will send it to you.

It is also important to make sure that these 15 companies are invested in different industries, such as energy, technology, pharmaceutical and banking, just to name a few. And my firm watches the concentration of any one company to make sure it does not become excessive or over-concentrated.

The last part of our strategy is the value of what we buy. If you have read my columns and newsletters or listened to me on the radio or TV, you would know some of the fundamentals we look at to make sure we are getting value for our investments.

Very briefly, we look at the valuation ratios, such as what we pay for the earnings, sales, book value and cash flow of the company. If the company pays a dividend, you want to understand the earnings the company uses to pay that dividend and how much is left over to continue to run and grow the business.

Do you have a question or a company you would like us to take a look at?
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