"Concentrate your energies, your thoughts and your capital. The wise man puts all his eggs in one basket and watches the basket." – Andrew Carnegie
One of the coolest features in AlphaClone is the ability to view dynamic groups. One such group we call "Concentrated Funds". Concentrated Funds are managers who have a large overall portfolio value but spread across a small number of equity holdings. Translation – they have high conviction in their picks.
This group combines the 25 funds with highest total market values but who have less than 50 total equity positions in their most recent filing. The list of managers can change quarterly, but there isn’t that much turnover Q/Q. Notice that the strategy makes no distinction regarding the style of the manager, or to their value added (destroying) abilities.
Taking the top 3 holdings from each fund, equal weighted and rebalanced quarterly, outperforms the market by 11% a year since ’00.
Taking the 10 most popular stocks from these funds, equal weighted and rebalanced quarterly, outperforms the market by over 15% a year since ’00. These 10 holdings are beating the market in 2009 by 20%. Yes, 20%.
You can view the current holdings here. When you type them into the Morningstar X-Ray it spits out on aggregate that they have valuations in line with the S&P 500 but growth rates 2X the S&P. On average the stocks are 43% from their 52-week highs vs. 58% for the average stock in the S&P 500.
Below are the current funds. Out of curiosity I took a look at the funds back in Q4 2001, and only the funds in bold were on both lists:
Blum Capital Partners
Chieftan Capital Management
Eton Park Capital Management
Fairholme Capital Management
Glenview Capital Management
Highside Capital Management
Lone Pine Capital
Longview Asset Management
Paulson & Co.
Pershing Square Capital Management
Sands Capital Management
Southeastern Asset Management
TPG-Axon Capital Management