Concentrated Portfolios

A new Bloomberg article takes a look at First Pacific Advisors’ Bob Rodriguez, the fund manager whose 15% average annual return over the past 25 years ranks #1 among diversified U.S. equity funds (according to Morningstar).  His portfolio had about 40% of its assets in energy stocks at the end of September, reflecting his belief in a concentrated approach. Rodriguez says that in college, he heard the great Charles Munger espouse such a belief: “He called diversification the hobgoblin of small minds with little confidence,” Rodriguez said.

Guess I shouldn’t feel too bad about the high concentration of energy stocks in my portfolio.

Noble Energy (NBL): Noble led the team which has found two huge natural-gas fields in Israel’s Mediterranean waters, enough resources to meet Israel’s energy needs for 20 years.

Carnival Cruise Lines (CCL):  Carnival is the Better Buy in a head-to-head comparision against Royal Caribbean over at the Motley Fool.

Stryker Corporation (SYK):  The Board announced a $750 Million share repurchase program.  Says CEO Stephen MacMillan, “We continue to be pleased with our strong financial position.  The actions of our Board of Directors today again demonstrate that we have the strength to continue to pursue investments in our business while returning significant capital to our shareholders through share repurchases and dividends.”

Forest Labs (FRX): Our holding Forest Labs is given as an example of a Free Cash Flow standout.

Berry Petroleum (BRY): In the “For what it’s worth” category, Jim Cramer gives a nod to Berry Petroleum.

Magellan Petroleum (MPET): MPET is up about 25% in the last week.  Very volatile small stock, finally going our way.