Modern financial theory says that diversification will reduce risk, but how well can you understand a business if it’s one of hundreds in your portfolio? “A lot of people with more diversified portfolios, own a lot of things but know very little about them. We prefer to invest in a small selection of high quality businesses and know a lot about them.” One such example is a Chinese company with a dominant market position, huge barriers to entry, and consistent high returns on capital.
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Adrian is the Managing Director and Chief Investment Officer of Avenir Capital and is responsible for the portfolio management of the Avenir Global Fund. He holds a Master of Business Administration (MBA) from Harvard Business School.
Exceptional investment philosophy, similar to Buffet in his early days
Sorry Adrian, but I bet you practice diversification in your portfolios too. Might not own 20/30 companies but I bet you don't own one company. That's diversification.
Well yes, your thinking is sound in that you follow the value philosophy mantra, but what about the sovereign risk of investing in China; I know everyone does it and will do, until there is a problem like a one party state or some of its functionaries 'acquiring' or 'demanding' a share of the proceeds or action. Is there the rule of law that we expect in the west? So how secure is your investment?