I was recently reading through some old investor interviews from the excellent Graham and Doddsville newsletter from Columbia Business School, and I came across an interview with Glenn Greenberg of Brave Warrior (formerly Chieftain Capital). A couple years ago I commented on a talk that Glenn Greenberg did at Columbia, where he discussed his investment approach. My own investment approach tends to fall in line with Greenberg’s investment philosophy as well as his portfolio management approach. Despite a few misses here and there (notably Greenberg’s investment in Valeant, a company I discussed last year in this post), his overall performance has been outstanding over the past 3 decades.
But putting Greenberg’s individual investment ideas aside, I’ve always like his general approach, specifically the following two points:
- Focus on the quality businesses (he lived through the stock market crash of 1987, where the market tumbled over 20% in one day, and he wanted to ensure that if that ever happened again, he would feel comfortable with the businesses he owned)
- Position Sizing: If it’s not worth putting 5% of your portfolio in the stock, then it’s probably either too risky, outside your circle of competence, or doesn’t have enough upside