Given that we're often buying into the teeth of a storm, it's rare that we feel we have to establish a full position right away. While some stocks may run away from us, we believe we've been hurt less by that than we've benefitted from averaging down as ideas in which we have high conviction [...]
Our view is that too much diversification in many cases reflects the fact that the portfolio manager isn't doing the work to fully understand the businesses. If you do the work and find a great business run by great managers at a great price, that ought to express itself in the size of the holding [...]
We focus on absolute value, trying to resist reaching for relative-value justifications just because we have the cash. Relying on relative valuation is how you end up paying silly prices for houses, Internet stocks, and anything else in life.
We think management's reinvestment acumen is something Wall Street doesn't adequately value. Most analysts are capable of developing linear earnings models, multiples, and price targets, but they're very likely to miss the extent to which smart capital allocation can compound value over a 5- or 10-year period.