What level of confidence do you need if you have to invest $4 billion dollars in just 6 stocks? Also among these 6 stocks the number one position is 40% of the total portfolio? This is exactly what Guru Glenn Greenberg is doing. It is also a key factor why he could achieve more than 22% a year since 1984.
You may not know Glenn Greenberg, it is not surprising because he does not entertain investment ideas from Wall Street analysts; he does not do marketing, and he does not even speak to his clients. He only communicates with them with two written updates per year.
The most important rule for Mr. Greenberg is that if they lacked the confidence to put five percent of their portfolio in a company's stock, they would not buy any. Therefore he has a very concentrated portfolio. Due to this excess concentration Chieftain typically has less than ten securities in their portfolio. The most number of securities Chieftain has held is twelve and the least, six, while maintaining a 30% cash position.
How does he invest? He said that a person should have an approach that over the long-term will win and will not fail. Investors should not use an approach which can provide both huge returns and huge losses. An investor must figure out an approach that will allow them to be a long-term winner because this is a long-term business. Investors need to win successively because they will be taking profits and reinvesting them continuously over their lifetime.
What does he look in a company? He likes business that is predictable, it has no or few competitors, and it has high profit margins and returns on invested capital. He tries to find two or three investment ideas each year that fit its vision of a good business and then it does enough research to feel comfortable putting 8-20% of its portfolio in each idea.
These are the review of his holdings as of Dec. 31, 2007 .
No. 1. Comcast Corp CL A Spl (CMCSK, Financial) 30.86%
Comcast, the largest cable operator, is the number one holding of Chieftain. It reprents more than 30.8% of the total equity holdings. Glenn Greenberg started to own Camcast since 2002, when the prices were at low teens. Today Comcast Corp. has a market cap of $57.7 billion, it was traded at around $20.1 with P/E ratio of 22 and dividend yield of 1.38%.
In the quarter ended 12/31/2007 , Glenn Greenberg owns about 56 million shares of Comcast K shares and 58 thousand A shares. The K shares do not have voting rights.
Comcast shares have not done very well in 2007. a few months ago, Greenberg wrote to Comcast CEO Brian Roberts: "I know you are a competitive guy, as am I: I once had a number four U.S. squash ranking, so I know that you care about winning and are willing to push yourself hard to be a winner," he wrote in the letter, which went on to lay out a series of complaints about the cable company's performance. "You think you are hitting beautiful strokes, but you are losing the game."
Comcast shares have recovered from its lows recently. It is widely owned among our Gurus, including Warren Buffett.
No. 2. UnitedHealth Group Inc (UNH, Financial) 24.64%
Unitedhealth Group Inc, the health insurer, is the second largest holding of Chieftain. It entered Chieftain’s portfolio in the second quarter of 2004. Over the past 3 years Glenn Greenberg added and reduced numbers of shares as the stick prices change. During the Q4 2007 Glenn Greenberg reduced the number of shares by about 18%. Unitedhealth Group Inc. has a market cap of $44.2 billion, it was traded at around $36 with P/E ratio of 10.
Unitedhealth Group Inc is also owned by 10 other Gurus including Warren Buffett. It is a small position in the portfolio of Berkshire Hathaway, with a weighting of only 0.09%. Other Gurus who own Unitedhealth Group Inc. include Bill Miller, Edward Owens etc.
UNH share prices dropped sharply in March since its competitors warned the weakness of earnings in healthcare insurance industry. UNH is traded at 3-year lows.
No. 3. Laboratory Corporation of America Holdings (LH, Financial) 17.8%
Laboratory Corporation of America Holdings, together with its subsidiaries, operates as an independent clinical laboratory company in the United States . It has a market cap of $9.32 billion, it was traded at around $79.22 with P/E ratio of 22.92 and P/S ratio of 2.51.
Laboratory Corporation of America Holdings entered Chieftain’s portfolio in the third quarter of 2002, when the stock price collapsed from $50 to $20 during the market downturn. Glenn Greenberg bought into the company. The price has since quadrupled.
During the past 5 years Glenn Greenberg adjusted the number of shares he held, although it has always been a large position of his. Glenn Greenberg owns 7.8 million shares as of 12/31/2007 , an increase of 2.9% of from the previous quarter. This position accounts for 17.8% of the $3.77 billion portfolio of Chieftain.
No. 4. Ryanair Holdings PLC (RYAAY, Financial) 14.43%
Ryanair Holdings operates a scheduled passenger airline serving short-haul, point-to-point routes between Ireland , the United Kingdom , and Continental Europe. Ryanair Holdings plc has a market cap of $8.1 billion, it was traded at around $38.28 with P/E ratio of 20.31 and P/S ratio of 3.94.
Glenn Greenberg started to buy Ryanair Holdings PLC during the four quarter of 2006, and kept this confidential until the second quarter of 2007. Glenn Greenberg owns 12 million shares as of 12/31/2007 , an increase of 11% of from the previous quarter.
Since March the stock prices sank by more than 30%. If you buy Ryanair Holdings now, you are getting a lower price than Glenn Greenberg has paid.
No. 5. Crosstex Energy, Inc. (XTXI, Financial) 9.2%
Crosstex Energy, Inc., together with its subsidiaries, engages in gathering, transmission, treating, processing, and marketing natural gas and natural gas liquids (NGLs) in the United States . Crosstex Energy Inc. has a market cap of $1.33 billion, it was traded at around $28.99 with P/E ratio of 348.19 and P/S ratio of 0.42.
Glenn Greenberg started to buy Crosstex Energy, Inc in 2006, it owns more than 17% of the company and is its largest institutional shareholder.
Glenn Greenberg also owns other smaller positions such as America Movil (AMX). He sold out a long time holding and Nike Inc. (NKE),
What We Have Learned by Studying His Portfolio?
Glenn Greenberg concentrates his bets on the companies he understands the best. Once he bought into a company, he is there for long haul. He may trade in and out the company over the course as the price change, but he does not mind to buy shares back if he has been reducing and the price decreased. It is not surprising because these are the companies he understands, if prices decreased to below its intrinsic value, why not buy some back?
You may not know Glenn Greenberg, it is not surprising because he does not entertain investment ideas from Wall Street analysts; he does not do marketing, and he does not even speak to his clients. He only communicates with them with two written updates per year.
The most important rule for Mr. Greenberg is that if they lacked the confidence to put five percent of their portfolio in a company's stock, they would not buy any. Therefore he has a very concentrated portfolio. Due to this excess concentration Chieftain typically has less than ten securities in their portfolio. The most number of securities Chieftain has held is twelve and the least, six, while maintaining a 30% cash position.
How does he invest? He said that a person should have an approach that over the long-term will win and will not fail. Investors should not use an approach which can provide both huge returns and huge losses. An investor must figure out an approach that will allow them to be a long-term winner because this is a long-term business. Investors need to win successively because they will be taking profits and reinvesting them continuously over their lifetime.
What does he look in a company? He likes business that is predictable, it has no or few competitors, and it has high profit margins and returns on invested capital. He tries to find two or three investment ideas each year that fit its vision of a good business and then it does enough research to feel comfortable putting 8-20% of its portfolio in each idea.
These are the review of his holdings as of Dec. 31, 2007 .
No. 1. Comcast Corp CL A Spl (CMCSK, Financial) 30.86%
Comcast, the largest cable operator, is the number one holding of Chieftain. It reprents more than 30.8% of the total equity holdings. Glenn Greenberg started to own Camcast since 2002, when the prices were at low teens. Today Comcast Corp. has a market cap of $57.7 billion, it was traded at around $20.1 with P/E ratio of 22 and dividend yield of 1.38%.
In the quarter ended 12/31/2007 , Glenn Greenberg owns about 56 million shares of Comcast K shares and 58 thousand A shares. The K shares do not have voting rights.
Comcast shares have not done very well in 2007. a few months ago, Greenberg wrote to Comcast CEO Brian Roberts: "I know you are a competitive guy, as am I: I once had a number four U.S. squash ranking, so I know that you care about winning and are willing to push yourself hard to be a winner," he wrote in the letter, which went on to lay out a series of complaints about the cable company's performance. "You think you are hitting beautiful strokes, but you are losing the game."
Comcast shares have recovered from its lows recently. It is widely owned among our Gurus, including Warren Buffett.
No. 2. UnitedHealth Group Inc (UNH, Financial) 24.64%
Unitedhealth Group Inc, the health insurer, is the second largest holding of Chieftain. It entered Chieftain’s portfolio in the second quarter of 2004. Over the past 3 years Glenn Greenberg added and reduced numbers of shares as the stick prices change. During the Q4 2007 Glenn Greenberg reduced the number of shares by about 18%. Unitedhealth Group Inc. has a market cap of $44.2 billion, it was traded at around $36 with P/E ratio of 10.
Unitedhealth Group Inc is also owned by 10 other Gurus including Warren Buffett. It is a small position in the portfolio of Berkshire Hathaway, with a weighting of only 0.09%. Other Gurus who own Unitedhealth Group Inc. include Bill Miller, Edward Owens etc.
UNH share prices dropped sharply in March since its competitors warned the weakness of earnings in healthcare insurance industry. UNH is traded at 3-year lows.
No. 3. Laboratory Corporation of America Holdings (LH, Financial) 17.8%
Laboratory Corporation of America Holdings, together with its subsidiaries, operates as an independent clinical laboratory company in the United States . It has a market cap of $9.32 billion, it was traded at around $79.22 with P/E ratio of 22.92 and P/S ratio of 2.51.
Laboratory Corporation of America Holdings entered Chieftain’s portfolio in the third quarter of 2002, when the stock price collapsed from $50 to $20 during the market downturn. Glenn Greenberg bought into the company. The price has since quadrupled.
During the past 5 years Glenn Greenberg adjusted the number of shares he held, although it has always been a large position of his. Glenn Greenberg owns 7.8 million shares as of 12/31/2007 , an increase of 2.9% of from the previous quarter. This position accounts for 17.8% of the $3.77 billion portfolio of Chieftain.
No. 4. Ryanair Holdings PLC (RYAAY, Financial) 14.43%
Ryanair Holdings operates a scheduled passenger airline serving short-haul, point-to-point routes between Ireland , the United Kingdom , and Continental Europe. Ryanair Holdings plc has a market cap of $8.1 billion, it was traded at around $38.28 with P/E ratio of 20.31 and P/S ratio of 3.94.
Glenn Greenberg started to buy Ryanair Holdings PLC during the four quarter of 2006, and kept this confidential until the second quarter of 2007. Glenn Greenberg owns 12 million shares as of 12/31/2007 , an increase of 11% of from the previous quarter.
Since March the stock prices sank by more than 30%. If you buy Ryanair Holdings now, you are getting a lower price than Glenn Greenberg has paid.
No. 5. Crosstex Energy, Inc. (XTXI, Financial) 9.2%
Crosstex Energy, Inc., together with its subsidiaries, engages in gathering, transmission, treating, processing, and marketing natural gas and natural gas liquids (NGLs) in the United States . Crosstex Energy Inc. has a market cap of $1.33 billion, it was traded at around $28.99 with P/E ratio of 348.19 and P/S ratio of 0.42.
Glenn Greenberg started to buy Crosstex Energy, Inc in 2006, it owns more than 17% of the company and is its largest institutional shareholder.
Glenn Greenberg also owns other smaller positions such as America Movil (AMX). He sold out a long time holding and Nike Inc. (NKE),
What We Have Learned by Studying His Portfolio?
Glenn Greenberg concentrates his bets on the companies he understands the best. Once he bought into a company, he is there for long haul. He may trade in and out the company over the course as the price change, but he does not mind to buy shares back if he has been reducing and the price decreased. It is not surprising because these are the companies he understands, if prices decreased to below its intrinsic value, why not buy some back?
