High conviction value investing in practice
Legendary investor Peter Lynch coined the term ‘Diworsification’ - making your risk-return profile worse through diversification - and famously ran a concentrated portfolio with some the best performance in history. While this approach usually comes with more volatility, it also has some significant advantages.
Collins St Value Fund follows a similar strategy, with just 10-15 positions at any time. The fund’s MD, Michael Goldberg, told us that fewer stocks mean more time to derive an information edge through deep research. He illustrated this with an anecdote about getting away from the desk for a few days to test a contrarian stock thesis which proved correct (and profitable). Watch below to see what high conviction value investing looks like in practice.