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Wadhwaney on Running a Concentrated Portfolio

Third Avenue International Value manager Amit Wadhwaney comments on how the firm's focus on downside protection and security selection affect performance.

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Hughes: One of the other things you and I have talked about before is how in a 30- or 40-stock portfolio, at any given time a third of the portfolio is working, the rest of it is not working as well. Can you comment on the fund's performance in that regard?

Wadhwaney: Sure. There is a couple of things. I think, Bridget, you got it quite correct. I mean, if the portfolio is 100 to 150 stocks, which were much more broadly diversified across countries and geographies, the performance would much more mimic – potentially could mimic index performance. However, you reduce the number of stocks, you also – because of the kinds of stocks that you have, you have many countries where you have minimal to no representation. The by-product of that is the performance will vary enormously vis-à-vis any index that one chooses.

Bridget B. Hughes does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.