I have some follow up question and comments:

Smartcat, First of all, the comments are not a critique on your endeavor but just to learn from this fascinating experiment. As an investor, we are all evolving & have to learn from mistakes and success (of others and our own) – so the discussion is in that spirit – to learn from what’s working and why.

My questions relate to:

Compromise in terms of absolute returns

Size of portfolio- why not get the same with less?

Compromise going into depth on each company because of size of the portfolio.

And

Capturing the absolute winners.   

Q. Are you going to compromise on absolute returns (think your goal was 25%+) for the benefit of dividends and broad diversification?

Comment: More the number of stocks - more you are playing a certain characteristic of the underlying portfolio e.g. value oriented (low p/e) with dividend yield of x% with ROE of Z% - so as a group of companies you have the characteristics playing out over time.

So from what you have answered the small percentage in each company seems to suggest a play on:

- Diversification (to manage company specific –ve events)

- Detachment (ability to sell)

- Active trading (when the company moves up so much -sell this much or in its entirety)

- Dividend yield (collect while waiting for capital appreciation)

Most fund managers suggest 15-20 companies as optimal – benefit of diversification, potential to dig deeper & follow the company, – though Peter Lynch if I remember from his book even had 1500 companies in his mutual fund. Anthony Bolton (another star Fidelity Fund manager in his book(Investing against the tide) also talks about having loads of companies in his fund).

Having said that, even Peter Lynch and Anthony Bolton suggest a smaller number of holdings for individual investors.

Q. Why so many companies – why not 30 or 50 or on the other extreme 150?

Also, don’t forget these guys were working with lots more money to deploy, so it was necessary to throw a larger net and had teams to support their endeavors.

Q. Now the question is can you get the same result (exposure/benefit/characteristics) with a smaller number of companies?

 So as a thought process: If you have 20 companies you need more conviction on each of your companies business model, management thinking, financials - but also have more insight and hopefully also the ability to capture the returns (compounding operational growth).

As you know each of the number has a story. ROE is improving because of low capital intensity. Margins are improving because of low input costs. To know, the sustainability of this story requires more depth of effort for each company.

Q. Are you willing to forgo this depth for a more generic capture of managing by numbers?

The other thought was:

As you know the phenomenal returns (multi fold returns) for individual investors can come from investing early in a well found outstanding company & then holding on with grit. Those companies are rare animals. (Where all the stars, moons & planets align J ) – For individual investors this can be life changing!

Q. With this method- will you able to find, buy, hold and optimally benefit if you find such a company? e.g. if you had Adani enterprises for last 10 years – you would be sitting on a unbelievable multiple of your invested capital.