Investment Categories and Update on Holdings
Investor letter to Saber clients from last fall that outlines three types of investments in our portfolio, along with some updated comments on the stocks mentioned
The following is an excerpt from a Saber client note that describes our portfolio strategy along with a summary of a few of our investments. I thought it might help readers better understand how I think about various categories of investments that might be discussed here (some of the examples mentioned below have been previously written up here).
Over the past few years, in part due to market conditions, Saber’s portfolio has been invested in companies outside of the largest pockets of the market (discussed here). A dozen years ago, we had the opposite condition. Quality large-cap businesses such as Apple, Moody’s and Walmart traded at 10-15 P/E (vs 30-40 today). Even “expensive” stocks like Costco had a reasonable 25 P/E (vs 60 today!)
So, the opportunity set has changed. I’ve noticed that great investors have many differences but there are a few things in common: they think independently, they apply common sense and they’re opportunistic. They “fish where the fish are”.
We should always make our best attempt to go where the best value is, regardless of size. I don’t think it makes common sense to restrict yourself to a style box (“I only buy great businesses”, “I only buy small caps”, etc…)
There are lots of opportunities in the stock market because so much capital gets allocated in a way that prioritizes rules and style boxes over common sense and value. This practice creates constraints for those who invest this way and opportunities for those who are free from these constraints.
This post is about some of these opportunities as well as an overview of our current portfolio structure.
I’m working on writing up a few new ideas that fall into the third category outlined below. More on those companies in upcoming writeups…
Here is the excerpt from the investor letter to Saber clients back in October (I added some current comments under 2/23/25 Updated Thoughts in bold after each stock mentioned):
I now think of our portfolio in three general categories: