Berkowitz on Ignoring the Crowd

In a wide-ranging three-part interview with Morningstar’s Don Phillips, top value investor Bruce Berkowitz discusses several aspects of his investment approach, including the willingness to go against the crowd and the decision to run a focused portfolio smaller than those of many other mutual funds. “At the end of the day, investing is about one person has to take the responsibility of pulling the trigger, and group-think always dummies down to the lowest common denominator, and so, you ignore the crowd,” Berkowitz says. “It’s still painful, but it’s worked.” As for portfolio size, he adds, “Given the nature of companies and the complexity of companies today, I really don’t know how you can get your hands around dozens and dozens of companies. So, we tend to focus, so we can spend thousands and thousands of hours on individual companies. But as you find more companies, I really don’t understand the concept of picking your 50th best company, when you can buy more of your first- or second-best company. Once you get past about 30 companies, you’re pretty much nearing an index anyway. So what’s the point?” Berkowitz also talks about some of his major holdings, his take on investing in China, and the macroeconomic climate.