Concentrated Investing by Allen C. Benello

One way to read this book is that it is a paean to the Kelly Criterion for public securities investors.

The book also details Kristian Siem and his climb to become a shipping magnate. Early in his career, Siem saw a a big asymmetric payoff opportunity and pushed for a deal until he got it, ie. 1) think like a general and enumerate all resources when calculating Kelly, and 2) at market tipping points, some people are clawing to get out.

It would be good to see more investing books that cover the superstars of managerial accounting and investment like Siem. Maybe one day there will be a section on Bill Beament.

The Grinnell case seems to not further their argument one bit. If anything, it shows the power of large unconcentrated personal networks and a good narrative.

Common Brothers was a mess that would take Siem four years to clean up. The problem, he says, was that the two members of the founding family who ran it were not interested in the detail of shipping. Both were gentleman who were a pleasure to deal with38 but the company had no controls, and they had lost grip of the financial details.

Siems first step was to terminate the chief executive. He learned that he had been working behind the scenes to tip the company into Chapter 11 bankruptcy protection so that he could buy it out of bankruptcy with assistance from a private equity firm. Instead, Norwegian Cruise paid the chief executive $1 million to walk away.

Shortly after meeting Buffett in 1967, Rosenfield bought $5,252 worth of Berkshire Hathaway300 sharesfor the endowment, and persuaded Buffett to join Grinnells board, which he did in 1968.20 Grinnell held the Berkshire position for more than 20 years, finally selling between 1989 and 1993 for $3.7 million for reasons that neither Buffett nor Rosenfield could remember.

The endowment would make a second serendipitous investment when Robert Noyce, a Grinnell trustee and alumnus, offered Grinnell stock in his then-private start-up, NM Electronics. Noyce had almost been expelled from Grinnell for stealing a pig and roasting it at a campus luau.

The third investment that set Grinnell apart was its 1976 acquisition of a TV station, WDTN in Dayton, Ohio.

The final holding critical to Grinnells incredible performance was its investment in the Sequoia Fund. In 1977, Warren Buffett had proposed to Rosenfield that the endowment invest with a new firm called Sequoia.

Even so, Ross was incredibly demanding about understanding what he called the blood and guts of a business. Rosss analysts were welcome to find their own investment opportunities, but Ross handed out assignments based on things that he was interested in. He liked to call an analyst into his office and start peppering him with questions about a business the analyst covered. The analysts werent allowed to bring in any notes. Hed keep asking questions until the analyst couldnt answer one. When that happened, Ross would get furious. He asked good questions and insisted on an unbelievable level of detail. Ross taught Greenberg to be a very, very careful and thoughtful analyst.31 He would think about everything that Ross might want to know, and he believes it made him a better investor as a result.