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  • Martin Sosnoff

Apple Concentration By Buffett Eclipses Hyper-active Honchos

Sole item I trade-in daily is my jockey shorts. For me, speculation is dead for now. My old $10 ragamuffins like Dish, Teva and Rivian float dead in the water, along with polite paper like Pfizer and Disney, banks and energy plays.

Demand holds for tech houses, but consider Tesla peaked at $400, now ticks at $180, bouncing up from par past months. Exxon Mobil has shed nearly 15% from its recent high of $120. Past 4 months, Schlumberger got chopped from near $60 to mid-forties. Blame softer oil futures.

My sole luxury is low-priced airline paper like American Airlines. Everyone’s entitled, even in a bear market. If operating numbers get a little better for airlines, the stocks can bounce. I am betting on American which swings 2 to 5% per diem.

You know the old expression, “If managing money was easy, they’d have girls doing it.” Utter such sexist crap today, you’d be ridden out of town, tout d’suite . Rather, I think of the dying Eva Peron‘s last words to her constituency: “Don't cry for me, Argentina.” Fight the good fight. Carry on.

In quarterly 13f reports, I always turn first to Renaissance Technologies, now a $75 billion house with a zero static ratio. It turns over its entire portfolio, pretty much quarterly, fighting for eighths and quarters. Renaissance is run by math marvins. Two biggest positions, at 2.3% of assets are Novo Nordisk, of which I am ignorant, and Amazon at 1.2%.

Currently, the portfolio holds to a growth stock orientation, which I, too, follow.

So does Warren Buffett with his outsized play in Apple. Is it still 43% of Berkshire-Hathaway’s assets? Helluva elegant entry point as well.

Tudor Investing, a $5.2 billion house, pursues a more comfortable trading persona, but static ratio is just 4.4%. Most positions just half-a-percent. Nothing really arresting, but, I’ve begun to see more interest in pharma and energy producers like Chevron and Phillips, more in healthcare, and now GDP industrials. Non-cyclicals still the right call. No tech. Nothing that can go to the moon.

Tiger Global Management, now an $11 billion fund still adheres to its high tech portfolio. Microsoft and Meta Platforms, both 15% positions. Amazon and Alphabet at 16%. The question is do you need this fund? Why not buy the top 10 positions in NASDAQ 100? Fees would be minimal. Why is Apple at just a 1.2% position?

Third point, a $6 billion house, at least shows a comparatively high static ratio at 44%. Some 40% of assets rest in three non-cyclicals, namely, PG & E, Colgate, Palmolive, and Danaker. At 13%, combined, are Microsoft and Alphabet. I can’t find a cogent theme in this stock group, so I pass.

T Rowe Price Associates which has been around nearly forever surprised me with its low static ratio, just 7%. On a $667 billion asset base. They have always been a growth stock player. Consider, 5 stocks make up over 20% of assets, namely, Microsoft, Apple, Amazon, Nvidia and UnitedHealth. No cyclicals, lots of tech. Why not just buy into NASDAQ 100 and call it a day? There’s a consistency to T Rowe Price that never waivers. This is the type of fund you buy for the next 20 years but the fees do add up.

Soros Fund Management is a horse of a different color. It’s growth oriented too, but digs into smaller capitalizations like Rivian Automotive, the electric car maker still fighting its way to breakeven. Call Rivian a 100% risk situation, now settled down in the low teens. It’s a luxury George can afford, but I pass on it. This Portfolio is broadly diversified with 1% holdings, but leaves me cold. Amazon and Alphabet comprise 4% of assets. Static ratio is a low 18%.

Pershing Square, a $10 billion house, sports a low turnover ratio. Eight positions account for all the assets with Lowe’s nearly 20%. But, is now the right time to overweight such a construction materials house? Home building and commercial construction are sloughing off. Commercial construction, particularly for office buildings, is suffering from a worrisome high vacancy ratio that will get worse next year or two.

The food service portfolio here has to carry them along with Alphabet. I’d delay new commitments, but I’ve great respect for management's long-term achievements. Portfolio compression is as relentless as I’ve seen and mainly on the money, cycle to cycle.

I want to like trillion dollar portfolios with low turnover ratios like Paulson & Company. This is a most concentrated portfolio mix. Serious compression with half a dozen stocks comprising 65% of assets. But, I know next to nothing about top positions like Bausch Health, Brightsphere, NovaGold, and Perpetua Resource, a gold play. I’m allergic to gold which is not to say it can’t work out. The high static ratio of 80% suggests they are tried and true gold bugs. Not my cup of tea.

Millennium Management, an $85 billion house exhibits a familiar construct of a low static ratio, 8%. It’s totally diversified, nothing over 1% in the list. The theme is by now familiar. Mainly tech houses starting with Amazon and Meta Platforms. Some 1-off positions like Lenke and AT&T which leaves me cold.

What is my takeaway from all such portfolio activism? Stay away from big diversified portfolio constructs. Consider specialty managers in gold, healthcare, and technology. But, if they’re just duplicating the list’s position weighting, you’re better off in an appropriate index fund, particularly when it comes to technology plays. Beware of high fee contant and especially high portfolio turnover, which never seems to work out a sign of weakness and shabby research capacity.

More ‘n’ more, I admire Buffett’s approach; Rape a couple of stocks, keep a few financials, and some energy plays. Stay engaged for the unfolding of a full economic cycle. Don’t trade. Finally, remember nobody promised you a rose garden.

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