Anthony Bolton is the former Fund Manager of the Fidelity Special Situations Fund.
He managed to achieve an average return of 22% over a 28-year period.
At this rate, $10,000 would’ve turned into $3,7 million.
Here’s his Investment Philosophy👇
He managed to achieve an average return of 22% over a 28-year period.
At this rate, $10,000 would’ve turned into $3,7 million.
Here’s his Investment Philosophy👇
1. The Basic Test
At the start of every analysis, Bolton asks two questions:
Will this business be around in 10 years?
And
Will this business generate cash anytime soon?
Surprisingly, most businesses will already fail this test.
At the start of every analysis, Bolton asks two questions:
Will this business be around in 10 years?
And
Will this business generate cash anytime soon?
Surprisingly, most businesses will already fail this test.
2. Management
Bolton used to buy businesses that he liked even if the management didn’t convince him.
But he learned from his mistakes.
A company’s management has way too many options to mislead investors.
If Bolton doesn’t trust the management, he doesn’t invest.
Bolton used to buy businesses that he liked even if the management didn’t convince him.
But he learned from his mistakes.
A company’s management has way too many options to mislead investors.
If Bolton doesn’t trust the management, he doesn’t invest.
3. Simplicity
Bolton’s famous colleague Peter Lynch said that your investments have to be easy enough so your teenager can understand them.
Only with such simple businesses you can give reasonable answers to the questions mentioned above.
Bolton’s famous colleague Peter Lynch said that your investments have to be easy enough so your teenager can understand them.
Only with such simple businesses you can give reasonable answers to the questions mentioned above.
4. Perception
In the markets, perception is almost as important as reality.
Investors' perception of a company can overwhelm its real intrinsic value for long periods of time.
Also, we subconsciously anchor current stock prices which makes perception even more important.
In the markets, perception is almost as important as reality.
Investors' perception of a company can overwhelm its real intrinsic value for long periods of time.
Also, we subconsciously anchor current stock prices which makes perception even more important.
5. What Will Work In The Future
Bolton dislikes the rear-view mirror focus when analyzing companies.
He prefers figuring out what a company has to do in the future to outperform its competition.
He then compares those answers with the management’s plan for the future.
Bolton dislikes the rear-view mirror focus when analyzing companies.
He prefers figuring out what a company has to do in the future to outperform its competition.
He then compares those answers with the management’s plan for the future.
6. Due Diligence
Reading and analyzing financial statements is a basic requirement for investors.
But most don’t read the small notes and comments.
That’s exactly why Bolton reads them.
If a company wants to hide something, they put it in there and hope it'll be overlooked.
Reading and analyzing financial statements is a basic requirement for investors.
But most don’t read the small notes and comments.
That’s exactly why Bolton reads them.
If a company wants to hide something, they put it in there and hope it'll be overlooked.
7. Be Comfortable with Being Unpopular
Many investors know about the importance of contrarian decisions.
Yet, in practice, it’s hard to own a portfolio under harsh criticism.
It takes practice to keep a neutral eye on them and still be open to reasonable doubts.
Many investors know about the importance of contrarian decisions.
Yet, in practice, it’s hard to own a portfolio under harsh criticism.
It takes practice to keep a neutral eye on them and still be open to reasonable doubts.
8. Economy Doesn’t Matter
Bolton doesn’t care nor trusts economic outlooks.
However, he does care about…
1. Historical patterns of Bull and Bear Markets
2. Indicators of Investor Sentiment
3. Long-Term Valuations (price to book or FCF)
Those factors help his decision-making.
Bolton doesn’t care nor trusts economic outlooks.
However, he does care about…
1. Historical patterns of Bull and Bear Markets
2. Indicators of Investor Sentiment
3. Long-Term Valuations (price to book or FCF)
Those factors help his decision-making.
I regularly write about Investing and Psychology on my Website.
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Here's the link: danielmnke.com
If you enjoy my content here, I'm sure you'll enjoy my content there as well.
You also find all my Twitter Threads there and 1000s of pages of Free PDFs Resources.
Here's the link: danielmnke.com
That's it for today!
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Creating these Threads takes quite some time, so I'd appreciate your support.
Please Like and Retweet this Thread so more people can see it!
Follow me @MnkeDaniel to learn more about Investing.
Have a great day!
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