The fiftieth portfolio stock exists purely to gather asset-based management fees
Brian Bares · Brian Bares – Qualitative Concentration at BCM (Capital Allocators, EP.191) · Apr 26, 2021 · at 19:46
Brian Bares, founder of Bares Capital Management, explains why holding 50 or more names in an active equity portfolio is unnecessary for diversification.
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“The evidence is that after eight stocks, you're 80% diversified, right? So the 50th name in your portfolio is doing nothing to get you more of the free lunch, right? I mean, it's just a exercise in gathering assets to get more asset based fees for a manager.”
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