The Hunter's Approach
Invest big, follow up
The Hunter's Approach is an investing strategy that involves investing a significant portion of one's portfolio in a small number of high-conviction companies. The approach requires a deep understanding of the companies and their underlying fundamentals, as well as the ability to withstand significant volatility and potential losses. The Hunter's Approach is centered around the idea of investing big in a company and then following up with additional investments if the price falls, thereby lowering the average cost per share.
- Investing big in a small number of high-conviction companies can lead to significant returns
- Withstanding significant volatility and potential losses is essential to the Hunter's Approach
- Having a deep understanding of the companies and their underlying fundamentals is critical to success
- Identify high-conviction companiesThe first step in the Hunter's Approach is to identify companies that have a strong potential for long-term growth and a competitive advantage in their industry. This requires a deep understanding of the companies and their underlying fundamentals.Pro tipLook for companies with a strong track record of innovation and a talented management teamWarningBe cautious of companies with high levels of debt or those that are heavily reliant on a single product or service
- Invest big in the identified companiesOnce high-conviction companies have been identified, the next step is to invest a significant portion of the portfolio in these companies. This requires a willingness to take on risk and withstand potential losses.Pro tipConsider investing up to 20% of the portfolio in a single companyWarningBe cautious of over-investing in a single company, as this can increase risk
- Follow up with additional investments if the price fallsIf the price of the invested company falls, the next step is to follow up with additional investments, thereby lowering the average cost per share. This requires a willingness to withstand significant volatility and potential losses.Pro tipConsider setting up standing orders to automatically invest additional funds if the price fallsWarningBe cautious of throwing good money after bad, as this can increase losses
Warren Buffett invested 42% of Berkshire Hathaway's portfolio in American Express in 1974, despite the company's stock price falling significantly. Buffett's investment ultimately paid off, as the company's stock price recovered and the investment generated significant returns.
The Hunter invested 20% of the assets he managed in Barclays shares when they traded at just 55p in 2009, despite the company's stock price falling significantly. The Hunter was prepared to invest more money in the company if the price continued to fall, and ultimately made a significant profit as the stock price recovered.
The Hunter's Approach was developed by the author, Lee Freeman-Shor, based on his experience managing an elite group of professional investors. The approach is inspired by the investing strategies of successful investors such as Warren Buffett, who has been known to invest significant portions of his portfolio in a small number of high-conviction companies.