Roger Nusbaum submits: There is an interesting interview in Barron's this week with "Team Kaminsky" from Neuberger Berman. You are probably familiar with Gary from his many past appearances on CNBC. The article has a table of their top ten holdings with percentages:
Suncor (NYSE:SU) 9.73%
Arch Coal (ACI) 6.67%
General Electric (NYSE:GE) 6.06%
Brookfield Assest Mgmt (NYSE:BAM) 5.49%
Capital One Financial (NYSE:COF) 5.08%
American Tower (NYSE:AMT) 5.03%
Citigroup (NYSE:C) 4.98%
White Mountain Ins (NYSE:WMT) 4.80%
Kinder Morgan (NYSE:KMI) 4.59%
Hewlett Packard (NYSE:HPQ) 4.02%
Their long-term results are very good, so let's be clear about that. I own Suncor personally, so I am obviously favorably disposed to the name but almost 10% in that name is a lot. I don't own ACI, but that is also a hot potato and I imagine AMT is a little jumpy too. I'm sure they realize the type of volatility they are bringing to the portfolio and do in fact want that much beta.
I think Barron's might be doing do-it-yourselfers a disservice, as the top-ten in this portfolio would be tough to manage from home. I think it would be tough to know when to reduce the energy -- we can see almost 17% and there could be more in the rest of the portfolio -- into a serious decline for the group and when to hold.
Actually, you could argue that more than 17% of the portfolio is in energy when you factor the betas of SU (1.43) and ACI (1.58). In theory you could say that the weight in energy is 24% when you multiply the weights by their respective betas. Some folks buy into that sort of calculation and some do not, but either way there is a lot of high octane energy in this portfolio.