Each month, we screen for attractive “bond replacement” investment candidates by looking up the reports of investments purchased by “Superinvestors” covered by the Dataroma site. Dataroma follows 64 managers that are all using value-based strategies.
This month, there was only one manager for which third quarter purchases has been posted: Ariel Focus Fund managed by Charles Bobrinskoy. In addition, we are placing L Brands — a company about which we have published extensively — on this list and it is also an attractive candidate.
In the Ariel Focus Fund, we looked for any transactions that met the following criteria:
- Stocks listed represented more than 2% of the portfolio’s value
- Stocks listed were a new purchase for the fund OR the position was increased by a material amount (+20% or more)
You will see a column on the sheet labeled “Transaction”. “Buy” means a new position and “+29%” means an increase in an existing position of 29%. We believe the willingness to take a new large position or to significantly increase one’s position size has greater information content than simple “bookkeeping” transactions.
These conditions were designed to screen for the stocks in which the managers had demonstrated the most confidence (by portfolio weight) and about which they had made an active decision to invest. As we explain in our video introduction to “Bond Replacement” investments, we are using these portfolio managers’ actions as an indication of undervaluation.
You can find the spreadsheet here:
October 2018 Covered Call Corner Spreadsheet 
A PDF copy of the spreadsheet is embedded below. Please reach out if you have any questions about these materials!
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