How To Be An Opportunistic Plagiarist
That’s the strategy of one of Britain’s richest investors, Jim Mellon.
I met him this past weekend in London, and was able to get a preview of a variety of areas he is looking to invest in next. He also mentioned several companies he’s looking to short.
Before I tell you where he’s looking (and avoiding), what does being an “opportunistic plagiarist” even mean?
Jim describes this investing strategy as just reading and studying the past successes of investors. Then, when the time is right, you just copy what has worked in the past.
The most common way that investors do this today is by looking at 13F filings. SEC Form 13F is a report that is filed quarterly by fund managers who have more than $100 million in qualifying assets.
Basically, this means that any big investors who manage a lot of money are required to report where they are investing on a quarterly basis.
This allows anyone (you can search for free here) to find out where the biggest money managers are investing.
So, if you were an opportunistic plagiarist, you could just copy what the big funds are doing.
However, with the rise of hedge funds in the past decade, you have to be careful with these filings. Many hedge funds have sold their positions before they have filed their 13F forms, as they sometimes trade quickly in and out of certain assets. So, even though they may have actually invested in a certain area, they may have done it for a very short time, but still must report every quarter.
Jim Mellon is clearly a successful investor with a net worth just below $1 billion. Perhaps we should be opportunistic plagiarists by looking at what he is doing.
First, he’s bullish about longevity. This means any company or sector that will profit from the trend of living longer.
He even presented a list of the top 25 companies he would (and is) invest in, with many being private. Now, I don’t want to give away his best picks, but I will point you in a close direction.
You can invest in the biotech area through 17 different ETFs. Yes, there are 17! You can check out the full list here. (By the way, I am not recommending any of these, just passing on the message.)
Now, let’s look at what he’s bearish about. He listed four companies that he would consider shorting. They are Alphabet (Google), Amazon, Deutsche Bank, and Facebook. He listed these companies for a variety of reasons with an emphasis on sky-high valuations.
Honestly, I don’t completely disagree with him as I too think that many valuations have gotten out of control (Amazon’s P/E is 173). That doesn’t mean I’d enter any short positions, but it is interesting to hear a guy who has been very successful suggest these kinds of trades.
It’s tough to argue with a guy like Jim Mellon who knows how to make money. Similarly, here in the US, Warren Buffett has raised the largest cash position that Berkshire Hathaway has ever had on hand. I wonder what he is preparing for?