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Do you know whether Gayner has expressed a viewpoint about the overall market, and whether he expects to complete this 51%=>80% transition during the current cycle? It doesn't seem like a great time to be making this transition, but perhaps Gayner is not convinced that the market is already fully valued if not overvalued.

One of my favorite things about Gayner is his modesty. He cheerfully puts himself in the camp of those who know they don't know the answers to macro questions -- whether the market is overvalued, what the Fed is going to do about interest rates, etc. -- and so he declines to answer such questions, often with three words. His whole game is the micro -- what a company is doing and whether it's worthy of an investment according to his criteria, price being only one of four.

He has said that the pace of conversion from fixed income to equities will be faster when there are more attractive opportunities, which I presume is his way of saying he's not finding enough such opportunities in today's market to do it any faster. I don't think he has a plan about when the conversion will be completed or whether it will be in "the current cycle" since I'm quite sure he would disavow any knowledge of how long the current cycle will last. But at the current pace, it seems likely that the equity percentage will be well shy of 80 by the next bear market, at which point I would expect the progress toward that goal to accelerate.

On the other hand, he added to or opened 47 positions in Q2, so I think it's fair to conclude he doesn't think we're in bubble territory.

I don't see how putting them in your portfolio makes them any more available for research. Surely he is not suggesting that he has to have a dink in his equity portfolio to get himself to research a company he is interested in? It has always seemed bizarre to me to first buy a small stake and then do the research, instead of the converse, and it seems even more bizarre for a professional like Gayner.

I'm certainly not qualified to speak for him, but I would say this is one of those brain wiring things. Your position is certainly rational, but I would guess that Gayner thinks about investments on a spectrum rather than as a binary choice (buy or don't buy). Certain companies intrigue him enough to take positions, but he is not yet convinced of staying power or Michelangelo-ness to the point where he's willing to give them the weight that would affect overall performance. For example, he just opened a position in Ritchie Bros. Auctioneers by buying 10,000 shares at $24.60 each, good for 0.01 percent of the port. Some people believe in toeholds such as this; some don't. Diff'rent strokes. Again, his performance over time makes me less likely to second-guess his method.

My understanding of his Michelangelo statement is that he is not so much interested in what has already been painted as in who is a great painter. So he may be prepared to pay up for a company that benefits from an individual, team or system that he thinks will be capable of delivering great results in the future. In other words, the great company at a good price, instead of the good company at a great price.

I think that's exactly right. It's interesting that his role model, Warren Buffett, has arrived at a similar position. In fact, he uses Berkshire as an example of why it can be worthwhile to overpay. The textile business selling for $19 a share in 1965 was not worth that much, nor did it have future prospects to justify that price, he has said. Nevertheless, you could have paid ten times that price and still done exceptionally well because of the capital allocation skills of the CEO. This helps to explain why Berkshire, Brookfield and Fairfax are among his top six holdings.
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