Too Hard Pile

February 20, 2015
Written by PenderFund

The “too hard pile” is a phrase we first heard coined by Charlie Munger, Berkshire Hathaway, “At Berkshire we have three buckets: yes, no and too hard.”

In order to find potential investments for our concentrated portfolios, we start by narrowing down the field from the universe of potential investments. We have three main filters to narrow down our choices.

  1. We begin by removing securities and sectors that fall outside of our “Circle of Competence,” where we do not feel we have an edge. 
  2. Next, we attempt to avoid securities that we believe exhibit signs of potential catastrophic risk – companies that we deem to have high levels of either balance sheet, business or valuation risk.
  3. Finally, we avoid securities that fall into our “too hard” pile such as companies that are difficult to analyze and understand, are facing structural business problems or have management teams we can’t relate to.

It is worth noting that our “too hard” pile might be someone else’s “easy pile” and, conversely, we often find our “Best Ideas” when we look at unfollowed and unloved parts of the market. In other words, other people’s “too hard piles”.


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