Leonard Berman joined First Manhattan in 2006. Len is both a Portfolio Manager and a Research Analyst, with primary coverage of media and real estate companies. Len manages assets for individuals, families, partnerships, and family and charitable trusts. His priority is to provide excellent personal service to his clients. Len focuses on understanding each client’s specific circumstances, and investing in a manner that is appropriate for his or her specific goals and risk tolerance.
Len acts as a trusted advisor to his clients, discussing financial planning issues as well as assets and investments held outside of First Manhattan.
Portfolio Construction and Management
Len, a risk-averse, value-oriented Portfolio Manager, seeks to achieve attractive long-term investment returns without taking unreasonable risks. Patient and often contrarian, Len tends to like companies and industries that are misunderstood or are temporarily out of favor, and which he expects to generate attractive long-term investment returns with lower risk of permanent losses.
Len’s equity portfolios typically consist of 25 – 30 companies, sensibly diversified by industry, target markets, and market capitalization. Len relies on First Manhattan’s research department as well as his own analytical work and familiarity with many types of securities and numerous industries, to identify and evaluate potential investment opportunities.
When considering an investment, Len takes a long-term approach that emphasizes an in-depth understanding of a company’s business and management. His investment process focuses on factors that should drive solid long-term returns while reducing the risk of permanent losses. These include:
Knowing what we own. A detailed understanding of businesses enables Len to invest opportunistically and with less risk. Len spends a great deal of time analyzing a company’s qualitative and quantitative characteristics, including its competitive advantages, growth prospects, profit margins, historical rates of return, financial leverage, dependence on capital markets, and cash-flow generation.
Quality of management. Len views himself as an owner of the businesses in which he invests. Therefore, he seeks to invest in companies with capable, shareholder-friendly management that can react to changing business conditions in a manner that will generate long-term value. Len meets regularly with management of companies he owns.
Understanding the investment opportunity. Len utilizes First Manhattan’s in-house research to better understand the opportunities and risks of an investment. This includes the opportunities management has to increase value over the long term and why those opportunities might not be reflected in the current share price.
Buying with a margin of safety. Critically important, Len seeks to buy shares of companies he understands and likes, at a discount to their intrinsic value. His insistence on a cushion helps reduce permanent losses when an investment does not work out as expected. Len expects this patient and disciplined investment process to enhance long-term returns and lower risk.