19. Is there a policy regarding industry or sector diversification? What are the maximum concentrations allowed in a single industry or sector? To what extent might you have large concentrations in specific industries?

We diversify across sector and industry, limiting our exposure in an industry to 20%. However, we do sometimes define sectors and industries differently than analysts do, which can lead to seemingly concentrated positions. For example, at one point in the mid 1990’s outside consultants concluded we were 40% in “Financials” but when we looked at specific holdings, we concluded that Fannie Mae was in a very different business from Citigroup, which was different from Morgan Stanley, which was different from Fidelity National Financial. So, where consultants saw financial stocks, we saw a mortgage company, a global bank, a global broker, and a title insurance company. We diversify by owning very different companies, in very different businesses.

For a description of the portfolio for separately managed accounts, please request a copy of our SMA Fact Sheet.