I personally only own 2 ASX shares: fund manager

Professional investors preach diversification but don't necessarily do it for their personal stock portfolios.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Diversify your portfolio, we hear constantly.

Having a variety of different ASX shares spreads out risk and helps you sleep at night, experts say.

However, it might surprise you to know those same professional investors don't necessarily practise diversification themselves.

In fact, many will use their in-depth knowledge to put all their eggs in one or two ASX shares that they're absolutely certain of winning on. 

Call it conviction, call it guts, call it what you will. 

But the writer has spoken to many fund managers who do this for their personal portfolios, which is completely the opposite of what they advise clients on how they run their fund.

Very few are willing to reveal this publicly though, for fear of burning vulnerable retail investors.

Turning $156,000 into $12 million

One expert who is quite happy to go on the record is Marcus Today founder Marcus Padley.

Padley has claimed more than once that diversification is a false idol.

"In the remote wilderness of portfolio construction, we have a lot of gurus — but there is one religion: it's called diversification," he said in a podcast last year.

"It underperforms in the good times, outperforms in the bad times, but it still doesn't perform anyway."

The Motley Fool reported last year that one of Padley's followers had turned $156,000 into $12 million in just 3 years by putting it all in one ASX share.

Many might think this is risky, but Padley reckons it's the opposite.

"It's actually less risky because you've got your head in the game and you've only got one stock to focus on after all," he said.

"If you were to buy one stock, you're going to watch every move. You'll go to every company presentation, get to know the CEO, get to know the other shareholders… You're going to watch the drivers and pick up on anything that's relevant to that stock."

Practising what he preaches

To put his money where his mouth is, in a recent podcast Padley revealed that he himself only owns 2 ASX shares.

One of them is Poseidon Nickel Ltd (ASX: POS), which he has held for "a long time".

"The CEO is godfather to one of my daughters, hence the faith in the man, who I know really well."

That chief executive, Peter J Harold, has a track record of turning exploration businesses into producers, and Padley believes Poseidon would follow.

"Poseidon is sitting on a couple of projects that used to produce. It's just a question of the nickel price rising high enough to make those viable," he said.

"They expect to be back in production by December this year."

The Poseidon share price has sunk more than 23% this year.

The second and final stock in Padley's personal portfolio is Environmental Group Ltd (ASX: EGL).

Padley became interested in this environmental services provider when a trio of former Tox Free executives joined the firm.

"There is more cleanup to be done in Australia that EGL could possibly handle," he said.

"This is just a question of getting around the technology. It's not a question of finding things to do."

Capital H Management founder and chief executive Harley Grosser told The Motley Fool earlier this month that he's also a fan of EGL.

"The management team is A grade," he said.

"They've done it before at Tox Free — a lot of the institutional fund managers know of [chief executive] Jason [Dixon] and his team, and the stock looks good value to us. So we'd expect it to do well this year."

The EGL share price is down almost 18% for the year so far.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the 'five best ASX stocks' for investors to buy right now. We believe these stocks are trading at attractive prices and Scott thinks they could be great buys right now...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Investing Strategies

The letters ETF sit in orange on top of a chart with a magnifying glass held over the top of it
Dividend Investing

Boosting passive income: With a 7.6% yield, is the YMAX ETF a good option?

Is this ETF's yield too good to be true?

Read more »

A woman standing in a blue shirt smiles as she uses her mobile phone.
Blue Chip Shares

2 ASX blue-chip shares that I think are excellent long-term buys

I think these blue-chip shares are impressive players.

Read more »

A man in a business shirt and tie takes a wide leap over a large steel trap with jagged teeth.
Bank Shares

5.75% yield: Are ANZ shares a dividend trap?

ANZ's dividend currently beats out its own term deposits.

Read more »

A woman smiles as she sits on the bus using her phone and listening to music through headphones.
Cheap Shares

2 compelling ASX shares on sale right now

These businesses look like low-priced opportunities.

Read more »

A woman jumps for joy with a rocket drawn on the wall behind her.
Small Cap Shares

Guess which small cap ASX stock is rocketing 28% on $100m deal

It has been a very good start to the day for owners of this stock.

Read more »

Man holding out Australian dollar notes, symbolising dividends.
Dividend Investing

Here are 3 buy-rated ASX dividend stocks to beat falling interest rates

Brokers are recommending these stocks to clients.

Read more »

A group of people in suits watch as a man puts his hand up to take the opportunity.
Blue Chip Shares

These top blue chip ASX 200 shares could rise 25% to 75%

Brokers are tipping these shares to deliver big returns over the next 12 months.

Read more »

Senior man wearing glasses and a leather jacket works on his laptop in a cafe.
Dividend Investing

Overinvested in BHP shares? Here are two alternative ASX dividend stocks

There are other businesses worth owning for passive income.

Read more »