Super Investor #37 in our series is Allan Mecham – a lesser-known but exceptionally disciplined value investor whose concentrated, long-term approach has earned comparisons to Warren Buffett. While his name might not dominate financial headlines, Mecham’s track record as the founder of Arlington Value Capital speaks volumes to buy-and-hold investors looking for enduring success through simplicity and patience.
🧠 Who is Allan Mecham?
Allan Mecham built his reputation by generating stellar returns with a portfolio strategy that goes against the grain of Wall Street. With no Ivy League pedigree or high-frequency trading background, Mecham carved out his niche by staying small, nimble, and focused on what he understood. His firm, Arlington Value Capital, achieved compounded returns that at times rivaled even Berkshire Hathaway’s.
- Known For: Ultra-concentrated, low-turnover, long-term value investing
- Investment Style: Buffett-like – focusing on high-quality businesses purchased at attractive valuations
- Notable Traits: Avoids the spotlight, holds deep conviction in a few companies, rarely trades
Mecham has managed to achieve what many investors only aspire to: significant outperformance through simplicity, patience, and rationality.
🧒 Early Life and Background
Influences & Education
Allan Mecham didn’t graduate from a top-tier business school nor spend time at Goldman Sachs. Instead, he was a self-taught investor who devoured Berkshire Hathaway shareholder letters and developed a mental model grounded in business logic and patience. This “outsider” status gave him a unique edge—unburdened by Wall Street dogma, Mecham built a style that reflects independent thinking.
Career Beginnings
Mecham started investing his own money in the 1990s and formally launched Arlington Value Capital in 1999. He gained attention in value investing circles after a 12-year run averaging double-digit returns, significantly outperforming the S&P 500. Notably, his strategy focused on avoiding activity and only buying when he found high conviction opportunities.
📈 Allan Mecham’s Investment Philosophy & Strategy
Core Principles
- Think like a business owner, not a speculator
- Avoid over-diversification; focus on a few great companies
- Stay within a circle of competence
- Ignore short-term market movements
Investment Approach
Mecham built portfolios with 8–12 core holdings, often holding them for years at a time. His research process was qualitative, focused on understanding the competitive dynamics, management quality, and cash flow consistency of businesses.
- He didn’t chase quarterly earnings
- He avoided overly complex models and instead focused on clear business economics
- He often held cash rather than compromise on quality or price
“Activity is often the enemy of returns. We’re not trying to be clever—we’re trying to be right.”
— Paraphrased from Mecham’s letters
Allan Mecham’s ultra-concentrated investing style aligns with long-standing Buffett principles, which emphasize patience, conviction, and a tight portfolio.
Notable Techniques
- Concentration: His willingness to allocate significant capital to a few ideas sets him apart.
- Low Turnover: Mecham rarely trades; he waits patiently for value to unfold.
- Behavioral Discipline: Mecham’s returns come as much from temperament as from analysis.
💼 Notable Investments & Track Record
Key Investments
Mecham never broadcast his holdings like a mutual fund manager, but some public filings and discussions from Arlington Value Capital suggest high-conviction bets in:
- Wells Fargo (WFC) – Bought during periods of controversy when the valuation was low.
- Bank of America (BAC) – A deep value financial sector play during the recovery years.
- Berkshire Hathaway (BRK.B) – Frequently held by value-oriented managers due to its diversified, cash-generative nature.
These choices reflect a Buffett-inspired tilt toward financials and businesses with wide moats.
Performance Overview
During a 12-year stretch post-1999, Arlington Value reportedly returned 18% annually, versus around 4–5% for the S&P 500 during that same timeframe—a staggering level of outperformance for a boutique firm.
External source: Read more on Allan Mecham’s performance in Forbes
Wins & Losses
While not every pick was a home run, Mecham’s strategy insulated him from panic selling and poor timing decisions. When investments underperformed, he revisited his thesis, held firm if fundamentals remained intact, or exited quietly if he made a mistake.
📘 Lessons for Individual Investors
Key Takeaways
- Stay focused – You don’t need 50 stocks to succeed.
- Ignore market noise – Great investors know when to do nothing.
- Invest in what you understand – Complexity isn’t required for success.
Practical Applications for Buy-and-Hold Investors
- Limit yourself to your top 10 ideas and monitor them closely.
- Don’t obsess over short-term results—compounding takes time.
- Use downturns to add to high conviction holdings, not panic sell.
Common Mistakes to Avoid
- Overtrading
- Blind diversification
- Following hype over fundamentals
⛈ Challenges & Criticism
Difficulties Faced
Mecham occasionally faced skepticism for his concentration and lack of media presence. Some questioned whether his returns were sustainable or whether he just benefited from a good run during a specific cycle.
How He Responded
Mecham let his results speak for themselves. His calm demeanor and strict adherence to a core philosophy protected him from succumbing to trends or pressure.
🌍 Legacy & Influence
Impact on Investing
Though not a household name, Mecham’s quiet consistency has inspired a generation of investors looking for Buffett-like results without the institutional trappings.
Influence on Others
He’s cited frequently in value investing forums and admired by boutique fund managers aiming to emulate a lean, concentrated model.
Educational Contributions
Mecham hasn’t written books, but his investor letters—though private—are occasionally referenced and analyzed by value investing communities online, providing insight into his philosophy.
💬 Quotes & Investing Wisdom
Famous Quotes
- “We believe it’s more important to understand a few businesses deeply than dozens superficially.”
- “Inactivity is our advantage, not our handicap.”
Core Investing Wisdom
“Concentrated patience beats frantic diversification every time.”
✅ Summary: Why Allan Mecham Is a Super Investor
Allan Mecham may not be a CNBC regular or best-selling author, but his disciplined, Buffett-like investing proves that success doesn’t require fame or fanfare. For investors who value clarity, conviction, and long-term thinking, Mecham’s blueprint offers powerful guidance.
Happy Investing!