In praise of “Bottom up”

Anthony Bolton is an investor who looks at individual stocks and invests where he sees unrecognised value (a bottom-up investor), rather than first allocating funds to sectors or countries before selecting stocks for the portfolio.
He certainly does not agree with the logic of allocating money to a sector simply because other investors are enthusiastic about it and have bid up the prices, resulting in it becoming a high proportion of the overall market.
For example, he refused to allocate much money to the dot.com, telecom and media sectors in 1999 when other fund managers felt obliged to take part.
But keep a balance
Despite this he acknowledges the need to keep an overall balance within the portfolio so that it does not become too heavily weighted on a theme, sector or a market.
His rules for this are that,
(a) an individual holding should not exceed 4 per cent of the total fund, except in very rare circumstances;
(b) he should not be more than 30 per cent overweight in any one sector, and
(c) he should not hold more than 15 per cent of a company’s equity.
Within these rules the size of his bet on an individual share depends on his ‘conviction level’ for the stock, how risky it is and how marketable it is.
For his Special Situat