Sellers likes big companies with few competitors -- "wide-moat" businesses -- buying when they're out of favor and shares are trading at levels he considers a bargain. He also invests in small companies with hidden assets that other investors haven't factored into the price -- stakes he calls "small-cap asset plays."

The hedge fund is extremely concentrated, holding between five and 15 positions, and typically closer to five. Nowadays, just six stocks make up 90% of the portfolio, he says, with one position accounting for half of the fund's assets.