Imagine that you can own shares of only one company. It means that your portfolio is not diversified at all. Well, it is rather difficult to call it a portfolio. It is just your money parked in shares of one business — hopefully, the good one.
Such an approach is not a great idea from the perspective of diversification. I would not put all my wealth into a single company.
Understanding a business well may not be enough. There are so many aspects of investing you do not have an impact on that such a bet would be a very risky one. Political decisions and changes in regulations are factors we cannot predict. It is something we can recognise as a risk, but we never really know what new idea is growing in the heads of politicians.