Elite analyst Chris Mayer beat the S&P 500 by 3-to-1 over a decade…
The best part is he did it while employing “Palm Beach-style” radical aversion to risk. So when he shares advice, we pay attention.
Today, Chris reveals the two most important factors investors like Warren Buffett used to make their fortunes…
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From Chris Mayer, chief investment strategist, Bonner & Partners: Berkshire Hathaway (BRK) has been one of the best-performing stocks of the past half-century.
A $1,000 investment in 1965 would be worth $15.3 million today. That’s a return of 21% annually.
Berkshire, as you probably know, owns a diversified collection of businesses acquired over its 50-year existence.
Two key factors helped make Berkshire great: It had permanent capital and it could invest in anything.
Of course, having a brilliant investor like Warren Buffett at the helm helps, too.
While there is only one Warren Buffett, there are plenty of talented investors at the helm of similar vehicles. Below, I’ll talk about one of them.
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Before I get to that, let’s look at those two key factors:
Permanent capital. Investors are a skittish lot. They tend to pull money out of funds after the market has fallen. If you’re running a fund, it means you have cash going out the door when the opportunity set is richest.
If you have permanent capital, as Berkshire does, when investors sell the stock, the amount of cash Buffett has to invest doesn’t change.
The ability to invest in anything. Buffett can, and does, buy anything. He owns railroads, insurance, jewelers, and a long list of other investments. He doesn’t have to invest unless he thinks it’s a good bet.
So there are a number of companies somewhat similar to Berkshire that you’ve probably heard of: Markel, Fairfax Financial Holdings, Loews Corp., Icahn Enterprises, and Leucadia National are some of the most frequently mentioned.
Sometimes people will mention Greenlight Re (Reinsurance), Third Point Re, and Pershing Square Holdings. These allow you to ride the coattails of three celebrated investors: David Einhorn, Dan Loeb, and Bill Ackman, respectively. But they are not quite so similar to Berkshire as the ones above.
There is another smaller one you may not have heard of: HC2 Holdings (HCHC). This is an investment vehicle run by Phil Falcone, who owns 11% of the stock.
Falcone is a talented investor who ran a publicly traded vehicle called Harbinger, which more than doubled under his four-year reign. But you may know him best for his past legal troubles with the SEC and communications company LightSquared (now rebranded as Ligado Networks).
With that behind him, Falcone has been on a redemption tour. HC2 owns a variety of businesses: Schuff (a steel fabricator) and Global Marine (undersea cables) as well as investments in insurance and biotech.
Most recently, Falcone made a bid to acquire Andersons, a publicly traded agricultural firm. This is quite a find by Falcone and shows his ability to find attractive deals. Andersons is undermanaged with key assets—such as grain elevators and fertilizers—worth significantly more than Falcone’s offer. (We’ll see if he gets it done.)
Altogether, it’s not hard to value HC2 at $8 to $10 per share—a big jump over the sub-$5 share price today.
Reeves’ Note: For the past three years, Chris has been developing a blueprint for finding early-stage companies that share the key traits of Buffett’s Berkshire Hathaway: permanent capital, the ability to invest anywhere, and a talented investor at the helm.
It’s called The Mayer Method: the breakthrough new formula that lets you identify tomorrow’s biggest stock market winners today. To learn how Chris has used this method to find stocks with these signature traits, click here.
As a bonus, everyone who watches the webinar tonight will get the names and tickers of six stocks from Chris’ watchlist, absolutely free. No cost. No commitment. Simply a reward for watching.
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