Sometimes it feels as though the name Warren Buffett is morphing into something like the legend of Bloody Mary - say his name three times in a column about investing and readers suddenly appear. It is very much worth mentioning, though, that Warren Buffett is simply one example of a successful investor and businessman. Granted, Mr. Buffett is an excellent example of a successful investor, but readers might be interested in considering the approaches and track records of other investors that have enjoyed considerable professional success, but do not necessarily get the same publicity as Warren Buffett. (This esteemed investor rarely changes his long-term investing strategy, no matter what the market does. See Warren Buffett's Bear Market Maneuvers.)
TUTORIAL: The Greatest Investors
Perhaps it would have seemed impossible to imagine as he was living through World War II, but George Soros became one of the most successful investors in history. With a current net worth north of $14 billion, Soros is largely retired as an active investor. However, he established a remarkable record while running the Quantum Group of hedge funds.
Soros is mostly known for his successes in making large bets in the currency and commodity markets. The most famous success story of his career is most likely Britain's Black Wednesday currency crisis, where Soros correctly surmised that the country would have to devalue the pound and reportedly made around $1 billion on his positions.
Whereas Buffett is famous for carefully evaluating individual companies and holding those positions for years, Soros was much more inclined to base his investment decisions on what would be considered macroeconomic factors. What's more, investments in the currency and commodity markets do not lend themselves to multi-decade (or even multi-month) commitments, so Soros was a much more active investor. (George Soros spent decades as one of the world's elite investors, and even he didn't always come out on top. But when he did, it was spectacular. Check out George Soros: The Philosophy Of An Elite Investor.)
Some will question whether Perelman is properly called an "investor." Though no one will dispute that a net worth of approximately $12 billion entitles him to be seen as a significant success in business, Pererlman's activities have centered on acquiring businesses outright, refocusing them on core competencies (often through spin-offs) and then either selling the companies later at a profit or holding onto them for the cashflow they produce. In that latter regard, though, Perelman is not so unlike Buffett - much of Buffett's success can be tied to the prudent acquisition of value-creating businesses within Berkshire Hathaway.
While Perelman has frequently faced criticism for his acquisition tactics and management decisions, he has nevertheless had many successful transactions, including his involvement in Marvel, New World Communications and several thrifts, savings and loans and banks.
With about $16 billion in net worth, John Paulson is arguably the most successful hedge fund investor today. What makes that even more impressive is that he founded Paulson & Co in 1994 with purportedly with only $2 million. Paulson really made his name during the credit crisis that marked the end of the housing bubble; reportedly shorting CDOs, mortgage backed securities and other tainted housing-related assets, as well as shorting the shares of several major British banks. Perhaps ironically, Paulson has benefited from both sides of that trade, having also taken long positions in companies like Regions Financial, Goldman Sachs, Bank of America and Citigroup.
In some respects, Carl Icahn follows an approach that is somewhat similar to Warren Buffett, as Icahn has built his fortune through a combination of equity investments and outright acquisitions. That is where the similarities end, though, as Icahn has generally pursued a much more aggressive strategy and shown no particular reticence to launch hostile offers. What's more, Icahn is not often interested in investing in business and seeing them continue to run as before; Icahn has built a reputation as a so-called activist investor who frequently pushes corporate managements to restructure, sell assets and return cash to shareholders.
Differences aside, Icahn's strategy has worked. Icahn has built a fortune reportedly worth in excess of $11 billion through his involvement in a range of companies including RJR Nabisco, Viacom and Time Warner. (Buying up failing investments and turning them around helped to create the "Icahn lift" phenomenon. To learn more, check out Carl Icahn's Investing Strategy.)
If there is an "anti-Buffett" on this list, James Simons may be a good candidate. Holding a PhD in mathematics from Berkeley, Simons founded Renaissance Technologies and uses exceptionally complicated mathematical models to analyze and evaluate trading opportunities. While Buffett is famous for having a minimal staff, Renaissance Technologies reportedly employs dozens of PhDs in fields like physics, mathematics and statistics to find previously under-used correlations and connections that can be used for better trading results.
Or at least that is as much as is known about Renaissance Technologies - while Buffett is rather open about his investment philosophies and methodologies, Simons maintains a much lower profile. Nevertheless, this heavily quantitative approach seems to work. Mr. Simons is estimated to be worth nearly $11 billion and his funds have been so successful that they can charge outsized management fees and profit participation percentages to investors.
Others Worthy Of Note
Investors would also do well to consider the careers of other well-known investors like Jim Rogers, Mark Mobius, and Peter Lynch. While Mobius is the only one of the three still highly involved in day-to-day investment operators, all three men have become very closely associated with their particular investment philosophies. Rogers is a go-to commentator on commodities and macroeconomic investments, while Mobius may be the best known emerging-markets investor of all time.
Peter Lynch, though many years removed his tenure at Fidelity and his management of the Magellan fund, is still widely seen as a leading voice in "disciplined growth" investing. All three men have written about their investment philosophies and outlooks, and their approaches are accessible and informative. (For related reading, check Pick Stocks Like Peter Lynch.)
The Bottom Line
Investors should cast their eyes beyond Warren Buffett if they wish to really learn about all that investing can offer. There is no doubting or ignoring Buffett's exemplary record, but there is always more to learn by broadening the pool of examples. While investors like Simons and Soros may seem to focus on strategies and techniques that are beyond the means of regular investors, there are still valuable lessons to be learned about macroeconomics and the benefits of looking at the markets in new and proprietary ways.
Mutual Funds & ETFsLearn about four mutual funds Warren Buffett would invest and recommend to his trustee, and discover detailed analysis of these mutual funds.
Stock AnalysisLearn about three value stocks Warren Buffett holds in his portfolio. See how Buffett uses market declines to find good deals on stocks.
Investing BasicsLearn about the ultra rich and what normally comprises their net worth; understand the top three alternative investments usually owned by the ultra rich.
Stock AnalysisUnderstand what value hedge funds can provide investors in the financial sector. Learn about seven hedge funds that pay consistent and high dividends.
InvestingAll businesses face adversity, and Procter & Gamble is no exception. We take a look at recent developments affecting this global giant.
ProfessionalsWorkplace stress can cost companies tons of money in lost productivity and absenteeism. Some of that is out of their control, but often they are the cause.
Forex EducationThe five most famous forex traders share common virtues such as strong self-confidence.
Investing BasicsUnderstand the hedge fund industry and why it has grown exponentially since 1995. Learn about the top six reasons why the industry underperforms.
ProfessionalsUnderstand what a hedge fund is and why hedge fund managers make so much money. Learn about the top 5 highest paid hedge fund managers.
EntrepreneurshipDiscover the educational backgrounds and entrepreneurial ventures of some of the most successful and well-known African entrepreneurs.
Many traditional lenders and banks are failing to provide loans. In their absence, hedge funds have begun to fill the gap. ... Read Full Answer >>
A hedge fund manager does not necessarily need any specific license to operate a fund, but depending on the type of investments ... Read Full Answer >>
A hedge fund analyst primarily provides support to a portfolio manager on how to best structure the hedge fund's investment ... Read Full Answer >>
Mutual funds are legally allowed to invest in hedge funds. However, hedge funds and mutual funds have striking differences ... Read Full Answer >>
A 12b-1 fee in a mutual fund is meant to cover the fees of companies and individuals through which investors of a fund buy ... Read Full Answer >>
Five federal regulatory agencies approved and are jointly responsible for enforcing the Volcker rule. These agencies include ... Read Full Answer >>