Warren Buffett is regarded by most as being one of the greatest investors of our time. His buy-and-hold style has allowed him to purchase hundreds of companies that he felt were fundamentally undervalued. Buffett’s ability to identify great companies at the right time has helped him to become one of the richest individuals in the world, with a net worth of over $100 billion.
Even though Buffett has beaten the S&P 500 nearly 50 years during his career, there are some critics that raise the question as to whether or not he has lost his mojo. Since the recession in 2009, Buffett has gone through several years where he failed to outperform the S&P 500.
Here are five other investors, not named Warren Buffett, that are also considered to be the best of the best in the industry.
Hedge fund manager George Soros is a completely different kind of investor compared to Warren Buffett. Soros doesn’t have a defined investing strategy; instead, he makes investments that come from gut decisions. He is most well known for his $10 billion bet against the British Pound in 1992. That bold move made Soros over $1 billion and forced the Bank of England to purchase 1 billion British pounds and raise interest rates by 2%.
Carl Icahn is one of the greatest investor of the past 25 years; however, at times his performance can be overshadowed by his corporate antics. Icahn, also known as a “Corporate Raider,” regularly gets involved with companies that he feels lack leadership. Love him or hate him, his involvement usually leads to a company’s turnaround, giving Icahn a 31% annual rate of return from 1968 until 2011. In comparison, Warren Buffett had an annual rate of return of just 20%. Icahn's rate has also beaten Buffett's over the last 20 years.
John "Jack" Bogle
Jack Bogle is the founder and retired CEO of The Vanguard Group. Bogle started Vanguard over 40 years ago, and today it is the largest fund company – even ahead of BlackRock Inc. (BLK) – with over $6.2 trillion under management.
Bogle has an extremely simple investment style. He believes in putting money into low-cost index funds that have low commissions and very little turnover of assets. That alone is a big reason why so many people trust him and his company with their money.
Benjamin Graham is the author of one of the most popular books on investing, “The Intelligent Investor.” Graham is known as the “father of value investing,” which is probably why he became Warren Buffett’s mentor. Graham was never a huge risk taker when he made investment choices; he used solid financial analysis to pick great companies.
In 1951, Buffett took a class at Columbia University that was taught by Graham. He said there were three important things that Graham taught him:
- A stock is the right to own a little piece of a company. The value of the stocks you own is only as valuable as the company as a whole.
- You need to use a margin of safety when investing. It’s important to buy into a company when the market price of the stock is below the company’s intrinsic value.
- Mr. Market is your servant, not your master. It’s important not to get wrapped up in everything that is going on with the markets. Instead, focus on your own research into a company.
Peter Lynch is most well known for managing the Fidelity Magellan Fund from 1977 to 1990. During this span, the fund returned an average of 29% per year to its shareholders. It beat the S&P 500 in 11 of those 13 years.
Lynch is known to be able to adapt his investment style to whatever was working during certain market conditions, so it makes sense that people started calling him the “chameleon.” Even though he might have lived by an ever-changing style, he always applied a set of eight different principles to the companies in which he invested.
The Bottom Line
Great investors don’t come around every day. Those that can manage to bring double-digit returns to their investors over decades are an even smaller crowd. These five investors have proven themselves to be some of the greatest investors of the past few generations.