At BillionairesPortfolio.com, we’ve studied the track records of hundreds of billionaire investors and billion-dollar hedge funds. And one man stands above the rest, as the best investor of all-time.
I’m sure most would consider Warren Buffett to be the best investor ever. But the numbers tell a different story. In fact, the greatest investor of all-time is billionaire activist investor Carl Icahn.
Incredibly, both Icahn and Buffett have been building their respective investment empires for close to five decades. And more incredibly, they remain at the top of their profession.
Icahn has, unequivocally, shown superior skill as an investor.
Consider this: Icahn has returned 31% annualized since 1968. That would turn every $1,000 invested with Icahn into $325 million today – an incredible number. Buffett, on the other hand, returned 19.5% annualized during virtually the same time period. Buffett’s growth rate over that length of time is indeed amazing too. But due to the power of compounding, the wealth creation of Buffett, from pure investment returns, pales in comparison to that of Icahn. Icahn’s investment skill has created $65 to every $1 created by Buffett.
So how has Icahn been able to outperform Warren Buffett (and the broad stock market) by so much and for so long?
Of course, Icahn is a dogged shareholder activist and often an agitator of corporate management. Key to his playbook is using power and influence to control his own destiny on stocks he invests in.
When we look strictly across the stocks in his portfolio, without necessarily the story-lines, we can see some portfolio traits that have made Carl Icahn the world’s greatest investor.
Trait #1: The media, mutual funds, CNBC, finance books — they all say having a high win rate is paramount to good investing. They tell you that the most important thing is being right. Like many widely accepted adages, it happens to be dead wrong. Billionaire iconic hedge fund investor, George Soros, says “it’s not whether you’re right or wrong, but how much money you make when you’re right and how much money you lose when you’re wrong.”
Over the past 20 years, the stocks in Icahn’s portfolio have a win rate only a tad bit better than a coin toss. But he puts himself in position, so that when he wins, he has the chance to win big! This is the concept of asymmetrical risk to return, a concept often found in the wealth creation of billionaires. They like to invest in opportunities with limited risk and huge potential return.
Among Icahn’s stocks, his winners were almost twice that of his losers.
Trait #2: Icahn became rich by taking concentrated bets throughout his career. As Buffett has famously said, “you only need one or two great ideas a year to get rich.” This is exemplified in Icahn’s portfolio. His big win on Netflix garnered a 463% return in just 12 months, between 2012 and 2013.
Trait #3: Patience is king. You don’t have to go to Harvard or have a Goldman Sachs investing pedigree to have patience. And many times, that can be the difference between making money and losing money in investing. Icahn has an average holding period of over two years.
Trait #4: Risk! When you hunt for big returns, you must be willing to accept drawdowns and losers. Icahn has multiple stocks over the past 20 years that have been full losers (i.e. they went to zero). But when you have a portfolio full of stocks with big potential, in the end the big winners can more than pay for the losers.
With these key themes in his portfolio, Icahn has achieved the greatest track record of any investor alive, and a net worth in excess of $25 billion along the way. And he has done it with a portfolio of stocks that most investors would likely run away from.
Want to invest like the greatest investor of all-time? According to his most recent 13F filings, Icahn’s five biggest stock positions (aside from his holding company) are Apple (AAPL), CVR Energy (CVI), eBAY (EBAY), Federal Modul Holdings (FDML) and Hologic (HOLX).
Billionairesportfolio.com, run by two veterans of the hedge fund industry, helps self-directed investors invest alongside the world’s best billionaire investors. By selecting the best ideas from the best billionaire investors and hedge funds, our exited stock investment recommendations have averaged a 31% gain since 2012.