Did you realize that Warren Buffett returned 81% a year from 1980 to 2003?
Buffett accomplished this amazing feat by using a strategy called “takeover speculation.” He bet big, and with leverage, on stocks he thought had a very high likelihood of being acquired.
The average person on the street thinks Warren Buffett is a safe value investor who holds stocks forever. This is only partially true. The other half of his portfolio, and the part of his strategy that has juiced the biggest returns for him, was takeover speculation, where he used significant leverage and options to produce 80+% annualized for 24-years.
Buffett said in a New York Times interview that he made the greatest returns ever in his portfolio employing this takeover speculation strategy.
But Buffett ran into a problem. He became too big. He had to stop using this strategy because the assets he was managing, which in 2003 reached $50 billion, were too big to successfully execute it.
He said in a BusinessWeek article that he guaranteed he could make at least 50% a year if he were managing smaller assets. And he can back it up. We have documented proof from Berkshire Hathaway letters, and from an academic paper on Buffett, which showed that he produced an 81% annualized return over a 24-year stretch.
For those who are interested in what 81% annualized compounds to over 24-years, here are some scenarios:
1) A $1,000 account compounded at 81% for 24-years would turn into $1 billion.
2) A $10,000 account compounded at 81% for 24-years would turn into $15.2 billion.
3) A $20,000 account compounded at 81% for 24-years would turn into $30.2 billion.
Interestingly enough, Buffett’s strategy of takeover speculation is exactly the strategy we use at the Billionairesportfolio.com, and trust me it works.
We had two stocks in our portfolio acquired for a 65% and 82% premium in one day, and better yet we own a handful of stocks in our portfolio that we think could easily double on a a takeover. Takeover speculation works great in a sideways stock market like today, and its an absolute return strategy that does not depend on the stock market to make money.
Do not miss out on your chance to own stocks that could double overnight on a takeover, sign up today for The Billionaires Portfolio.
President of The Billionaires Portfolio