Investment heroes of our time
The era of special opportunities
The COVID-19 pandemic ushered in a period of global instability that continues to this day. Among other things, February and March 2020 marked the era of a new reality for investors and economic shock, followed by big losses. Thus, the global stock index MSCI ACWI, which reflects the value of shares in 47 markets, fell by an unprecedented 21.3% in Q1 2020. An example close to today's realities is the record collapse of bitcoin (which, by the way, has all the prerequisites for continuing).
However, the global economy and individual beneficiary companies have proven their ability to successfully overcome the most difficult situations (the McKinsey report shows this well). Plus, crisis periods in themselves are, as you know, a time of special opportunities.
Classic is timeless, but not always
Investing legends such as Buffet, Soros, Bogle and their offspring, thanks to a carefully built strategy, remain afloat today.
Warren Buffett (born in 1930), for example, certainly feels great with a fortune close to $100 billion. His company Berkshire Hathaway reached its peak capitalization ($730 billion) in March of this year.
Still at the top is the hedge fund Renaissance Technologies, founded by former military codebreaker mathematician James Simons (b. 1938). With an average annual return (before commissions) of 66% for 1988-2018, the company also closed 2021 with a grandmaster figure of 48%.
And the American Bill Ackman (b. 1966), manager of the hedge fund Pershing Square Capital Management, received an annual return of 17.1% from 2003 to 2021, which is significantly higher than, for example, 10.2% of the S&P 500. Like many investors, Ackman's performance took a hit during the stock market sell-off in 2022, with his fund down 1.7% in the first three months of the year. However, it still outperforms the S&P 500 by about three percentage points. In the past couple of years, Ackman's personal wealth has grown markedly, reaching $2.8 billion at the last moment. Personal investment strategy - a bet on operational or structural changes in companies that he initiates after buying influential stakes - continues to be rewarding.
The list can be continued, but “living legends” today are increasingly “stalling”. Cathie Wood (b. 1955), founder, CEO and CIO of ARK Invest, an ETF portfolio management company, was named the best stock picker in the crisis year 2020 by Bloomberg. But not having time to navigate in a rapidly changing environment, she lost more than 70% in the value of her fund in 2022 compared to last year's peak.
Ray Dalio (b. 1949), founder of the world's largest hedge fund, Bridgewater Associates, managing $236 billion, has seen his personal wealth rise to $22 billion. However, since 2021, the fund's performance has lagged noticeably behind the S&P 500.
Intuition and belief
More clearly than a great experience, today the instinct of investors on the prospects of a particular direction, asset or a company shows promise. A prime example of this is the investment activity of Ohio native Chris Dixon (b. 1972). Since 2013, when he partnered with venture capital firm Andreessen Horowitz, Dixon has chosen a "progressive" range of his investment priorities. He acquired stakes in companies operating, as they say, for the future: in the areas of 3D printing, drone manufacturing, virtual reality, etc.
Cryptocurrencies have also become a clear priority for Chris, and their quintessence is the Coinbase cryptocurrency exchange. Interest in a promising direction, of course, was not something out of the ordinary. However, investing 15 times in the same project, from the B round in 2013 to the IPO in April 2021, was considered by many as nothing more than an obsession. Nevertheless, the bet played. 30 million shares in the possession of Andreessen Horowitz were worth $10 billion on the first day of trading. Thus, Dixon's margin was approximately x60. And in just 2021, he, with his company and other successful projects, turned $350 million into $6 billion, thereby providing an almost 18-fold profit.
The aforementioned Coinbase exchange enriched not only Dixon. Micky Malka, Hans Tung, Scott Shleifer, Garry Tan, and others are just a few on the list of investors who have replenished their pockets thanks to the same project and the widespread rush demand for cryptocurrencies in 2021.
Hans Tung, Peter Thiel, Marc Stad, Rick Heitzmann and others belong to a completely different industry. We are talking about venture investors who profitably invested in the Airbnb rental service. Despite the apparent decline in business after widespread coronavirus restrictions, it soon became clear that work and tourist travel had not disappeared, but, on the contrary, resumed with renewed vigor. The result: an IPO in December 2020, revenue growth of 78% next year and a good investment margin.
TikTok video service parent platform ByteDance (Neil Shen, Hans Tung, Scott Shleifer), Snowflake cloud data service (Satish Dharmaraj, Marc Stad, Mike Speiser), DoorDash food delivery service (Keith Rabois, Pejman Nozad, Marc Stad), commercial and logistics platform Coupang (Neil Mehta, David Frankel, Matthew Witheiler) are other successful investment projects of the last year.
By the way, many names are repeated. This fact helped all the listed names to enter The Midas List-2022 - the ranking of the 100 best venture capital investors in the world according to The Forbes. Chris Dixon was the winner, succeeding Taiwanese Alfred Lin (b. 1973) of Sequoia Capital. The latter was fortunate mainly thanks to the IPOs of the mentioned Airbnb and DoorDash.
The secret of success
Perhaps, investment today does not hide cardinal secrets in comparison with traditional ones. However, the following appears to be of greater importance:
- A correct assessment of the potential of industries and specific projects, often various and unrelated.
- The ability to part with the asset that has taken off in time. Reality shows that the picture can change rapidly.
- Growing importance of constant market monitoring and operational steps.
- Commitment to principles and strategies.
- Consistency and experience.
- Asset diversification in conditions of increased risks.
And, finally, one more important detail. It is today, in the era of great risks and great opportunities, that the importance of stable income is growing. One of the assets that can generate such earnings is P2P investments with their understandable ROI system and relative income passivity.