Warren buffett and George Soros are the most mediatic investors there has ever been. In the case of the first, the Oracle of Omaha, his fame is due to the extremely long duration of his career as an asset manager and the colossal returns achieved: 23% annual average over 65 years. The latter carved out his legend in 1992 with a short bet against the British pound that put the Bank of England itself in check. Now, being the most famous, are they also the best?
Answering the question of who is the best investor in history is not as obvious as it might seem. It is necessary to take into account not only the accumulated returns, but also for how many years those benefits were achieved. In addition, we must consider what the markets did during that time. It is not the same to make money in the middle of strong recessions than to ride the wave of a great economic expansion.
In addition, the result changes a lot depending on the type of asset and the strategies adopted. An investment in venture capital, with participation in unlisted companies, could never be compared to the operation of a conventional stock exchange fund. Similarly, the flexibility (and some opacity) with which hedge funds invest (hedge funds) makes its results not comparable with those of other investors.
When it comes to comparing sustained returns in equities, it is difficult for anyone to question the leadership of Warren Buffett. Through its investee vehicle Berkshire Hathaway (which is also publicly traded), it has achieved an average annual return of 20%, since 1965. According to the investor’s calculations, if the first years are added, when it managed a family capital Between 1955 and 1965, the average annual profitability reached 23%.
Perhaps the figure is not dazzling, but what is exceptional is the very long period of good returns. $ 100 invested with Buffett in 1955 would have turned into $ 64 million today. Today the investor is the sixth richest man in the world, with a net worth of 102,000 million dollars
Buffett is 91 years old. His right hand, Charlie munger, 97 years old. Although they have already delegated some of the management, each year when the Berkshire Hathaway shareholders’ meeting is held, they respond to dozens of questions ranging from monetary policy, to streaming going through the future of the insurance sector. Anyone can invest hand in hand with Buffett and Munger by buying Berkshire Hathaway B shares. They are worth $ 281 and in the last year they have appreciated 33%.
Munger, who is also from Omaha, Nebraska and who worked at Buffett’s father’s grocery store as a teenager, maintained his own investment firm between 1962 and 1975, achieving an average solo return of 19.8%. In 1978 he would go on to become vice president of Berkshire Hathaway.
George soros, who is the same age as Warren Buffett, was born in Budapest, Hungary in 1933. In 1971, after working for several banks, he founded his own hedge fund with Jim Rogers. Between that year and 2011, it achieved an average annual return of 20% for the participants of this vehicle. It is a high profitability, although for a hedge fund Not that much.
The most striking anecdote of Soros’s career is the short bet against the British pound, but the truth is that already in the 80s he began to use what is called investing through algorithms. Soros agreed for a brief period with another figure in the industry that, this yes, has achieved stratospheric results, Jim simons.
Hedge funds or hedge fundsCompared to conventional investment funds, they hardly have any restrictions on their operation. They can go short against any asset, go into debt, buy and sell in milliseconds, purchase options, hedges and all kinds of derivative contracts, or concentrate the portfolio in a handful of securities. Things that normal fund managers cannot do so freely.
Simons, a mathematician by training, converted investment through his hedge fund Renaissance Technologies into a precision tool like never seen before. As the journalist Gregory Zuckerman said in The Wall Street Journal, “Simons managed to pass the markets.” The vehicle he managed achieved a gross annual return of 66% between 1988 and 2018. The return net of commissions was 39%. These commissions were shared between Simons and his small team of mathematicians.
However, Renaissance since its inception was a vehicle closed to the general public. Very few institutional investors were able to invest with Simons, and what happened inside the fund was a true black box, which is why many authors remove Simons from the more conventional list of the best investors.
Another manager that always appears in the pools is Benjamin Graham, who was Buffett’s professor at Columbia University (New York) and is considered the father of value investment (buying companies frowned upon by the market, to await their appreciation). However, his returns were not as amazing as those of his disciple: he achieved an annual average of 11.4% in 29 exercises.
Another proper name of the industry is Peter lynch, who with his emblematic Fidelity Magellan Fund achieved a 29% return between 1977 and 1990.
Also with a somewhat shorter trajectory than its elders, but surprisingly profitable, it appears Jim rogers, who founded the Quantum Fund with George Soros in 1973. Rogers retired very young, aged 37, but in his active period he achieved an average annual return of 38%. In its golden age, between 1973 and 1980, the fund appreciated 4,200%.
The best disciples in Spain
The value investment philosophy created by Benjamin Graham, and brought to excellence by Warren Buffett, has many followers in Spain. The pioneer was Francisco García Paramés, at Bestinver. In its best period, between 1993 and 2008, it achieved an average annual profitability of 15%, levels never seen before. However, since he founded his own manager, things have not gone as expected and his flagship fund, Cobas Selección, has still lost 9% since its inception in 2016.
Who has taken the baton as the great benchmark of investment in the Stock Market is Ivan Martin, president of the management company Magallanes Value Investors. This 44-year-old manager began to stand out in 2008, when he managed funds for the British insurer Aviva. Already then he began to get international recognition. After passing through Santander Asset Management, in 2015 he decided to found his own firm. He named it Magallanes in honor of the Fidelity Magellan fund, managed by one of its great leaders in the sector, Peter Lynch.
Its flagship fund, the Magallanes European Equity, has generated an accumulated profitability of 81% since it was launched at the beginning of 2015 (in the type of participation that has the lowest commissions, only accessible for high net worth). In the last five years it has achieved an average annual return of 10.7%. It may not seem very high, but it must be borne in mind that the vehicle invests only in the European Stock Market, which has not had as great a revaluation as the American one.
Martín is one of the few Spanish managers that is repeatedly managing to compete with the best investors from around the world on the European Stock Market.
Another manager with exceptional results, although competing in a difficult market, is Didac Perez Alonso, from Caja de Ingenieros. In the last decade, it has achieved an average annual return of 7.75% with its fund specialized in the Emerging Countries Stock Market. It is one of the asset categories that has performed the worst in the last ten years, only 5.6% on an annual average. Pérez, like Martín, is one of the few investors to appear in international leagues with the most prominent managers.
In the field of the Spanish Stock Market, it is more difficult to highlight great professionals, especially since it is the equity market that has had the worst performance between 2011 and 2021. Only 2.26% on an annual average. Therefore, even the most prominent investors have also failed to achieve outstanding returns.
In this area it stands out Lola solana, manager of the Santander Small Caps fund, which in this period has achieved a notable average annual return of 9.14%, with its investments in small and mid-capitalization companies, ranking as the most profitable vehicle on the Spanish Stock Market in the last decade.
It also highlights the work of Marc Garrigasait, one of the world’s best specialists in investment in agriculture.
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