On Thursday, Sept. 25, Derek Jeter will take the field at Yankee Stadium for the last time. A winner of five World Series and selected to the All-Star team fourteen times, he will be remembered as one of the greatest players of his generation and an all-around class act.
Yankees fans are queuing up to say their goodbyes to the Captain, and there is a mini-bubble forming in ticket prices for the game. As of Tuesday, the average price of a ticket to Derek Jeter’s final game had risen 30% over the preceding week to $845.41.
Retiring at age 40 with a net worth estimated at $185 million, Derek Jeter has had a good run. But as he enters this next stage of his life — and as Yankees fans ponder the end of an era — there are also some long-tenured gentlemen nearing retirement from that borough to the south: Wall Street.
Today, we’re going to take a quick look at five legendary investors nearing the end of storied careers. I don’t expect any of these gentlemen to retire, per se. In fact, I would expect all to die in the saddle with their boots on, God willing.
But when these investing legends do eventually leave for that great boardroom in the sky, they will be missed by generations of investors that learned the trade from watching them operate.
Any list of living legends has to start with Warren Buffett. I hope the Oracle of Omaha lives forever, if for no other reason than I appreciate his wit. When asked what his plans were after becoming the world’s wealthiest man, his deadpan reply was “to become the oldest.”
He also once commented that he’d retire “About five to 10 years after I die” and that he and long-time business partner Charlie Munger “take as our hero Methuselah.”
Congrats, Mr. Buffett. You’ve managed to do something that so few of us are able to do: grow old gracefully and with a sense of humor.
Buffett admitted to CNBC’s Becky Quick that buying Berkshire Hathaway (BRK.A, BRK.B) was the worst trade of his career, yet he’s managed to do quite well, all things considered. Buffett has compounded Berkshire Hathaway’s book value at an astonishing 17.9% annualized return over the past 30 years, beating the S&P 500 by 6.8 percentage points per year. Again, that’s over a period of 30 years.
Buffett has dabbled in a little bit of everything over the decades, buying everything from silver bullion to complex options and derivatives. But he is most famous for his philosophy of buying great businesses with competitive “moats” around them selling at fair prices.
Well done, Mr. Buffett. You’ve made a lot of people wealthy over the course of your career.
Next on the list is Marty Whitman, founder of Third Avenue Management and lead portfolio manager of the Third Avenue Value Fund (TAVFX) for most of its history. Like Buffett, Whitman is a noted value investor, though he tends to focus more on “deep value” special situations. And like Buffett, Whitman has been around for a while; he has worked in the investment management business for more than 50 years.
Whitman retired from full-time management of the Third Avenue Value Fund in 2012, though he remains active in his company and as opinionated as ever. His letters to investors are as entertaining as they are insightful; if you are a student of finance, I recommend you spend a few days browsing them. In his most recent letter, Whitman digs into the dirty details of GAAP accounting.
Whitman’s insistence on balance sheet quality has served him well: over the past 15 years, his Third Avenue Value Fund has outperformed the S&P 500 by 2.4 percentage points per year over the past 15 years.
My enduring memory of the 78-year-old Carl Icahn will always be his manhandling of fellow activist investor Bill Ackman live on CNBC over Ackman’s Herbalife (HLF) short.
At one point, Icahn called Ackman a schoolyard crybaby.
Icahn isn’t the warm, grandfatherly type like Warren Buffett. He’s kind of a mean old man, to be honest. But he’s a hard-nosed, no-nonsense investor with a reputation for fixing broken companies.
He’s also a natural contrarian. In his own words, “The consensus thinking is generally wrong. If you go with a trend, the momentum always falls apart on you. So I buy companies that are not glamorous and usually out of favor. It is even better if the whole industry is out of favor.”
Over the past five years, Icahn’s flagship hedge fund has outperformed the S&P 500 by 8.9% per year.
In recent years, Icahn has taken very large and high-profile positions in Netflix (NFLX) and Apple (AAPL) and was a very loud advocate for Apple’s expanded buyback program.
Love him or hate him, we’ll be talking about him years after he’s gone.
Irving Kahn has seen it all. At 108 years old, his career predates the Great Depression. In fact, he made his first trade — a short sale of a copper mining company — in the summer of 1929, just months before the Great Crash.
Like Warren Buffett, Kahn studied under Benjamin Graham, the father of value investing, as a discipline. He was also one of the first professionals to earn the CFA designation.
If I am lucky enough to still be alive at 108, I probably won’t still be running money. Frankly, it’s a stressful job. The fact that Kahn is still actively managing portfolios is testament both to incredible genes and to the emotional detachment he brings to his value investing methodology. Per the Kahn Bother’s website:
“Kahn Brothers thinks of a portfolio as an orchard of fruit trees. One cannot expect fruit every year from each species of tree. Investments can and often do have varied and unpredictable timetables to maturity. We believe a suitable time horizon for investment fruit to ripen for harvest can be three to five years or longer. Indeed, a key factor in realizing outstanding performance is having the discipline and patience to maintain time-tested principles and not abandon the orchard before the fruit has ripened.”
At 108 years old, Kahn has no doubt learned a thing or two about patience.
And finally, we come to the granddaddy of macro hedge fund traders, George Soros.
Soros’ investment returns were the stuff of legend. In its heyday between 1969 and 2000, Soros’ Quantum Fund generated annual returns in excess of 20% per year.
Soros will be forever remembered as the man who broke the Bank of England — and as the man who pocketed nearly $2 billion in a single day shorting the pound.
Soros doesn’t do a lot of trading these days; he focuses more on political causes and leaves most investment decisions to his very capable lieutenants. But he’s still very much in the news, recently meeting with Argentine president Cristina Fernandez de Kirchner and very publicly suing BNY Mellon over the failure of the bank to release bondholder funds in the wake of Argentina’s recent technical default.
Soros’ fund has also been accumulating shares of one of my favorite global shale gas plays in Argentina’s YPF (YPF).
Charles Lewis Sizemore, CFA, is the chief investment officer of investment firm Sizemore Capital Management. As of this writing, he was long AAPL and YPF. Click here to receive his FREE weekly e-letter covering top market insights, trends, and the best stocks and ETFs to profit from today’s best global value plays.