Two more powerful examples of holding blue-chip stocks for the long run
Continuing my series on the importance of holding stocks for the long term, today I'd like to focus on two more successful examples of this form of investing...
First is my college buddy Bill Ackman, who founded the famed Pershing Square hedge fund... And second is the team at our flagship newsletter here at Stansberry Research: Stansberry's Investment Advisory.
1) Among professional money managers, I think Bill comes closest to following the "10 for 10" strategy I outlined in Thursday's e-mail – buying only 10 stocks and having an average holding period of 10 years.
This strategy implies replacing roughly one stock a year on average and involves very little rebalancing since the key to long-term investment success (as I've written many times before) is letting your winners run.
The 2023 annual report (specifically, pages 115 and 116) from Bill's Pershing Square Holdings shows an extremely concentrated portfolio of nine stocks (it had been 10 until Bill sold Lowe's (LOW) recently). Here's the breakdown:
This graphic from the report shows that over the past two decades, Bill has had only 45 significant long positions – a little more than two per year:
(Note that my analysis of Bill excludes a half-dozen shorts – an activity he abandoned after his failed campaign against Herbalife (HLF) – and a handful of one-off derivative bets like his famous credit-default swap investment on the eve of the COVID crash, when he turned $27 million into $2.6 billion in a matter of weeks.)
Bill has held those stocks I showed above in his portfolio for an average of eight and a half years:
So we can see that in terms of portfolio concentration and turnover, Bill is practicing something pretty close to the "10 for 10" strategy I outlined.
Has it worked?
It sure has... Over the past nearly two decades, Bill's hedge fund (2004 to 2012) and closed-end fund (2013 through March 19, 2024) have cumulatively compounded at 15.6% annually, net of fees, versus only 10% for the S&P 500 Index.
That's good for a total return of 1,776.5% – triple the 592.1% return of the S&P 500, as you can see on this page from the Pershing Square annual report:
In summary, this is another data point of how well a strategy of buying carefully selected blue-chip stocks and holding for the long run can generate massive, market-beating returns.
2) For another example, let's turn to our flagship newsletter here at Stansberry Research: Stansberry's Investment Advisory...
Now, let me be clear – the Investment Advisory is a monthly newsletter. We're not running a fund.
We're giving advice to our subscribers, who manage their own money. And we aim to give subscribers one good idea each month, but we know they can't buy them all – especially if they've subscribed for many years.
We don't manage the model portfolio like a fund...
And we understand that our subscribers apply a wide range of strategies and have an equally broad array of interests and goals when it comes to stocks and markets... so we recommend a wide range of stocks.
For example, just in the past several issues, we've pitched one of the largest, best-known businesses in the world... a developing-market stock exchange... and a busted former tech high-flyer.
But if you look closely at our long-term results, you can see the same phenomena at work that power the "10 for 10" strategy I've been describing...
For example, take the longest-term holding in our portfolio: candy and snack maker Hershey (HSY).
It needs little introduction – the company has a collection of brands like the iconic Hershey Kisses, Reese's, Kit Kat, Almond Joy, and Twizzlers.
When the team recommended it in the December 2007 issue of the Investment Advisory (if you're a subscriber, you can access it here), they wrote: "Expect to hold this stock for an exceptionally long period of time."
That's exactly what has happened... And the returns show the incredible power of holding a capital-efficient stock like this over the long run.
Subscribers who followed the advice to buy back then in December 2007 – and, equally importantly, the advice to continue holding it to this day – have enjoyed more than 16 years of capital gains and dividend payments.
That's good for an incredible 463% return, far surpassing the 261% gain of the S&P 500 over that same time frame.
In fairness to our paying subscribers, I can't give away the names of all our top ideas. But Hershey is hardly an anomaly...
If you look at the recent top 10 performers among our 44 current open recommendations (one of which is Hershey), you'll find they've been in the model portfolio for an average of nearly 10 years.
And the returns would impress even my dear friend Bill...
As of June 18, those 10 positions have gained an average of 434%, including one of 1,422%.
Importantly, none of these were risky lottery tickets. They're household names with rock-solid balance sheets that compound in value over time.
The Investment Advisory portfolio is filled with stocks that fit this profile – and it has worked beautifully.
We track every recommendation we've ever made – yes, including the stinkers – and, as of our most recent quarterly update, the average return of all the recommendations we've made since launching the letter in 1999 is 19.6%. If someone had made comparable investments in the S&P 500 over the same period, the returns on each of those investments would have been just 14.9%.
Now that's outperformance.
My team and I are very proud of the Investment Advisory's phenomenal long-term track record of providing our subscribers with market-beating ideas, and we aim to continue it.
If you'd like to give the Investment Advisory a try, right now you can do so for only $49 for an entire year. Even better, it's 100% risk-free because we offer a 30-day money-back guarantee.
That's 12 monthly issues... access to our entire archive of back issues and special reports... and access to the entire portfolio of all open recommendations.
You can get started in minutes by clicking here.
Best regards,
Whitney
P.S. I welcome your feedback – send me an e-mail by clicking here.