Founder Owned Companies

In doing some stock research today I ran across the idea of investing in and holding onto Founder Ran Public companies.  Here are seven companies that were recommended in the article from InvestorPlace.com by Will Ashworth a contributor to the outlet.

Amazon (AMZN) CEO Jeff Bezos.

Interactive Brokers Group (IBKR) CEO Thomas Peterfly

Zayo Group Holdings (ZAYO) CEO Dan Caruso

Blackrock, Inc. (BLK) CEO Larry Fink

FedEx (FDX) CEO Fred Smith

RealPage (RP) CEO Stephen Winn

Net Flix (NFLX) CEO Reed Hastings

 

Now the article suggested that you could purchase these stocks and hold them forever.  While I’m not sure about holding anything forever (look to General Electric GE that was kicked out of the Dow Jones Industrial Average this week) I do believe you may want to consider holding some of these long-term.  While we can’t make all decisions based on past performance … past performance is a good place to consider starting at to get information to make a decision.

By clicking on the links above you will see five-year charts (or should) from Yahoo Finance.  If you don’t see a five year chart you can make it one by simply clicking on 5Y at the top of the chart.

Bottom line … here is how the price shows over the past five years (and all have been price adjusted for potential splits).

 

Stock Price 06/21/2013 Price 06/21/2018 Price Change % Change
AMZN $273.36 $1,730.26 $1,456.90 532.96%
IBKR $16.27 $66.41 $50.14 308.17%
ZAYO* $22.00 $36.35 $14.35 65.23%
BLK $256.85 $523.98 $267.13 104.00%
FDX $98.58 $246.16 $147.58 149.71%
RP $18.34 $56.60 $38.26 208.62%
NFLX $30.16 $414.86 $384.70 1,275.53%

* No price until 10/20/2014

While some of these returns were really good (AMZN and NFLX) the others were just good.  What would have happened if a person would have invested $100,000 into such a portfolio of stocks on 10/20/2014 (since one has no price available until 10/20/2014) which is about 3 years and 8 months ago?

Let’s See:

Slide1

This graph assumes an equal amount of money being invested into each stock.  The average price on 10/24/2014 would have been $128.27 as compared to an average price as of this writing of $439.51.  A terrific Equity Curve (green). The Red Line represents the 200-day simple moving average price of all the holdings.

Turning $128.27 into $439.51 in about 3 years and 8 months would require a total return of 242.64%.  That’s an average annual return (divide return by 3.67) of 66.11% per year. On a compounded annual basis, a person would literally have to earn 39.87% per year.

How does this compare to say the S&P 500 Index?

On 10/24/2014 the SPX closed at 1964.58.  As of this writing it stands at 2749.76. An increase of 785.18 or 39.97%.  Annually that is an average return of 10.89% and on a compounded annual basis it is only 9.59%.  Wouldn’t you agree that 39.87% per year is better than 9.59% anytime … not to mention that some of these companies do pay a dividend, though not all do?

You may want to consider such a strategy if you are a buy and hold type investor.

That’s all for now.  Good luck on your future investments and let me know if you have any questions.

 

Thanks,

Jerry

Freewavemaker

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s