In this fast-paced world, many people often get lost in the crowd, but one woman has used patience and research to build a world-class portfolio.
Who is Nancy Zevenbergen? I hear you ask!
Well, she is a world-class investor who set up her firm from her living room floor whilst nursing a baby and betting around $500,000 of her own money. Today, however, Zevenbergen Capital Investments (MUTF: SCATX) manages around $6 billion in assets from a small office in Seattle. Her core senior stock-picking team is made up of her and two other women, Brooke De Boutray and Leslie Tubbs, who have both also made a name for themselves in the finance industry.
We can learn a lot from this impressive woman. In terms of her comparable peers, she is in the top 1% looking at her returns over the last 5 years. With a long and successful career behind her, we lay out 3 tips from her investing strategy that an investor can apply to themselves and their portfolio.
1. Invest for the long-term
Much like MyWallSt, Zevenbergen holds a long-term investment philosophy stating that investing in a company for any less than five years is 'truly speculative'. With this strategy, Zevenbergen has outperformed the S&P 500 Index (NYSEARCA: VOO) by an average of 4 percentage points each year since 1987, not including the record-setting year of 2020. Using patience, logic, and a great instinct for entrepreneurs, this long-term investment strategy has yielded such great results that she can be counted among one of the best investors in the world.
Unfortunately, Zevenbergen only manages mutual funds, but this does not mean that we can't learn a thing or two from her investing career. Long-term investing is something we at MyWallSt advocate, If you want to learn more about our strategy you can click here to find out more.
2. Look for founder-led businesses.
Zevenbergen was an early investor in many large-scale businesses we know and love today. These investments included Apple, Microsoft, and Amazon. One thing that tied these three companies together was their founder-led status. Even today, whilst Apple is no longer founder-led, it still very much follows the ethos laid out by Steve Jobs when he was alive.
Of the 'Big Four', only Amazon is still led by its founder, Jeff Bezos. But whilst Bill Gates is no longer the CEO of Microsoft, he still remains the largest individual shareholder in the company, thus remaining invested in its success.
It is this 'investment' that Zevenbergen looks for in a company, stating:
"I would much rather buy a company and go to a desert island for five years knowing that a founder was leading it, because their vision and their passion would drive the company through ups and downs."
2020 was a prime example of this strategy working out for the best, as many founder-led firms such as Netflix, Amazon, and Tesla outpaced hired CEO-led firms. The top 400 stocks which were led by someone other than a founder saw an average return of 10% over the year, whereas the top 400 founder-led stocks registered an average share price growth of 58.4%.
Historically, founder-led businesses are able to recover quicker from a period of economic turmoil. Something to keep in mind when you are searching for your next investment opportunity.
3. Believe in the company
Another key tenet that MyWallSt and Nancy Zevenbergen have in common is that you should believe in the company that you choose to invest in. This means that you need to put in the time and effort researching the company, 'you have to do your homework.'
Some key questions to ask yourself are:
- Do you see the company growing over the next 10+ years? Will it become a titan such as Netflix or Amazon have?
- Do you feel that the company ethos is a winning one?
- Do you believe in the founder/CEO?
These are some hard questions to ask yourself when adding new stocks to your portfolio. It also helps if you buy or follow the company as a fan of its product. Believing in a company helps investors navigate market or stock volatility as you fully believe that it will come out the other side well enough to continue growing. You can read more on this subject here.
Nancy Zevenbergen is a world-class investor from whom we can all learn a thing or three. With these simple hacks, an investor can look ahead and know that the future will pay out more than they put in.
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MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here.
