There are plenty of stocks investors can point to have significant ownership stakes by billionaires. Indeed, the argument can probably be made that most billionaire investors have exposure to nearly every stock in the market via index funds for a portion of their portfolios.
That said, when looking at truly world-class investors with exposure to single-stock names, I thought I’d look for one non-Magnificent-7 stock I think may be intriguing for investors to consider.
I think I have it. I’m going to discuss why Costco (NASDAQ:COST | COST Price Prediction) appears to be so widely-owned in the world of wealthy investors, and why this stock may also be perfect for a small retail investor as well right now.
Warren Buffett
The former CEO of Berkshire Hathaway (NYSE:BRK-B), and still my favorite CEO and investor of all time, Warren Buffett invested in Costco during the second quarter of 2000.
That’s right, more than a quarter century ago, Buffett bought Costco at under $29 per share. After the stock rose roughly 900% from his purchase price, he ended up selling his position more than two decades later in Q3 2020.
That’s a very long time to hold any particular stock, and it’s worth pointing out that plenty happened between 2000 and 2020. You know, the dot-com bust, Great Financial Crisis, and a pandemic. But hey.
What’s amazing about this purchase is that Buffett bought Costco stock after an absolute bloodbath in the Nasdaq and most tech (and non-tech stocks). He then sold Costco at a premium multiple in the middle of the third major crisis over that two decade span.
With a durable competitive advantage (moat) around its business from membership fees (generating around 70% of Costco’s business) and consistent same-store sales even during downturns, it’s clear that this purchase met all of Warren Buffett’s investing criteria. I only hope one day to be a fraction of as good of an investor as Warren Buffett, but there’s still time.
Ken Fisher
A pile of $100 bills
Fisher Investments’ Ken Fisher purchased Costco stock in 2012 somewhere within the range of $45 per share to $65 per share, seeing its value skyrocket since this purchase. Notably, Costco is still a core holding for Mr. Fisher, and represents another notable long-term billionaire investor purchase I think is worth considering.
His purchase of millions of shares of Costco stock following the GFC is an indication that many top-tier investment managers want to own Costco when it’s cheap. And unlike the company’s merchandise, Costco rarely goes on sale.
Fisher’s investing strategy has been similar to Buffett’s in that he’s a long-term thinker, and has a stark value tilt. His funds have outperformed the S&P 500 by a wide margin, in part due to well-time investments in blue chip stocks such as Costco trading at discounts. His view is that companies with strong customer loyalty and growing private label success can drive upside over time. I can’t disagree with that logic.
Chris Davis
Image of a yacht
Founder of Davis Advisors, Chris Davis bought Costco sometime in mid-2000 for around $27 per share, another incredible price to get in this world-class name. It’s unclear to me whether he offloaded part of his position over time, though he has said in the past that he has held this as a long-term investment, as the other billionaire fund mangers on this list have.
His publicly-stated view in the past has been that Costco is among the best quality compounders in the market. His view is that the company’s business model is world-class, at least in the world of retail. That’s a view that’s hard to disagree with, and one of the reasons why investors continue to buy and hold this stock to this day.
With plenty of billionaire investors like Davis, Buffett and Fisher owning Costco over the long-term, I think this speaks to the company’s quality, and the fact that varying investing strategies can come to the same conclusion – world-class brands with loyal customers are worth holding onto.
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