The Greatest Investor You’ve Never Heard Of
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When considering the greatest investors of all time, certain names come up: Warren Buffett, Peter Lynch, Stan Druckenmiller.
There are several more that could be added to the debate. But one that’s unlikely to come up is George Michaelis.
And that’s a shame. Because his approach to investing was both timeless and accessible to the average investor. It also achieved incredible results.
Michaelis resurrected a closed-end fund called Source Capital. Source was founded in 1968 by a “gunslinger” of the go-go investment era. Go-go was a time when the public became enamored with the glamour stocks of their day like Xerox and Polaroid. Source not only invested in high-flying growth stocks, but it was especially partial to speculative and illiquid securities. Unsurprisingly, the fund nearly collapsed during the market crash of 1969-70.
Thankfully for Source, Michaelis’s approach couldn’t be more different.
Michaelis was brought into the fund in 1971. The firm had fallen so out of favor that it traded at half its net asset value. This steep discount attracted Buffett’s partner Charlie Munger, who bought 20% of the fund. His position was liquidated in 1977 for double the initial investment. A great return to be sure. But in hindsight, he bailed out too soon.