April 23, 2013

8 of History’s Best Investments

When the right investor marries the right time with the right company, the return on investment and the size of the return goes through the roof

This clown made someone a lot of money. (Photo: AP) This clown made someone a lot of money. (Photo: AP)

Making a great investment depends on a number of factors. Being in the right place at the right time, knowing the right person, and having a vision for a business or sector can all add up to a big payday.

We wondered which investors have managed to shine in terms of return on investment (when adjusted for inflation). As you might imagine, investors who saw the potential of Facebook, eBay and other Internet success stories made out well.

But there are great investments to be found in any age. Just look at the stories of Asa Candler (Coke) and Howard Hughes (TWA) and others who found riches in other eras.

We sifted through the data and came up with our list of 8 of History’s Best Investments.

Warren Buffett (Photo: AP)Investor: Warren Buffet

Investment: $25 million ($135 million today) to buy See’s Candy in 1972

ROI:  10x

Lucy Ricardo might have had trouble at the candy factory, but Warren Buffet had a vision in 1972 that was sweeter than anyone could have expected. Buffet bought See’s, a family-owned candy company with stores around the American West. Founded in 1921, the business became, according to an interview with Fortune, one of Warren Buffet’s favorite investments. For an outlay of $25 million, the return has topped more than $1.35 billion so far, since he still owns the stock. A sweet return for the company where Lucille Ball trained for her classic “I Love Lucy” candy factory comedy bit.

Howard HughesInvestor: Howard Hughes

Investment: $7 million ($113 million today) for control of TWA circa 1940

ROI:  11x

Howard Hughes was, to put it politely, a tad eccentric. That’s the word we’ll use. After all, really rich people deserve our respect. You never know when a billionaire might be hitchhiking in the desert. So we’ll say eccentric, not crackers. Behavior aside, Howard Hughes managed, even in the face of seeming failure, to make money. Lots and lots of money. Such was the case with his investment in TWA. The iconic, and now defunct, airline, came under Hughes’ control by 1952. For an investment of $7 million he got control of 78% of the airline. A drawn-out lawsuit by his investors that lasted well in to the 1960s led to Hughes being forced to sell his shares. Not to worry, though, he walked off with about $550 million ($4 billion today).

McDonald's sign. (Photo: AP)Investor: Ray Kroc

Investment: $2.7 million ($20.4 million today) in McDonald’s in 1961

ROI: 54x

Burgers and fries are a staple of post-World War II America, and no one symbolizes their rise in the U.S. diet more than Ray Kroc. Kroc’s story of seeing the possibility of riches in the California drive-in owned by the brothers McDonald is oft told. After helping the brothers franchise their restaurants for several years, Kroc bought them out. For his investment, Kroc managed to amass a fortune of $500 million ($1.1 billion today) when he died in 1984.

The Standard Oil founder, John D. Rockefeller, in 1936. (Photo: AP)Investor: Henry Flagler

Investment: $100,000 ($1.6 million today) in Standard Oil in 1867

ROI: 707x

Imagine a world in which oil has little value. Then imagine joining forces with a man who jumped into the business early and exploited its value like no other. That’s how Henry Flagler managed to turn his $100,000 fee to join John D. Rockefeller’s business into an estate worth $75 million ($1.7 billion today) in 1913. And that doesn’t count the $50 million he spent building railroads and hotels and founding cities (Miami, for one) in his adopted state of Florida.

EBay sign at its headquarters. (Photo: AP)Investor: Benchmark Capital

Investment: $6.7 million ($9.9 million today) in eBay in 1995

ROI: 714x

Benchmark Capital couldn’t have been more aptly named. Started by four partners who agreed to share equally in all profits, in the late 1990s it became the most profitable venture capital firm in history. The quartet hit it big when they made an opening “bid” on the fledgling Internet auction house eBay. By 1999, the bet had paid off, with a value of $5 billion ($6.8 billion today).

Facebook co-founder Mark Zuckerberg. (Photo: AP)Investor: Peter Thiel

Investment: $500,000 in Facebook in 2005

ROI:  800x

It pays to be social. At least for some people. Just a few years ago, MySpace was the hottest place to be. Now, not so much. These days, everyone and their grandmother (and maybe even their dog) is on Facebook. PayPal founder Peter Thiel was ahead of the curve.

In 2005, he plunked down half a million dollars for a 10% stake in the then small site, with some of the shares belonging to investors in Thiel’s Founders Fund. In 2012, Thiel sold off about 80% of his 25 million Facebook shares for $400 million.

Coke bottle and glass. (Photo: AP)Investor: Asa Candler

Investment: $2,300 ($57,875 today) to buy Coca-Cola in 1891

ROI:  833x

Coca-Cola is the pause that refreshes, as the slogan used to say. Before Coke came along, the options for a cold drink on a hot day were far more limited. But then a Southern pharmacist trying to concoct a headache remedy stumbled upon a very different sort of elixir. With his personal health problems growing, and Coke not bringing in much revenue, the pharmacist sold off his recipe.

If he had known what was to come, he would have needed that headache remedy. Lots of it. Asa Candler scooped up Coke for $2,300 ($58,000) in 1891 and sold it for $25 million ($332 million today) in 1923. Adjusting the purchase price for 1923 dollars brings a refreshing return for Candler.

Henry Ford stands next to a Model T in 1921. (Photo: AP)Investor: John Gray

Investment: $10,500 in Ford Motor Co. in 1903 ($264,000 today)

ROI:  1,300x

Often in investing, it’s not how smart you are, but who you know. It helps to have a budding business titan in the family circle. John Gray proves the rule. His nephew had formed a car company with Henry Ford and was looking for investors. One of the original dozen was Gray. While he never personally reaped the benefits of the investment, his heirs made out well. When Ford bought the stock from them in 1919, they were paid a whopping $26.25 million ($1.8 billion today).

 

----------

More Top 10 lists from AdvisorOne:

Page 4 of 9
Single page view Reprints Discuss this story
This is where the comments go.