Warren Buffett Returns, Berkshire Hathaway Performance & IPO Winners
Warren Buffett's returns at Berkshire Hathaway came to 1,027x after money printing over 60 years. We compare them with Walmart, Nike and other IPO winners.
Topic
IPO Investing: The Winners and the Odds
The best IPOs of the last 60 years beat money printing by enormous margins.
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Measured from their listings, Walmart returned 1,024x after M2, Home Depot 826x, McDonald’s 760x and Nike 724x, with Costco at 85x and Starbucks at 42x.
The catch, which Part IV spends most of its time on, is the odds. Long-run IPO research suggests around 30-35% go to zero or are delisted within 10 to 20 years and only about 10-15% beat both the S&P 500 and the money supply, so a portfolio of new listings is far more likely to hold failures than Walmarts.
- 1,024x Walmart since its 1970 listing M2-adjusted, at 21.1% a year.
- 30-35% IPOs that go to zero or delist Within 10 to 20 years, from the research cited in Part IV.
- 10-15% IPOs that beat the index and M2 The small group that cleared both bars over the long run.
Articles on IPO Investing
1 article from our research on this topic.
Plain-English definitions
Key terms for IPO investing
- IPO
- An initial public offering, the point when a company first lists its shares on a stock exchange.
- Survivorship bias
- Judging a strategy by the winners that are still around while forgetting the companies that failed or were delisted along the way.
- CAGR
- Compound annual growth rate: the steady yearly rate that would turn the starting value into the ending value over the period.
- M2-adjusted value 1.0 = break-even
- An asset’s growth divided by M2 growth over the same years. Above 1.0 it gained share of the money pool, below 1.0 it lost share.
FAQ
Questions about IPO investing
Answers drawn from the figures in our research. Educational only, not financial advice.
Which IPOs beat money printing the most?
Of the non-tech companies we measured from their listing dates, Walmart (1970) led at 1,024x M2-adjusted and 21.1% a year, followed by Home Depot (1981) at 826x, McDonald’s (1965) at 760x and Nike (1980) at 724x. Costco from 1985 and Starbucks from 1992 returned 85x and 42x. Among the tech listings in Part V, Nvidia reached 836x from 1999.
Is buying IPOs a good way to build wealth?
On the evidence we looked at, it is a hard way to do it. Besides the low odds, you had to hold a winner through several recessions and crashes and resist selling after it doubled or tripled, and it took 40 to 60 years for the industrial winners to pull clear of the money supply. The S&P 500 total return got there with no picking at all, and Berkshire offered a middle route.
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