How to profit from the trades of investing legends

Flight Centre Travel Group Ltd (ASX:FLT), Magellan Financial Group Ltd (ASX:MFG) and XERO FPO NZ (ASX:XRO) are amongst a handful of unique ASX companies that offer investors an opportunity to invest alongside very wealthy founding operators.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Warren Buffett's recently published annual letter to shareholders of Berkshire Hathaway is a timely reminder of the huge wealth investors can achieve by "hitching a ride" with a top-performing entrepreneur.

While Buffett is famous for being one of the richest people on the planet, what is less known is the number of people who have become millionaires simply by buying-and-holding Berkshire Hathaway shares.

A similar scenario can be applied to a handful of Australian stocks where early investors who have stuck with entrepreneurial founders such as Graham Turner from Flight Centre Travel Group Ltd (ASX: FLT) have grown rich themselves. Flight Centre, under Turner's stewardship has produced a 10-year total shareholder return (TSR) of 18.4% per annum (pa).

Of course, in hindsight it's easy to identify these types of value creating superstars, but it's no cinch to do so in the early days of a growth story.

One way to narrow the field is to focus on founders who live and breath their business and have significant amounts of their own wealth tied to the business. Here are two to consider…

Magellan Financial Group Ltd (ASX: MFG) – With a TSR of 42.1% pa over the past decade the track record of this still young company is incredibly impressive. Magellan operates in the growing industry of funds management where it is foreseeable that one day Magellan's funds under management are many times larger than today. The group is led by co- founder Hamish Douglass who owns around 7% of this $3.6 billion company.

XERO FPO NZ (ASX: XRO) – Rod Drury is the co-founder steering this $2 billion cloud-based accounting software business as it captures a growing number of users. Drury holds 16% of the shares so his fortunes are closely aligned to the future of Xero. While it is still early days for this company, the three-year TSR stands at 15.8% per annum.

Motley Fool contributor Tim McArthur has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia owns shares of Xero. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Investing

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares
Technology Shares

Joining the revolution: How I'd invest in ASX AI shares right now

Advances in artificial intelligence (AI) could usher in a new industrial revolution. Here’s how you can invest in it.

Read more »

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »