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One Of The Greatest Investments Of All Time
It is not often that an investment can annualise a return of 41% over 22 years...
One of the greatest investments of all time. An investment that annualised a return of 41% per year for 22 years. Here's what you need to know about Joel Tillinghast and Monster.
Joel Tillinghast was born in Wakefield, Rhode Island, and bought his first shares at age ten. After studying economics at university, he started working at research service Value Line before moving into investment banking.
In 1986 he was hired based on a five-minute conversation by legendary fund manager Peter Lynch to work at Fidelity and, by 1989, was in charge of the Fidelity Low-Priced Stock Fund.
In 2001, Tillinghast became aware of Hansen (now Monster Drinks) at a corporate event. He liked their drinks, was impressed by the intensity of the company's management, and noted that the shares were trading at only ten times earnings.
The US were in recession at the time, but Tillinghast believed the company's strategy had decoupled its success from the performance of the economy, and it was debt-free. He bought some shares at $0.08.
Hansen's energy drinks proved to be a massive hit, especially among the young, and profits began to soar - so much so that within a few years, the firm was making more money per share than the price Tillinghast had paid.
That meant Hansen was no longer cheap in terms of the price/earnings ratio. However, Tillinghast resisted the urge to sell, believing the company still had tremendous growth potential and would benefit from customer loyalty.
As of January 2023, Monster's shares, $MNST, were trading at $102 - a rise of more than 1,275 times over two decades, representing an annualised return of 41%. Shares are up 11% this year.
That success played a part in enabling Tillinghast to beat the market by around 3.9% a year since 1989 (he is due to retire at the end of this year).
His successful investment in Monster highlights the importance of researching and thinking ahead to where a company could be several years down the line.
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