This article by MOI Global instructor Shreekkanth Viswanathan is excerpted from a letter of SVN Capital, based near Chicago, Illinois.
Around this time last year my son, a High School Senior then, was working on college applications. He had focused on two in particular. One of them was Grinnell College, a small liberal arts school in Grinnell, IA. Having lived in Des Moines, IA, in the mid-90s, I was vaguely familiar with the college, but not intelligent enough to help an aspiring college entrant. So, we decided to visit the college. At the end of a wonderful tour of the campus I was pleasantly surprised to find that this tiny college in Grinnell, IA, laid claim to having the largest endowment per student in the US. With about $1.8 billion in endowment funds and approximately 1,700 full-time students, this Midwestern gem competed head-to-head with the likes of Harvard, Yale, Princeton, and other Ivies. I became curious to learn more about the school and its endowment.
Joseph Rosenfield, a 1925 graduate of Grinnell College, became the head of Grinnell’s endowment in 1968 when it had $11 million. Joe immediately invited his friend Warren Buffett to sit on the investment committee in which Warren served until 2011. By the time Joe stepped down in 1999, the endowment had grown to $1.0 billion, at a compounded annual growth rate of 15.1% per year, not counting the 4.75% of assets the endowment sent to the college every year for operating expenses. This is fantastic investment return over a 30-year span.
So how did Joe Rosenfield do it? He had a simple template: own a handful of stocks and hold them for a very long time. Jason Zweig, who now writes for Wall Street Journal, interviewed him and wrote about Joe Rosenfield for Money Magazine in 2000 – a wonderful article titled “A Golden Oldie: The Best Investor You’ve Never Heard Of.” Jason says – In 30 years, Rosenfield made fewer than a half-dozen major investments and has sold even more rarely. Jason summarized Rosenfield’s investment principles down to three:
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