The World’s Best Investors You’ve Never Heard Of

Investing Strategies

You’ll see them every year, right after all the market predictors are done with their end-of-year foolishness: countless articles that advise you to buy what the world’s best investors are buying.

The problem is that most of those advising you to “buy what the world’s best investors are buying” have no idea who the best investors are right now.

Warren Buffett is always mentioned. While it is true that Warren has one of the best long-term track records of all time, his public portfolio returns could have been better over the last two decades.

As for the investors who have ­actually had the best returns lately, you may not have heard of them – or where they’re putting their money…

Hand stacking coins

It’s not that following in Buffett’s footsteps wouldn’t have been fine. Owning Berkshire Hathaway’s (BRK-A) top 20 holdings with the same portfolio weight that Warren has given them, each stock has earned 8.97% annually since 2001. The returns increased to 9.92% annually over the last ten years, and while that beats the S&P 500’s 7.30% over the same time frame, it is not a best-in-class return.

Carl Icahn’s name will also come up. And Icahn is, in fact, one of the greatest investors of all time—studying every deal he has done since the 1970s would give you an education no business school in the world could match.

However, Icahn has also lagged behind the S&P 500 over the last decade with an annualized return of 11.87%.

Seth Klarman of Baupost is, similarly, one of the best investors of all time. However, his equities portfolio has returned just 6.59% over the past decade. Most of his fund’s assets are in fixed income and real estate opportunities not reported in 13F filings.

The superstars of yesterday are now aging billionaires whose goals differ from those of us who are still looking to pile up wealth as rapidly as possible. Plus, their funds have billions of dollars, making it far more challenging to take advantage of the most attractive opportunities.

I will spend a couple of issues identifying who the best investors are today, and share a few ideas they have been buying recently that might offer outstanding potential returns.

For starters: have you heard of Electron Capital?

Most investors have not, but the New York firm, which invests in companies focused on the transition of energy consumption towards lower carbon intensity solutions, has one of the best track records in the game.

Electron is investing in companies committed to producing clean energy and developing infrastructure for the energy transition process, as well as the utilities that will provide cleaner energy to homes and industries in the future.

It is no secret that I am still a huge fan of fossil fuels, but I have also made it clear that I believe in the eventual transition to green energy. Of course, we will still burn oil and gas, but renewable energy will be the fastest-growing segment of the energy industry.

How good is Electron Capital?

Look at a few stocks it sold recently to see how good it is.

In the third quarter, Electron sold out of Enphase Energy (ENHP), the popular solar inverter company, at a price of about $276. Its first purchase of the stock was back in 2017, long before every talking head and pundit recommended it. At the time, Electron paid a split-adjusted price of $1.37.

Electron also sold a bunch of Quanta Services (PWR) in the quarter for an estimated price of $127. The firm’s first purchase of the stock was in 2018, at around $33.

The firm has returned in excess of 33% over the past three years for its investors. In addition, over the past 17 years, the firm has outperformed the S&P 500 by a 2.5-to-1 margin and the World Utilities Index by more than 13 times.

One of Electron Capital’s newest positions is Eos Energy Enterprises (EOSE), a company that designs, manufactures, and deploys battery storage solutions for utility, commercial, industrial, and renewable energy markets.

Eos Energy has developed Znyth, an aqueous zinc battery designed to overcome the limitations of conventional lithium-ion technology. This company has a long-shot element, but if the battery works at a utility level, this stock could be a ten-bagger as the energy transition progresses.

Electron Capital was also adding to its already large position in Stem (STEM), a global leader in AI-driven clean energy software and services. Stem’s AI- software platform, Athena, enables organizations to use AI to deploy and unlock value from large-scale clean energy assets. The company also provides solutions to help improve returns across energy projects, including storage, solar, and electric vehicle fleet charging.

Over the next several decades, there is an enormous amount of money to be made in both fossil fuels and renewable energy.

I have fossil fuels more than covered in both Underground Income and The 2023 Turnaround Project, but investors looking to uncover energy transition opportunities might do well to track the buying and selling of Electron Capital.

I will be doing the same here at the Hidden Profits Report.