• Peter Lynch one of the most successful fund managers
• Not all good opportunities taken
• Lynch mourns missed investments in Apple and NVIDIA
Former fund manager Peter Lynch has had great success in his long career as an investor. Under his direction, the Magellan Fund of the investment company Fidelity developed into a star of returns from the 1970s to 1990 and enabled Lynch to retire early at the age of only 46. During this time, fund assets multiplied from around $18-20 million to a whopping $14 billion.
Value investing advocate
Like star investor Warren Buffett, Peter Lynch also pursued the value approach: he was specifically looking for undervalued stocks in order to add them to the fund portfolio as a long-term investor. Lynch is considered a tough analyst who was not influenced by assumptions or possible future forecasts, just like Buffett, he preferred companies whose business model he understood and whose management level he was convinced of.
Growth-oriented tech companies have hardly met the conditions that Peter Lynch set for an investment. Accordingly, they were also underrepresented in the fund portfolio of the Fidelity flagship product. A mistake, as Lynch conceded years later in an interview with CNCB’s Squawk Box.
Apple: “How stupid was I?”
One of those missed investments that Lynch is mourning is tech giant Apple. It wasn’t because of the business model that he didn’t get involved: “Apple wasn’t that difficult to understand, I mean, how stupid was I?” The company has a “nice balance sheet. I should have done some work on Apple … it’s not a complicated company,” said the investor self-critically.
He didn’t buy the stock even after seeing the high margin Apple had generated selling iPods, a product that even his daughter used.
Fellow investor Warren Buffett also made the mistake of underestimating Apple’s potential – for years the head of Berkshire Hathaway stood on the sidelines at Apple and just watched the steady upward trend in Apple shares. It wasn’t until 2016 that Buffett took action and acquired a first stake in the iPhone maker. Apple is now by far the largest position in Buffett’s portfolio – the investor has increased its stake several times in recent years.
Also missed NVIDIA
In addition to the missed investment in Apple, Lynch mourns another missed investment opportunity: an entry into the chip manufacturer NVIDIA. “NVIDIA was a huge stock, wish I could spell it out,” Lynch joked to CNBC.
Here, too, there is something in common with Warren Buffett – NVIDIA stock has no place in Buffett’s portfolio either. However, the star investor had joined an industry colleague of NVIDIA, the contract manufacturer TSMC, only to pull the ripcord a few months later and massively reduce its stake again.
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