My search for the British Warren Buffett

Exceptional money managers like Nick Train and Michael Lindsell have successfully implemented Buffett’s winning formula.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

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 Buffet is, without a doubt, the most popular investor in the world. His stellar rise to the top of the global rich list through savvy investments is an inspiring story for any of us. Indeed, Buffett’s simple model has inspired countless others to try the same strategy for wealth creation.

Canada’s Prem Watsa, India’s Radhakishan Damani and Spain’s Francisco García Paramés come to mind. Until recently, fund manager Neil Woodford was considered Buffett’s British counterpart. However, after a disastrous run over the past few years, Woodford had to stop withdrawals from his flagship investment fund down, leaving his reputation permanently damaged. 

Woodford’s misfortune has left a gap for British investors seeking inspiration and a few stock tips. So I set out to find the country’s next big investment legend.

Passive income stocks: our picks

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

The criteria

Warren Buffett presents a straightforward framework for wealth creation — buy a bunch of diverse companies below their intrinsic value and hold them for extended periods of time, preferably forever. Buffett, of course, used the float from his insurance business to fund these investments, so a little bit of leverage was involved. 

Since he took over his investment vehicle in 1964, Buffett has managed to expand the company’s book value at an annualised rate of 18.7%, while the S&P 500 has compounded at a mere 9.7% over that same period. 

With that in mind, it’s clear that the British Buffett is probably a professional stock picker or a business leader in charge of capital allocation at a well-diversified conglomerate that has grown faster than the FTSE 100 over several decades. 

Britain’s wealthiest entrepreneurs

Britain’s two richest families, the Hindujas and the Reuben brothers, both fit the bill. The Hinduja Group is a massive global conglomerate that is involved in several different industries, including motor vehicles, banking, call centres and healthcare.

Meanwhile, the Reuben brothers are bona fide investors who’ve managed to compound their wealth from $3.2bn in 2003 to £18.9bn in 2019, an annualised growth rate of 11.7%. The FTSE 100, meanwhile, has merely doubled over that period, implying a compound growth rate of 4.4%. 

However, the Hinduja Group isn’t a listed entity while many of its subsidiaries are listed in Mumbai. The Reubens have focused on private real estate deals and venture capital investments that are beyond the reach of retail investors such as myself. Whereas most of Buffett’s investments are public and his holding company is listed in New York.  

That brings me to the thriving wealth management scene and the fund managers that have earned a reputation for investing other people’s money wisely. 

Fund managers

One of the top performing equity funds in the country is Lindsell Train Global Equity. Managed by an investment team that includes Nick Train, Michael Lindsell and James Bullock, the fund has outperformed its benchmark MSCI World Index (developed markets) by several basis points. 

Since its inception in 2011, the fund has returned 20.6% on an annualised basis. The MSCI benchmark has delivered an annual rate of 13% over that same period. 

Their top holdings are some of my favourite stocks. I recently called Unilever the most dependable FTSE 100 stock and have said that Diageo’s resilience surpasses gold. Some 16% of the Lindsell Train portfolio is invested in those two stocks. 

So it seems I found what I was looking for. Britain’s answer to Warren Buffett is… a team of London-based portfolio managers.  

Is this a top choice for growing wealth now?

Before deciding, we think this pick is another must-see.

Discover ‘One Top Growth Stock from The Motley Fool’ absolutely FREE.

Though past performance does not guarantee future results, over the past 5 years, it’s seen consistent double-digit revenue growth. ‘Return on capital’ - a key measure of business quality - is a colossal 57%. That’s almost 6 times higher than the UK average!

Best of all, it has a cult-like following. Customers who’re raving fans, potentially spending more money, more often - whatever the economy.

In our experience, discoveries like this are extremely rare.

So please, don’t leave without seeing, ‘One Top Growth Stock from The Motley Fool’, which includes both the Risks and opportunities.

Claim your FREE copy now

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

VisheshR has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Unilever. The Motley Fool UK has recommended Diageo and Diageo. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

Don’t panic as Warren Buffett retires! Just stick to the Oracle of Omaha’s method

The world's greatest investor Warren Buffett is finally retiring, but this isn't the end of his influence. It’s only the…

Read more »

US Tariffs street sign
Investing Articles

Up 10% in a month! Are the Scottish Mortgage shares the best way to play the tech stock recovery?

Harvey Jones is impressed by the resilience shown by Scottish Mortgage shares during recent turmoil. Should tech-focused investors consider buying…

Read more »

Mature black woman at home texting on her cell phone while sitting on the couch
Investing Articles

Is the HSBC share price an absolute steal at today’s levels?

The HSBC share price has had a terrific run despite the recent sell-off. Now Harvey Jones wonders if the FTSE…

Read more »

Close-up image depicting a woman in her 70s taking British bank notes from her colourful leather wallet.
Investing Articles

Start investing in the stock market this May with under £1,000? Here’s how!

Christopher Ruane explains some basics of how a stock market newcomer could start investing with under £1,000 and no prior…

Read more »

Fans of Warren Buffett taking his photo
Investing Articles

Is this a ‘Warren Buffett moment’ in the markets?

Warren Buffett has been doling out wisdom to shareholders this weekend. Our writer puts one well-known Buffett adage into current…

Read more »

Young woman holding up three fingers
Investing Articles

3 stocks Fools bought over 10 years ago and still hold

The Motley Fool’s approach to investing prioritises buying and holding quality stocks for long periods of time.

Read more »

Young black colleagues high-fiving each other at work
Investing Articles

8.1% yield! Here’s the dividend forecast for British American Tobacco shares through to 2027

British American Tobacco shares have been a prized commodity for investors seeking a large passive income. Are they a potential…

Read more »

House models and one with REIT - standing for real estate investment trust - written on it.
Investing Articles

1 FTSE 250 stock trading well below book value

Stephen Wright thinks investors have a number of attractive possibilities with a FTSE 250 REIT trading at a discount to…

Read more »