Roundtable: 1 Stock That Changed My Life
Every investor has a story to tell about a stock that changed his or her life. We Fools are no different, so we asked a team to share a story about a stock that they own that's particularly meaningful to them. Read on to hear how Amazon.com (NASDAQ: AMZN), Activision Blizzard (NASDAQ: ATVI), andSilver Standard Resources (NASDAQ: SSRI) changed their financial lives for the better.
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Quality is worth the price of admission
Brian Feroldi(Amazon.com): I've owned more than 150 individual stocks since I started investing, and they each have taught me a valuable lesson or two. My early foray into penny-stock land was particularly illuminating, as I learned very quickly that you can lose a lot of money in a flash even if the stock is trading for under $1 per share. However, the company that has changed my investing philosophy the most, by far, is Amazon.com.
While I'd been a happy Amazon consumer for years, I was extremely reluctant to become a shareholder. My reasoning wasn't based on the company's leadership team, its balance sheet, the market opportunity, or the business fundamentals. I knew enough about investing to realize that the company was on solid footing in all of these areas. Instead, the only thing that kept me away was the company's valuation. One look at Amazon's P/E ratio was more than enough to keep me from buying shares.
Obviously, that decision turned out to be a huge blunder. Instead of buying shares for under $100 in 2007, 2008, or 2009 as I should have, I sat on the sidelines and watched the stock go up.
I finally decided that enough was enough and become a shareholder in February 2010, after David Gardner called out Amazon as a "best buy now" in Stock Advisor. My initial purchase price was $114, which was an all-time high for Amazon at the time. Regardless, I decided I wanted to become an owner and steadily added to my position over the next few years at higher and higher prices.
That proved to be one of the best financial decisions I ever made. Amazon continued to perform beautifully and is currently flirting with a $1,000 price tag. That enormous share-price appreciation has turned the company into my single biggest holding.
My experience with Amazon has taught me a number of important lessons. First, if you like everything about a business but the valuation, buy a small position anyway. Truly great businesses can grow into their valuations and surprise to the upside. Second, winning stocks tend to keep on winning, so it can still make sense to buy even if the stock is at an all-time high. Finally, long-term investing works. If you've managed to catch lightning in a bottle, don't be in a hurry to book a quick gain.
A game changer
Keith Noonan(Activision Blizzard): I spent plenty of time playing Activision Blizzard video games and keeping up with broader industry happenings before I initiated a position in the company, and I can happily say that those hours manning the joysticks and reading gaming websites have resulted in a material payoff.
Adhering to the school of thought that investing in industries you're familiar with can give you a decisive edge, I identified Activision Blizzard as a company with an impressive portfolio of products and purchased shares in 2014 at an average price of $22.50.Following three years of strong business performance, the stock now trades above $58 -- good for a 158% return across a period when the S&P 500 index has gained roughly 22%. Who said playing video games will never get you anywhere?
Today, Activision Blizzard looks stronger than ever, with an expanding stable of popular franchises and rapid growth in digitally distributed content driving sales and margins to record levels. Following the success of last year'sOverwatch, Activision Blizzard now counts eight billion-dollar franchises under its corporate wing, and the game's success also played a role in the 50% year-over-year increase in the company's digital sales in its most recent quarter.
With digital content sales likely to provide an ongoing source of momentum, an impressive track record of creating and maintaining great franchises, and the company's emerging opportunities in virtual reality, e-sports, and consumer products, I'm betting that Activision Blizzard has what it takes to be a long-term winner.
This stock brought some luster to this Fool's portfolio
Sean Williams (Silver Standard Resources): Picking out the stock that changed my life is simple: Silver Standard Resources, which came by way of its purchase of Claude Resources in 2016. It was through Claude Resources, and now Silver Standard Resources, that I learned how lucrative buy-and-hold investing could be.
I began nibbling on shares of Claude Resources more than five years ago, with the belief that a couple of simple turnarounds would fix its issues. Claude has been holding an asset that wasn't economically feasible to develop, given its debt situation and falling spot gold prices. It was also seeing higher-than-necessary mining costs at its flagship Seabee mine and was a couple of years away from a major expansion of the Santoy Gap. If I had put myself into the CEO's shoes, I would have restructured the debt, sold off non-core assets, and worked to lower mining costs. Lo and behold, that's exactly what happened.
In late 2013, Claude announced that it had sold the Madsen Project -- the aforementioned asset that it couldn't feasibly develop -- for cash and stock considerations to Laurentian Goldfields, and it wound up restructuring its debt not too long after. More importantly, it found ways to reduce its all-in sustaining costs at Seabee and bring the Santoy Gap online ahead of schedule. Before I knew it, Claude was generating more than 70,000 ounces of annual gold production when it had historically been stuck around 50,000 ounces of annual gold production. Best of all, it was generating positive cash flow and a profit.
In March 2016, Silver Standard Resources offered to acquire Claude Resources in what was essentially an all-stock deal -- the cash component was laughably small. Since the value of the two companies was intricately linked, the 32% premium to Claude's closing price on the day the deal was announced turned into a nearly 100% premium by the time the deal closed three months later. Since then, Santoy Gap production has increased, and I've seen my investment grow more than sevenfold.
Since my initial nibble, and through today, I've yet to sell a single share -- and I see no reason to start now. Silver Standard generates a little over 80% of its sales from gold production and is soon changing its name to SSR Mining to reflect this shift in production -- at a time when physical silver and gold look poised to increase in value. Uncertainty surrounding Brexit and Trump's presidency, rising inflation levels, and constrained gold and silver supply are all reasons to believe Silver Standard's margins can improve as spot metals rise and the company aims to keep spending under control. Plus, a new joint venture in Argentina should help reignite its silver production beginning in the second half of 2018.
If there's a stock that's changed this Fool's life, it's Silver Standard Resources.
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Brian Feroldi owns shares of Activision Blizzard and Amazon. Keith Noonan owns shares of Activision Blizzard. Sean Williams owns shares of Silver Standard Resources. The Motley Fool owns shares of and recommends Activision Blizzard and Amazon. The Motley Fool has a disclosure policy.