When trying to pick stocks, it’s often the simplest strategies that work best. What could be simpler than finding the management team with the best track record, then betting on such performance to continue? It’s what so many people have done with Berkshire Hathaway, an investment that of course has turned out very well.
While none of these managers are quite as well-respected as Warren Buffett, they have all done a fantastic job over the years. And there’s no reason to expect that to change. Any of these stocks deserve serious consideration for your portfolio.
1. Brookfield Asset Management
There aren’t many companies that have a better track record in Canada than alternative asset manager Brookfield Asset Management (TSX: BAM.A)(NYSE: BAM). Over the past 20 years, the company’s shares have returned nearly 20%, a result that can only be achieved through consistent outperformance.
The big knock on Brookfield is its complexity. The company holds a variety of different business units and assets, some publicly traded, some not, and it all makes for very confusing financials. Therefore, an investment in this company requires a blind faith to some extent. In Brookfield’s defense, that blind faith would have been very profitable over the past two decades.
2. Canadian Natural Resources
One company that may have a better track record than Brookfield is Canadian Natural Resources (TSX: CNQ)(NYSE: CNQ), an energy producer that emerged seemingly from nowhere 15 years ago to become one of Canada’s largest companies. Over this time, the shares have returned not quite 20% per year.
A rising oil price hasn’t hurt. However, the company’s disciplined capital allocation and its ferocious emphasis on cost control are the real reasons it has performed so well. Just like Brookfield, there’s no reason to expect this to stop.
3. First Quantum Minerals
This is a very ominous time to buy a mining company, but if you had to go for one, it should be copper miner First Quantum Minerals (TSX: FM). Just look at its track record — over the past 15 years, its share price has returned 39% per year!
First Quantum actually has quite a bit in common with Canadian Natural Resources. The company is very good at buying assets for less than they are worth. Management has also shown a consistent ability to develop projects on budget, no small feat in the mining world. Unfortunately, the shares will have a difficult time repeating their past performance, but if First Quantum continues to execute, then in all likelihood it will be worth holding in your portfolio.