Investing maven Warren Buffett famously quipped that his favorite holding period is forever. There’s a lot to be said for thinking in those terms, not just because it’s the strategy the world’s most successful living investor follows. For one thing, focusing on the ultra-long term forces you to focus on the quality and staying power of the businesses you’re buying when you purchase their shares. For another, holding onto the companies you own allows you to build wealth very tax-efficiently, as capital gains taxes are rarely due unless and until you sell. And of course, a long-term focus gives you patience when the market is moving against you.
Knowing the benefits a long-term focus can have for investors, we asked three contributors to each pick a company whose shares they believe would be worth holding onto for the next 20 years. They selected…
Take-Two Interactive (NASDAQ:TTWO), Berkshire Hathaway (NYSE:BRK-A)(NYSE:BRK-B), and Kinder Morgan (NYSE:KMI). Read on to find out what makes these three companies worth your consideration.
Gaming’s top performers will put up great results
Keith Noonan (Take-Two Interactive): The video game industry has seen many corporate players come and go over the last two decades, but Take-Two Interactive has been one of its biggest winners and looks primed for long-term success. The publisher has significantly expanded the strength of its franchise portfolio, with properties like Grand Theft Auto, NBA 2K, and Red Dead Redemption putting up great numbers and giving the company a strong base of properties to rely on as it launches new series and ramps up the mobile wing of its business.
Grand Theft Auto V is still going strong, bringing in substantial retail and online sales despite having first released in 2013. The franchise has been an industry leader since 2001 and demonstrated incredible longevity to become one of the most successful entertainment properties ever. NBA 2K19 was North America’s best-selling sports game last year, its third-best-selling title overall, and put up record online engagement and in-game digital spending for the series. Meanwhile, Red Dead Redemption 2 was 2018’s best-selling game.
Take-Two has a stable of bankable properties and has shown that it can reliably deliver great content. That’s a recipe for success in the video game industry, and a commendable track record on that front has allowed the company to build a healthy balance sheet. Take-Two doesn’t plan to rest on its laurels and sit on its cash. Comments from management suggest that the company will continue to make acquisitions to bolster its position in the mobile gaming space and tap into the huge audience there. With high-quality gaming content becoming increasingly important in broader media and technology ecosystems and the likelihood that the global gaming audience will see a significant expansion over the next two decades, there’s a good chance that Take-Two Interactive will be a strong performer over the stretch.
Buffett already bought these businesses. You should hold onto them.
Rich Smith (Berkshire Hathaway): A lot can happen in 20 years. Today I’m going to place a bet on one particular thing happening:
At some point in the next 20 years, Warren Buffett is…
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