SUR­VIVORS’ GILT

What would’ve hap­pened to $1,000 in­vested in the top 100 com­pa­nies of 1917? Plus: A Cen­tury of stocks, p. 52

Forbes - - CON­TENTS -

Only 12 of the orig­i­nal 100 largest U.S. com­pa­nies of 1917 have lasted a cen­tury un­der the same name. The sur­vivors—ge, AT&T, Ford and Dupont—have de­fined Amer­i­can in­dus­try and in­no­va­tion. De­spite the high at­tri­tion rate, any­one smart and wealthy enough to have in­vested $1,000 in each of top 100 pub­lic com­pa­nies in 1917 would now have a port­fo­lio worth $26.6 mil­lion—based on price ap­pre­ci­a­tion alone. The 5.8% com­pounded an­nual re­turn slightly ex­ceeds that of the 30 stocks of Dow Jones In­dus­trial av­er­age. And if you were to add in div­i­dends ac­crued, the re­sult would likely be 10% an­nu­ally, or as much as $1 bil­lion. The in­fla­tion rate over the last 100 years av­er­aged 3%.

The star of the orig­i­nal list is Proc­ter & Gam­ble. An ini­tial in­vest­ment of $1,000 would have ap­pre­ci­ated in value to $1.6 mil­lion. (In­clud­ing div­i­dends, the amount would be at least $50 mil­lion.)

Most com­pa­nies shape-shifted through merg­ers and breakups, but gov­ern­ment med­dling played a big part in re­turns. Amer­i­can Tele­phone & Telegraph, known to Boomers as Ma Bell, was forced to split into eight com­pa­nies in 1984. Own­ers of the orig­i­nal com­pany now also own shares in Ver­i­zon, Com­cast, Cen­tu­rylink and Nokia. Like­wise, John Rock­e­feller’s Stan­dard Oil was bro­ken into dozens of com­pa­nies in 1911, ten of which were among Amer­ica’s 100 largest com­pa­nies at Forbes’ 1917 found­ing. To­day those “Stan­dards” re­side in­side Exxon Mo­bil, Chevron, BP and Sin­clair Oil.

In­vestors in Sears, Roe­buck have done well de­spite a 90% plunge in the stock since 2007. A thou­sand in­vested would be $691,000 thanks to spinoffs such as All­state and Dean Wit­ter. Ko­dak went bank­rupt in 2012, but its 1994 spinoff of East­man Chemical means 1917 shares are now worth $138,200. As for the rail­roads, Atchi­son, Topeka & Santa Fe and South­ern Pa­cific were lousy in­vest­ments for decades, but there’s hope: Shares have mor­phed into Berk­shire Hath­away, man­aged by the cen­tury’s best in­vestor, War­ren Buf­fett.

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