How Shelby Cullom Davis succeeded by investing in insurers
Shelby Cullom Davis is an American businessman who, as of 1988, was listed by Forbes as one of the richest men in the world. Unlike many of his colleagues, the investor began his financial career rather late – at the age of 38. Having started in 1947 with a capital of 50 thousand dollars, he turned it into 900 million dollars by 1994.
Shelby was born in 1909 in Illinois and after school went to Princeton University. The young man completed his master’s degree at Columbia University. Davis continued his studies and in 1934 defended the status of doctor of political science in Switzerland.
After his studies, he took a job at a major radio station in Geneva, then worked as an economist on the New York governor’s staff. In 1944 Shelby began working for the state department, which dealt with insurance, and this place gave the future businessman a huge amount of experience and knowledge. Davis realized how profitable it was to invest in the securities of insurance companies. He started investing a little as early as 1941, but decided to make bigger bets. In 1947 Shelby borrowed 50 thousand dollars from his wife’s relatives and used them to open the investment firm Shelby Cullom Davis & Company, which was focused on working with securities of insurance companies.
The businessman visited various regions of the country and purchased stock from such firms. In doing so, he developed clear characteristics by which he determined the prospects for investing in one company or another. His approach worked, and the papers rose in value fairly quickly. After Davis bought all the stocks he was interested in in the United States, he expanded his activities into the Japanese market.
However, Shelby Cullom did not limit his interests only to the financial sector. In 1969 he became U.S. ambassador to Switzerland, a post he held for five years. At the same time, he continued to invest, focusing primarily on insurers. According to Davis, this sector was the most profitable, because the value of companies was regularly growing, and changes here were extremely slow.
Shelby preferred to invest in companies that were considered undervalued. It should be noted that for Wall Street at the time, the entire insurance industry was uninteresting; in turn, the insurers themselves did not disclose the real level of their earnings, trying to show the niche as less profitable. After careful analysis, Shelby discovered that the capitalization of this market was much larger than thought. Thanks to his discovery, the investor was able to raise the return on his portfolio to an average of more than 23%.