If you had to do a double take of the title, I wouldn’t blame you. But Kenny G is in fact a secret buy and hold dividend millionaire. Yes the same Kenny G who rose in stardom during the 80’s and 90’s with hits such as Duotones, Going Home, Forever in Love and Sentimental.
So how exactly did this world renowned saxophonist become a stock market millionaire?
Kenny G invested in Starbucks in the 1980’s. Here is a video of him taking about this investment.
Kenny G met Howard Schultz, the founder of Starbucks, after a recommendation from his uncle (Harold Gorlick), one of the first investors in Starbucks. Harold Gorlick invested $200,000 Il Giornale. In 1987, Il Giornale took over Starbucks for $3.8 million.
Although most of us learnt about Starbucks after the commencement of the 21st century, those people living in Seattle Washington at the time knew all about Starbucks. They were a company dominating there niche. In fact, Kenny said “They had a reputation for the best coffee [in town].”
I can be sure of this but it seems like Kenny G invested in Starbucks in 1988.
Say Kenny G invested $10,000 in Starbucks in 1998, that investment would be worth close to $27.5 million today!
In March 2011, at the Starbucks annual meeting, Howard Schultz said that Kenny G has never sold a share. In a 2014 interview, Kenny G stated that he ‘ keeps a fair amount of his original shares in Starbucks and watches the stock price everyday.’ I’m just extrapolating here but the reason for the different accounts in 2011 and 2014 might be due to Kenny G offloading some of his shares in his 2012 divorce. But I digress.
By investing in Starbucks early on, and holding on to the stock, Kenny G was able to benefit from the immense growth the Seattle based coffee company has had over the years.
He achieved a compound annual return of 30%. This is far in excess of the S&P 500 which delivered close to 7 compounded annual returns in the same period. Kenny G outperformed by 23% per annum. Wow!
Kenny admits to him making more money investing in Starbucks then he did selling more than 75 million albums worldwide!
So what lessons can we take from this?
Over the years, Kenny G didn’t see Starbucks stocks as just being something that moves up and down at random on a compute screen. No, he saw Starbucks as being a tangible real life business. He didn’t see his shares as being something that should be traded on a whim. He saw his shares as making him a part owner owner of the business. He knew that by holding on to the shares, he would benefit from the rapid growth that was occurring.
Kenny G become so involved in the business that he played at company events and is even said to have brought the Frappuccino to the Starbucks menu.
So the next time you invest in a stock, think like a business owner. Don’t buy it with the intention of selling it a couple months down the line. Instead have the intention of holding it for a longer period of time and enjoy the wonderful wealth building effects it may bring. Thinking this way will also help ensure that you are investing in a company you have confidence in and think will do well over the long term!