Another Path to a Billion

Last week, Foolish colleague Tim Hanson revealed some of the secrets of the world's billionaires. Surely his findings were obvious to most: Master investors make oodles of money, especially those who faithfully follow a strategy that plays to their inherent strengths.

What he didn't mention is that entrepreneurs dominate the same list of Forbes billionaires, including five of the top 10.

Oh, to be an owner
You know the list: Bill Gates and Paul Allen of Microsoft (Nasdaq: MSFT  ) , Larry Ellison of Oracle (Nasdaq: ORCL  ) , and Michael Dell are the three most obvious. Real estate mogul Sheldon Adelson and his $20 billion fortune, comprised mostly of stock in Las Vegas Sands (NYSE: LVS  ) , ranks third, rounding out the list of self-made billionaire entrepreneurs among Forbes' top 10.

But, of course, there are many, many more. Amazon.com (Nasdaq: AMZN  ) founder Jeff Bezos ranks 70th with a $3.6 billion fortune. Beanie Babies creator Ty Warner is 52nd with $4.5 billion. Black Entertainment Television founder Robert Johnson ranks 374th, thanks to a $3 billion buyout of his network by Viacom (NYSE: VIA  ) . And New York City mayor Michael Bloomberg, inventor of the Bloomberg financial terminal, ranks 44th with $5.3 billion.

Invest with owners
If you're feeling envious, I don't blame you. Wouldn't it be great if we were all billionaires, unencumbered by the need for money? Of course it would be. But that's not how the world works.

Still, I find it reassuring that, as rich as Bill Gates and Paul Allen are, the bulk of their wealth came from staying invested in the company that brought them to the billionaires' ball. Why? Because anyone with a brokerage account could have enjoyed similar gains -- on a percentage basis, at least.

In fact, many did. So great is the story of Microsoft's ability to generate wealth that it has a name -- the uprising of the so-called "Microsoft millionaires." At least hundreds of them must still exist. Seriously, consider this chart. A $1,000 investment in Mr. Softy at the dawn of 1990, four years after his debut on the Nasdaq, would be worth more than $51,000 today.

Searching for the next Microsoft
That's why Motley Fool Hidden Gems co-advisors Tom Gardner and Bill Mann focus on the stocks of up-and-coming firms in which the managers own a significant stake. Some of their best performers still feature heavy insider ownership.

Consider education-financing specialist First Marblehead (NYSE: FMD  ) , which Bill first singled out in the March issue of Hidden Gems. The stock has nearly doubled in a few short months, yet insiders remain firmly committed, with a stake that exceeds 45% as of this writing.

And then there's oven maker Middleby, which has been a four-bagger since Tom first picked it for the November 2003 issue. Insiders still own more than 20% of the shares of this small-cap superstar.

So don't envy the billionaire owners. Invest alongside them. They're the ones who really have the best chance to create the next Microsoft, and make you millions in the process. And if you'd like Hidden Gems to help you identify some promising prospects, click here to join the service free for 30 days.

Fool contributor Tim Beyers owns shares of Oracle. Get the skinny on all of the stocks in Tim's portfolio by checking his Fool profile. Microsoft is a Motley Fool Inside Value selection. Amazon.com is a Motley Fool Stock Advisor pick. The Motley Fool's disclosure policy always takes ownership.


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