What's the wealth-making secret of America's billionaires? For investors on the list, it's sticking with a strategy that plays to their inherent strengths. For many of the others, including five of the top 10, it's entrepreneurship.
Oh, to be an owner
You know the list: Microsoft's Bill Gates and Paul Allen, Oracle's Larry Ellison, and Dell's Michael Dell are the four most recognizable names on Forbes' latest list of the nation's 400 richest. Casino mogul Sheldon Adelson, with his $20 billion fortune comprised mostly of stock in Las Vegas Sands, ranks third and rounds out the list of billionaire entrepreneurs in the top 10.
But there are many more among the remaining 390. Broadcom (Nasdaq: BRCM ) co-founders Henry Thompson Nicholas III and Henry Samueli are tied at 160th with $2 billion each. Dolby Laboratories (NYSE: DLB ) founder Ray Milton Dolby, at 204th, dances to the tune of $1.7 billion. Quicken developer and Intuit (Nasdaq: INTU ) co-founder Scott Cook ranks 297th with $1.3 billion. And Morningstar's (Nasdaq: MORN ) mutual fund maven, Joseph Mansueto, is 322nd with $1.2 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 Gates and 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 percentage gains.
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. 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 roughly $56,000 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 meaningful insider ownership.
Consider leisure-dining specialist Buffalo Wild Wings (Nasdaq: BWLD ) , which Tom originally recommended in July 2004 for its excellent management and outstanding growth prospects. The stock is up more than 240% since, easily beating the market and enriching insiders who still own roughly 12% of the company.
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. Want help identifying promising prospects? Click here to join Hidden Gems free for 30 days.
This article was originally published on Oct. 12, 2006. It has been updated.
Fool contributor Tim Beyers owned shares of Oracle and Buffalo Wild Wings at the time of publication. All of Tim's portfolio holdings can be found at his Fool profile. Dell and Dolby Laboratories are Stock Advisor recommendations. Dell and Microsoft are Inside Value picks. The Motley Fool's disclosure policy always takes ownership.