Ryan Cohen did something most billionaires wouldn’t dare do, and most financial advisors would say investors should never do.
When he sold the company he co-founded—online pet food supplier, Chewy (NYSE: CHWY)—back in 2017 for $3.35 billion, Cohen threw diversification out the window and put nearly his entire payout into just two stocks.
“It’s too hard to find, at least for me, what I consider great ideas,” Cohen told Bloomberg. “When I find things I have a lot of conviction in, I go all-in.”
Forget real estate, hedge funds, private equity, and bonds. Cohen stayed in the same home he’s had for years and continues to drive the same car, and put an unspecified amount of his multi-billion dollar payout into Apple (NASDAQ: AAPL) and Wells Fargo (NYSE: WFC).
“I try to keep my life as simple as possible, so I’m not really a family office person,” Cohen said, referring to the private companies the ultra rich typically establish to manage their investments and personal affairs.
But keeping it simple hasn’t always been a smooth ride.
Apple is up more than 120% since 2017, and—thankfully for Cohen—represents a larger chunk of his portfolio.
However, Wells Fargo has struggled in that same time frame.
Cohen told Bloomberg that his average cost basis for the troubled bank is around $46 after beginning to accumulate his position in the second quarter of 2017 when it was trading at $54.
But since 2017, Wells Fargo has been mired in scandal after it was discovered that the bank had created millions of fraudulent savings and checking accounts on behalf of Wells Fargo clients without their consent.
The fallout from the controversy resulted in the resignation of CEO John Stumpf, a federal investigation into the bank, a number of settlements between Wells Fargo and various parties, and a commitment from new management to reform the bank.
The scandal devastated the stock, and shares are down just over -50% since the second quarter of 2017, and now trades trades at $26.79 – 41.7% below Cohen’s average cost basis of $46.
Cohen sees both Apple and Wells Fargo as consumer businesses, something he understands from building Chewy. And while he acknowledges that his highly-concentrated approach would raise eyebrows among the pro-diversification crowd, he said, “I don’t want to swing for a single.”
He also cautioned that most investors shouldn’t follow his lead. “You need the temperament to block the noise,” Cohen said. “Sometimes it feels like a roller coaster.”
There is one stock Cohen regrets not buying: Amazon (NASDAQ: AMZN).
“The execution of Amazon is just phenomenal,” Cohen said. “I should have [bought it]. I wish I did.” At Chewy, “we couldn’t have staked out a bigger competitor if we’d tried.”