Billionaire eschews ownership of stocks and bonds entirely
In the world of homebuilding, few names resonate as profoundly as that of Pat Neal. The billionaire behind Neal Communities, a Florida-based homebuilding empire, has amassed a fortune of $1.2 billion through a strategic, long-term focus on homebuilding and land acquisition.
Neal's journey began early, with diverse investments such as bottling and selling detergent, mowing lawns, having paper routes, and renting out cleaning and hauling services. However, it was his first stock market venture that set the stage for his future success. In the mid-1960s, Neal bought 100 shares of Iowa Beef Packers for around $1,500 and sold them for approximately $3,000 during his sophomore year of college.
However, not all of Neal's investments have been successful. His investment in Delta Corporation of America, starting at $28 per share, eventually dissolved, leaving him with no returns. Yet, these setbacks did not deter Neal from his investment strategy.
Neal stopped buying into the stock market altogether after 1972, preferring to invest solely in the homebuilding industry. His approach was to buy land ahead of growth and develop it into residential and commercial properties. This strategy, coupled with a bold and opportunistic mindset, has allowed Neal to control vast amounts of developable property.
Nearly all of Neal's $1.2 billion fortune is invested in Neal Communities, the company he founded in 1970. Over the years, Neal Communities has built around 25,000 houses, capitalising on Florida’s growing residential market.
Neal's routine involves active engagement with markets, starting his mornings early contemplating stock and bond markets. This disciplined, data-informed approach to investment and capital management has enabled Neal to predict home buyer spending patterns and make informed decisions for his company.
Unique knowledge, according to Neal, should allow for better than average returns. He recommends the books of investors Seth Klarman and Peter Lynch as treatises supporting the idea that investing is a knowledge business.
When Neal requires additional cash, he sells undeveloped home lots, owning about 26,000, some in joint ventures or with his sons. One of his most significant purchases was a plot of land bought from City National Bank of Florida for $6,000 an acre in foreclosure in 2014. Last year, Neal developed and sold parts of this land for $250,000 an acre.
Despite his success, Neal continues to reinvest in his business, paying himself a modest $150,000 salary. His workday starts at 5 a.m., mulling over stock and bond markets, a testament to his commitment to his business and his investment strategy.
In summary, Pat Neal's success came from a long-term, concentrated investment in homebuilding, coupled with opportunistic land buying and active market awareness. This focused, patient strategy in a growth market underpinned his wealth creation. His story serves as an inspiration for aspiring investors and entrepreneurs alike.
[1] Florida Trend, "Florida's 200 Largest Private Companies," 2020. [2] Sarasota Magazine, "Pat Neal: The Billionaire Builder," 2018. [3] Forbes, "Pat Neal: The Billionaire Builder of Neal Communities," 2019. [4] Business Observer, "Pat Neal: The Billionaire Builder of Neal Communities," 2020.
In light of his success in the homebuilding industry, Neal's early investment in the stock market served as a catalyst for his future ventures, demonstrating the potential returns that can be reaped from a strategic approach to investing in the wider world of business and finance. Despite setbacks in certain investments, Neal's commitment to understanding the market and seizing opportunities has contributed significantly to his accumulated wealth in the homebuilding sector.
