NEW YORK ( TheStreet) -- When push comes to shove, the vast majority of investors -- professional and otherwise -- tend to stick with the herd. As a result, statistics show that the long-term performance of most investors tends to be mediocre at best.Truly independent thinking is a rare commodity on Wall Street and everywhere else. What's more, the explosion of 24-7 media consumption threatens to fuel more groupthink, which can have disastrous results. In contrast, consider the actions of business mogul John Malone and his team at Liberty Media ( LMCA), which launched a surprise effort to buy Barnes & Noble's ( BKS) about a year ago, when the company was being dismissed by many as road kill on the digital media highway. Liberty wound up with preferred stock that's convertible into common shares worth a 16.6% stake in Barnes & Noble. Now consider this week's news that Barnes & Noble's Nook e-reader business will receive hundreds of millions of investment dollars from tech giant Microsoft ( MSFT). This gave new credibility to an effort by the venerable bookstore chain to reinvent itself for the digital age. For investors paying close attention, the news also bolstered the reputation of Malone.
Many people on Wall Street talk a big game about contrarian thinking, but in reality, the financial industry is a cesspool of so-called groupthink.Of course, it's easier to swim against the tide as an investor when you're John Malone. The guy at the poker table with the biggest stack of chips in front of him tends to be the most dangerous, and Malone is one of those guys. Forbes estimates his net worth last year at $4.5 billion, and he recently surpassed Ted Turner as the largest individual private landowner in the U.S. He's credited as a founder of the modern cable telecommunications business, and he's renowned as a tough negotiator and a financial wizard with a special knack for avoiding taxes. In another display of contrarian investing, Liberty provided financing for Sirius XM Radio ( SIRI) in the depths of the financial crisis in 2009, rescuing it from bankruptcy. The satellite radio company was saddled with debt after muddling through an arduous regulatory process that merged the only two players in the satellite radio industry. Its fortunes were dependent on the auto business, which was collapsing as the economy sank into recession, and investors were fleeing for the exits. That was then. This is now. The auto market is rebounding, and Liberty's financing deal left it with a sizeable stake in a cash-rich subscription business that faces no competition from other satellite radio providers. Sure, the business faces a myriad of threats from wireless Internet proliferation and so forth, but Liberty's investment has already achieved spectacular returns, and it's now locked in a struggle with Sirius XM over control of the satellite radio empire.
Not everyone can invest like Malone, but anyone looking for a place to start finding bargains can follow his moves and those of other large investors they admire.Many people follow the investments of Warren Buffett's Berkshire Hathaway ( BRK.A), and the markets often react quickly when his investments are disclosed. However, there are other investors out there with track records of independence and superior performance. Their holdings are often disclosed to the public in regulatory filings with the