Nationwide

“Nationwide is on your side.” You've probably heard the jingle, but what exactly is Nationwide? At its core, Nationwide is a massive American financial services company, a giant in the insurance and investment world. Headquartered in Columbus, Ohio, it offers a vast array of products, from car and home insurance to retirement plans and mutual funds. But here’s the fascinating twist for an investor: Nationwide is not a publicly traded company you can buy on the New York Stock Exchange. Instead, it's a mutual company. This means it is owned entirely by its policyholders—the very people who buy its insurance products. Think of it like a member-owned club or a co-op. Instead of profits going to outside shareholders, they are meant to benefit the members, either through dividends, lower premiums, or reinvestment back into the company to ensure its long-term financial strength. This unique structure fundamentally shapes its business philosophy and how investors should think about it.

The concept of a mutual company is a throwback to a simpler time, and it’s a structure Warren Buffett has often praised. Because there are no external shareholders demanding ever-increasing profits every three months, a mutual company like Nationwide can play the long game.

Publicly traded companies live and die by their quarterly earnings reports. A slight miss on expected profits can send their stock price tumbling. This immense pressure can lead to short-sighted decisions to please Wall Street. Nationwide, however, is insulated from this frenzy. Its management can make decisions that might not pay off for a year or even five years, but which build enduring value for its policyholder-owners. This focus on long-term stability and resilience is music to a value investor's ears.

In a typical corporation, there can be a conflict between what's best for shareholders (e.g., maximizing short-term profit) and what's best for customers (e.g., lower prices, better service). In a mutual company, the customers are the owners. This elegant structure aligns the interests of the company with the interests of its clients. The goal isn't to extract as much value as possible from customers, but to create as much value as possible for them.

So, if you can't buy shares of Nationwide, how should you think about it from an investment standpoint?

You can't call your broker and buy 100 shares of Nationwide. The only way to become an “owner” is to become a customer by purchasing one of their insurance policies. This isn't investing in the traditional sense, as you aren't buying a claim on future earnings that you can sell for a profit later.

The more practical angle for most investors is interacting with Nationwide's investment arm. The company offers a wide range of financial products, including ETFs and annuities. When considering these products, the key is to evaluate them just as you would from any other provider like Vanguard or Fidelity. The company's mutual structure is a sign of a stable, long-term-oriented parent, but it doesn't automatically make every one of its funds a brilliant investment. You need to do your homework. Look at the specifics of the fund you're considering:

• Expense Ratio: Is the fund cheap to own? High fees are a guaranteed drag on your returns over time. A value investor is always a frugal investor.
• Long-Term Performance: How has the fund performed over 5, 10, or 15 years compared to its benchmark, such as the S&P 500? Don't be dazzled by one good year.
• Management and Philosophy: Who is running the fund? Do they have a clear, consistent investment philosophy that aligns with your own?

While you can't add Nationwide to your stock portfolio, its business model offers a powerful lesson in value investing principles. The company's structure creates a natural competitive moat. Its brand is trusted, its scale is enormous, and its focus is locked on the long term. It doesn't have to answer to the whims of Wall Street, only to its members. The bottom line is this: Nationwide embodies the very stability and customer-centric focus that value investors cherish. When you evaluate one of its investment products, you can take comfort in the fact that it comes from a parent organization built for the long haul. However, you must still apply the same rigorous, independent analysis to the individual fund or product itself. The parent company's structure is a feature, not a substitute for due diligence.