100 Baggers: Stocks that Return 100-to-1 and How to Find Them

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And while the recent volatility might have many investors anxious, I’d point out that all three examples survived and even thrived through past periods of market volatility. Tilman Versch: Then maybe let me try to reframe those questions. What were positive surprises for you this year as an investor?

100 Baggers – Christopher Mayer | JM Finn Book review: 100 Baggers – Christopher Mayer | JM Finn

That’s one thing I think is important just to pay attention to language and particularly how we use these abstractions and we just pass over [unintelligible 00:08:44] as if they were real things and if you break them down and examine them, you find there’s not really much there. How to stay focused A company that has to take, that’s constantly writing down those acquisitions and three or four years later, they’re writing them down. This company is probably not doing a good job on acquisitions. Tilman Versch: Hello, everyone. It’s great to have you here for a conversation with Chris Mayer. Hello, Chris. It’s pretty balanced. I don’t think… I’m not a big fan of trying to overweight positions or people say, well, this position is riskier, so I’m going to make it a smaller position. For me, I just want to have it all balanced because at least for me what I found is that there isn’t that much difference in return. In other words, if I were to give you my top 10 names, it’s not necessarily that number one is going to beat number two is going to be at number three. Sometimes, the number six is the best one. You are just not sure where the performance is going to come from. Though I’ve found it’s better to just kind of keep it more balanced. The other thing that I try to do is have a limit on how much I’ll put in any one name on a cost basis.Chris Mayer: Every quarter it was a performer. He was just constantly selling. I would say that’s a personal preference. Let it ride as long as possible. Just don’t touch it and let it go. Positive and negative surprises for Chris I think if you come at it with the mentality that there’s always someone on the other side, trade gives you some pause. Think about it before you buy. Make sure you have a good thesis and you know why you’re buying, you know why someone might be selling it to you, and what the counter-thesis is to your thesis and you understand it. I think those things are very helpful. They’re not really talked about very much. Building positions Now, there’ll be a lot written about that as we get closer to the election, people will come up with their Biden portfolio and their Trump portfolio, but I don’t really think of it that way unless there was something that would be like an obvious target. I’m trying to think of an example where you might be particularly scared. If a politician had it out for a particular industry and you might be a little more cautious. I don’t know for sure, but depending on how the US election goes, you’re still probably going to have a divided government and it’s not so easy for one person to just do what they want. I like investing with companies that have high insider ownership. I think it brings the alignment with shareholders closer together.

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Revenue growth remains necessary to achieve 100-bagger status; it will not happen without revenue growth. A bonus is if the revenue growth filters down the income statement to earnings. Because as the growth filters down, it helps expand the P/E multiple. Chris Mayer: Well, it’s a very simple way, not a very simple way, but there’s one way where I look at roll-ups and that is hopefully you have a long history. I’ve done this before, where you take a company, you look at the last 10 years and you see how much they’ve put towards acquisitions, and then you see what the return has been on those acquisitions. A simple way to do it to start is, you could say over a 10-year period company spent however much on CapEx and how much on acquisitions, and then you can also see free cash flow per share return, free cashflow went up however much percent. You can see the changes. You try to get a sense of what their return has been on those acquisitions. The other way is if a company is earning a pretty stable return on invested capital over that time, or look at some return metrics ROA, ROE, ROI, CEOs kinds of things. They are small-caps: To return 100X, investors had to take a position when the company was in its early stages, when the upside potential was highest. That means investing in small-capitalization companies. The world needs Taiwan to continue to thrive and innovate independent from mainland China. The systemic risk to global production will simply be too large otherwise. Again, this is not necessarily a question I would think about that way because where a company is listed, of course, doesn’t necessarily mean that’s where they do business. I mentioned InterContinental Hotels listed in London. It’s also listed in the US but they have a big business all over the world, US, Europe, and Asia. I can think of another example like air lease is listed in the US but 95% of our business was outside the US so is really an American company. More than 20% of their business was in Asia. I don’t really look at it that way anymore.

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Chris Mayer: I want to make it big or I just want to either or that or get it off or get it out. That’s just the way or how I think about it. Chris Mayer: That’s an interesting question. I’ve thought about it a little myself, but I don’t think if you’re really going to be a long-term investor that you should necessarily worry too much about the outcome, who’s going to be president because even if Biden is president and you have an investment, hopefully, if you’re right, it’ll be one that you own past his presidency. I wouldn’t let those influence you too much. Tilman Versch: Markets can be somehow brutal, so you have sometimes phases where things just go nowhere and then explode. When you feel confident about the company, how do you keep to that company even if there is nothing happening? Tilman Versch: [inaudible 00:03:35] you’re to grab a book that’s some good investing book for you, if you have good investing books there and a book that’s a good non-investing book you can recommend and after that, I will post a disclaimer so everybody can see the disclaimer and you can- Timing the market is hard, so don’t try. Instead, focus on the task and search the market for the best companies.