This is a summary on the investing book “100 Baggers: Stocks that Return 100-to-1 and How to Find Them”, written by Christopher Mayer. Finding just a single one of these may finance a retirement.
Buy Puppies
- Look for companies that can mathematically get to 100X
- Avoid large companies
- 30% of stocks are in micro caps: this is the focus
- Not look for smallest companies with unproven sales and no customers
- Research shows that median sales had $175m dollars
Twin Engines
- Look for growth in all dimensions: sales + valuation multiples
- High margins are not necessity
- Look for products that is disruptive in the industry
- Beware of too high multiples
Owner-Operators
- “Ultimately, it is the management alone which is the 100X alchemist. And it is to those who have mastered the art of evaluating the alchemist that the stock market rewards with gold”
- Question whether if the owners have the right incentives
The Coffee Can Portfolio
- Pick the best stocks, and put them in the coffee can (patience)
- Need at least 6+ years to get to the bagger status
- Stocks that don’t move often gets sold because it is boring
- “The stock market is a device for transferring money from the impatient to the patient”
Ignore the Macro Analyst
- Ignore feds
- Ignore presidents
- Ignore China
- 100 baggers seldom care about the macro environment