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

 Name of the Book:  100 Baggers

Author: - Christopher Mayer   

No of Chapter :-15

Number of Pages: - 205

One line Description of the book: - Identify, Buy and Hold Good stocks for wealth creation.

What this book is about: - 100 Baggers gives you detailed insight about the companies that had  generated huge amount of wealth for stock investors. Book provides statistics  about number of years in which companies have generated a wealth of around 100 times from the initial investment. It also shares some basic concepts like promoter buying, moat and growth to explain the exceptional wealth creation by these companies. Book contains references of some studies/books pertaining to 100 baggers like 15-page study by Tony at TS Analysis with four important conclusions, Thomas Phelp's Book 100 to 1, 100 bagger study by Chip Maloney posted at Microcap Club’s website, Motilal Oswal’s study of 100 baggers in 2014, Martelli’s 10 Baggers study, Heiserman’s Earning Staircase study on how growth stocks become multibaggers.

In the book, Author explains why  coffee can approach is one of the best to have 100 baggers in an your portfolio. With this approach, investors can survive disasters in the economy and create a great amount of wealth for them. Author has sighted example of Voya Corporate Leaders fund which bought 30 major stocks with equal distribution in year 1935. At the time of publication of book in year 2015, fund still holds some of the same names it had in 1935, DuPont, GE, Proctor and Gamble and Union Pacific etc. It is remarkable to note here that the Fund has beaten the S&P 500 for 40 years.

Author has compiled list of companies that become 100 baggers in a period of 50 years from 1962 to 2014. The list states that top 10 performers for the last 50 years included companies from diversified sectors like retailers, beverage makers, food processors, tech firms etc. The compiled data also dispels the myth that only tiny companies can be 100 baggers. Book also includes case studies on Monster Beverages, Amazon, Electronic Arts , Comcast , Pepsi and Gillette. With these case studies, the author explained how these companies focused on capital allocation, ROI, Good Acquisitions and adapting to changing circumstances to generate wealth.

Author explained how criteria of companies with ROE>15 % proved beneficial for   Jason Donvilles Capital ideas fund  to find 100 baggers  Section of the book focused on investing in companies with a good percentage of owner operators holding. There are 03 studies shared by Author indicating that companies managed by owners are able to beat the index regularly. Author cited the  methods like being  tax efficient and opportunistic by owners to generate alpha for investors. 

Apart from Owner-Operators, Author also laid importance on Outside CEO’s who grew the company irrespective of the market conditions. He explains some basic traits adopted  by  GOOD CEO's  like they know when to buy low, disdains dividends and disciplined acquisitions for growth of company. Author has given example to support his theory by citing companies like NVR Inc, AutoZone, Leucadia National etc.

Author has explained how Berkshire Hathaway become 18000 bagger over a period of 50 years from 1965. The leverage used by Berkshire came from their Insurance business where premium is collected upfront, and claims are paid latter. Book Chapter also contains study on probable's who could be next Berkshire. Author  advises to bet big on your best bets as done by larger number of big investors to generate wealth. Importance of allocation is to be done as per risk v/s returns as cited as Kelly’s disciplines.

Due importance is given to buybacks citing the classic example of Tontine theory of France. Author has cited examples like AutoNation where companies are able to generate wealth to their shareholders by constantly buying their shares back. Author has explained  various types of moats like strong brand, cost of switching, network effect, cost effectiveness and size which helped companies to stay out of competition for a longer period.

Author has explained in detail about miscellaneous concepts on 100 baggers like ignoring forecasters, no need to chase returns, no need to get bored, avoid managements involved in scams, think twice before switching portfolio, wisely watching management con-calls etc. Section of the book is dedicated that how great depressions provided opportunity for wealth creation and explains the three types of stocks that are likely to witness comeback after market crash. He explained the importance of holding the stocks during depression by citing the wealth creation by  investing stalwarts like John Maynard Keynes and Floyd Odlum.

The summary of various principles required for 100 baggers which are enumerated below: -

1.      You have to look for them.

2.      Growth, Growth and More Growth

3.      Lower Multiples preferred.

4.      Economic moats necessary

5.      Smaller companies preferred.

6.      Owner Operators preferred.

7.      Use Coffee can approach.

8.      You really need a good filter.

Top 5 Fastest 100 Baggers from the book:-

1.      Franklin Resources Inc in 4.2 years

2.      Pharmacyclics Inc in 5 years

3.      Nexstar Broadcasting Group in 5 Years

4.     Questcor Pharmaceuticals Inc in 5 years

5.    Biogen Idec Inc in 5.5 years

Conclusion:- Overall, "100 Baggers: Stocks That Return 100-to-1 and How to Find Them" is an invaluable book for anyone looking to enhance their understanding of stock market investing and achieve extraordinary returns. Book contains extensive research, practical advice, and emphasis on long-term strategies make this book a must-read for ambitious investors. Must read book for every investor.

 

Buy it Here