100Baggers

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100-BAGGERS DISTILLED: ESSENTIAL PRINCIPLES 191 You would’ve been stopped out of every one long before it ever returned 100 to 1. Monster Beverage became a 100-bagger in 10 years, as we’ve seen. Remember the heat map above? I count at least 10 different occasions where it fell more than 25 percent during that run. In three separate months, it lost more than 40 percent of its value. Yet if you focused on the business—and not the stock price—you would never have sold. And if you put $10,000 in that stock, you would have $1 million at the end of 10 years. I have many such examples. It’s true you could get lucky and hit a double or triple by getting the timing right on something. But in that effort, you’ll surely be stopped out of a lot of ideas along the way. And what is the point of going through all the research required to come up with an idea if you’re going to let your neighbor dictate your sell price? Second, you might say to yourself, “Well, I can buy it back later.” But honestly, will you buy it back? I think it is easier to say these things than to do them. Investing is such a mental game. Further, you might point to periods where stocks got bubbly. In 1998 or 1999, Coke was trading for 50 times earnings. It was a sell then. But then again, would Coke have qualified for a buy based on our 100-bagger principles? I don’t think so. It was a sell even by those lights. Of course, investing in the buy-and-hold manner means sometimes you will be hit with a nasty loss. But that is why you own a portfolio of stocks. To me, investing in stocks is interesting only because you can make so much on a single stock. To truncate that upside because you are afraid to lose is like spending a lot of money on a car but never taking it out of the garage. I invest in stocks knowing I could lose big on any position. Overall, though, I know I will turn in an excellent result. I here quote again that wise old bird, Mr. Phelps. He writes, “Let us fall back on the principle that when any rule or formula become a substitute for thought rather than an aid to thinking, it is dangerous and should be discarded.”
192 100-BAGGERS (A professor wrote in to tell me the above was a “self-negating rule.” I suppose it is. Well, life is full of contradictions.) Stop losses are a substitute for thought. What I present above are aids to thinking about the problem. If there is one general principle, it is this: if you’ve done the job right and bought a stock only after careful study, then you should be a reluctant seller. I’ll end this section on when to sell with one of my favorite quotes, from Martin Whitman at Third Avenue Funds: “I’ve been in this business for over fifty years. I have had a lot of experience holding stocks for three years; doubled, and I sold it for somebody else, for whom it tripled in the next six months. You make more money sitting on your ass.” If you are hunting for 100-baggers, you must learn to sit on your ass. Buy right and sit tight. Coda: There Is No Magic Formula By now, you’ve figured out there is no magic formula for producing 100-baggers. There is no easy way to screen for them. Still, in this final chapter, I’ve distilled things down to essential principles. Keep it handy and refer back often in your quest for 100-baggers. I wish you good fortune and many 100-baggers in your own investing pursuits. And I hope this little book contributes in some small way to your successes.
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100 BAGGERS STOCKS THAT RETURN 100-
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In memory of Thomas W. Phelps, auth
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CONTENTS Chapter 1: Introducing 100
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2 100-BAGGERS You should read this
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4 100-BAGGERS year by year—that m
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6 100-BAGGERS of compounding, to fo
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8 100-BAGGERS some new insights, si
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10 100-BAGGERS These principles I w
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12 100-BAGGERS I have had my share
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14 100-BAGGERS fears. The list of r
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16 100-BAGGERS The idea is simple:
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18 100-BAGGERS Here’s Kerber: The
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20 100-BAGGERS (Lowenstein is also
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22 100-BAGGERS only when you are in
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24 100-BAGGERS earned around $21 mi
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26 100-BAGGERS But Biggs was someth
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28 100-BAGGERS unlikely, given all
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30 100-BAGGERS It seems to me a bet
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32 100-BAGGERS He looked at 19 such
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34 100-BAGGERS MTY’s path to cove
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36 100-BAGGERS Years it takes for 1
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38 100-BAGGERS Martelli’s study,
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40 100-BAGGERS Another trap is that
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CHAPTER 5: THE 100-BAGGERS OF THE L
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THE 100-BAGGERS OF THE LAST 50 YEAR
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76 100-BAGGERS about $80 per share.
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78 100-BAGGERS “That’s exactly
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80 100-BAGGERS But he has no intere
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CHAPTER 7: OWNER-OPERATORS: SKIN IN
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OWNER-OPERATORS: SKIN IN THE GAME 8
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CHAPTER 8: THE OUTSIDERS: THE BEST
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THE OUTSIDERS: THE BEST CEOS 95 Eac
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THE OUTSIDERS: THE BEST CEOS 97 bou
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THE OUTSIDERS: THE BEST CEOS 99 •
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THE OUTSIDERS: THE BEST CEOS 101 Le
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104 100-BAGGERS “The amount of le
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106 100-BAGGERS The Berkshire Hatha
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108 100-BAGGERS Next was Canadian f
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CHAPTER 10: KELLY’S HEROES: BET B
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KELLY’S HEROES: BET BIG 113 The f
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CHAPTER 11: STOCK BUYBACKS: ACCELER
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STOCK BUYBACKS: ACCELERATE RETURNS
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STOCK BUYBACKS: ACCELERATE RETURNS
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122 100-BAGGERS houses, items that
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124 100-BAGGERS has no moat. See wh
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126 100-BAGGERS The beverage indust
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128 100-BAGGERS gross margin. “Am
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130 100-BAGGERS It seems to me a bo
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132 100-BAGGERS The problem with th
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134 100-BAGGERS “Boredom”—as
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136 100-BAGGERS The same kind of ar
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138 100-BAGGERS How can you deal wi
Page 140 and 141: 140 100-BAGGERS Market-Research Fir
Page 142 and 143: 142 100-BAGGERS Many investors watc
Page 144 and 145: 144 100-BAGGERS Note how the consen
Page 146 and 147: 146 100-BAGGERS The results showed
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Page 150 and 151: 150 100-BAGGERS A similar compariso
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Page 154 and 155: CHAPTER 14: IN CASE OF THE NEXT GRE
Page 156 and 157: IN CASE OF THE NEXT GREAT DEPRESSIO
Page 168 and 169: CHAPTER 15: 100-BAGGERS DISTILLED:
Page 170 and 171: 100-BAGGERS DISTILLED: ESSENTIAL PR
Page 192 and 193: APPENDIX THE 100-BAGGERS (1962-2014
Page 194 and 195: APPENDIX: THE 100-BAGGERS (1962-201
Page 202: APPENDIX: THE 100-BAGGERS (1962-201
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