If you invest in a company’s shares and the price rises 10 times or 900%, that’s known as a 10 bagger. However, what if the share price rises 100 times or 9,000%? It’s then known as a 100 bagger. Is this possible I hear you ask? Well, I have news for you. It is absolutely possible. In fact so much so that Chris Mayer wrote a book called 100 Baggers, described companies that had become 100 baggers and explained how to find such shares to invest in.
Interestingly in order to achieve such stellar returns, you need investor attributes which are rare, such as patience and inactivity which appear to be counter-intuitive but are in fact the tremendous traits of super successful investors.
Amazon’s shares were initially priced at $18 a share in May 1997 which is the equivalent of $1.50 when adjusted for subsequent stock splits. An initial investment of $1,000 which was enough to buy 55 shares would now be worth more than $2 million! The increase in value is an astonishing 189,684% which makes it a 2,189 bagger!
Over the last 24 years, Amazon’s share price has fallen 50% on no less than 4 occasions. It is unlikely that any fund manager has continued to own the shares throughout this 24 year period. Amazon is one of those rare companies that has achieved 100 bagger status. They were not the first and they won’t be the last.
In the appendix, to his book, Chris Mayer lists no less than 365 companies that became 100 baggers between 1962-2014. That is an astounding record of achievement.
Mayer very helpfully lists the essential principles of finding 100 baggers in the form of a 10 point checklist which I have re-produced below.
- You have to look for them.
- Growth, growth and more growth.
- Lower multiples preferred.
- Economic moats are a necessity.
- Smaller companies preferred.
- Owner-operators preferred.
- You need time: use the coffee-can approach.
- You need a really good filter.
- Luck helps.
- You should be a reluctant seller.
We have decided to focus the CCM Intelligent Wealth Fund on investing in companies such as these. Many of our existing holdings already fit much of the criteria anyway.
I have set a target for the fund of a 20% a year return net of charges. If this target were achieved then the CCM Intelligent Wealth Fund would itself become a 100 bagger after 25 years. It’s a bold target but an eminently achievable one in my opinion.
In the last 12 months (for the period September 2020 to September 2021) alone our fund has risen in value by 46.5% (Source: Trustnet.com) in spite of a recent setback in price.
https://www.trustnet.com/factsheets/o/oxo8/ccm-intelligent-wealth
So if you are patient, ready to invest long term and can accept the greater volatility of a fund like ours, then why not invest in it?* You never know, it may well become a 100 bagger itself one day. You know it makes sense*.
*The value of investments and the income derived from them may fall as well as rise. You may not get back what you invest. This communication is for general information only and is not intended to be individual advice. You are recommended to seek competent professional advice before taking any action. All statements concerning the tax treatment of products and their benefits are based on our understanding of current tax law and HM Revenue and Customs practice. Levels and bases of tax relief are subject to change
