Nordic Investment Partners was founded in 2017 by Ole Søeberg. Ole has a broad and long experience in global equity markets since early 1980's. He has been in investment banking, Investor Relations in large corporates and Asset Management and in various leadership roles.
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How to find a 100-bagger?
25 April 2023
I've been in the investment business since early 1980's and in that period there has been many listed companies that have seen their stock price rise by more than 100 times (10.000%). A good example is Coca Cola that has generated 11.5% per year since 1983 and that's almost 100x over the period. Coke was not unknown in 1983, 1993 or 2003 and yet it just kept giving.
So what are the key ingredients for a 100-bagger?
Earnings growth is by far the most important driver. And it's cash flow earnings and not the 'adjusted EPS' that they learn over at the CFO school. The board might like to see a steady progression of the business, but you can't pay the bills with adjusted EPS. Cash flow pay the bills, wages and other things to make the business run.
And the earnings growth need to be relatively high, which means the business much have a large potential market. Also, the business is so unique that it's customers simply must have it's products or services almost no-matter the price. Apple's iPhone and ecosystem and NovoNordisk diabetes and obesity treatments are good illustrations of this
Yet, even if you find the best growth business in the world and you then overpay for it you'll wait for years for the fundamentals to catch up with the price (valuation).
So, 100-baggers are easier to find in periods of crisis, when financial assets are for sale.
I've been onboard in some 100-baggers and they split evenly in two brackets;
1. pure growth - year after year of solid growth. ASML and NovoNordisk
2. Fire sale pricing - the company gets so inexpensive that the stock exchange should halt trading. Samsung Electronics in 1997 Asia crisis and Royal Unibrew in 2009 fires sale by Icelandic investor.
There are many more and the 100-baggers in 2035 are already listed today. The 2035 100-bagger is today a relatively small business, it's got good and focused management that know what capital discipline is and they have high return on invested capital in the business. And they have a product or service at lot of customers want.
So use your imagination, turn a lot of stones, be patient and you will find a 100-bagger in due course
NovoNordisk since 1980s