Naspers, Capitec and Tesla are examples of companies with stock that has increased 100 times from when an investor originally bought it
I recently listened to a conference call by an investment manager I hold in high regard. His investment style can be best described as “high quality”. This is in contrast to the traditional “value” manager who searches for unloved stocks the market has pushed to unjustifiably low multiples of earnings or book value. It is also in contrast to the typical “growth” manager, who is prepared to pay high multiples to buy companies that are growing their revenues or earnings at very high growth rates.
An example of an SA 100-bagger would be Naspers. While Koos Bekker’s investment acumen had already been demonstrated through his involvement in the founding of MultiChoice and MTN, it was Naspers’s $32m investment in Chinese internet company Tencent that catapulted it into the global “big league”. Naspers’s market cap was a “mere” R5bn when it invested in Tencent in 2001. Now its market cap is more than R1.3-trillion.
The most important of these is to identify stocks that earn above-average rates of return on capital due to a “moat” or a competitive advantage. Interestingly, however, Mayer found that companies should not be “too small”. In his study of the 365 companies that were 100-baggers, the median sales level at the outset was $170m , which still represents a fairly sizeable business.
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