Actionable insights — How to Find 100-Baggers

1. Convert the target multiple into an annual rate before deciding whether the search is worth running

1. State the outcome you are hunting for as a multiple and a horizon — 10x over ten years, say.
2. Convert it into a compound annual rate. 5x over ten years is 17% a year; 10x is 26%.
3. Notice how ordinary the annual rate is relative to the headline. This is what removes the temptation to reach for leverage or speculation to get there.
4. Set the acceptable outcome, not just the target: here 5x is explicitly "pretty happy", which changes the position-sizing and the patience required.
5. Re-run the conversion whenever a holding is halfway there — the remaining rate needed is what tells you whether to hold.

• Backward reasoning: an acceptable-sounding annual rate does not make an implausible multiple plausible.
• Ignoring the survivor problem — the arithmetic describes the winners, not the distribution you are drawing from.

2. Put a subjective interest filter first, and defend it on workload grounds

1. Before any screening, ask a single question about each idea: do I actually want to know more about what this company does?
2. Reject on a no. This is not aesthetic — the test is whether you will still be reading its filings in year six, when the position is down and the news is bad.
3. Only then apply the quantitative screen. Here: 20%+ consistent revenue growth, then management quality.
4. Require the market itself to be growing: "If the overall pie is shrinking, even a great company is swimming against the current."
5. Then do the primary reading — calls, analyst days, 10-Ks, S-1s, founder interviews — and write the case out in full before buying.

• Interest as a proxy for familiarity, which biases the portfolio towards consumer-facing and technology names and away from dull, high-return businesses.
• A filter that removes 90% before any evidence is examined — cheap to run, but expensive if your curiosity is poorly calibrated.

3. Hold sector exclusions as rebuttable defaults with a named override

1. Write down the sectors you will not normally own, and why.
2. Specify in advance the single condition that would let one back in — here, genuine disruption of the incumbent model.
3. When a candidate meets it, take the position and say publicly that the rule was overridden and on what grounds.
4. Review the overrides periodically: several in the same sector mean the rule itself is wrong.

• "Disruptive" doing the work of an actual test — the override needs a definition or it becomes a licence.
• Overrides that are only ever granted after the price has already risen.

4. Pre-commit a buying schedule with a drawdown escalator keyed to the index, not to your own holdings

1. Fix a regular purchase interval and a standard amount — fortnightly here.
2. Define escalation bands against a broad index: -10% invest 20% more, -20% invest 50% more, -30% double.
3. Key the trigger to the index rather than to your own portfolio, so a name-specific collapse does not automatically pull more money into the mistake.
4. Check the precondition: this requires new income arriving. "If you have a closed portfolio, without money coming in, this works differently."
5. For a lump sum, split it into 52 fortnightly instalments over two years, with the escalator overriding when the index falls.
6. Accept the cost of the discipline explicitly rather than pretending it is free.

• The escalator running out of cash before the drawdown does — the bands assume income continues through the fall, which is exactly when it may not.
• Averaging into a deteriorating business: the schedule is agnostic about whether the thesis still holds, so it needs a separate stop.

5. Process a bear thesis claim by claim, and let the check — not the tone — drive the decision

1. Read the whole report, including the parts designed to frighten you. Note your reaction and set it aside.
2. Extract every factual assertion into a list. Discard the rhetoric.
3. Verify each assertion independently against primary sources.
4. Classify what remains: substantiated claims, unsubstantiated insinuation, and matters of opinion.
5. Act on the classification. If the substantiated set is empty and the price has fallen, that is a buying signal, not a survived scare.
6. Repeat the whole procedure on any follow-up report rather than assuming the first verdict carries.

• Confirmation bias in the checking — you are verifying an attack on something you own.
• Short reports that are right: the procedure is only valuable if it can also produce a sell.

6. Treat a founder's pull as a testable asset, not as a feeling — and test it on non-investors

1. When a founder impresses you, do not stop at the impression. Ask who else would be affected by it.
2. Look for the evidence in third parties: employee retention and calibre, customer advocacy, the quality of backers, the ability to recruit above the company's weight.
3. Look for the founder's language in the company's own documents — a self-description adopted years before the market agreed is a dated, verifiable signal.
4. Restrict the criterion to its stated shape: "a visionary founder CEO bringing an outsider's view to an industry that hadn't changed in ages."
5. Keep it as one criterion among several, never as a substitute for the financial work.

• The evidence base offered is entirely retrospective and entirely winners — Apple, Amazon, Tesla, Walmart, Berkshire. Charismatic founders also run failures, and they are not in the list.
• The stronger claim in the interview — that intuition outperforms analysis because most knowledge is subconscious — is unfalsifiable. Take the testable half and leave the rest.

7. Distrust market-capitalisation screens, and audit the ones you have used

1. Whenever you reject a candidate for being "too big to multiply," write down the market capitalisation and the date.
2. Revisit the list annually and mark the outcomes. This is the cheapest self-audit available to an investor.
3. Replace the size rule with the actual question: how large can this business's end market become, and what share can it hold?
4. Note that the size heuristic fails hardest exactly when a new market is being created, which is when the biggest returns are available.

• The same instinct dressed up as prudence — "the easy money has been made" is a size screen with better manners.
• Overcorrection: most large companies genuinely do not multiply, and the counter-example is memorable precisely because it is rare.