Could YOU ever buy a UK 100-bagger?

Finally caught up with the book 100 baggers by Christopher Mayer (pdf here).

Lots of online commentary about the book, with a follow up by the author here.

The book found 365 100-baggers in the States between 1962 and 2014. The general conclusion to find a US 100-bagger was to look for smaller companies preferably with low multiples and owner-management and, crucially, the ability to reinvest earnings at high rates of return. Oh, and you had to hold onto the shares for a decade or two and withstand substantial share-price fluctuations.

The author commendably admitted the study was not perfect due to survivorship bias. We will never know how many companies that exhibited the early winning traits of actual 100-baggers never made it to 100-bagger (or even 10-bagger) status.

So what chances do we have of buying a UK 100-bagger? I have employed SharePad to scan through the last 25 years to find out:

TIDM Name Mkt Cap (£m) Price (p) 25 y high 25 y low Max bagger Price % of 25 y high
GBG GB Group PLC 1,802 915 954 5 182 96%
AHT Ashtead Group PLC 26,185 5,862 6,162 2 2,672 95%
DPH Dechra Pharmaceuticals PLC 5,517 5,095 5,405 43 126 94%
DPLM Diploma PLC 3,652 2,932 3,166 23 137 93%
JD. JD Sports Fashion PLC 10,925 1,059 1,151 2 517 92%
RNWH Renew Holdings PLC 607 772 850 8 110 91%
GHE Gresham House PLC 327 860 955 9 106 90%
DOM Domino’s Pizza Group PLC 1,705 375 432 3 124 87%
JDG Judges Scientific PLC 472 7,480 8,640 60 145 87%
GAW Games Workshop Group PLC 3,462 10,560 12,220 101 122 86%
IPX IMPAX Asset Management Group PLC 1,440 1,086 1,314 3 389 83%
FOUR 4imprint Group PLC 798 2,840 3,500 33 108 81%
RWS RWS Holdings PLC 2,397 616 805 5 161 77%
HCM Hutchmed (China) Ltd 4,067 471 624 4 177 75%
SAR Sareum Holdings PLC 226 7 9 0 166 73%
CRL Creightons PLC 65 96 134 1 213 71%
IWG IWG PLC 3,022 300 469 3 144 64%
PPH PPHE Hotel Group Ltd 574 1,350 2,140 13 171 63%
JET2 Jet2 PLC 2,545 1,186 1,943 13 155 61%
GGP Greatland Gold PLC 686 17 37 0 623 46%
FDP FD Technologies PLC 577 2,075 4,680 28 170 44%
AVON Avon Protection PLC 635 2,046 4,625 25 185 44%
ARB Argo Blockchain PLC 579 124 284 3 105 44%
ASC ASOS PLC 2,769 2,773 7,730 3 2,379 36%
PPS Proton Motor Power Systems PLC 318 41 125 1 111 33%
IOM Iomart Group PLC 163 149 475 4 112 31%
FUTR Future PLC 4,229 3,506 11,816 75 158 30%
ACSO Accesso Technology Group PLC 355 860 2,975 3 992 29%
CWR Ceres Power Holdings PLC 2,134 1,120 3,900 12 336 29%
MBO MobilityOne Ltd 13 12 45 0 120 27%
NCYT Novacyt SA 202 285 1,194 7 184 24%
BOTB Best of the Best PLC 61 645 3,440 15 229 19%
MUL Mulberry Group PLC 177 295 2,472 25 101 12%

All told I reckon the table holds 33 genuine 100-baggers from 1996. Note that survivorship bias will affect these results, too, with 100-baggers that have since disappeared from the market not shown.

Within the table, ‘Max bagger’ is the 25-year price high divided by the 25-year price low and reflects the maximum bagger opportunity – assuming you bought at the low and sold at the high!

‘Price %…’ is the proportion of the current price versus the 25-year-high. This proportion helps eliminate all the shares that have 100-sagged. I have eliminated all the 100-saggers, although a few (e.g. RWS, Future and Ceres Power) 100-sagged before 100-bagging!

A few shares on the list are familiar to me. I have written SharePad articles on JD Sports, Domino’s Pizza, Games Workshop, Impax Asset Management, Avon Protection, Argo Blockchain, ASOS and Best of the Best.

But is buying a UK 100-bagger realistic? My only experience of potentially enjoying a 100-bagger is Games Workshop (GAW). I owned the shares between 1998 and 2007, and among my various buys and sells I bought around 125p during 2000.

GAW then was not quite the £100-a-share ‘quality’ company we know today. This sales warning during 2000 admitted the ‘moat’ had been breached by Pokemon…

"In the post Christmas period there has been a deterioration in the performance of our UK retail operations, as a consequence of which we now expect the results for the current year to be below market expectations.

We believe this deterioration in UK retail is primarily due to the launch and success of the Pokemon trading card game. This has drained an element of the discretionary ‘pocket money’ spend which, we believe, would otherwise have been spent on Games Workshop products."

… and presumably sales were now at risk of other gaming fads and trends.

GAW’s 100p low during 2000 put the shares on a P/E of 5 based on (heavily) adjusted earnings.

Back then I could not imagine GAW becoming a 5-bagger or 10-bagger let alone a 100-bagger, which is what ‘hindsight’ studies always overlook. I am convinced nobody buying at the lows for any of the 100-baggers above had an inkling of the mega returns ahead.

No doubt many of 100-baggers I have listed above were smaller companies with low multiples and owner-management… but I suspect their ability to reinvest earnings at high rates of return was extremely unclear at the time.

I think to have a realistic chance of enjoying a UK 100-bagger, the holding period has to be extended beyond 30 years (and SharePad’s data). The longer time horizon means you could pick up a smaller, but well-run business and have greater time for the share-price compounding. Halma (HLMA) for instance had a c£100m market cap during the 1980s after c15 years of above-average growth…

…and its market cap is now 100x at £11b!

The alternative to UK 100-baggers perhaps is to start fishing for ‘the next Amazon’ in the States.

I’d welcome any stories of 100-baggers – actual(!), what-could-have-beens… or potentially future!

Maynard

2 Likes

Hi,

I have no 100 bagger stories, unfortunately.

However, I am just enjoying an awesome Australian red wine called ‘The Full 15’ (obviously so named because it’s 15% proof).

McPherson The Full Fifteen 2020 | Product Details | Laithwaites Wine

You may agree (with me) that finding a 100 bagger is beyond my personal powers (especially after a glass of wine :wine_glass:), however achieving ‘The Full 15’% p.a. on average over the longer term for my portfolio overall may not be?

(It hasn’t been to date, anyway, but the past is no prediction of the future… etc etc etc).

Assuming I am still around in 33 years, if my portfolio has bagged 100 times (at the full 15% overall p.a.), my heirs should probably buy me a drink or two!! (If they don’t want to, I could probably buy myself a vineyard, and disinherit them anyway!)

Regards,

Ben

4 Likes

2 posts were split to a new topic: Aquis Exchange (AQX): disruptive multi-bagger?

A few months ago you did a post on deep value investing and, in particular, one exponent who was interested in HDT - Holders Technology. The shares were then at 44p and they are now 93p. The 52 week low is 37.5.

Perhaps this might become a multi bagger. Perhaps worth a closer look?

Hi Diogenes

Wow. I had not realised HDT had since doubled. Have replied on the original topic:

Maynard