From 1 to 100...

o, this isn't about comparing car acceleration speeds; the time it takes to reach 100 km/h though the acceleration that I am talking about can be equivalently heart racing!




_{No no no, not this kinda 0 to 100....I mean X 100...we're talking stock appreciation...}






EDITOR'S NOTE

I wanted the last Mozz post for this year to be special... for the end of 2020, a unique year it was. I have been saving this up and it was fun to research and write. I myself learnt plenty while doing the research and I hope you enjoy the read. It's a long one and will set a personal record in terms of length, so get conformable, and settle in!

Tonight I have so much material I want to cover that I'm breaking this up into three distinct parts:

PART 1 - 1 to 100
PART 2 - 1 to 100 continued
PART 3 - What a top analyst looks for



Parts 1 and 2 will draw on the Book 100 Multibaggers by Christopher Mayer and in part 3 I will cross over to some analysts I follow myself though it's not a 1:1 following in that I really only refer to their material at a higher level and at an ad hoc basis. I do find they have some good material every now and again. Of course this will not be just a general information blurb, you can pick up a lot of investment books for that material, nah I will be tailoring this towards our investment in PAR.


WHY DO IT?

A few of my close followers ask me, why do you do it Mozz? Why spend so much time researching and then sharing...well a number of reasons:

1) Research makes us wiser....when I read something from across the board...I learn and I discover. I come across some really interesting material that I wouldn't have ordinarily been motivated to read. It results in questions which we can either pose here or to other sources. I was darned impressed at the level of questions this year not just at the AGM and the R&D day that we as a collective put together, but the questions in the forum too throughout the year. Let's maintain this going forward.

2) Your feedback drives me...I love it, it is so different having an audience to play to. Sure one can play the violin (or any instrument) at home, but playing it to a crowd in front of you, it's another level. (I can't play any musical instrument except for a slow paced Chariots of Fire on the Piano...I sing as well as a I play)

3) Through this forum you guys come up with some great articles and research yourselves, it gives me leads and together we progress. I have little to no presence on social media...no time... so it's not a one way street. I've had the good fortune to develop some ace contacts and some excellent friendships...one day that pirate cruise might become a reality.


ACKNOWLEDGEMENT

I must start with a very special thanks to a star poster @Eire2011 for suggesting this book, Only because of you I read the book and I bring you my version and summary. As always do enjoy!






PART 1

INTRODUCTION

There are many good Investment and financial books out there. No single book will give you the Holy Grail, it is a compilation, a snippet here, a paragraph there...you put it altogether over the years and you get the winning recipe from these bites and the choice paragraphs. It's not just true for shares, property is the same game...read widely, there are many things to learn about what I like to call the two brothers...(could also be sisters)....the two siblings of property and shares. Both as valuable as each other for the long run...and that's what this post is about....the long run.

The book that Eire2011 suggested is no doubt a good one and I thoroughly enjoyed it. There is finally no substitute for reading the book itself from start to finish, no matter how I summarise it for you, There are some beaut examples in the book too wieldy to quote in total here.Having said this, I think I have gleaned a lot of the good points.

Now this isn't a Book review club, so I will fashion the points I make into PAR relevance...a bit like an Iron Smith with a lovely hot piece of liquid malleable steel...ready to be moulded into shape.



_{Like moulding liquid iron... we too are setting up to craft something quite unique the world hasn't seen before.}



THE PRINCIPLES

Here are my thoughts and the prevalence to what you and I hold. The way I am analysing this book, and it is a gem of a book, is to break it down into 'principles' and I will add my comments ("Mozz take") where applicable, remember as always, I am not qualified, you must do your own due diligence and take into consideration our own individual circumstance and if this is at all relevant to you. Not at all advice.



PRINCIPLE 1 - "The key to a 100 bagger is not only finding them, but keeping them".

So often we invest...we get our double (x 2)..and we sell...it's gone...no more...MOZZ take: Golden advice right from the get - go...page 3 contained this little gem and though it is obvious and a lot of the material might be to most of you seasoned investors, I think the book articulates it well. Yes FINDING the next AMZN...finding the next SHOP...finding the next RIO (AX) is half the battle....it is the fortitude of HOLDING it for the long term, that's more than 50% effort in my books.....LIVE through the boring times....SURVIVE the dips....this is where the real gold lies in my view.

Never sell? I'm not saying don't ever sell, I'm not saying don't crystalise some profit for it is THIS crystallisation, this very realisation of profit that NO one can take away from you, it is no more a gamble in terms of what you take off the table. BUT I am saying don't take 100% off....keep some...in fact either ratchet up (my plan) or have some amount dedicated and locked in the Garage Fridge that you will never touch....think of it as your private stash...ONLY YOU will decide when the time is right...but do give it some time.......this isn't a stock that has limited potential in my view....this isn't a stock for a quick double and you are out and move on....yes maybe move on for a chunk...but keep a piece aside in that drawer and come back only in 5 years..maybe 10....even 12 years from now.



PRINCIPLE 2 - Don't get suckered into something that just moves....be patient!

In this gem of a book the author introduces a Mr Phelps, who gives us this pearler of a quote:"...a great deal of investing is on par [his word, not mine] with the instinct that makes a fish bite on an inedible spinner because it is moving".And further, Mayer writes "investors crave activity, and Wall Street is built on it".

Mozz take: This means that investors get bored of what they own particularly if the thing doesn't move....they see a stock that's inedible (they don't know it at the time) and they rush off...sell up and buy the next new thing in that's flavour of the month. DO NOT SELL WHEN IT IS BORING...PAR doesn't move sometimes.....in fact quite the contrary...PAR moves down on good news...How is this possible? Why does this happen?

Because it has ALREADY moved up...shorters and short term holders are trading it. Share holders that are not informed are getting bored and slowly selling..The new (to us) poster @fareki has done a good job showing us that Instos are getting in, and they are getting in because of weak retail hands.....we long term holders DO NOT CARE for this short term fluctuation...we are NOT here to make a 0.5 X or a 2 X...I'm here for the 100 + X (starting to look a lot like algebra)...Do the maths...stay the course...don't jump ship when you are in the middle of the Atlantic, you will just get wet and regret it. (My views).



_{Don't do it, don't jump ship though the seas are not our friend at the moment and the share price is low.}



PRINCIPLE 3 - Do not get hung up about our share price from Month to Month.

Do not get disappointed if it fluctuates or goes down. MOZZ take: Focus not on the share price, focus on the business, particularly in the early days like where we are at. Is the business sound? Can it grow...will it be sought after? Are management looking after the business, are we in good hands. Are we knowledgeable holders? Where are we in the life cycle? Do we know (in detail!) the pathways that are upcoming? Ask these questions.



_{Huh? We haven't even started on our revenue path! We have lot's to come!}



PRINCIPLE 4 - "Relying only on published growth trends, profit margins and price earnings ratios is not as important as understanding how a company could create value in the years ahead".

Mozz Take: this marries up perfectly with Warren Buffet and Charlie Munger's philosophy.It's part of the recipe for success, a template that should be applied for the longer term. Ask this question now: "How can our company create value?"...ask this very same question in months time....years from now when we have revenue going.


PRINCIPLE 5 - The average 100 bagger in Mayer's research is not generally super micro cap companies.

In fact, "...the median market cap was about $500 million". It's a myth that to get your 100 X you need to find a stock that's in the cents.Paradigmers, what is our market cap currently? At the time of writing this it was $602.1 M. That's $403 M USD. This aligns well with the median market cap in Mayer's research. Baggers of this magnitude can come from all industry types, in fact over the period of Mayer's research the best performing stock was a railroad company and came it at some 16,000 fold increase over 40 years if you had held it!
(The book is littered with excellent examples).

PRINCIPLE 6 - When is the most powerful share appreciation phase?

Well generally it will be as our earnings grow...and that will really take off when the OA program starts....my guess is not until 2023 sometime..maybe 2024, that will be the REAL steep gradient of growth, so the REAL ARG (Accelerate Revenue Growth) prob won't occur till around 2024 onwards. A long slog from here I know...but don't forget:

1) Some revenue before then (SAS RRV which might happen sooner than we think and later, TGA Provisional Aus)

2) A real chance of deals (yes that's plural..perhaps OA, but higher chance for MPS before 2023).During such early periods like now for us and specially with young growing Pharmas...the P/E ratio is destined to get silly, ignore it! It will only start to make more sense as we mature and by then you and I will hopefully be on our private yacht somewhere in the warm 27 °C waters of the Bahamas charting a further path to The Maldives... PoolChampion, pass me another Rum if you will...When will AbsentFriend make himself Non Absent and join us on the upper deck?


PRINCIPLE 7 - (George F Baker (1840 -1931)) "To make money in stocks you must have "the vision to see them, the courage to buy them and the patience to hold them" According to Phelps, "patience is the rarest of the three".

Mozz-Take: It's a common theme throughout the book, but I admit , it is hard to not touch your investment..I do believe it will reward those that can hold out.



Here ends part 1. In Part 2 we will cover 6 more relevant principles as a summary of the Mayer book. We will also take a look at a very unique managed fund and gain some insights into this area that may seem initially glossy but might just be one to allocate to only lightly if at all.