Speaking With Chris Mayer: Looking For The Next 100-Bagger

About Chris Mayer

Chris Mayer is the Portfolio Manager and Co-founder of Woodlock House Family Capital, a private investment fund based in Maryland. He's also the author of several books including 100 Baggers - Stocks That Return 100 to 1 and How To Find Them. He writes an occassional blog at Woodlock House Family Capital. You can follow Chris on Twitter @chriswmayer

1) Most people know you from your ground-breaking book "100 Baggers: Stocks That Return 100-to-1 And How To Find Them" What was the journey that led you to writing that book?

It was a series of serendipitous events. Maybe a good place to start is in 2011 when I read the transcript of a speech Chuck Akre gave titled, “An Investor’s Odyssey: The Search for Outstanding Investments.” You can find it online and I would highly recommend it.

Anyway, in that speech he talks about 100-baggers. In particular, Chuck mentioned Thomas Phelps and his book 100 to 1 in the Stock Market and how that book influenced his thinking. I had never heard of Phelps before that – and I was a junkie for investing books. I thought I had read everything.

Well, I read the book and loved it. I would quote from it often. And finally one of my readers suggested that I should update it. Boom. Big lightbulb went off. That’s how it started. I began to do the research and the product of all that was 100 Baggers.

2) In your experience, what have you found to be the impediments to investors either finding or holding on to potential 100-baggers?

The big impediment to not finding them is simple: people don’t look for them. I’m not being insincere here. Most investors are distracted. If you want a 100-bagger, you gotta put your focus on companies that have the ability to earn high rates on their capital for a long time. The logic of a 100-bagger comes down to simple math – if you compound at X for Y years, you get your 100 bagger. Most of the 100-baggers in my study fell in the fat part of a bell curve where they compounded capital at 20-25% for 20-25 years to get to 100x. 

The second big impediment feeds right off this math; most people have a hard time thinking in those kinds of time frames. And so they are impatient and buy and sell too frequently. You have to approach every investment in a stock as if you were to own it for decades. It’s remarkable how just this shift in mindset has such a profound effect on how one looks at the investing world. It’s a great filter

"You have to approach every investment in a stock as if you were to own it for decades. It's remarkable how this shift in mindset has such a profound effect on how one looks at the investing world"

3) Tell us a little bit about the work you do as a portfolio manager?

I run a small portfolio of ten stocks at the moment. I hope to own all of them for a long, long time. I am always looking for new ideas, but the bar is very high. A new business would have to be quite meaningfully better than what I already own to make me switch. 

I also continue to work on my existing holdings – checking in with management, as well as talking with competitors, industry experts and former managers and employees. All of which deepens my understanding of our businesses and keeps me abreast of changes. I call it the “care and feeding” of a portfolio, and I really enjoy it. 

It’s a quiet, contemplative life. I have a lot of time to think, to read. I try not to check the market during the day and I avoid the circus, the news cycle and all that. I try to keep things calm and cool. I try hard to cultivate that long-term outlook

4) There's no one-size-fits-all, but from your perspective, how should someone considering a career as a professional investor/portfolio manager think about going about the journey?

My journey was unusual and circuitous. So I don’t know if I have any good advice for anyone. I just loved investing. And I loved to write. I started my own newsletter in 2004, where I combined the two into a nights and weekends hobby. But it became my main livelihood and I did that until 2016 when I started working with the Bonner family office, which eventually led to me launching my fund in 2019. I’m fifty years old now, so it’s not like I took a shortcut. But I am happy with the path I took.

I guess I would say follow your interest. Read and study the great investors, explore different investment styles and don’t be afraid to experiment. Build an investment philosophy you believe in and learn to communicate that philosophy to regular people; don’t try to talk like a Wall Street person. Drop the jargon. Also, expect that your philosophy will evolve and change over time. In fact, it should or you’re not learning. Finally, try to enjoy the journey as much as possible, because it’s really all journey.

Today, there are a lot more avenues to write and be “discovered” than there was when I started. I’d encourage people who want to get into money management to start writing and publishing their ideas – on a blog, on twitter, somewhere. It helps build a track record of sorts, but more importantly shows the quality of your thinking. And it can be a tremendous door opener. You’ll meet lots of people. And you’ll be surprised where your work goes. It’s fun, too.

5) You're fairly active on social media (Twitter) and have done a lot of writing in public in the past. How does this help you in your investment process?

Anytime you sit down to write, it forces you to think through some things you might not have otherwise. You start to organize your thinking in some framework. You tend to go deeper into a subject when you are writing about it than you would otherwise. And then when you publish, sometimes you get great responses that can sharpen your thinking. 

I keep an investment journal, too. I’d recommend that. Keep a record of how you’re thinking about certain ideas, of your emotions. That record prevents you from lying to yourself. The mind has a funny way of convincing itself of whatever it wants to believe. A journal helps keep you honest.

• Was this forwarded to you? Sign up here.

• Want to advertise in Daily Market Briefs? Go here.