100 Baggers — Mayer: COMPLETE

A 100-bagger turns one dollar into one hundred dollars — that is the whole definition, and it matters more than it sounds. If you put 10 000 dollars into a true 100-bagger you have 1 000 000 dollars when the journey is complete. Mayer and his team scanned the entire American stock exchange between 1962 and 2014, from essentially every possible starting point, and found exactly 365 companies that passed the test.

It is a small group — but larger than most think, and common to the companies is that they were no secrets when the journey began.

The monsters in the study are legendary. Monster Beverage, the energy drink company, rose more than 1 000 times from the middle of the 1990s to 2014 — one of the largest stock journeys in modern market history. Berkshire Hathaway was transformed under Warren Buffett from a dying textile mill into a compounding machinery with a ten-thousandfold return over half a century.

Amazon, listed in 1997, had grown several hundred times by the study's end. But the point of Mayer's material is that most of the 365 were small, boring and fully visible companies — manufacturers, insurers, specialty distributors — that simply kept reinvesting and growing for decades.

Run the core equation. A hundredfold over 25 years requires an annual return of about 20 percent, since 1,20 raised to 25 is roughly 95 — almost exactly 100x. One hundred kronor then becomes about 9 500 kronor. Slow the pace to 10 percent per year and it instead takes nearly 48 years before the capital has grown a hundredfold.

That is why Mayer returns to the power of time: time is the variable that decides whether the equation becomes reasonable or impossible.

Mayer describes every great stock journey with two images: the engine and the fuel. The engine is the growth in earnings per share — it does the work year after year as the company retains and reinvests its profits. The fuel is the expansion of the valuation multiple, which accelerates the journey when the market re-rates the company upward.

Mayer is clear that 100-baggers require both: a car without fuel goes nowhere, and fuel without an engine just burns up.

Count with a concrete scenario. A company whose earnings per share grows 20 percent per year for twenty years reaches an earnings factor of about 38 (1,20^20 ≈ 38,3). If the stock was at the same time bought at P/E 8 and over time is re-rated to P/E 21, the multiple contributes a factor of 2,6.

Multiplied: 38 × 2,6 ≈ 100. That is the whole recipe in numbers — but note the order: the engine first, the fuel after. Whoever buys at P/E 40 has no fuel tank left, however beautiful the company.

In AKM1 language you measure the fuel tank with V04 (P/S), V05 (P/B) and V06 (EV/EBITDA) at the moment of purchase. A low starting multiple is not the same thing as cheap — it must be paired with a working V01 machine that grows into its quality.

And a high starting multiple is the silent enemy: whoever pays 40 times earnings for a wonderful company can make good money on the EPS side and still compound ten times worse than the one who bought the same company at 10 times earnings.