My Past and Our Future Multibaggers

A documentation on how I generated 32.8% unlevered gross IRR, where I am looking for opportunities and why you should join my journey

Hello and welcome,

I’m Armin, an investor who achieved a 32.8% unlevered gross IRR by pursuing a concentrated equity strategy focused on multibaggers. I actively seek deeply undervalued opportunities unconstrained by company size, industry or geography, with a strong focus on overlooked asymmetric situations. To be clear, this is not about high-growth, disruptive companies, but rather about a value approach focused on a margin of safety and a high likelihood of heavily skewed upside.

My background is in economics and finance, I worked as investment banker at a bulge bracket bank and have been part of the investment team of renowned private equity and hedge funds. I started working in finance in 2019, but only manage my own money since mid 2022, partly because this is the time when I accumulated some savings and partly because regulations imposed on investment bankers prohibit people from investing in individual companies.

If you are reading this then you are either a friend or fell prey to the clickbaity title, about how to achieve a high return with stocks. So let’s talk investment philosophy. My ideal investment would be a company with durable and increasing moat, economic resilience, high profit margins, low capital intensity and a long runway for growth. All of that, of course, for a heavily discounted price. If identifying the highest quality stocks would be the secret to high investment returns, it would be fairly easy. Just think Alphabet, Amazon, Berkshire, Costco, Mastercard/Visa, Meta, Microsoft, Moody’s, etc. (Maybe I should only screen for companies starting in “M”). The crux is that those names are well understood and highly priced, as they rightfully should be. However, once in the blue moon, there are either massive market downturns or idiosyncratic events dragging even the highest quality names down. These are the opportunities I look for when entering select high quality compounders.

But those instances are rare. What am I doing if the market does not provide me with such an obvious opportunity (note: nothing is obvious even if it may appear so in hindsight)? I explore niches and companies which are hated, unloved & severely depressed, too small for sophisticated investors or in a special situation with clear evidence to resolve. Most of the companies I look at are left dead for good reason, but every once in a while there is a diamond in the rough. And it only takes one or two of these diamonds to be financially set for the rest of life. That’s why I devote my time to discover these opportunities that can generate 10x-100x.

But virtually no one makes 100x on their investment, how can I achieve such results? When consulting a study on past 100-baggers conducted by Thomas Phelps in his seminal work called “100 to 1 in the stock market”, it becomes obvious that the reason why people don’t generate 100-bagger type returns is because they for one don’t look for it, and for two don’t hang around long enough. Thus, simply devoting time and energy to identify these opportunities gives us an edge. Now we only need to find a selection mechanism to reduce the number of >50k stocks globally to a manageable universe with high likelihood of success? Luckily Mr. Phelps also provides a list of situations which historically generated 100-baggers. The past does not repeat itself but it often rhymes, which makes this our best starting point. There are four situations which have been futile hunting ground for 100-baggers: 1) severely depressed markets, 2) surprise findings of natural resources, 3) special situations such as high leverage, and 4) quality compounders with high ROI and long runways. Sounds familiar?

Equipped with a solid financial education, robust mental framework and hunger to perform better than my past and present highly regarded employers, I started the journey of making my own investment decisions. This started off as a side gig and lead to following investments (in chronological order): Somero Enterprises, Tencent, Shopify, TAV Airports, Warrior Met Coal, Alpha Metallurgical Resources, Core Natural Resources, Prosus, Carvana, Anadolu Efes, Falcon Metals, Zedcor, Valaris and Sintana Energy. These days, I left the industry to follow my own investment philosophy. I launched this Substack hoping to at least cover my food expenses - because, well, pizza isn’t cheap these days.

The next post will be devoted to a short overview of my investment thesis on exited investments and those that remain in my portfolio, but appreciated meaningfully. Then we will cover my current investments which are still highly asymmetric. Those will come in individual posts to thoroughly elaborate on the investment thesis and provide the best value possible.

If you enjoy this content, I’d appreciate if you like, share or subscribe to my substack. Subscribing costs less than a Netflix membership, and just one idea can offset costs for a lifetime.

Join the journey - let’s find multibaggers together!
Armin