Author Topic: Alta fox presentation “The makings of a multi bagger”  (Read 3116 times)

scorpioncapital

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Re: Alta fox presentation “The makings of a multi bagger”
« Reply #10 on: September 15, 2020, 05:06:57 AM »
Few can find them quite like Connor Haley.

Time for an ETF perhaps?


BG2008

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Re: Alta fox presentation “The makings of a multi bagger”
« Reply #11 on: September 15, 2020, 07:04:40 AM »
One thing that has not happened and really surprised me is that there weren't as many "de-leveraging plays"

Perhaps, this is a matter of times.  After 08/09, there were quite a bunch of deleveraging plays where a company was over levered going into the crisis and the stock got crushed.  SL Green was one such example, went from $140 down to $8, raised a bit of equity in early 2009 and then went to over $100 per share in 2013-2014ish.  Perhaps, 6-7 years post crisis, the capital markets would have already figured out who is a clown and who has a real business. So the debt capital markets would have more than accommodated the highly levered companies.  Or that the company would have managed to pay down debt.  Some examples that I can remember from 08/09 are:

SL Green and most REITs
Napco (locks and such)
Builder's First Source
Ashland


Jurgis

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Re: Alta fox presentation “The makings of a multi bagger”
« Reply #12 on: September 15, 2020, 11:42:36 AM »
A (largish) number of healthcare companies outperformed. IMO that's a tough area to invest though. Unless you really know the area, predicting results and sales in pharma/medical devices is difficult. And you mostly cannot value them on early financial results, since success/failure completely changes the future sales/income.

So possible choices:
1. Skip healthcare cos
2. Learn the area - lot's of work - and possibly multiple Ph.D.s required to cover even part of it
3. Hire a bunch of Ph.D.s - like Seth Klarman did. I wonder what are his results in bio.
4. Invest in hedge fund or mutual fund. There are couple hedge funds that may have been mentioned who perform(ed) really well. I don't know if there are any great mutual funds or ETFs. IIRC, Fidelity Biotech fund has very so-so results.
5. Scatter shot based on some heuristics/etc.

I'm vacillating between 1, 4, and 5.
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BG2008

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Re: Alta fox presentation “The makings of a multi bagger”
« Reply #13 on: September 15, 2020, 11:52:36 AM »
A (largish) number of healthcare companies outperformed. IMO that's a tough area to invest though. Unless you really know the area, predicting results and sales in pharma/medical devices is difficult. And you mostly cannot value them on early financial results, since success/failure completely changes the future sales/income.

So possible choices:
1. Skip healthcare cos
2. Learn the area - lot's of work - and possibly multiple Ph.D.s required to cover even part of it
3. Hire a bunch of Ph.D.s - like Seth Klarman did. I wonder what are his results in bio.
4. Invest in hedge fund or mutual fund. There are couple hedge funds that may have been mentioned who perform(ed) really well. I don't know if there are any great mutual funds or ETFs. IIRC, Fidelity Biotech fund has very so-so results.
5. Scatter shot based on some heuristics/etc.

I'm vacillating between 1, 4, and 5.

I put healthcare in kind of similar category as O&G as I will probably not get any better at it in the long run

Spekulatius

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Re: Alta fox presentation “The makings of a multi bagger”
« Reply #14 on: September 15, 2020, 03:39:46 PM »
A (largish) number of healthcare companies outperformed. IMO that's a tough area to invest though. Unless you really know the area, predicting results and sales in pharma/medical devices is difficult. And you mostly cannot value them on early financial results, since success/failure completely changes the future sales/income.

So possible choices:
1. Skip healthcare cos
2. Learn the area - lot's of work - and possibly multiple Ph.D.s required to cover even part of it
3. Hire a bunch of Ph.D.s - like Seth Klarman did. I wonder what are his results in bio.
4. Invest in hedge fund or mutual fund. There are couple hedge funds that may have been mentioned who perform(ed) really well. I don't know if there are any great mutual funds or ETFs. IIRC, Fidelity Biotech fund has very so-so results.
5. Scatter shot based on some heuristics/etc.

I'm vacillating between 1, 4, and 5.

The pick and shovel plays like ILMN, BAX, BDX, A, TMO, CRL have been doing very well and don’t really require an in depth knowledge. THe alternative is to bet on track record and/management team. That’s sort of what I am doing with BMRN.

I think it gets hard with biotech or device startups with no track record
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Spekulatius

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Re: Alta fox presentation “The makings of a multi bagger”
« Reply #15 on: September 15, 2020, 04:09:18 PM »
One thing that has not happened and really surprised me is that there weren't as many "de-leveraging plays"

Perhaps, this is a matter of times.  After 08/09, there were quite a bunch of deleveraging plays where a company was over levered going into the crisis and the stock got crushed.  SL Green was one such example, went from $140 down to $8, raised a bit of equity in early 2009 and then went to over $100 per share in 2013-2014ish.  Perhaps, 6-7 years post crisis, the capital markets would have already figured out who is a clown and who has a real business. So the debt capital markets would have more than accommodated the highly levered companies.  Or that the company would have managed to pay down debt.  Some examples that I can remember from 08/09 are:

SL Green and most REITs
Napco (locks and such)
Builder's First Source
Ashland

Right now, deleveraging really doesn’t move the income statement much, because interest rates are low and credit readily available, even for very crummy credit. So deleveraging is a poor use of cash flow in most cases and not much value accrues to equity. This is very different than 2009/2009.
Life is too short for cheap beer and wine.

shamelesscloner

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Re: Alta fox presentation “The makings of a multi bagger”
« Reply #16 on: October 08, 2020, 11:14:01 PM »
Chris Mayer, author of 100 Baggers, is big on using insider ownership as a filter. This doesn't appear to be mentioned as a factor in the study, and might be a useful addition. I just looked up the top performer (ZYXI) and the founder/CEO has a 50% equity stake.

Cigarbutt

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Re: Alta fox presentation “The makings of a multi bagger”
« Reply #17 on: October 09, 2020, 04:22:30 AM »
Chris Mayer, author of 100 Baggers, is big on using insider ownership as a filter. This doesn't appear to be mentioned as a factor in the study, and might be a useful addition. I just looked up the top performer (ZYXI) and the founder/CEO has a 50% equity stake.
The Alta Fox presentation is interesting but Mr. Mayer, in his book, mentions the problem of survivorship bias: "There are severe limitations or problems with a study like this. For one thing, I’m only looking at these extreme successes. There is hindsight bias, in that things can look obvious now. And there is survivorship bias, in that other companies may have looked similar at one point but failed to deliver a hundredfold gain. I am aware of these issues and others. They are hard to correct".
I'm not saying you're wrong and it's interesting to look at ingredients leading to the best outcomes but when looking at those candidates early on, many are swinging for the fences in a way. It may be more prudent to use a basket approach. You may want to try to spot let's say ten of them and watch them over ten years or something. I've done this exercise and this is a nice way to build humility.

Pelagic

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Re: Alta fox presentation “The makings of a multi bagger”
« Reply #18 on: Today at 08:52:40 AM »
For anyone else who gets an error message trying to open the original link, this one from their site worked for me. I got the same error message opening it from a couple different reddit threads too.

https://static1.squarespace.com/static/5aaacb57506fbe4636414126/t/5f85c428b4bac16b20450df0/1602602051503/Conclusion+Deck-+Makings+of+a+MultiBagger+-+FINAL-compressed.pdf