🚀 Two Engines Behind 100-Baggers
|
Welcome to the 9th edition of this exclusive behind-the-scenes newsletter.
Last week, I told you about 🏆 The Magic of Tiny Titans.
Today? Let’s talk about 🚀 Two Engines Behind 100-Baggers.
You want to join Tiny Titans on the 9th of June? Apply here by leaving your email.
Hi Partner 👋
I’m writing this email on a bus ride from La Sologne (South of France) to Paris (the capital of France).
What I’m doing here?
And why did I travel almost straight from Omaha (Nebraska) to France?
I’m traveling with some high-end American entrepreneurs to talk about investing, business, and life.
 |
All attendees of this trip are worth millions of dollars.
One of the key lessons from being around this group of high-quality people?
They are all humble. Very humble.
They all say they’ve been lucky during their career.
This humbleness truly touches.
It signals something.
Successful people know what they know.
But more importantly… They know what they don’t know.
They attribute a lot of their success to luck.
Getting lucky is one thing. Recognizing the opportunity and seizing it is another.
Swing heavily when the odds are in your favor.
This is something many people underestimate.
 |
So why am I writing this?
What does it have to do with Tiny Titans?
Well… The people I talked with this week are all very successful.
They all build their own business from scratch.
And when you start from scratch, the upside potential is tremendous.
The upside actually is unlimited if you think about it for a second.
It just all makes sense.
It’s far easier for a company making $3 million a year to triple in size than for one already making $1 billion.
The smaller you are, the more upside potential you have:
 |
What makes it even more powerful?
You have two engines working in your favor favor:
Small companies grow at higher rates compared to larger ones
Small companies are cheaper, giving room for multiple expansion
Let’s say a company doubles its earnings per share, and at the same time its valuation doubles too.
In that case, you actually 4x your money.
That’s how multibaggers (or even 100-baggers) are created.
You only need a few success stories like this:
 |
So which kind of companies match these criteria right now?
Which companies have tremendous growth potential and are currently still very cheap?
1. Kingsway Financial Services ($KFS)
How does Kingsway Financial Services make money?
Kingsway is a Search Fund. They operate in two segments:
Extended Warranty
Kingsway Search Xcelerator (This is the Search Fund where they acquire other companies)
Kingsway uses a search-fund strategy to find good businesses to buy.
Search Funds first identify talented people who want to lead a company.
Afterwards, they help them acquire a business they can run and grow.
This creates value by putting strong operators in charge of businesses, helping them improve performance over time.
A Stanford study found that 681 Search Funds delivered an average return of 35.1% since 1984.
This means they massively outperform the market over time.
 |
Why is it interesting?
Search Funds are one of the best investment vehicles
Kingsway is the only public U.S. company using this model
They have a world-class advisory board:
 |
2. Asseco Poland ($ACP)
How does the company make money?
How does Asseco Poland make money?
Asseco Poland develops software for banks, governments, healthcare institutions, and businesses. They make money by selling software, providing implementation services, maintenance, and long-term support contracts.
Asseco Poland is not just a software company.
It’s also an acquisition machine.
Since 2004, Asseco has completed over 130 acquisitions and expanded across dozens of countries.
Topicus acquired a 24.8% stake in Asseco for €417 million.
When one of the best serial acquirers in Europe makes a move like that, it says a lot about Asseco’s long-term potential.
 |