I can assure you this is definitely a bull market…
…if not for shares, then at least for bullish predictions!
Fresh from projections of…
- FTSE 7,000 (Fidelity)
- FTSE 8,000 (Citigroup)
- and even FTSE 10,000 (Invesco Perpetual)
…along comes another investor who claims:
“We are very bullish because I believe we are on the verge of a golden age for equity investing”
Now that’s what I’m talking about!
“A golden age for equity investing” sure sounds ultra-positive to me.
His portfolio boasts plenty of two-baggers, three-baggers and four-baggers
This latest investor joining the bull chorus in Nick Train.
He’s managed the Finsbury Growth & Income investment trust since December 2000 and – as the chart below shows – has thrashed the FTSE 100:
Source: Capital IQ
Anyway, Mr Train spoke to the Investors Chronicle last week.
He explained his über-bull stance was supported in part by further technological progress and a significant part of the world population being lifted out of poverty.
He also outlined his stock-picking approach for success:
“If you own a collection of shares in great businesses for long enough, something happens… They turn into something wonderful – baggers – shares that go up a whole load and are right at the core of our investment approach.”
Importantly, Mr Train has trounced the market not because he’s managed to luck out on blue-sky start-ups or high-risk turnarounds.
On the contrary, a simple buy-and-hold-great-companies approach has delivered several ‘baggers’ for Mr Train.
Indeed, the Finsbury investment trust holds plenty of two-baggers, three-baggers and four-baggers…
…shares that have doubled, tripled or quadrupled under Mr Train’s watch…
…including popular names such AG Barr, Burberry, Fuller Smith & Turner, Hargreaves Lansdown and Schroders.
How about the possibility of Unilever doubling and doubling again?
In a note to Finsbury shareholders two years ago, Mr Train referred to the man who coined the term ‘baggers’ – legendary US investor Peter Lynch:
“The wonderful thing about baggers, as Peter Lynch demonstrated, is that there is no reason why they should cease to work for you, even after the first doubling or trebling.”
“Good companies often carry on being good companies – generating high earnings over time, as a result of both business growth and, not to be underestimated, their ability to protect investors against the effects of inflation.”
One such example could be Unilever (LSE: ULVR) (NYSE: UL.US).
The other year Mr Train wrote: “How about the possibility of Unilever doubling and doubling again?”
I must admit, I did snigger when I read that quote.
I mean, what chance has large, low-growth Unilever have of quadrupling during my lifetime?!
But then Mr Train revealed Unilever’s shares had quintupled – and its dividend had sextupled – between 1990 and 2010.
And when you think about Unilever’s revenue ambitions – to double its sales from emerging markets during this decade – it may not be too surprising to learn that Mr Train reckons…
…the period 2011-2031 could be “even more bagtastic” for Unilever shareholders.
(I bet that should please Nathan Parmelee, one of the super-smart stock-pickers at Motley Fool Share Advisor. He recommended ordinary investors buy Unilever shares this year and last!).
Almost 9% of Mr Train’s trust is invested in Unilever. The trust also has large holdings in similar brand plays Diageo and Heineken.
A big bull market idea of the next decade
But Unilever’s soap and shampoos are not the most important multi-bagging growth theme for Mr Train.
That’s reserved for companies with “a credible strategy to grow and improve profitability by exploiting developments in digital technology.”
In fact, Mr Train describes digital technology as nothing less than his “big bull market idea of the next decade”.
And he cites Pearson, Daily Mail & General Trust, Euromoney, Fidessa, Reed Elsevier and Sage as “probable participants”.
Those six names represent about a quarter of the Finsbury trust. So if Mr Train’s big bull market idea actually comes good, I guess the trust’s share price could rocket.
Indeed, speaking to the Investors Chronicle, Mr Train let on that Fidessa – a developer of financial trading software – could ultimately become a TEN-bagger for his portfolio.
“It is right at the heart of global capital markets.” Mr Train said.
Fidessa is already a three-bagger for Mr Train, so presumably there is scope for the shares to triple once again.
(I bet that should please Charly Travers, another super-smart stock-picker at Motley Fool Share Advisor. He recommended ordinary investors buy Fidessa shares last year!)
The biggest multi-bagger I have ever known anyone anywhere to enjoy
Now all this talk of market bulls and multi-baggers brings me to possibly the biggest market bull I have ever met and the biggest multi-bagger I have ever known anyone anywhere to enjoy.
The market bull in question is David Gardner, co-founder of The Motley Fool in America, and the multi-bagger is Amazon.com.
Now a bit of ancient Fool history.
When Fool.com launched in 1994, David set up a real-money $50,000 portfolio called Rule Breakers.
He invested in the ‘rule-breaking’ tech champions of the time and the portfolio reached almost $1,000,000 – that is, it nearly 20-bagged! – by 2000.
Anyway, David was über-über-über-bullish on overblown techs when the dotcom bubble burst…
…and his Rule Breakers were promptly crushed as the NASDAQ began an 80% peak-to-trough collapse.
To many, that was the end of the story.
But for long-term investors in Amazon such as David, it was just the first part of a rewarding but volatile journey.
You see, David bought Amazon at $3.19 a share in 1997.
And the other week the price crossed $319 to deliver him a 100-bagger.
Clearly, David’s patience and skill was rewarded with what Mr Train might call a mega-bagtastic investment.
Anyway, I’ll leave you today simply by saying I’m going to watch David talk about 100-baggers…
…to see if I can land a bagger of any size for myself!
