value
Start Small
The rule
Huge multi-year winners almost always start as small companies. A giant simply cannot grow a hundred times.
Where it flips
Small also means fragile, hard to sell, and easy to fall in love with. Most small companies stay small or fail, so 'start small' can lure you into weak gambles. The fix: demand the same quality and staying power you would from a large company, and size the position for the real chance it goes to zero.
For a stock to rise a hundred times, the company usually has to grow many times over. It is far easier for a ₹500 crore business to become a ₹50,000 crore one than for a ₹5 lakh crore giant to grow a hundredfold. The already-huge names are safer and better known, but their size is exactly what limits how far they can run. If you want the rare giant winners, you have to look where they are born, among the smaller and less-followed names, and accept the higher risk that comes with them.
A worked example
Haridya finds a little-followed ₹800 crore auto-parts maker. Over fifteen years it grows into a ₹40,000 crore leader, a rise no ₹5 lakh crore blue-chip in her portfolio could ever match from its already-huge base. [illustrative]
How to spot it
- ·Small market value with room to grow
- ·Few analysts following it
- ·Big market to sell into ahead
Christopher Mayer · 100 Baggers