Here’s the secret to acquiring a portfolio of multibagger stocks
Subscribe to enjoy similar stories. If I had got even ₹10 for each time I was asked a version of this question, I could have a few lakhs on this account alone! And the question is: What’s the next HDFC Bank or Amazon that we can buy and forget for 25 years? Or can you tell me one stock I can buy for my infant daughter or son so that they have a huge corpus when they grow up? First the back story. First Global had a ‘Strong Buy’ on Amazon at a price of $15 (split-adjusted $0.75) back in 2001, post the tech crash.
This was at a time when there was no other ‘Buy,’ let alone a ‘Strong Buy’ from any firm on Wall Street. In fact, Jeff Bezos sent us an email thanking us for the support. At the very same time, BusinessWeek and other major business magazines were predicting bankruptcy for Amazon.
Even all the Wall Street firms, which had been big supporters and promoters of Amazon, were now ‘throwing in the towel’ on the stock, as they put it. The ride since then is there for everyone to see. Similarly, we had a ‘Buy’ on HDFC Bank at a price of ₹38 (split-adjusted ₹3.8) in 1996, just a year after its initial public offering (IPO).
On the cover of our research report was a picture of a baby saying that this is where the company was then. And it had Mr. Universe, Arnold Schwarzenegger with a blurb saying that this was where the bank was headed.
We have all seen that transformation play out over time, with HDFC Bank becoming the 800-pound- gorilla in the banking business. Both these calls were based on analysis of business prospects, financials and so on. For example, Amazon had made a free cash flow of over $200 million in the preceding quarter after having been free-cash-flow negative all along.
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