25 year track record of finding multibagger stocks
First, we have to compliment Shankar Sharma. He has a distinguished career spanning 25 years with an unblemished record for finding multibagger stocks.
We are familiar with some of Shankar’s stock recommendations like Bajaj Auto, Tata Motors, Kiri Industries and A2Z Industries which have filled our pockets with big bucks.
100-Bagger stocks like Amazon, Apple and IndusInd sparkle in Shankar Sharma’s portfolio
Shankar made the sensational revelation that he was amongst the first to recognize the potential of super mega-baggers like Amazon Inc and Apple Inc. He claimed that he recommended a buy of these stocks when they were discarded by investors and were available at throwaway valuations.
Shankar pointed out that when Amazon was tottering on the brink of insolvency in 2001, he took a contrarian call that the Company would pull through and recommended a strong buy. He explained that he personally spoke to Jeff Bezos, the whiz-kid billionaire founder of Amazon, and asked him to vet the projections that Shankar had made about Amazon’s future. When Jeff Bezos affirmed Shankar’s projections, he (Shankar) knew that he had a mega-bagger on his hands.
Shankar revealed that even Apple Inc, which is everyone’s darling stock today, was tottering under heavy losses in the early part of 2001. Shankar sensed that Apple’s products would click with the masses and he recommended a buy. The rest is history.
Amongst Indian stocks, Shankar cited IndusInd Bank as an example of a stock which was written off by the investors owing to the dubious quality of its management. Shankar recommended a buy when the stock was available at a throwaway valuation of Rs. 46 and a market capitalisation of Rs. 1400 crore.
Today, IndusInd Bank has a market capitalisation of Rs. 73,000 crore and is a multibagger several times over.
Five Mantras for finding multibagger stocks
Shankar has distilled his vast knowledge into five easy-to-understand mantras. These are as follows:
(i) Find stocks that are languishing at multi-year lows;
(ii) The stock must not be profitable but must be making losses;
(iii) The stock must occupy a low weight in its sector. It must not be the sector leader or be a part of the Index by any stretch of imagination;
(iv) The stock must not be well covered and if it is, the consensus opinion should be negative;
(v) There must be the expectation of a tiny “spark” which will ignite the stock and send it rocketing into orbit.
Shankar explained that in the case of Apple Inc, the launch of the IPod was the spark which changed the fortunes of the Company. Similarly, in the case of Tata Motors, the take over of JLR (Jaguar, Land Rover) was the much needed spark which dragged the Company out of poverty and into riches. In the case of IndusInd Bank, the change in the management (appointment of Ramesh Sobti) did the trick.
Adaptation of Howard Marks’ theory that it is 100% “safe” to buy such stocks
If one ponders over Shankar’s mantras, it is clear that the logic is similar to that evolved by Howard Marks, the Billionaire investment-philosopher.
Howard Marks explained that stocks which are at multi-year lows and which are suffering from negative reviews from analysts are actually very “safe” stocks because all expectations are drained from them and there is no risk of a disappointment. Even if such stocks continue their miserable performance, there is unlikely to be any incremental loss. However, one “spark” is enough to send these stocks into orbit and translate into multibagger gains.
Shankar Sharma’s latest stock recommendation
Shankar disappointed by not naming a single Indian stock which meets his five mantras.
Instead, he named twitter.com as a stock which meets the criteria.
Shankar explained that twitter is loss making (though EBIT positive) and is quoting at multi-year lows owing to analysts’ prediction that the advertisement revenues would plunge. Also, the latest rejection by Salesforce.com to takeover twitter has dealt a body blow to the latter’s prospects, Shankar said.
Heavy trolling on twitter will translate into mega bucks
Shankar opined that the recent phenomenon of aggressive trolling that has gripped twitter augers well for its monetary prospects.
There is merit in Shankar’s theory because it is common to see super-charged fans of NAMO, RaGa and AAP battle each other on twitter for supremacy. The participants are relentless and neither is willing to squander an inch. The debates go on till late in the night and resume early morning.
It can also be seen that some specialist troll accounts like TrollKejri boast of several thousands of followers. Each tweet of his is lustily cheered with hundreds of RTs and comments.
Trolling is a sign that you are really popular: Chetan Bhagat https://t.co/UWI9a8JunQ
— TOI India (@TOIIndiaNews) October 22, 2016
Every religion / ideology has extremists and fanatics who claim power by bullying, intimidation and (now) trolling. It was so; will stay so.
— Devdutt Pattanaik (@devduttmyth) October 22, 2016
However, some experts at gizmodo.com opined that “Bullies and Trolls Chased Away Twitter’s Potential Buyers”.
A similar view was expressed by Bloomberg which pointed out that aggressive anonymous trolls were crossing the limits in “bullying, trolling, racism, sexism and other forms of lewd communication” and that this had intimidated other users from signing up and expressing their views on twitter. The slump in the number of new subscribers had discouraged Walt Disney and Salesforce from making a bid for twitter.
Shankar Sharma’s recommendation of twitter as a stock that fulfills his five mantras is of no use to us because the stock is out of our reach. However, the principles formulated by Shankar are invaluable. If we ever do spot a stock that fulfils the criteria, we should unhesitatingly grab it because it is certain that the stock will be our ticket to magnificent riches!