I read about Louis Navellier and a book by him few months back called “Little Book that makes you Rich”
Most of his picks are 2-3 baggers or less. Only a few would be 5 baggers. Guy is quite well read, wise or not another story. He quotes that one of fallacies is to sell too soon. Hes Writing financial newsletters since 1980. Many of them paid, thats how he made money.Chap is self made and manages over 5 billion $
According to independent source his newsletter turned money 48 times in 22 years, one of the top percentile long term record esp. if you included those 10 dud years in dow jones, where msft, ge, xom lost 50% market cap and dow stayed flat.
What we need to learn from him is, lack of emotions and no love for stock. Eg. he sold out from Ebay in 2005, after 2-3 bagger ride between 2003-2005 and it collapsed by 60% in 2006 based on numbers. He sold out from Enron before collapse, he exited Cisco and Sun Microsystems in Dec 2000, he enjoyed several years of ride in Apple Computers. He write that, people fall in love with stocks that make them big money. Analyzing things from a subjective piont of view allows us to color situations with our own opinions, views, hopes and dreams and to be influenced by others. There is way too much info floating around of subjective nature.
He quotes interesting examples of quant coache Billy Beane, in NBA /basketball that forever changed game and other teams like Red Sox and Yankees had to hire a quant, that make mocker of those who believe “that you have to have an eye for talent”.
Similar story comes up in operation theatre where doctor had too many variables to worry about so a formula was needed during cardiac arrest.
There are about eight parameters which are on which he measures companies. Earning Revision by Wall St Analysts is first amon. A wall st analyst wants to be an All-Star analyst put out annually by Institutional Investor magazine. Analysts does not want being fired like anyone else, so estimate is close but slightly lower to avoid stock from falling. They err on lower side to be conservative in self-preservation. Since 2001 burst analysts estimates are far less accurate now due to less information in possession, thanks to SEC’s FD regulation. So they are reluctant to raise estimates. SOX also had impact. Analyst has to be wildly enthusiastic to raise estimate of next earnings. guess high, stock drops and you lose job, guess low and stock goes up or you get it wrong but who cares, there lies the rub ! another reason is once things begin to catch fire and sales and earning move at a fast clip, they tend to do so for a while. usually more earnings revision are on the way after the first one.
Other parameters are positive earnings surprises, increased sales growth, expanding operating margins, strong cash flow, earnings growth, positive earnings momentum – and last high ROE. Hes made 100s of million for himsif not billions of $, I believe someone worth learning a lesson or two from.
For example: Here is his ratings on Apple Computers
He is a pure Quants guy.
Those you want to chase will-o-wisp of Microfinance bewitching beauties in India need to be hard calculating not emotional.