Today we check in again on Chris Mayer, he’s sending out ads for his Chris Mayer’s FOCUS newsletter ($2,500) over at Bonner & Partners, and his ideas are often interesting.
His big focus in recent years has been trying to back-test qualitatively to identify the things that made huge investment successes possible — and specifically to look for what ingredients went into making a long-term “100 bagger” investment.
Here’s a bit of the ad:
“After spending six months and over $138,000 on research… Chris discovered all the companies that paid out 100-to-1 or more in the 52 years between 1964 and 2014.
“By studying these companies, he was able to reverse-engineer a blueprint of what made them tick.
“Now, he’s taking it one step further – and in this exclusive presentation, Chris is going to tell us about his ongoing hunt for 100-baggers… and the company he has just discovered that he believes has the potential to pay you 10,000% – or more.”
So there’s your “giant long-term potential” tease… what else do we learn about this?
“… according to Chris’ research, these kind of 100-bagger opportunities appear on average seven times per year….
“… folks don’t believe these kinds of returns are possible for everyday investors without putting their money in something risky or highly speculative… like penny stocks or Bitcoin.
“But you don’t have put your hard-earned money in something risky or highly speculative to see returns of 10,000% or more… It’s possible to see those types of gains by investing in real companies… that solve BIG problems.”
That’s one of his criteria — “small company that solves a big problem” … we’ll get into that a little more in a minute, but first let’s get into the clues about the specific idea he’s recommending:
“I first was clued in to this company at a closed-door investing meeting in New York City. At the event I talked with a billion-dollar hedge fund manager, whose name I’m not able to reveal. What we discussed led me to look into the company.
“Naturally, that got my attention. This person has a really phenomenal track record. But what really piqued my curiosity was the fact that this particular stock was hiding in a historical 100-bagger hotbed.”
And what’s that “hotbed?” Pharmaceuticals… he runs through a bunch of comparisons to other companies, all name-brand big Pharma stocks that had massive runs driven primarily by one blockbuster drug. Like Pfizer (PFE), for example…
“You can literally see the spike from the news of Lipitor’s discovery in August 1995 to its release… and subsequent success as a treatment.
“And it’s important to note: The Lipitor effect was felt for over a decade… from 1996 to 2012, Lipitor became the world’s best-selling medication… ‘providing up to a quarter of Pfizer Inc.’s revenue for years,’ according to Crain’s New York Business.”
And Abbott Labs…
“HUMIRA became the second-bestselling medication in history, with total lifetime sales of roughly $109.2 billion.
“And Abbott Labs’ investors were rewarded with a 1,965-to-1 return.”
And he runs through several other examples of huge 1,000%+ gains from other big pharmaceutical companies, including Amgen and Biogen.
“I believe my new pick has an even wider moat that can protect company profits for years to come… helping it to become the next 100-bagger…..
“The company I found takes a similar approach… developing specialty treatments for patients with high, unmet medical needs… and that’s one reason I believe it could be a game changer.”Are you getting our free Daily Update
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So what is it? It’s a company that he thinks will make a difference in the opioid epidemic…
“… by investing in this company, my readers can literally make a small contribution to saving millions of lives… as well as potentially ride the next 100-bagger….
“At least 66,324 people died of opioid-related drug overdoses during the 12-month period ending in May 2017 based on data released by the National Center for Health Statistics.
“For context, that’s more than the 58,000 soldiers who died in the entire Vietnam War… more than the 34,461 people killed in car accidents in 2016… and more than the 43,000 people who died from HIV/AIDS during the epidemic’s peak in 1995….
“… the surge in overdoses has brought down the life expectancy in the United States for the past two years.”
OK, so what else do we learn about this stock?
“I first heard about this stock at a closed-door investing meeting in NYC. A billion-dollar hedge fund manager, whose name I can’t reveal, inspired me to find it. I knew about her and her company from an associate.
“There were a handful of interesting companies mentioned at this invite-only event, but this one jumped out at me… because it promised a cure for the opioid epidemic… and this was something I instantly recognized had 100-bagger potential.”
And then some real specifics for the Thinkolator to chew on…
“Their treatment was approved by the FDA in late 2017. And they just started selling this treatment in March of 2018….
“… they have a track-record of success developing treatments. In fact, according to our research one of their earlier drugs generated over $12 billion in sales and $6 billion in operating profit.”
“And they believe this opioid treatment drug will be much bigger.”
OK, so that’s probably enough for the Thinkolator… but let’s get a couple more little tidbits from the ad in first:
“Mike Derkacz, a 25-year pharmaceutical veteran, and current CEO and president of Braeburn said, ‘This new technology has the potential to greatly influence the way patients are treated today… [it can] free patients from the daily decision and reminder of the disease.’
“Bottom line: I believe this drug could become the predominant player in the opioid treatment world and turn into a multibillion-dollar medication in just a few years.
“In fact, the co-director of opioid research at Brandeis University said ‘It’s potentially a game changer… This could become the first-line [medication] for opioid addiction.'”
That all sounds impressive, right? Certainly we need more ways to combat this wave of addiction. So what’s the stock?
We do get a few other clues…. The company has a $4 billion market cap, the CEO is a 25-year veteran of the pharma industry who has developed multi-billion-dollar treatments before, their treatment uses a “new and improved” delivery method that creates a “moat” for the business, with patents, and they’ve built products before so they know how to ramp up a sales force and get doctors and patients to buy it.
Which means it’s time to pull the Thinkolator out of the garage and shovel those clues into the hopper. Haven’t had to really click it into gear recently, but this one requires a little chugging and churning… still, the ol’ beast still has some power left in her, so our answer does come dribbling out the other side — this must be Indivior (INDV in London, INVVY for the US ADR, each ADR is five shares).
The name might not sound familiar to those who haven’t explored the opiate addiction space, but it used to be part of a much larger company — Indivior was spun out of Reckitt Benckiser as an “addiction control” company, built around their suboxone opioid addiction product, back in 2014.
Mayer talks about this as one of his “coffee can” investment, a “buy and hold” strategy that he’s talked about for several years…
“So the idea in a nutshell is to find the best stocks you can and let them sit long enough to grow. Don’t put anything in your coffee can you don’t think is a good 10-year bet….
“Before I ever put a stock in my coffee can portfolio, I ask these four questions…
Is this a small company that solves a big problem?
Is it run by owner-operators or CEOs with skin in the game?
Does the business have competitive moats?
Does the business have unquestionable growth potential?”
So he presumably believes that this stock ticks those four boxes. I’ve not looked at Indivior in any detail before, but it has been a powerful player in the opioid addiction treatment market for a while, with strong sales of Suboxone and then, when the