Ralph Wanger
Market Wizards Index: +18.8%
Compound annual over 10 years
Fund or affiliation
- Acorn Fund
Methodology
- Aggressively seeking good small company stocks that will derive benefit from a trend.
Research Techniques Employed
- Identify major trends, buy companies that will derive benefit from the trend.
- Armies of analysts employed by large institutions neglect small companies. Wanger gives out annual awards, called Scarlet A’s, to regional and smaller brokerage houses.
Valuation Techniques Employed
- Growth potential:
1. Growing market for product;
2. dominant market share;
3. outstanding management;
4. understand its business;
5. skilled in marketing;
6. dedicated to customers;
7. large enough stake in company. - Financial strength: Strong balance sheet.
- Fundamental value: Price must be attractive. You can have a good company but a bad stock.
Philosophy and beliefs
- To capitalize on the "small firm" phenomenon that U. of Chicago professor Rolf Banz documented in 1978.
- "Individuals often sell small companies below their economic value and buy mature companies at full value, thus providing the other side for our trades."
- In a transforming industry, the big money is made outside the core business.
- Indexing creates Dow bubble.
History and other facts
- Often you have businesses run by geniuses and don’t do very well. The competitors are also geniuses, so nobody gains an advantage.
Examples
- Japanese Disney World - Sold when it quadrupled. "... the best single piece of property on earth, everyday there are 30,000 people lined up at 8 am waiting to come in... probabily be true whatever the entrance price was."
Performance Record
- 18.8% over 10 years: "... for the decade 1978 through 1988 Acorn grew at 18.8% compounded...".
All International Welcome Messages: 1, 2, 3, 4, 5, 6, 7 & 8
