EMJ’s Core Strategy is to be invested in the best 25 growth companies at all times. Our portfolio typically consists of our 25 Best Long Ideas and 12 – 25 Worst Ideas for short positions. We want to invest each incremental dollar in our 25 best ideas and NOT our 83rd best idea.
Only investing in our 25 best ideas means that, by definition, we are going to be concentrated.
Before we commit to any new stock getting a place among the 25 Best Ideas in our portfolio, we typically have to believe it has the ability to appreciate 100x over the next 10 – 20 years.
We know from our research that it’s quite common for some of our 25 Best Ideas to not appreciate for many quarters; we don’t give up on them.
We don’t run from volatility by over-trading or trying to market time; we embrace volatility as an innate aspect of this strategy of owning the 25 Best Ideas; we put our heads down during volatile periods and power through to all-time highs.
A 2019 study by Professor Hendrik Bessembinder of Arizona State found that 61% of non-US stocks underperformed Treasury bills between 1990-2018.
The most striking conclusion of the study, however, was that less than 1.3% of companies in the universe of stocks accounted for the entire $44.7 trillion of net wealth creation over the period.*
If you can buy and hold a handful of these 1.3% of companies, your portfolio can achieve super-charged returns. His data imply that “finding just one of these nascent stock market titans can more than compensate for losses elsewhere.” Discussing his findings, Bessembinder said: “I think I have provided some ammunition for the people who say it’s their business to chase moonshots. The skewness shows just how big the pay-offs can be if you’re good at this.”**
Constantly Seeking New Ideas
We are constantly looking for new ideas of companies which should crack our portfolio. Usually – a few times a year – a handful of ideas will jump up on their hind legs and demand our attention. We will typically review 200 new ideas a year to assure ourselves we are still holding the 25 Best Ideas.
Data Science to Find and Keep Our Best Ideas
Our data science program is focused on our 25 Best Ideas strategy:
We believe holding the 25 Best Growth Ideas for long durations means facing periods of portfolio volatility; it is a feature and not a bug of successfully following this particular strategy. Click to learn why.
The greatest growth stocks in the history of the stock market have all experienced 50 – 81% max drawdowns over the course of their histories as public companies.
If you are interested in investing and fully support our strategy and its inherent volatility, contact us.
Based in Toronto, outside the herd of hedge fund groupthink.
Proprietary data science program to help identify early trends which may be indicators of stocks that are about to break out.
Track record of identifying early growth winners.
Founder of EMJ Capital, Eric Jackson, Ph.D., did not sit in front of a screen on Wall Street for his entire career. He’s been an operator in a tech company, a consultant, an activist investor, and a scholar. He maintains a 20-year network of technology and venture capital executives who invest in public and private tech and media firms. Learn more about Eric Jackson.