Since our inception 4 years ago, EMJ has come across evergreen growth stories where the companies end up vastly exceeding our most optimistic expectations. We call these #NeverSell companies. These are the kinds of companies you want to hold for 10 – 20 years and not just 2 – 3 years. In the best-case scenarios, they don’t just 2x or 3x but 10x, 20x, or even 100x.
We don’t want to trade in and out of these companies as many investors do; we’re just not that smart at market timing. We spend more effort as an organization identifying these #NeverSell companies, buying a meaningful position in them and then just waiting, while looking for more #NeverSells. These companies can be highly volatile. They can also not move for years. But they can then suddenly erupt and climb to heights that not even the brightest minds of Wall Street expect.
A major part of our data science effort is spent on identifying #NeverSell companies. Not every company we invest in will be a #NeverSell company. They’re usually a minority of our overall positions. And we sometimes think we’ve found a #NeverSell company only to realize a year or two later that we were wrong. But, when we get it right and include 1 or 2 #NeverSell companies in the portfolio, the effects on our long-term portfolio performance can be transformational – similar in fashion to how just one moonshot investment can dramatically pull up an entire venture portfolio’s returns.
We strongly believe that our portfolio manager’s real-world operational experience, technology experience, a generalist mindset, an inter-disciplinary academic background, combined with our focused data science approach, gives us a significant advantage in finding these #NeverSell companies which are hiding in plain sight.
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