Multi-bagger small caps

Investing / Portfolios
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I’ve been lucky with some fortunate timing when investing in small caps which turned out to be multi-baggers.

My biggest win was investing in Fever Tree right after the IPO and I made 1000%. This was early on in the gin-tonic craze, I accidentally ran into the product, loved it, googled it and found out that it had just IPO’d and put my money to work.

I rarely make investments like this and only do so when I know the product and am a strong believer in it.

So, with that in mind, I am considering stepping into Blackline Safety
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Canadian small cap / high revenue growth / high % recurring revenues / disrupting a niche industry and taking significant share / likely it’ll eventually be acquired by a major player.

Would appreciate thoughts on this business and also if others can provide any high conviction small cap ideas.

1 Like
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Same here on FEVR.

BL: I quite like these niche players.

2 Likes
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I like this model as well… it does require a lot of investigation. here are 3 that I am looking at but did not pull the trigger. I think all of these require a multi-year horizon. Not financial advice

Evolution = EVO
I-Tech = ITECH
Shift4 Payments = FOUR

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Thanks, will look into those.

Have spent the morning running the numbers on Blackline and despite the run up during the past year, I believe there is a LOT of room left:

  • 4B market size
  • They’re targeting 20% of it (which is reasonable given complacent competitors)
  • They’re growing 20-30% YoY for a few years in a row
  • Simply extrapolate and you get 800M revenues, probably at least 200M EBITDA
  • At a very moderate multiple of 10, you get a market cap of 2B vs. current market cap of 0.5B

…business doesn’t even have to be acquired in order for this stock to gain 100-200-300% during the next years. So add:

  • Multiple upside (15x EBITDA is not outrageous)
  • M&A premium

…and I don’t see much dowside risk.

THey have just become EBITDA positive as well so chance of them tapping into the equity market is low.