10 Lessons From 446 Global 10-Baggers

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In his 2023 book “Global Outperformers,” Dede Eyesan analyzed 446 companies across 13 economic regions that returned over 1,000% between 2012 and 2022.

Here’s a summary of Eyesan’s key findings:

While the list above provides useful screening criteria, Eyesan emphasizes that succeeding as an investor isn't about following a single formula:

Near the end of the book, Eyesan distills his research into ten lessons on what it takes to achieve global outperformance.

These ten lessons discuss how to apply these findings in practice, from identifying turnarounds and navigating cyclicals to using value chain analysis and knowing when to search for entirely new opportunities.

Great investments can come from anywhere, yet investors constantly limit themselves with self-imposed restrictions. Common biases that hurt performance include:

Eyesan’s findings proves these restrictions costly.

Investing only in technology, healthcare, and consumer sectors (as many growth funds do) would have missed 40% of outperformers from cyclical sectors like materials and industrials.

Limiting investments to developed markets would have excluded 37% of 10-baggers.

As Eyesan emphasizes, "investment flexibility is not a substitute for due diligence." Every investment requires understanding the business model and key drivers, but artificial constraints eliminate opportunities before proper analysis begins.

While 59% of global outperformers came from Asia, the continent represents only 10% of global mutual fund portfolios.

This disconnect exists despite Asia's share of global GDP rising from 26% twenty years ago to 40% today, while Europe fell from 31% to 23% and North America declined from 36% to 28%.

The underperformance of Asian indices masks exceptional opportunities. The MSCI China ETF returned just 1.32% annualized over 30 years despite China's GDP growing 40-fold.

The disconnect occurs because larger Asian companies tend to be slower-growth conglomerates and state-owned enterprises with unfavorable economics.

However, looking beyond these giants uncovers an enormous range of exceptional companies.

Asian equities often trade at bigger valuation gaps than Western peers. Indian IT services companies, for instance, generated most revenue in U.S. dollars through foreign subsidiaries but were priced like domestic Indian companies during volatile currency periods.

Thematic investing exploded during the decade through ETFs and mutual funds, directly benefiting outperformers like MSCI, Bure Equity AB, and Impax Asset Management whose business models relied on various themes' success.

The sustainable energy theme, in particular, produced clear winners: BYD and Tesla in electric vehicles, Vestas Wind System and Terna Energy in wind power, LONGi Green Energy and Enphase Energy in solar.

But thematic stories can distract from fundamentals.

For every Tesla and BYD, hundreds of companies had equally compelling thematic narratives but failed to generate returns. To provide a couple examples:

"Finding the right theme is only 10% of the investment journey," Eyesan warns. What matters is identifying the handful of undervalued winners with genuine potential.

Traditional screening misses opportunities.

An EBIT margin filter above 0% would have excluded loss-making cyclical companies like Sony Group in 2012.

An EV/EBIT below 10x would have eliminated high-growth companies like Amazon that were undervalued despite high multiples.

“Value chain investing” provides a solution, particularly for new industries that revolutionize how we do things. The process requires three steps:

Solar Energy Case Study

Eyesan demonstrates this with solar energy, where 26 outperformers directly benefited from the industry's rise between 2012-2022. The solar value chain flows from raw materials to end consumers:

The visual shows four key stages in solar energy production:

By mapping this chain, investors could identify that LONGi Green earned double the margins of competitors through superior monocrystalline silicon wafers (returning 4,734%), while Solaria Energia successfully pivoted from manufacturing to installation after recognizing Chinese dominance in production (returning 7,126%).

Applying Value Chain Analysis

When evaluating future trends, ensure the technology creates real value for society by making things cleaner, easier, faster, safer, more accurate or reliable.

Focus on companies with business segments concentrated on the theme for better exposure to upside. Shell, BP and TotalEnergies had solar operations but achieved different results because their segments were concentrated elsewhere.

Once you map your value chain, identify segments with opportunities for value-added products, as LONGi did with monocrystalline solar panels.

Eyesan also suggests asking these key questions:

After answering these questions, select your top five companies and compare the results with traditional stock screeners.

The past decade offered countless reasons to exit markets:

As Eyesan observed in his book:

Facts are what matter most, and when they’re on your side, staying optimistic is important.

But discipline matters equally. In 2022, 18% of outperformers declined more than 30% from peaks. Companies like Hypoport (Germany), Magazine Luiza (Brazil), and Benefit One (Japan) each fell over 60% after reaching valuations exceeding 100x EV/EBIT.

Therefore, Eyesan suggests reality checks ensuring profitable companies in steady state have an EV/EBIT to future growth ratio below 1-1.5x.

The average holding period for stocks has collapsed from 8 years sixty years ago to just 5.5 months today.

Yet patience remains essential for capturing multi-bagger returns, with Eyesan emphasizing that "the short term performance of stocks says nothing about the fundamentals."

Among the 446 outperformers, 46% had total returns below 20% (9.5% annualized) within the first two years, while 36% showed negative returns between 2011-2013.

An investor selling after two years of negative performance would have missed NVIDIA, Netflix, ANTA Sports, SalMar, and Abbott India.

Long-term doesn't mean forever. Only 55 of 300 companies (18%) that returned over 1,000% between 2002-2012 went on to return over 500% in the following decade.

Eyesan estimates optimal holding periods at 3-5 years for cyclicals and turnarounds, and 5-10 years for compounders.

Nearly half (47%) of global outperformers came from cyclical industries: mining, energy, construction, airlines, banking, semiconductors, consumer discretionary retail, and others.

Growth and quality investors avoiding these sectors miss exceptional opportunities.

Moreover, the myth that cyclical investing requires perfect timing proves false. You could have bought ANTA Sports at the peak of China's sports apparel cycle (two years after the 2008 Beijing Olympics) and still earned 21.3% annually over the following 11 years.

To provide another example, Bajaj Finserv, exposed to India's insurance market, saw shares fall 40% when life insurance premiums dropped 10% in 2012 and 6% in 2013. Buying at the 2012 peak still yielded 29% annualized returns over the following decade.

These cyclical companies simply grew business volumes to compensate for price volatility. Perfect timing helps, but as Eyesan shares, "bad timing can still lead to great long term results if the growth opportunity and price paid is at a discount."

Eyesan found that turnarounds represented a surprising portion of outperformers.

Businesses struggle for various reasons: management distraction from core operations, superior rival products, or bureaucracy and complacency after years of leadership.

Successful turnaround investments require identifiable and solvable problems, measurable progress indicators, and high upside potential (often due to negative sentiment).

Destination Analysis Framework

Eyesan applies investor Nick Sleep's "destination analysis" using a road trip analogy:

Overall, this framework seeks investments with long distance (huge upside), quick fixes (speed and time), and potential shortcuts from external factors.

Spotting opportunities requires pattern recognition beyond obvious connections. As Eyesan shares:

For example, in solar energy, polysilicon growth drove demand for microinverters, which connected to home energy storage, electric vehicles, and lithium demand.

"Creativity and imagination is what truly differentiates top investors from their peers," Eyesan writes. While others see one investment case, creative investors identify five through ripple effects.

This skill can be developed by studying history, reviewing both successful and failed investments, analyzing great entrepreneurs, and understanding how innovations impact society.

The allure of ultra-long-term compounders like Amazon, Relaxo Footwear (India), and Vitec Software (Sweden) has led many investors to focus exclusively on companies that can outperform for decades. But continuous outperformance is rare.

Among companies returning over 1,000% between 2002-2012, only 23 of 300 (7.7%) repeated as outperformers in 2012-2022. The difficulty stems from the law of large numbers, market forces, and valuations.

Today's valuation reality is also stark. Only 12.5% of profitable outperformers trade below 10x EV/EBIT, compared to 48.9% in 2012. Just 4.7% trade below 1x EV/Revenue versus 50.7% in 2012.

These valuation shifts occur because yesterday's uncertainties become today's consensus views:

The solution? You must constantly search for new opportunities.

This means examining fresh ideas, exploring downturn sectors with depressed valuations, investigating business models facing excessive pessimism, and identifying founders and management teams overlooked by sell-side analysts.

As Eyesan concludes, "investing is about the future, not the past."

The next decade's outperformers are likely hiding today in unloved sectors, misunderstood business models, and overlooked geographies where perception gaps remain widest.