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In Search Of The Next Big Elephant – Elements Of Great Serial Acquirer

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Slides by Matthias Riechert and Dhiren Joshi from the EUROPEAN Investing Summit 2016, titled, “In search of the next big elephant – elements of great serial acquirer.”


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1. What does a great business look like?
2. Research and Elements of a great “serial acquirer”
3. The idea - Judges Scientific

What does a great business look like?

Media and mainstream love “quality-stocks”


But what is a quality-stock?

  • Large Cap, high liquidity?
  • Well-known brand?
  • Strong balance sheet, growing free cash flows?
  • High-dividend yield (New label: “Bond- proxy”)?
  • Continuously increasing dividend over time? (New label: “Dividend Aristocrats”)
  • No mentioning of price vs. value

… sounds like the Nifty Fifty in the 70ties!

How we define a "great business"

A “great business” has a number of elements (characteristics) that result in…

Serial Acquirer

… an ability to reinvest free CFs at high returns on incremental capital.

Example 1 – Reinvestment in own growth

Wal-Mart in the 80ties – the benchmark.

Serial Acquirer

The stock price follows the operating result.

Serial Acquirer

Example 2 – Reinvestment in acquisitions

Constellation Software during the last decade - deploys free cash flows into M&A.

Serial Acquirer

… producing a similar phenomenal result.

Serial Acquirer

Unfortunately only in hindsight are results clear.

How can we find a great business (a “young elephant”) early enough to enjoy a long runway of growth but mature enough to allow for a confident assessment?

Research and Elements of a great "serial acquirer"

Learning from books and other investors…

We set out to study all the elements that successful platform businesses have in common (and those that unsuccessful examples have in common).

Serial Acquirer


Pershing Square Capital Management, L.P.: 45x (May 2015)

JHL CAPITAL GROUP LLC: Conglomerate Boom 2.0 (October 2015)

Elements of a great business

Research framework to find a great business.

Serial Acquirer

Further important questions for serial acquirer

Serial Acquirer

See the full slides below.


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