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Greenfield's Point of View - June 2021

Achieving Outsized Returns in AutoTech Investments

In my teenage years I voraciously consumed as many business and investing books as I could get my hands on. I learned to greatly appreciate annual shareholders reports from Warren Buffett and Charlie Munger and have read many times over my copies of Benjamin Graham’s The Intelligent Investor and Graham & Dodd’s Security Analysis.

In 1989, Peter Lynch published One Up on Wall Street, which convinced millions of investors that you didn't need to be a quant or investing savant to find so-called "10 bagger" stocks (stocks that go up tenfold). Just use common sense and invest in things you understand and see everyday.

In 1977, Lynch took over portfolio management of Fidelity's Magellan mutual fund. The fund had only $18 million in assets when Lynch began running it.

Lynch ran Magellan from 1977 until 1990, and by the time he stepped down the fund had grown to $19 billion in assets with more than 1,000 stock holdings. Peter Lynch's compounded average annual investment return during the 13 years was 29.2%. A thousand dollars invested the day Lynch took over Magellan would have been worth $28,000 when he quit.

During his tenure at Magellan, Lynch bought more than a hundred "10 bagger" stocks, including Fannie Mae, Ford Motor, Philip Morris International, Taco Bell, Dunkin' Donuts and General Electric.

“10 bagger” returns aside, it’s not often in anyone’s life that they are able to realize a 160x return on a single investment. But this is just what happened to me recently.

An IRR of 55% per year, compounded over 12 years equates to a return on invested capital of 160x. You don't see many of those in a lifetime.

I met Vinay Sanghi back in 2006, when he was running a company called Mahindra First Choice, which he had grown into the ‘CarMax of India’.

Vinay was a truly gifted individual, and when he left Mahindra to start his own company, he offered me the opportunity to invest in his ‘friends and family’ financing round.

Twelve years later, I am honored to have had a chance to be along for the entire journey with Vinay and the team -- from an investment in that very first "friends & family" round, all the way to the upcoming IPO.

This has been a very inspirational journey for me, to observe the team single-handedly evolve the automotive ecosystem in India.

And here’s to 100x investments in Auto Tech for all of us in the future; to make Peter Lynch, Buffett and Munger proud.

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