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$XPEL has been a 46-bagger (from lowest purchase) for me and those I manage money for.
I eventually went all in. It has changed my life.
I’ll share my journey - all of the trials, tribulations & lessons.
This journey might help someone else.
I eventually went all in. It has changed my life.
I’ll share my journey - all of the trials, tribulations & lessons.
This journey might help someone else.
It was not easy. Far, far, FAR from it.
It wasn’t pure luck either.
I, and those I manage for, still own shares.
It wasn’t pure luck either.
I, and those I manage for, still own shares.
It started in 2014. I joined MicroCapClub (MCC) led by @iancassel & @Mikeddking. This was pure luck. Xpel (DAP.U/XPLT) back then was well followed on the forum.
I didn’t like Xpel at first. My first inhibition was what they sold. Sticky plastic for cars to protect paint.
Yuck. Sticky plastic for cars is neither sexy nor what I think anybody else would want to buy.
Yuck. Sticky plastic for cars is neither sexy nor what I think anybody else would want to buy.
Second, the stock had gone up close to 500% since it was first posted on MCC. The stock had gone from a few pennies in 2009-2010 to $1.75. The stock traded in Canada and operates in the US. Who does that?
Was the stock a bit over followed on MCC? Could the high keep up? Could the company unlock more profitability as it grows?
I kept an open mind. I read all of the MCC forum. I read all of Xpel’s filings. Insiders owned a ton of shares. The CEO owned a ton of shares.
I kept an open mind. I read all of the MCC forum. I read all of Xpel’s filings. Insiders owned a ton of shares. The CEO owned a ton of shares.
One thing stood out. ZERO OPTIONS. No options were given to executives. No options to employees. Never had I seen that.
I was flummoxed. Who on earth does that? Aren’t companies piggy banks set up for the betterment of management only?
I was flummoxed. Who on earth does that? Aren’t companies piggy banks set up for the betterment of management only?
Xpel’s growth was good. So the incentive structure clearly must have been correct, sans options.
In July 2014, I made my first purchase of Xpel @ $1.75.
In July 2014, I made my first purchase of Xpel @ $1.75.
An aside. By that time I was 2 years deep into studying & trying to tease out how great companies grew from tiny to BIG. Walmart was a recent fascination.
I had read Sam Walton’s book
https://amzn.to/3qW7AgG
I had also read annual reports after their IPO in 70-74
I had read Sam Walton’s book
https://amzn.to/3qW7AgG
I had also read annual reports after their IPO in 70-74
In November 2014, I wrote an article on Seeking Alpha comparing Xpel with Walmart post IPO. Traits similar: nascent, underpenetrated market, initially niche, right sized incentives for all and intelligent fanatic leadership.
Read the article here -> https://seekingalpha.com/article/2676825-xpel-technologies-wrapping-up-a-sticky-model-and-hyper-growth-worth-multiples-of-todays-price?source=_title
Read the article here -> https://seekingalpha.com/article/2676825-xpel-technologies-wrapping-up-a-sticky-model-and-hyper-growth-worth-multiples-of-todays-price?source=_title
I contacted Xpel’s sales managers and finally found out the incentive structure. Low base salary and heavily incentivized on the back end. I called around to the competing companies and their incentive model was more heavily based on salary.
I called installer shops and asked what they thought of Xpel. I lurked around paint protection web forums and car enthusiast forums that used Paint Protection film. Xpel clearly was a leader. Some in the industry didn’t like Xpel’s strategy.
A big shout out to the MCC members who had also done a ton of due diligence on Xpel. It helped so much.
Xpel results kept doing well. I bought more shares above $2.
Xpel results kept doing well. I bought more shares above $2.
I went to MCC’s Detroit conference in 2014. I rode the train. I rode the bus. I couldn’t afford a plane ticket. I was primarily writing articles on Seeking Alpha. I was managing ~$100k of money. I was broke.
My goal was to meet Ryan Pape, Xpel's CEO. He seemed different than all other CEOs at the conference. Not salesy. Didn’t feel like he had an ulterior motive. Kind of reminded me of me.
Other investors at the conference were talking up how they owned Xpel. Some people had huge portions of their portfolio in the name. At that time with the run up I had probably 25% of my portfolio and about 5% for people I managed accounts for.
By early 2015, Xpel acquired their Canadian distributor. Xpel also removed many of the underperforming Chinese distributors. They ended up focusing on one good distributor.
Plenty of slight negatives appeared. Foreign margins were depressed because of the strong dollar.
Plenty of slight negatives appeared. Foreign margins were depressed because of the strong dollar.
SG&A kept growing at a fast pace. Often growing faster than revenue. A bit concerning on the surface.
Xpel was in building mode. Purchased an ERP system, developed marketing IP, invested in their bank of cut designs & large expansion in foreign legal expenses for foreign growth
Xpel was in building mode. Purchased an ERP system, developed marketing IP, invested in their bank of cut designs & large expansion in foreign legal expenses for foreign growth
I trusted management. That trust was built over time. I kept trying to find things to test the trust and build it further.
By the end of 2015, Xpel traded at the high $2s. I felt great. I bet many other shareholders felt even better.
By the end of 2015, Xpel traded at the high $2s. I felt great. I bet many other shareholders felt even better.
Then the worst happened. During Christmas break 3M throws a lawsuit on Xpel. I remember the day hearing the news like yesterday.
I had just started a job at a non-profit. My phone was blowing up with notifications. I checked my phone and I just about threw up.
I had just started a job at a non-profit. My phone was blowing up with notifications. I checked my phone and I just about threw up.
Xpel's stock fell in half and was on a free fall.
Other Xpel shareholders were screaming. The thought of impending death for the company was very, very real.
I had a huge chunk of my money in the stock. One day Xpel stock was up 150% and then down to -40%.
Other Xpel shareholders were screaming. The thought of impending death for the company was very, very real.
I had a huge chunk of my money in the stock. One day Xpel stock was up 150% and then down to -40%.
It hurt. I wanted to cry. I wanted to go into hiding.
I decided not to act on the hurt, at least yet.
I decided not to act on the hurt, at least yet.
I had been studying Herb Keller’s early building of Southwest Airlines. Before Southwest flew their first flight, well resourced incumbents like Braniff Air did everything in their power to prevent Southwest from getting off the ground.
Long story short, Southwest was barred from flying. Herb Kelleher, co-founder and lawyer, spent years overturning the court’s ruling. He took no pay and funded the court battle himself.
Southwest eventually won in 1971. Discount airfare turned out to be fantastic. And Kelleher’s leadership helped Southwest buck all airline trends. Southwest made early investors tons of money.
Well, if Herb Kelleher could overcome well-resourced incumbents, I believed Xpel could stand up to 3M.
Further due-diligence, including some from people much smarter than me, helped me significantly. I bought more shares from $0.93 - $1.00.
Further due-diligence, including some from people much smarter than me, helped me significantly. I bought more shares from $0.93 - $1.00.
Xpel’s stock languished with the lawsuit overhang over the next year. I felt stupid. I questioned myself the whole time.
It felt like everyone else was a better investor than me. I kept pushing on.
It felt like everyone else was a better investor than me. I kept pushing on.
Every person I managed money for were sitting on large paper losses. They were lagging the market by a lot. I had prepped them in the good times that the good times weren’t going to last. Still, each call was very, very hard.
I told each client the situation and explained why my pattern recognition was saying Xpel was special. Xpel was still growing despite the lawsuit. That’s rare. And that if I’m right, the stock is worth up to 10x its current stock price.
I managed to convince each one of them, and myself to stick it out.
Building my pattern recognition for great leaders became an obsession. I partnered with Ian Cassel on the Intelligent Fanatics Project book. Get a copy of the book here ->
https://www.amazon.com/Intelligent-Fanatics-Project-Sustainable-Businesses-ebook/dp/B01HLCUA7M
Each study helped solidify my conviction in Xpel.
https://www.amazon.com/Intelligent-Fanatics-Project-Sustainable-Businesses-ebook/dp/B01HLCUA7M
Each study helped solidify my conviction in Xpel.
We continued studying Intelligent Fanatics and wrote this book -> https://www.amazon.com/Intelligent-Fanatics-Standing-Shoulders-Giants/dp/0997576537/ref=tmm_pap_swatch_0?_encoding=UTF8&qid=&sr=
And published this book on Indian fanatics -> https://www.amazon.com/Intelligent-Fanatics-India-Rohith-Potti/dp/0997576553/ref=pd_sbs_14_2/134-9501422-5561431?_encoding=UTF8&pd_rd_i=0997576553&pd_rd_r=b0c0f853-a7b4-40ff-97d3-b3ae4f9470bb&pd_rd_w=dlido&pd_rd_wg=wbROj&pf_rd_p=ed1e2146-ecfe-435e-b3b5-d79fa072fd58&pf_rd_r=ZAA856AD5CD8KTRG0VJ0&psc=1&refRID=ZAA856AD5CD8KTRG0VJ0
The significant pre-payment in studying Intelligent Fanatics early in their careers was the sole reason I held/hold onto Xpel. Each story held a different piece of the puzzle on spotting & holding a great company.
My conviction grew. Xpel shares continued to flat line. The 3M lawsuit was settled and shares really didn’t move much higher. It was one little thing or the next that held profitability back. The topline kept growing like a rocket.
During the lull period I tried to refrain from tuning into the peanut gallery. Instead, I focused my energy on family, music, and studying fanatics.
Xpel turned the corner in 2018. I added and added. I personally went all in right before Xpel’s uplist to the NASDAQ.
Xpel turned the corner in 2018. I added and added. I personally went all in right before Xpel’s uplist to the NASDAQ.
I began selling around $9. Always only selling a tiny amount. I used the proceeds to reinvest into a business opportunity.
Roughly $20k funded my real estate photography business Immersion Factory. That business is now doing very well.
Roughly $20k funded my real estate photography business Immersion Factory. That business is now doing very well.
I purchased a tiny house that serves as my office. This has always been a goal of mine to own one. I have peace and quiet to think, work and create. My work/life balance is better.
Xpel level opportunities do not come often. It’ll be years until I find the next Xpel for me.
Surround yourself with ridiculously smart people be it directly or indirectly. I’m eternally grateful for @iancassel for so many reasons, @eighttrack, @lockstockbarrl and countless others.
Make friends & jam with the eminent dead.
Make friends & jam with the eminent dead.
You CAN find intelligent fanatic led businesses early. Invest mammoth amounts of time into building your pattern recognition before and during. Be prepared to be dragged by supercar up and down a hill for years. Hold on for dear life.
The ultimate usage of that pattern recognition is to become an intelligent fanatic yourself. Find an uncompetitive niche. Build your own business. Control your own destiny.
I am thankful, thankful, thankful, thankful. I could no where have done this without other people.
It looks like @eighttrack, much smarter/funnier than me, will be share his XPEL experience at SNN Canada Virtual Event. I’ll be tuning in. You should too -> https://canada.snn.network
Okay, cue the music for Xpel's stock to fall precipitously.
