A visionary investor who’s up over 35,000% on Netflix since he bought it in 2003 shares his 10-step process for spotting world-changing companies – and names 3 of his favorite stock picks

Emmet Savage invested in Netflix before its streaming video was even invented.

  • Emmet Savage, CEO of MyWallSt, first bought Netflix in 2003 for $1.69 – before it rose 35,000%.
  • Invest in companies with a strong track record and culture that have visionary leaders, Savage said.
  • Here are three companies he says have revolutionary potential and can increase at least tenfold.
  • See more stories on Insider’s business page.

Ask any investor what they’d do with a time machine, and chances are they’d tell you that they’d go back in time and buy Netflix in 2003 or Tesla in 2012.

In other words, they’d want to be like visionary investor Emmet Savage. The co-founder and CEO of investment app MyWallSt first bought Netflix (NFLX) shares 18 years ago at $1.69 per share and started snapping up Tesla (TSLA) shares in 2012 at $6.35, according to brokerage documents viewed by Insider. Those stocks now trade near $595 and $755, respectively.

Netflix shares have risen an eye-popping 35,250% since Savage first bought them, adjusted for stock splits, while Tesla is up an astounding 11,880% since Savage’s initial investment. The tech-heavy Nasdaq 100 is up 1,027% since January 2003, and the S&P 500 is up 414%.

Savage spotted potential in the DVD-rental company and scrappy electric-car startup years before they grew to disrupt Hollywood and the auto industry.

Netflix pivoted from relying on renting movie discs to on-demand streaming video, which wasn’t even mainstream when Savage first bought shares. The MyWallSt CEO admits he couldn’t have possibly seen the streaming revolution coming but had a hunch that Netflix, which built strong relationships with consumers by removing late fees, would stay ahead of its competitors.

“What Netflix was doing at the time was highly innovative,” Savage said in a recent interview with Insider. “… It was utterly disruptive to Blockbuster, who at the time laughed off this as a business approach. But clearly, Netflix had the last laugh.”

What’s even harder than spotting Netflix over a decade before it becomes one of the world’s largest entertainment companies is having the conviction and patience to not sell. Savage said his discipline came from an unshakable belief in the company’s vision, and – inevitably – its leader, who he said must be focused on purpose instead of profits.

“[Look for] a culture in the business that is set out with a higher purpose,” Savage said. “One that is, ‘We aren’t here to make money. We aren’t going to worry about the next quarter. … We’re here to change the world.’ And that is, ultimately, the attribute to look for.”

The first company Savage said he was “captivated by” was Dell. Once he learned that investing a few thousand dollars in the computer hardware company early on would’ve yielded millions, he said he was hooked on finding “the next Dell.”

It took countless hours of research for Savage to discover exactly what made Dell different from its peers. He then developed a process that led him to invest in Tesla decades later because he said he saw similarities between the two firms.

Savage shared the keys to his investing success with Insider. He said his 10-step process invokes the “left brain,” which is responsible for logical and analytical thinking, and the “right brain,” which is more creative and imaginative.

The “left brain” traits to note when looking for the next world-changing stock are as follows, according to Savage: strong year-over-year sales growth, high return on equity, more cash than debt, a high insider stock ownership rate, and a relatively small market capitalization – given that smaller company valuations are more likely to multiply several times more than their larger peers.

The “right brain” traits are just as important, Savage said – if not more so. He looks for firms in a growing industry with a strong company culture, customers that evangelize and serve as free marketers, a sustainable competitive advantage, and a visionary leader. The latter is the hardest to evaluate, Savage said, adding that they’ll generally, though not always, be the firm’s founder.

Finding a company with all 10 of those traits is nearly impossible, Savage said, but investors should aim to target ones with as many of the winning attributes as possible. Below are three companies that the MyWallSt CEO said fit the bill, along with each one’s ticker and market cap, as well as a company overview, risk level, and thesis based on an interview with Savage.

1. Airbnb

1. Airbnb

Ticker: ABNB

Market cap: $110B

Company overview: An online accommodations and experiences marketplace that is disrupting travel industry stalwarts like hotels

Risk level: Low

Thesis: This “American icon in the making” may grow tenfold and become the first trillion-dollar travel company, Savage said, thanks to its visionary founder and CEO Brian Chesky as well as its strong global brand and company culture. Airbnb has already proven to be disruptive and has much more room to grow on its experiences side, a space that Savage said could develop into a $1.4 trillion market. Shares are up 25% since its initial public offering last December but have more room to run, Savage said.

2. InMode

2. InMode

Ticker: INMD

Market cap: $6.4B

Company overview: A designer of “cutting-edge” medical devices for aesthetic procedures that are minimally invasive or non-invasive

Risk level: Medium

Thesis: In an image-obsessed world, Savage said InMode can continue to gain market share with its minimally invasive and non-invasive treatments. The company has a range of patented products that give people an alternative to liposuction. InMode’s metrics, including its high gross margin of 85%, impress Savage, who said the firm has a strong track record and a “massive” opportunity for future growth. Shares have grown tenfold since debuting in August 2019.

3. WRAP Technologies

3. WRAP Technologies

Ticker: WRAP

Market cap: $256M

Company overview: Its flagship product is called the BolaWrap, an apprehensive device that shoots a lasso-like kevlar rope around suspects to safely detain them.

Risk level: High

Thesis: Heightened awareness in recent years around police-community relations may drive police departments to buy WRAP Technologies’ BolaWrap devices, which Savage said can effectively and safely stop suspects on the run. He said they’re “a product the world needs.” 

The company’s CEO, Tom Smith, co-founded TASER International and helped make the Taser stun gun a staple of law enforcement officers across the country. WRAP’s sales are still low, but that can present an opportunity for investors, Savage said. Many institutional investors can’t invest in firms with such tiny market caps. Shares have lost 10% since their debut in May 2018.

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