It's wonderful when everything comes together.
After doing the research, you buy a stock because you love the business and where it's going but feel like the market hasn't woken up yet.
Then soon afterwards external forces come along that supercharge the investment.
That's exactly what happened with an ASX share that Australian Eagle Asset Management bought a few years ago.
Australian Eagle chief investment officer Sean Sequeira explained this week how it unfolded.
Lowest of lows for iron ore producer
Sequeira revealed recently that Fortescue Metals Group Limited (ASX: FMG) was "one of the most satisfying investments" ever made for his clients.
Back in 2015, the Fortescue share price was languishing below $2 but the Australian Eagle team noticed the business was "changing significantly".
"Their management of the difficult situation they found themselves in resulted in the improvement of the overall quality and risk profile of the business," Sequeira said in an interview on the Montgomery blog.
"In January of 2016, their production report highlighted a cash cost below that of BHP Group Ltd (ASX: BHP) and a continued priority to pay down debt."
Iron ore prices were at decade lows during this time too, but Sequeira saw that Fortescue had successfully executed its reforms.
"Despite the extremely low prevailing iron ore prices, Fortescue's improved cost structure meant that they could pay off their debt in well under four years and the danger of the company going under had already passed."
Nothing more satisfying than 'I told you so'
Then as 2016 arrived, iron ore prices started to rocket upwards to further push the stock to new heights. But Sequeira readily admits this type of external boost is not for anyone to claim credit.
"As no one could have forecast the subsequent change in iron ore prices, the investment decision was not based upon a favourable iron ore forecast but rather a change in the business that reduced risk and allowed for the opportunity of significant upside should the pricing environment change."
The Australian Eagle team bought into Fortescue shares at below $1.60 in the dark days of 2015. It has been as high as $22.99 over the past 12 months, which made it a 14-bagger without counting dividends.
It closed Tuesday at $17.32.
Over that time the stock has also paid out more than $9 per share in fully franked dividends, according to Sequeria.
But the massive financial gains were not the sole source of elation for the fund manager.
"The satisfaction comes more from the fact that when we told people of this at the time, not one person agreed with us."
