Hot Tip From Liberty Acorn Skipper Wanger: Real Growth Takes Time

In our opinion, the weak market has taken Americredit's stock below where it ought to be.

8. Harley-Davidson is another big holding; the stock has had a tremendous ride the past decade or so. Some people are concerned about its ability to grow. Where do you think the stock is headed?

Harley-Davidson(HDI Quote) has posted 10% to 12% growth in units -- the number of bikes each year. They've enjoyed rising profit margins over the course of the past decade.

The amazing thing about this company is they have showed no signs of noticing a recession. It's hard to find any company in America that sells to consumer market that has done this.

In my opinion, they still have more growth to do. You can't keep increasing profit margins. They're high now and that has to level out. Overall growth will trend down toward their growth in units. But this is a great company, and a very well-run one.

9. A lot of the stocks we've discussed have been ten-baggers for you. Can you name a few that you think will be ten-baggers over the next decade, but are at the earlier part of their trajectory?

One technology company we like is JDA Software(JDAS Quote). It's an impressive company that is growing steadily.

Three retailers we really like are two women's clothing retailers, Christopher & Banks(CBK Quote) and Chico's FAS(CHS Quote), and [craft-goods retailer] Michaels Stores(MIK Quote).

These are all good companies -- small, growing quickly. It's fairly simple: You have good retail concepts. Start with one store, do it right, execute. Ten years later, you have 500 stores.

With Michaels, are you worried about Home Depot and Lowe's trying to get into their business? Lowe's has fashioned itself as being more women-friendly.

I don't think the average young lady is going to go to Home Depot to buy beads to make a necklace. And I've asked Michaels not to sell wallboard, so I think we can keep them separate.

10. The key to the success of most small companies is a strong management team. The past year has taught us how important it is to have trustworthy executives. How do you assess leadership at the small companies you buy?

Well, it's a little different in the small-cap arena. Most of the companies we invest in don't have executives careening around in jet planes because they can't afford them yet.

We keep an eye on a few things, such as excessive stock options. That's a problem across the board, but it's been reduced somewhat since stocks don't go up like they used to. Also, these little companies generally don't have pension-plan issues like bigger companies, so we don't need to worry about that too much.