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Are we there yet?

Are we there yet?

Half-year reporting season is just around the corner, and at Montgomery, we have the tendency to get a little bit excited about it.

There are a few reasons for this.  Firstly, we aim to own companies that have the ability to grow their earnings over time. Share prices tend to follow earnings, and if we have done a good job selecting growing businesses, then reporting season is where we see confirmation of that growth, and often a favourable share price reaction. One factor that interests us currently is the declining value of the Australian dollar. Some high quality companies in the healthcare sector (as well as others) should enjoy increased Australian dollar earnings from recent exchange movements – and this may start to be reflected in outlook statements in the coming weeks.

More broadly, reporting season is a time to find out what is happening across corporate Australia. A tremendous amount of information is released in a short space of time, and there is a real benefit to being able to quickly assess that new information and work out changes to company valuations. We pride ourselves on being quick to assimilate new data, and this sometimes allows us to scoop up opportunities before the share price has properly factored in changed prospects.

Of course, there is the potential for bad news as well, so it can be something of a roller coaster ride. In any event, we’ll keep you posted with some of the more interesting developments as we see them.

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Tim joined Montgomery in July 2012 and is a senior member of the investment team. Prior to this, Tim was an Executive Director in the corporate advisory division of Gresham Partners, where he worked for 17 years. Tim focuses on quant investing and market-neutral strategies.

This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.

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5 Comments

  1. Hi Tim intresting comment if you have got good businesses that you have invested in it doesnt matter what good bussinesses are doing in a six month time frame,its way too short to be judging a business take for example the reject shop they have told the market that they are not going to make that much profit this year ,thats fine they in my opinon are still recovering from the qld floods that effected that business, what do investors do they punish the business because the managers were honest to tell the market.

  2. I hope for both of our sakes, JBH’s earnings are big to stop the free fall in the SP that has been occurring lately!

  3. Look forward to the HY result coverage. Reporting season always throws up some interesting stories. My eyes are going to be focused on retail, healthcare and technology.

    I will be interesting to see whether my various thoughts concerning retailing in Australia are flowing through to the results.

    Healthcare and technology are two very strong areas of the Australian economy at present and have some very good companies in that space. These two should be a key focus for the government to try and expand.

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