Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
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Some aviation analysts believe budget courier Tiger Airways will be forced out of business after being grounded over safety concerns – Roger Montgomery shares his expert opinion. Read the article.
Analysts say if Tiger Airways calls it quits, travellers can expect airfares to increase as industry competition eases. Roger Montgomery shares his expert opinion on the economics of airlines. Read the article.
Now on the cusp of reporting season, it is worth reviewing our expectations for Value.able intrinsic valuations and double-checking those that belong to higher quality (MQR: A1, A2, B1, B2) businesses.
There were more than 107 suggestions! Thank you.
Our new A1 service allows us to whip up all the data required for all your nominated stocks in less than a minute (soon you can too!). For now, let’s put stakes in the ground for those which achieved at least three nominations.
In order of mentions…
Matrix C&E, followed by JB Hi-Fi, Forge, Vocus, BigAir, Credit Corp, Woolworths, Thinksmart, BHP, M2 Telecommunications, Zicom, Oroton, ANZ, CSL, ARB Corporation, Thorn Group and Cash Convertors. The remaining companies received less than 5 mentions each. The companies with only a single mention (and therefore arguably least followed) were: ILU, RFG, SMX, KRS, AMA, LNC, RQL, COU, TBR, CPB, AVM, BDR, REA, AIR, CKL, AJJ, FXL, CTD, STU, MIN, TGR, CXS, CMI, CDA, CGX, DGX, RCO, MND, CIX, MOC, RHD, DLX, RMS, MYE, SEA, DPG, SFR, NCK, SRX, NCM, CLV, NFK, CLX, NOE, CMG, NST, IPP, CDD, WTF, OGC, KNH, DWS, FRI and KCN.
Well without further delay, here’s the list with our 2012 forecast Value.able intrinsic valuations.
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Over the next few weeks we will build on the list, include some additional useful information and data and generally prepare you for reporting season.
Stay tuned. This is a period when even developed markets can be inefficient.
Posted by Roger Montgomery and his A1 team, fund managers and creators of the next-generation A1 service for stock market investors, 1 July 2011.
Baby boomers have boosted the property market, but what’s going to happen when they retire? Investment expert Roger Montgomery says he isn’t encouraged by comments by the housing industry. Listen to the podcast.
If given $100,000 to invest in the stock market, would Roger Montgomery spread the money equally across the portfolio or invest a larger percentage in the very best stocks that are trading at prices less than they’re worth? In this appearance on Switzer TV with Peter Switzer, Roger explains why he thinks investors could achieve the greatest benefit by investing in between 10-20 companies – and no more! Watch this interview and discover seven stocks that achieve Roger’s highest A1 and A2 Montgomery Quality Ratings (MQR). Watch the interview.
Many shares that appear cheap based on their fundamentals may just be harbouring dark secrets. Read Roger’s article at www.eurekareport.com.au.
For those interested in Shale Gas stocks, an interesting article was published in the New York Times at the weekend.
Here’s an excerpt or two from the article…
“Money is pouring in” from investors even though shale gas is “inherently unprofitable,” an analyst from PNC Wealth Management, an investment company, wrote to a contractor in a February e-mail. “Reminds you of dot-coms.”
“And now these corporate giants are having an Enron moment,” a retired geologist from a major oil and gas company wrote in a February e-mail about other companies invested in shale gas. “They want to bend light to hide the truth.”
…and here is the link to the story: http://www.nytimes.com/2011 and a link to more than 480 pages of leaked insider emails and reports: http://www.nytimes.com/interactive
And more recently, in this e-mail chain from April 2011, United States Energy Information Administration officials express concerns about the economic realities of shale gas production.
I am not allowing any comments on this subject. Do your own research and seek personal professional advice.
Please continue contributing to the two prior posts, listing the companies you think we should be watching this reporting season (Scroll Down).
Posted by Roger Montgomery, author and fund manager , 27 June 2011.
I am working tirelessly to generate superior returns for the Montgomery [Private] Fund. That is the number #1 goal. But stay tuned, because I am also writing a post for next week that will list some of the companies you should be seriously watching this reporting season (and there may be a few gems). Stay tuned and keep checking in.
Today’s earlier post (What if the sell off is just a Flash?) lists some out-of-favour A1 companies.
If you have a company that you believe investors should be watching this reporting season, please start posting them here. Check in next week to see if they’re on our list too.
Posted by Roger Montgomery and his A1 team, fund managers and creators of the next-generation A1 service for stock market investors, 23 June 2011.
Did you overhear a prominent investment commentator (not a Value.able Graduate, of course) recently express how upset/annoyed they were that the market for big companies’ shares was deteriorating?
In the short run prices move independently of the underlying business, so let’s encourage the market to decline further!
For those truly concerned about Australia’s prosperity, relax. Be comfortable in the knowledge that short-term share price moves are unlikely to impact the employment policies of Australia’s largest listed businesses.
Looking over the financials of fifty-six A1 companies, little has changed. While Telstra and Fosters share prices are beating to the drum of hoped-for franked dividends and a takeover, the fundamentals of many other companies, particularly A1s (and indeed A2 and B1), are resolute. Are these businesses worth 10% to 26% less than they were worth before? No chance. The Value.able intrinsic valuations of companies that were cheap before haven’t changed.
So what has changed?
Only investors’ perceptions. Perceptions about the global economic outlook; perceptions about a US slowdown becoming a recession; perception about a Chinese slowdown causing a global rout the world cannot afford; and hope that Australian house prices will fall to levels people can actually afford.
Think about that for a moment. Baby boomers own $1m + homes that they will be forced to liquidate to fund their retirements and health care. Meanwhile, Generation Y is struggling to afford a property. Something has to give. Economics 101 suggests price declines.
Investors have simply been reducing their appetite for risk.
Armageddonists are spouting scenarios similar to those that followed Britain’s exit from the gold standard in 1931.
But this fear may be unfounded. It’s most certainly not a cause for permanent worry. Even if a recession does transpire, it will not be permanent.
Our job as Value.able Graduates is not to guess the gyrations of the economy – while they are vital in determining the sustainability of a given return on equity, many of the world’s very best investors do not even employ economists (they employ former US Federal Chairmen).
Your mantra is to simply put together a list of ten extraordinary businesses that you believe will be much more valuable in five, ten or twenty years time.
Of course trying to fit all this into your daily life can be a challenge. Completely eliminating the drudgery, and making it simple and fun, is something my team and I have been working on for you. We created our A1 service because we wanted to make finding extraordinary companies offering large safety margins easy. And, of course we love investing. We have worked really hard to create our next-generation service because its what we all want to use. We are its first members! Soon, you will be able to make your investing life simpler too (remember, Value.able Graduates will be invited first – have you secured your copy?). It’s an A1 service that is like nothing you have ever seen before.
You may sense our excitement…
… back to the regular program.
So, here it is. Our list of out-of-favour-but-extraordinary businesses. WARNING: out-of-favour does not always mean ‘bargain’.
Steve Jobs once said; “People think focus means saying yes to the thing you’ve got to focus on. But that’s not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully.”
With that in mind, here are my thoughts on ten businesses we have discussed over the past few months with a back-of-the-business card reason for interest…
JB Hi-Fi (ASX: JBH, MQR: A1) – Bad news across the board in retail may get worse, but it will turn around and JB Hi-Fi is not Harvey Norman. The buyback has increased intrinsic value at the same time the price slides below.
Cochlear (ASX: COH, MQR: A1) – The shining star amongst A1s (COH is one of this country’s best export successes), yet the worst performer on the share market amongst its peers. Rational, anyone? Australian dollar fluctuations doesn’t change the quality of COH’s business, only the nature or shape of its earnings. Aussie dollar appreciation may last a while, but is not permanent.
CSL Limited (ASX:CSL, MQR: A1) – Another A1 amongst A1s. Like COH, earnings are affected by currency fluctuations.
Woolworths (ASX: WOW, MQR: B1) – Trading at a premium to current Value.able intrinsic value, but a small discount to 2012. Intrinsic value has taken five years to catch up to the price and the price has complied by waiting. In the absence of further downgrades, intrinsic value for future years now rises beyond the price at a good clip.
Reece (ASX: REH, MQR: A2) – Great quality business. Wait for weaker prices or intrinsic value to catch up.
Platinum Asset Management (ASX: PTM, MQR: A1) – Whilst few businesses can compete with Platinum on an ROE and low capital intensity basis, patience is required before acquiring.
Matrix C&E (ASX: MCE, MQR: A1) – Matrix is unique amongst its small capitalisation peers also servicing the resources sector. Watch the full year results closely.
ANZ (ASX: ANZ, MQR: A3) – Short of swimming off the island, we don’t have much choice when it comes to choosing a banking partner. Thanks to fears of an ineffectual Asia roll-out, ANZ is the cheapest of Australia’s big four at the present time.
Vocus Communications (ASX: VOC, MQR: A1) – Run by some of the best in the business, the intrinsic value of Vocus has the potential to be much, much higher in five years time.
Zicom Group (ASX: ZGL, MQR: B2) – Like Matrix, Zicom is exposed to both small-cap and resource sector engineering negativity. And like Vocus, the intrinsic value could rise much higher on the back of further rises in the price of oil and demand for gas.
What’s on your list?
This market, with an increasing number of companies hitting 52-week lows, is demanding your attention!
Posted by Roger Montgomery and his A1 team, fund managers and creators of the next-generation A1 service for stock market investors, 23 June 2011.
In a nationally broadcast speech, Qantas boss Alan Joyce says the airline had to change with the times or risk going the way of Ansett which collapsed ten years ago. Roger Montgomery adds “I have very low expectations for airlines. I think that you would hate to own the business outright and so I don’t own a little piece of it either.” Listen to podcast.
