A large portion of Australian share portfolios include shares in one of the ‘big four’ banks. Does Roger Montgomery prefer CBA, ANZ, NAB or has his focus shifted to smaller credit unions? In this appearance on Market Moves with James Dagger-Nixon, Roger reveals his Montgomery Quality Rating (MQR) for Santos (STO) and shares his insights on oil and coal. Read more of Roger’s predictions for oil, coal, uranium, rubber, inflation, interest rates and changing weather patterns at his blog. Watch the interview.

by Roger Montgomery Posted in Media Room, TV Appearances.

• save this article
• POSTED IN Media Room, TV Appearances.

Roger Montgomery was invited to share his top A1 stock for 2011 with viewers of the Sky Business channel. Roger decided to ask the Value.able Graduate class of 2010 to nominate the A1 stock that investors should include in their 2011 watchlist. Which stock made Roger’s A1 Montgomery Quality Rating (MQR)? The stand out company is trading at a discount to its intrinsic value, has bright long-term prospects, a sustainable competitive advantage, high ROE, little or no debt and fantastic cash flow. It is the leading supplier of buoyancy devices for deep-sea oil rigs and is an A1 business that Roger has mentioned many times at his Insights stock market blog. Watch the interview.

by Roger Montgomery Posted in Media Room, TV Appearances.

• 2 Comments
• save this article
• 2
• POSTED IN Media Room, TV Appearances.

The Value.able class of 2010 is indeed all class.

Your nominations for the A1 stocks to watch in 2011 are fine examples of the sorts of companies that I eagerly seek for my own portfolio (with the exception of the odd recalcitrant student who diverged from the lessons learned).

I haven’t yet decided which will be revealed on Sky’s Twelve Shares of Christmas special tonight at 7pm, although the shortlist may be obvious from the numbers presented in the table below.

If we presume that all A1s have equally bright prospects – they don’t – then the job of picking the top stock comes down to the one that offers the highest return when combining the discount to intrinsic value and the prospective change to intrinsic value over the next two or three years.

One difficulty with such a simplistic approach is that firstly, varying degrees of certainty about the future cloud the picture. I have also used consensus numbers to produce the valuation changes and these are notorious for being optimistic at precisely the wrong points in the business cycle.

To avoid this dilemma for the purposes of the exercise (but perhaps not for the purposes of investing), I could elect to go with the choice that received the most recommendations. The winner of that contest would be a tie between Matrix Composite & Engineering (MCE) and Forge Group (FGE) and the equal runners up would be Oroton (ORL), ARB Corp (ARP), Cash Convertors (CCV), Cellestis (CST) and CSL (CSL). The remaining contributions include Acrux (ACR), BHP (BHP), Bradken (BKN), Centrebet (CIL), Coca Cola (CCL), Decmil (DCG), Euroz (EZL), Fleetwood (FWD), Focus Minerals (FML), FSA Group (FSA), Hunter Hall (HHL), iCash Payment Systems (ICP), Industrea (IDL), JB Hi-Fi (JBH), QBE (QBE), REA Group (REA), Resource Equipment (RQL), Seek (SEK), Seymour White (SWL), Sirtex (SRX), Speciality Fashion Group (SFH), The Reject Shop (TRS), ThinkSmart (TSM), Thorn Group (TGA) and Woolworths (WOW).

Whilst I have identified a universe of A1 companies trading at discounts to intrinsic value that have slipped under your radar, the objective of the exercise was to ask for your picks and now that I have the list, choose a winner I must.

On tonight’s Summer Money program on Sky Business at 7pm I will reveal the ONE stock that you have selected as the relatively best prospect for 2011. It won’t be Roger Montgomery’s pick. It will be the top pick by the Insights Blog Community –  the Value.able Graduate Class of 2010!

Posted by Roger Montgomery, 16 December 2010.

by Roger Montgomery Posted in Companies, Investing Education.

• 114 Comments
• save this article
• 114
• POSTED IN Companies, Investing Education.

The sharp fall in The Reject Shop’s shares might be an opportunity in disguise. Roger Montgomery thinks it will a stock to watch in 2011. Read Roger’s article at www.eurekareport.com.au.

by Roger Montgomery Posted in Media Room, On the Internet.

• 6 Comments
• save this article
• 6
• POSTED IN Media Room, On the Internet.

Roger says good value companies tend to hit you in the face – their value is obvious. This engaging presentation has lots of questions from the floor as Roger lists ways of assessing the value of companies. He lists companies he regards as good value and those that are poor value and gives his reasons. View the presentation.

by Roger Montgomery Posted in Media Room, Radio.

• save this article
• POSTED IN Media Room, Radio.

CONTRIBUTIONS ARE NOW CLOSED.

I have an assignment for you.

Before we start, two things…

1. If you are looking for a gift that keeps on giving in 2011, give your loved ones a copy of Value.able. To guarantee your gift makes it into Santa’s sleigh, you must order before 5pm next Monday, 13 December.

2. Put Thursday 16 December @ 7pm in your diary. Sky Business has invited me to appear on their Summer Money program.

Within Summer Money, Sky is running a series called The Twelve Stocks of Christmas and I have been asked to present one of the twelve stocks. What I would like to do is let everyone on Sky Business know about you – the Value.able Graduate class of 2010!

You have been instrumental in contributing to the knowledge and awareness of value investing and I would like to say thank you by reviewing your suggestions on air.

So, what will it be? You can nominate one of the companies we have already discussed. More points can be earned by contributing a company of which you have industry-level knowledge. Think about your industry or business:

– Who is the strongest [listed] competitor in your industry?

– Who would you like to see out of business because they are an emerging threat?

– What are their competitive advantages, their opportunities for growth and why do you think they will sell more of their product or services in the future or at higher prices?

– Perhaps they are out of favour in the share market, but you believe it’s a case of a temporary set back being treated like a permanent impairment?

I encourage you all to post your contribution. There are just two rules:

1. One stock (your best pick) per Value.able Graduate. The more detailed your information, the better; and

2. Ideas must be submitted by Wednesday 15 December

Before the live show at 7pm next Thursday, 16 December, I will run my valuation eye over every suggestion and give each my Montgomery Quality Rating (MQR). But the list will be yours – a contribution from the Value.able Class of 2010.

Whilst only one stock will make it to the show, EVERY SINGLE STOCK  contributed on this post with sufficient supporting detail will be subsequently listed in my final pre-Christmas post for 2010, complete with MQRs, current valuations and prospective valuations (I have decided to called these MVEs – see below).

Embrace this opportunity to practice what you have learned over the past twelve months, and get the official Montgomery Quality Rating (MQR) and Montgomery Value Estimate (MVE) for your favourite stock. You never know, your stock may just be the one I contribute on national television to The Twelve Stocks of Christmas.

Post your suggestion here at the blog by Wednesday 15 December 2010.

I look forward to reviewing your insights and hearing what you think of your classmates’ suggestions. Simply click the Leave a Comment button below.

Posted by Roger Montgomery, 9 December 2010.

Postscript: thank you for your kind words and birthday wishes. I’m thoroughly enjoying my time away and am very much looking forward to reading and replying to your comments when I return to the office next Monday.

Postscript #2: Steven posted his own Value.able 12 Days of Christmas at my Facebook page last Friday – brilliant!

On the twelfth day of Christmas,
My independent analyst’s blog gave to me
12 A1s humming
11 valuations piping
10 C5s a-sleeping
9 forecasts prancing
8 capital raisings milking
7 floats a-sinking
6 CEOs praying
5 golden A1s!!
4 C5 turds
3 emerging bubbles,
2 editions of Value.able
And a market leader with a high ROE!

Here is Steven with his daughter Sophie.

Roger, you were good enough to sign my book…

“To Steven, Your guide to avoiding the dogs you told me you were so worried about, RM”.

Here I am reading Value.able to my little two year old Sophie at bedtime, holding her toy dogs. The moral of the story for Sophie? Roger shows dogs make fun toys and pets but must be avoided at all costs when investing in great businesses!”

Steven

by Roger Montgomery Posted in Companies, Insightful Insights, Investing Education, Value.able.

• save this article
• POSTED IN Companies, Insightful Insights, Investing Education, Value.able.

Shareholders must be certain that any business they own has strong competitive advantages. Pfizer’s decision to bypass Australian distributors bites deep into revenues to two pharmaceutical wholesalers is a lesson to investors. Read Roger’s article at www.eurekareport.com.au.

by Roger Montgomery Posted in Media Room, On the Internet.

• save this article
• POSTED IN Media Room, On the Internet.

At 7.30am this morning after inspecting a property, I found myself on the street being presented with a sealed envelope and cryptic directions to a taxi suspiciously parked just 10 metres from where I was standing.

Turns out my family thought my upcoming 40th was a pretty good reason to celebrate and surprise me! They have whisked me away for a few days, as one of mates put it, for a ‘birthday soriee’.

I am completely unprepared. My laptop sits idle on my desk and iPhone charger is still in the power point (not turned on). I have been told there is an internet café where we are staying, however I’m not certain how reliable the connection will be.

I was planning to publish a new post today: What are the twelve stocks of Christmas? Thankfully all the post requires is one final proof read and then a click on ‘Publish’. I’ll venture down to the internet café this evening.

Please keep posting your comments here at the blog and on Facebook over the next few days and I will reply upon my return. I will be back in the office on Monday 13 December

Thank you in advance for your understanding and patience.

Posted by Roger Montgomery, 8 December 2010.

by Roger Montgomery Posted in Insightful Insights, Value.able.

• 44 Comments
• save this article
• 44
• POSTED IN Insightful Insights, Value.able.

Christmas is about sharing and joyful memories. With just 18 days to go, I thought it would be educational, if not insightful, to share the performance of some of the securities Value.able Graduates have discussed here at my blog.

Does the Value.able approach to investing, as advocated some of the world’s leading investors, have merit?

First Edition Graduates may not be surprised by the results posted below. The higher quality businesses, those scoring A1 and A2 Montgomery Quality Ratings (MQRs), and those at larger discounts to intrinsic value have, in aggregate, beaten the index. Some have trounced it. And with the exception of QR National, the companies that were labeled as poor quality (C4 and C5 MQRs) and overpriced, have under-performed. Some of the maturing higher quality companies (think JB Hi-Fi) have indeed performed.

The following tables present some of the blog posts and the stocks that I have listed, mentioned or discussed in them. I have consistently suggested investigating an approach that seeks the highest quality businesses and prices that offer the biggest discounts to value.

Whilst the results are short-term (therefore nothing should be taken from them), they are nevertheless encouraging. The approach advocated in Value.able is worth investigating.

Many Value.able Graduates have suggested I start a newsletter or a stock market advice service. Thank you for the encouragement. I do enjoy the cross pollination of ideas and look forward to 2011 attracting even more investors to the patient and rational approach shared here at my blog.

Here are the tables (DO YOUR HOMEWORK AND RESEARCH. ENSURE YOU ARE COMPREHENSIVELY INFORMED. SEEK AND TAKE PERSONAL PROFESSIONAL ADVICE).

Do these three companies represent the last of good value? Oroton, JB Hi-Fi, DWS, Cogstate, Cash Converters, Slater & Gordon, ITX, Forge, Decmil and United Overseas

Which 15 companies receive my A1 status? CSL, Worley Parsons, Cochlear, Energy Resources, JB Hi-Fi, Navitas, REA Group, Carsales, Mondaelphous, Iress, Fleetwood, ARB, McMillian Shakesphere, Sirtex, Oroton.

Is Apple an A1? What A1 companies does Roger Montgomery think are the best value right now? Apple, Forge and Decmil.

Where are my valuations Roger? Cabcharge.

JBH’s years of fast growth has slowed.

What do you think of the QAN, JBH and ITX results Roger? Qantas and ITX

Telstra profits will continue to drop

Who is in front of the reporting season avalanche? Navitas, JB Hi-Fi, Cochlear and Matrix.

Part II: What else has the reporting season avalanche uncovered? Ross Human Directions, Monadelphous, Forge, Carsales, DWS, Finbar, SMS Management, CSL, Consolidated Media, Integrated Research, McMillian Shakesphere, Count Financial, Domino’s Pizza, The Reject Shop, Credit Corp, Chandler Macleod, Primary Healthcare, Slater & Gordon, Noni B, Embelton and Tamawood.

Retailing Maturity – Roger Montgomery now has reservations about JB Hi-Fi.

Part III: The avalanche is over – where should you be digging for A1s? Lycopodium, REA Group, Fleetwood, K2 Asset Management, Acrux, Hunterhall, Macquarie Radio, Blackmores, ISS Group, Thorn Group, GUD Holdings, Webjet, Kresta Holdings, Kingsgate, Fiducian and Euroz.

Foster’s turns down $2b bid.

How does cash flow through Decmil?

Part IV: Where should you focus your digging?

Will Roger Montgomery invest in QR National?

I thought the performance of Fosters after the wine bid was knocked back was interesting, but only another year or two will confirm whether the opportunity to add value was passed up. Some higher quality businesses also underperformed the market, thanks in part to deteriorating short-term prospects rather than deteriorating quality.

Remember to look for bright long-term prospects. Of course, in the short-term prospects will swing around – that is business, but longer-term prospects of businesses with true sustainable competitive advantages tend to win out.

Keep an eye on the blog before Christmas as I will be posting a couple of very handy lists (and possibly some homework) before the annual Montgomery Family Christmas break.

Posted by Roger Montgomery, 7 December 2010.

by Roger Montgomery Posted in Companies, Insightful Insights, Investing Education, Value.able.

• 40 Comments
• save this article
• 40
• POSTED IN Companies, Insightful Insights, Investing Education, Value.able.

Choosing your shares is a big step, but it’s not unmanageable if you ask the right questions. Gayle Bryant of the Medical Observer asked Roger Montgomery for his insights. Read article.

by Roger Montgomery Posted in In the Press, Media Room.

• READ
• 4 Comments
• save this article
• 4
• POSTED IN In the Press, Media Room.