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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Before Roger Montgomery reveals his top five stock tips, which he ranks in terms of quality and performance from A1-C5, he talks about the characteristics of great businesses – his A1s: 1.Great quality high rates of ROE, little or no debt; 2.Intrinsic value is rising; 3. Share price is trading at discount to intrinsic value. Watch the interview. Sign up free to Peter Switzer’s latest personal finance and financial planning news at switzer.com.au.
On the opposite end of the spectrum of Roger Montgomery’s A1 stock picks are C5 businesses – low quality, high debt, low ROE and trading at prices significantly about their intrinsic value. Transurban and Primary Healthcare are two such companies Roger talks with Peter Switzer about. Another is Myer. Watch the interview. Sign up free to Peter Switzer’s latest personal finance and financial planning news at switzer.com.au.
Tatts Group’s purchase of NSW Lotteries could reduce its intrinsic value. A lottery ticket might be a better investment. Read Roger’s article at eurekareport.com.au.
Developer and funds manager Mirvac has unveiled a $500 million capital raising and revealed it is in exclusive takeover talks with Westpac’s fund management arm. Fund manager Roger Montgomery says he’s not surprised at Mirvac’s interest. Read article.
Developer and funds manager Mirvac has unveiled a $500 million capital raising and revealed it is in exclusive takeover talks with Westpac’s fund management arm. Fund manager Roger Montgomery says he’s not surprised at Mirvac’s interest. Read transcript. Read related blog post.
Twelve months ago TheBull.com.au asked four stock pickers to select a portfolio of 10 stocks to hold for one year. So how did they fare? Independent investment analyst Roger Montgomery blitzed the field with a whopping 51.90% gain, beating off his competitors by as much as 24% as well as the All Ordinaries index by a hefty 13% margin. Read article.
Heading into Easter, I received an enormous pile of valuation requests and while many were little mining explorers burning through $500,000 of cash per month and with just $3 million in the bank, quite a few were solid companies that hadn’t been covered before.
And to confess, some of the requests were quite rightly keeping me accountable and making sure I post the company valuations I said I would, when I have appeared on Sky Business with either Nina May, Ricardo Goncalves and Peter Switzer.
What are they, I hear you ask? Forge Group (FGE), Grange Resources (GRR), Arrow Energy (AOE), Cabcharge (CAB), Coca Cola (CCL), Data 3 (DTL), Hutchison (HTA), Incitec Pivot (IPL), Metcash (MTS), Sedgeman (SDM) and UXC (UXC)
I am really impressed by the frequency with which I am now receiving emails containing insights I didn’t know about companies that I have covered.
As a fund manager it was not unusual for me to adopt Phil Fisher’s ‘scuttlebutt’ approach to investing. By way of background, Warren Buffett has previously described his approach to investing as 85 per cent Ben Graham and 15 per cent Phil Fisher. Fisher advocated scuttlebutt – talking to staff, to customers and to competitors. I did the same and would often end my interview of a company’s CEO or CFO with I’d learned from reading Lynch; “if I handed you a gun with one silver bullet, which one of your competitors would you get rid of?” The answers were always revealing. Sometimes I would get; “there’s noone worth wasting a silver bullet on”, but most of the time, I would find out a lot more about the competitive landscape than I had bargained for. Occasionally, I would learn that there was another company I really should be researching.
Back to your insights, they are amazing. Now you know why I enjoy sharing my own insights and valuations with you as much as I enjoy the process of investing.
One thought for you; Many of you are sending your best work via email. I would really like to see everyone benefit from the knowledge and experiences you all have so hit reply and if you have some insights (as opposed to an opinion), just click on ‘REPLY’ at the bottom of this post and leave as much information as you would like.
So here are a few more valuations to ponder over Easter. I hope they add another dimension to your research. And before you go calling me about coal seam gas hopeful Arrow Energy, note that the valuation is a 2009 valuation based on actual results. The forecasts for Arrow for the next two years are for losses, and using my model, a company earning nothing is worth nothing. Of course Royal Dutch Shell and Petro China think its worth more and perhaps to them it is, but as a going concern its worth a lot less for some time to a passive investor.
I hope you are enjoying the Easter break and look forward to reading and replying to your insights.
Posted by Roger Montgomery, 1 April 2010
They might be able to run a business, but many managers are incompetent at allocating capital. Read article.
On 31 March 2010 Roger Montgomery’s YouTube channel,www.youtube.com/RogerJMontgomery, ranked as the #16 Most Viewed Guru Channel in Australia. Following is a message from Roger.
“Today my YouTube channel achieved a new record, # 16 Most Viewed (Today) – Gurus – Australia. Once again I would like to say thank you for your encouraging Facebook comments, emails and blog interactions. I enjoy sharing my knowledge almost as much as I enjoy the process of investing, and to be able to interact with so many of you online makes the process even more rewarding.”
On balance, there’s a lot that appears in a company’s books that’s simply not worth bothering about. Read article.
