Last Thursday the Federal Reserve in the United States released the results of its annual “stress tests” or Dodd-Frank Act Stress Testing (DFAST). DFAST, along with his brother the Comprehensive Capital Analysis and Review (CCAR for short), forms part of the Federal Reserve’s annual assessment of whether large banks have effective capital adequacy processes and sufficient capital to absorb losses during stressful conditions. At the same time the banks should be able to meet their obligations and continue to provide loans. Continue…

by Christopher Demasi Posted in Financial Services, Insightful Insights.

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McMillan Shakespeare Limited (ASX: MMS) has had a rough ride since mid 2013, but yesterday showed it was back to business as usual for the company. There are a few a few reasons why this is: Continue…

by Christopher Demasi Posted in Companies, Insightful Insights.

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On Wednesday the Board of Toll Holdings (ASX: TOL) announced that it had unanimously agreed to be acquired by Japan Post for a total enterprise value of more than $8 billion. Toll shareholders will receive a cash payment of $9.04 per share plus a fully franked interim dividend of 13c per share, for total consideration of $9.17 per share excluding the value of the franking credits. Continue…

by Christopher Demasi Posted in Companies.

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This year is the 50^th anniversary of Warren Buffett taking control of Berkshire Hathaway. To mark the occasion Seth Klarman, founder of Boston-based hedge fund Baupost Group, wrote a column in the Financial Times last week outlining a dozen lessons he has learned from Warren Buffett. Continue…

by Christopher Demasi Posted in Insightful Insights, Investing Education.

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This week’s edition of The Economist provided commentary and analysis demonstrating the dramatic increase in bank lending against housing at the expense of business lending. In 1900 just 30 per cent of bank lending in wealthy countries was directed towards residential mortgages. Today that proportion is about 60 per cent. Further, since the 1970s mortgage lending has contributed to the substantial majority of the increase in private-sector debt to Gross Domestic Product, while corporate bank lending has remained flat. Continue…

by Christopher Demasi Posted in Insightful Insights, Technology & Telecommunications.

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From Europe across to Canada, down to Singapore and New Zealand, central banks globally have been focusing their efforts on easing monetary conditions over the last week by cutting benchmark interest rates, buying bonds and intervening in currency markets. In an attempt to provide conditions to stimulate local economies and stoke the flames of inflation, monetary policy-makers have forced government bond yields lower and lower – and in some markets, below zero.

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by Christopher Demasi Posted in Economics, Insightful Insights.

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Jim Chanos, founder of hedge fund firm Kynikos and renowned short seller, was interviewed by CNBC last week to speak about his view that oil companies are candidates to be sold short. At a time when the price of oil has fallen by almost 60 per cent in the last 7 months this segment may seem at first blush to be the ship that has already sailed. A high profile fund manager taking to the air to publicise a winning bet on the direction of commodity prices. Not so. Rather Chanos provides us with insight into a permanent pillar of successful investing: focus on understanding the true underlying economics of a business. This 3 minute video is a great investment of time, click here to view.

Chris Demasi is a Senior Analyst with Montgomery Investment Management. To invest with Montgomery, find out more.

by Christopher Demasi Posted in Insightful Insights.

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Warren Buffett has called cash “the worst investment you can have.” Cash is an unproductive asset. At best interest earned on cash might enable an investor to slightly outpace inflation and maintain spending power. At worst this power could be eroded over time (if inflation runs higher than the interest rate on a bank deposit), leaving an investor unable to buy tomorrow what could have been bought yesterday. So why would you want to pay an investment manager for holding cash? Continue…

by Christopher Demasi Posted in Insightful Insights, Investing Education.

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