The silence on the Montgomery blog around the Vocus Communications Limited (ASX: VOC) / M2 Group Limited (ASX: MTU) reverse acquisition was rather deafening, but as our funds are shareholders in each entity we had extensive due diligence to complete before any response could be warranted. Continue…

by Scott Shuttleworth Posted in Insightful Insights, Technology & Telecommunications.

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The rewards in the stock market can be vast – why else would we spend so much time on it? But the risks can often go overlooked as we dream of retiring down at the beach tomorrow. One risk we would like to highlight is catastrophe risk. Continue…

by Scott Shuttleworth Posted in Insightful Insights, Investing Education.

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Vodafone Australia and TPG Telecom Limited (ASX: TPM) yesterday announced a circa $1 billion deal for the rollout of 4,000 km’s of dark fibre around Australia.

The agreement will allow Vodafone to link up it’s circa 3,000 mobile towers across Australia. This will enable the carrier to advance later in the decade into offering 5G mobile broadband services, a requirement for future competition with Telstra Corporation Limited (ASX: TLS) & Singtel Optus Pty Limited (SI: Z74). Continue…

by Scott Shuttleworth Posted in Insightful Insights, Technology & Telecommunications.

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As many readers are aware, the Montgomery funds monitor the telecommunications industry on a consistent basis. With the development of the National Broadband Network over the next decade there appears to be an immense number of opportunities for valuation creation as the spend of each broadband consumer rises and the number of broadband users across Australia continues to grow. Continue…

by Scott Shuttleworth Posted in Insightful Insights, Technology & Telecommunications.

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For a firm to grow in value, it must earn returns in excess of its cost of capital. Typically we expect that firms will achieve this by developing a competitive advantage difficult to replicate by competitors and exploiting said advantage for all it’s worth. But what if the firm has no competitive advantage? Continue…

by Scott Shuttleworth Posted in Economics, Insightful Insights.

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Let’s define the term ‘competitive advantage’, what does it mean? There’s unfortunately many definitions, confusing a vital tenant of investment theory. Bruce Greenwald of Columbia University defines it as “being able to do what rivals cannot.” We can extend on this in such a way to suggest that having a competitive advantage will enable a firm to earn abnormally high returns.

Interestingly, competitive advantages when defined in this light, can both be thought of as the same as barriers to entry. Continue…

by Scott Shuttleworth Posted in Consumer discretionary, Insightful Insights, Manufacturing, Market Valuation.

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With reporting season out of the way, we now can continue our series in small cap stocks.

One clear outperformer has been Bellamy’s Australia Limited (ASX: BAL). For those unaware, Bellamy’s is a Tasmanian firm producing organic baby milk powder and formula. Continue…

by Scott Shuttleworth Posted in Companies, Insightful Insights.

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Last week Altium Limited (ASX: ALU) provided its full year results for the 2015 financial year. Below we make a few notes on its progress. Continue…

by Scott Shuttleworth Posted in Companies, Insightful Insights.

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Burson Group Limited (ASX: BAP) again demonstrated the rewards reaped by those invested in value this reporting season. We met with management last week to discuss the result and we’ve posted below an ‘over-the-shoulder’ view of our notes. Continue…

by Scott Shuttleworth Posted in Companies, Insightful Insights.

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