Beyond Productions and the question of economists: double edition white paper report
As well as asking the somewhat controversial question on whether or not we, as investors, need economists and economic commentary, in this exclusive subscriber-only Montgomery White Paper, we look to production company Beyond – and how it’s managing to perform in a depressed media arena.
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.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
Tony C
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Hi Roger
I don’t know if Scaffolds scores are the same as yours or when this was written, but downgraded to a A3 [Average] after the half year report.
Roger Montgomery
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A3 is still investment grade
Andrew Legget
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Nate Silver’s website fivethirtyeight.com has just relauched and one of the first articles is in regards to questioning economic data and claims. The three steps are very similar to what i do in regards to economic claims and viewpoints on whether companies are investment grade.
My personal thought is that economics sometimes gets a little too macro to be of any benefit. However, udnerstanding some of the concepts will help in a great way (the dynamics and effects of supply/demand being the obvious one).
Also, one needs to view economic details firstly through the prism that it (like valuation) is not an exact science. Economic claims and results from modelling are based on assumptions and these assumptions can (and usually will be different in reality). You cannot expect precision. Accept the lack of precision and then you will be better able to deal with the actual point of view from the economist.
G H
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Buying shares with volumes of 50,000 to 100,000 a day are very hard to trade and chances are you will get caught. What I tend to do is buy a small parcel in a stock that I have confidence in and accumulate with time, after 12 to 24 months I find the stock starting to find support I can then buy more and find the end position I’m comfortable with and hold. A stock I found with my own research was BGL at 20c 2010 had no volumes at all but is now finding a much better following now. BTW I do spend countless hours over the weekends to find those little gems. Good luck all…….
Alan Jacobs
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Roger, one has to learn to use the information provided by economists to one’s best advantage. I might also observe that you never mentioned inflation as a prime determinant of interest rates and bond yields as well as stock valuations.
Roger Montgomery
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Using the information to ones best advantage, first requires an understanding of what information is the best to use. The point of the article is to call into question the broader discussion about GDP as it relates to stock market ‘timing’. I have removed your comment about “blaming” because it didn’t seem relevant to the discussion.
Richard Benson
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I bought BYI in October after it was first mentioned by the Montgomery Fund. I paid an average of $1.60c/sh, investing about 2% of my SMSF. It rallied stongly for a short time to over $2 then started falling. I started trying to get out at about $1.90 but liquidity was extremely poor with big buy-sell price spreads. I eventually sold half in small parcels to average $170/sh, the interim report was good but they keppt falling and I finally exited other half today at $1.50- after Montgomery report- to make a very small profit. Liquidity is extremely poor and I fear this stock is only for those who know the media industy well and have faith in the stock. I will not buy illiquid stocks again- not to this extent anyway, it is not worth the worry.
Roger Montgomery
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This is a very good lesson for everyone reading these pages. You should not be buying or selling stocks without first thoroughly investigating the company yourself and seeking and taking personal professional advice. You also need to ensure that every investment is part of, and consistent with, a well considered investment strategy.
Ian Hammond
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Hi Richard,
I bought BYI at $1.20 not quite a year ago. I started researching it when it was 90c. I am quite happy to continue to hold it. As a small investor I feel that I can have an advantage in smaller less liquid stocks as big institutional investors just can’t own them and there can be good quality companies to be found that can be at attractive prices.
Yes there is a bit more risk in that if something goes wrong it may be difficult to sell, but by limiting the amount invested in any one small company and having a diversified portfolio I have found that is possible to make a good return from a portfolio that contains a number of carefully selected smaller companies.
Roger Montgomery
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That’s great Ian. Richard may like to to seriously consider your suggestion about relating position size to liquidity.