Insightful Insights
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What is happening in the retail sector?
Russell Muldoon
November 20, 2014
Asset prices are well-up on just a few years ago. No matter which way you cut the data, both the property and share markets have performed strongly. And so the economic theory goes: that if you feel wealthy, you’ll act wealthy and go out and spend. Exactly what a low interest rate envrionment – the one we are in now – is supposed to encourage.
But unlike past economic cycles, where the wealth effect has translated into the withdrawal of equity to be used on consumption of new furniture or a stereo for example, our listed retailers tell a different picture about the health of the Australian economy.
by Russell Muldoon Posted in Companies, Consumer discretionary, Insightful Insights, Investing Education.
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How to get value from an hour or so of your time
Roger Montgomery
November 20, 2014
Bruce Greenwald is the Robert Heilbrunn Professor of Finance and Asset Management at Columbia University, a dyed-in-the-wool Graham acolyte and the author of a multitude of books and papers on Value Investing including Value Investing From Graham to Buffett and Beyond.
At the 12th annual Post Keynesian Conference held on September 25th this year at the University of Missouri in Kansas City, Greenwald presented ‘Value Investing and the Mis-measures of Modern Portfolio Theory‘ as the plenary talk.
Instead of spending thousands of dollars learning how to become a “Property Millionaire” overnight, spend an hour or so with Bruce for free. The risk reward payoff is much more attractive.
by Roger Montgomery Posted in Insightful Insights, Investing Education, Value.able.
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Expensive Pizza
Tim Kelley
November 19, 2014
Domino’s Pizza (ASX:DMP) has been one of the standout success stories on the ASX in recent years. The business has achieved excellent financial metrics with good earnings growth, and shareholders have enjoyed exceptional returns over many years, with a +60 per cent share price gain in the past 12 months alone.
However, while we applaud the management of the business for excellent financial performance over this period, we wonder whether the share market might have pushed Dominos beyond a sensible valuation range. continue…
by Tim Kelley Posted in Companies, Consumer discretionary, Insightful Insights, Investing Education.
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Looking at Ansell’s Long Term Incentive Plan
Ben MacNevin
November 18, 2014
Upon examining Ansell’s (ASX:ANN) Long Term Incentive Plan for management, we have noticed some interesting developments in the company’s capital position. continue…
by Ben MacNevin Posted in Consumer discretionary, Health Care, Insightful Insights, Investing Education.
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Free Trade or simply Free?
Roger Montgomery
November 17, 2014
Is the chest beating and plumage preening about and over the Free Trade Agreement a bit of a joke?
Parliamentary Secretary to the Prime Minister, Josh Frydenberg, said the deal to be signed today with China could be worth (note the word ‘could’) up to $18 billion to the Australian economy over the next few years. I think he actually said 10 years. If that’s the case, it’s worth $1.8 billion per year.
Let’s put that into context. Our total annual iron ore exports are 600 million tonnes. At US$80/tonne, the total value is A$56 billion. The total value of the FTA could be wiped out by a US$2.79/tonne move in the iron ore price.
The full terms of the deal are expected to be signed this afternoon and the details released then also. Stay tuned.
by Roger Montgomery Posted in Economics, Insightful Insights, Market commentary.
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Property; be careful! Equities; get ready!
Roger Montgomery
November 17, 2014
It doesn’t seem that long ago, but the Global Financial Crisis-inspired rout in the stock market began in late 2007 and even though it bottomed in March of 2009, the symptoms that triggered the collapse, are even worse today.
But before you go jumping at shadows keep in mind that while interest rates remain low, the status quo is very likely to be maintained. Indeed low or lower rates could trigger an equity bubble before any correction is experienced. continue…
by Roger Montgomery Posted in Economics, Insightful Insights, Investing Education, Property, Value.able.
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Good news this week for two Montgomery holdings
Roger Montgomery
November 14, 2014
Firstly, Seek Limited (ASX:SEK) subsidiary Zhaopin Limited (NYSE:ZPIN) received a boost when it reported 3Q14 revenue growth of 32 per cent year-on-year (YOY); and EBITDA growth of 34 per cent YOY.
We will be investigating why the unaudited result was so strong given the company had been growing at around 11 per cent YOY; and Zhaopin’s key competitor, JOBS, reported 3Q14 revenue growth of just 13 per cent YOY. The result, which was reported under A-IFRS (Australian Accounting standards), will differ to the results prepared under GAAP for its US listing. continue…
by Roger Montgomery Posted in Financial Services, Insightful Insights, Investing Education, Technology & Telecommunications, Value.able.
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Iron Ore Pricing: Where is the floor?
David Buckland
November 14, 2014
Citigroup Inc. analyst, Ivan Szpakowski has slashed his iron-ore forecast to average US$65/tonne in 2015.
Ivan is looking at the iron-ore price bottoming in the September 2015 quarter at an average US$60/tonne on the back of renewed supply growth and further demand weakness. About 140 million tonnes of export supply growth is expected in 2015, with the bulk of this coming from Rio, Vale and BHP.
When the Australian Federal Budget deficit of A$30 billion for the 2014/2015 financial year was announced in May, the iron-ore price was above US$100/tonne and few analysts could see it would decline to the current levels.
So far this calendar year, the iron-ore price has declined 44 per cent from US$131/tonne to US$74/tonne. If Ivan is right, there are further declines expected.
As we have previously noted, it is worth remembering that for decades prior to 2004, the price of iron ore traded between just US$10/tonne and US$20/tonne. The price then rallied to $187 in 2011. It has been falling ever since. Today’s experts guessing iron ore’s near term levels are the same people who failed to see the current levels materialising.
by David Buckland Posted in Energy / Resources, Insightful Insights.
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AFR: Just how good are our banks
David Buckland
November 13, 2014
The Australian Financial Review’s Jeremy Chunn published an excellent piece this week taking a look at the major banks. With full-year results for three of the four major banks delivered in the past two weeks, Jeremy asked five professional investors for their outlook on the sector. This included a London-based analyst for perspective on the value of Australian banks relative to international peers.
The Montgomery team has generated meaningful insights from our research and analysis of the banking space and the impact of the changes emanating from the Financial System Inquiry. Read the article to below to find out which bank is the stand out pick in an industry facing increasing challenges.
Click here to read the article on the AFR’s site.
Please note, you may need to be an AFR subscriber to view this article.
by David Buckland Posted in Companies, Financial Services, Insightful Insights, Montgomery News and Updates.
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Stress Testing The Banks
David Buckland
November 12, 2014
Wayne Byres, Chairman of Australian Prudential Regulation Authority (APRA) recently made a mockery of the Banks’ self-administered stress tests. continue…
by David Buckland Posted in Companies, Financial Services, Insightful Insights, Montgomery News and Updates.
