Investing Education

Roger Montgomery discusses his insights into how to view takeover offers, and in particular he discusses the Sundance Resources (SDL) takeover bid with Ross Greenwood on Radio 2GB.  Listen here.

This program was broadcast 19 September 2012.

by Roger Montgomery Posted in Insightful Insights, Investing Education, Radio.

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Join Roger as he explains how the long-standing principles of value investing can be applied so that you too can identify A1 businesses for your portfolio and beat the index. Watch here.

by Roger Montgomery Posted in Insightful Insights, Intrinsic Value, Investing Education, Market Valuation.

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Did you know that the market capitalisation of Apple Inc. is now more than the entire equity markets of Spain, Portugal, Ireland and Greece combined? Its stunning. Surely Forrest Gump from Greenbow Alabama would be writing to Jenny with much enthusiasm. But what about its intrinsic value? Back in 2010 (http://rogermontgomery.com/is-apple-an-a1/) I wrote that Apple’s intrinsic value was higher than the share price at the time. The table below first published in July 2010 reveals the company’s pattern of rising intrinsic values. back then the price was indeed showing a small margin of safety.

A couple of blog readers have subsequently told me they purchased Apple shares and obviously they have done nicely. But what about today?

Only last year, when the share price hit $600 I wrote that I thought price had run ahead of intrinsic value (but not forecast intrinsic value) and the share price subsequently fell slightly. We also noted declining margins and market shares losses. But improving quarterly results and rising forecasts means revisions have resulted in IV estimates continuing their stellar rise so a revisit of our assumptions might be worth our time.

The graph below reveals that our ‘revised’ back-of-the-envelope intrinsic value estimate for Apple is forging ahead. If you are confident that Apple’s pipeline of products will usurp the competition, take back market share and fill Apple’s coffers towards 1000 billion dollars and that the iPhone 5 – expected to be revealed this week – will knock everyone’s socks off, then the massive rises in intrinsic value, might not seem so extreme.

Of course all intrinsic values are just estimates and while our haven’t done too badly for us – we’ve been spot on with BHP at $30 and done well on others – the reality is they can change dramatically as new information comes to hand.

So lets keep an eye on whether Apple impresses this week with its new release.

by Roger Montgomery Posted in Insightful Insights, Investing Education, Market Valuation, Value.able.

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One of the constants of the last 10 years is market commentators saying that “this time is different” – we believe that the principles of of value investing  never change, and Roger articulates the reasons why in this interview with Ticky Fullerton (and Marcus Padley!) on ABC1’s The Business, broadcast 7 September 2012.  Watch here.

by Roger Montgomery Posted in Insightful Insights, Intrinsic Value, Investing Education, TV Appearances.

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“Follow the steps outlined in Value.able, and I believe that over the long run, you cannot help but beat the market.”

The stock market can be richly rewarding and the broad market indices relatively simple to beat over time but you must first discover the steps to identifying the very best stocks and the steps to buying them for less than they’re worth.  Value.able invites you to not only discover and master the steps to successful value investing but to also hear and watch how Roger Montgomery applies the steps to identifying the best stocks and avoiding the worst with stunning audiovisual clips and screencasts from his own trading screen and using the software he invented.

Using this visually rich and captivating premium version of Montgomery’s best seller will entertain, engage, educate and enrich through all of the stock market’s trials and tribulations.

by Roger Montgomery Posted in Insightful Insights, Investing Education, Value.able.

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Last night the US markets rallied. There was no good news. In fact the reason for the rally was that the US economy was floundering. A floundering economy means more stimulus and stimulus is good because it should eventually lead to a better economy.

In other words an unhealthy patient is about to receive another sugar hit which might make them better. Buy!

Clearly the irony was not lost on traders of Fortescue shares this morning. FMG’s share price rallied several percent on the open in response to FMG’s announcement that it will significantly cut back on capex and production targets. Apparently, investors in a pure play iron ore company are pleased that the company will be less exposed to iron ore. Evidently the company is worth more if it does less. Taken to its extreme, it worth the most if it does nothing.

We believe that over the long term, equity markets work effectively as a weighing machine. In the short term, however, they can sometimes seem a little odd – and thats putting it mildly!

Stay tuned we are cooking something mind boggling about FMG and its peers…

by Roger Montgomery Posted in Energy / Resources, Insightful Insights, Investing Education.

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Portfolio point:  Reporting season is in full swing and there have been some excellent results.  We always watch GWA because it’s a company that has the potential to regain its crown but the 2012 results didn’t inspire.

GWA is a leader in the design, manufacture, import and distribution of bathroom & kitchen products, door and access systems, and heating & cooling products. Brand names of these three core building fixtures and fittings divisions include Caroma, Dorf, Fower, Brivis, Dux, Gainsborough and Trilock.  Analysis of virtually every financial measure over the past five years has seen GWA demonstrate bond like qualities.

continue…

by Roger Montgomery Posted in Companies, Intrinsic Value, Investing Education, Manufacturing.

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Over the past week more than 100 companies have reported their full year results. These results have begun to flow through Skaffold, resulting in the changes listed below for each company. A membership to Skaffold ensures you are constantly up to date with changes to the quality and valuations of every Australian listed company.

To become a Skaffold member and start taking advantage of market inefficiencies that may transpire during reporting season CLICK HERE

And here’s a list of the elements in Skaffold that change automatically as companies report:

1. Earnings and Dividends, Capital History and Cash Flow Evaluate screens updated with 2012 figures
2. New 2012 Skaffold Score
3. 2012 Intrinsic Value – Actual
4. 2013, 2014 and 2015 Intrinsic Value forecasts
continue…

by Roger Montgomery Posted in Companies, Investing Education, Market Valuation, Skaffold.

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Roger Montgomery discusses his insights into the perfromacne of Fund Managers on behalf of investors, and the implications of poor fund performance on pensioners in this discussion with Ross Greenwood on Radio 2GB broadcast on 15 August 2012.  Listen here.

by Roger Montgomery Posted in Insightful Insights, Investing Education, Radio.

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Many believe that understanding economics is the key to being able to predict the stock market.  Curiously the Chinese economy is growing the fastest of all economies and is variously described as the global growth engine.  And the Chinese ripples positively impact many peripheral economies too, as my recent visits to Singapore have shown me.

Meanwhile the US economy is in the doldrums, threatening to fall into another recession with anemic growth, stubbornly high unemployment and continued weakness in housing.

And yet the Chinese market as measured by the Shanghai Stock Exchange A Share index remains 65% below its high of 6391.98 in October 2007.  Perhaps ironically the S&P500 made its high of $1565.42 on October 10, 2007 and today it sits just 11% below that.  If the Total Return index is taken into account, its sits level or just above its 2007 highs.

So all that chatter about recessions, depressions, unemployment and the like counts for very little.  How many children are suffering needlessly because the money spent on economists isn’t directed to the kids?

What we do know is that investors should be looking at individual companies.  Or talking to people on the ground.  In China, balance sheets are deteriorating as receivables blow out while in the US, of the 411 companies listed on the S&P 500 that have reported earnings so far this quarter, 297 have exceeded analysts’ estimates, while less than 110 have missed their forecasts.  And as many of our travelling clients have informed us, things seem to be swimming along in the US.

Keep an eye on individual companies and you’ll go far.  So don’t worry about whether you should say Go Australia or not.  We say Go ARB, Go WOW, Go CCP, Go COH and Go CSL!

by Roger Montgomery Posted in Insightful Insights, Investing Education, Market Valuation.

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