Investing Education

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

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Credit Corp (ASX:CCP) has just reported their FY12 results, announcing a NPAT of $26.6m versus market forecasts and company guidance of $25-28m.

The company increased its 2H12 dividend to 16 cps and most analysts were expecting 15 cps forecast. The 16 cent dividend takes the full year dividend to 29 cents, which is 45% higher on the previous year.  The company has talked down the forthcoming year and cited increasing competition resulting in higher ledger purchases.  Investors need to accept this at face value rather than continuing to assume the company will upgrade again at the next half year (as they have done consistently in the past).  FY13 guidance for NPAT is $27-29m and DPS of 29-32 cps.  Based on an estimated 50% payout and an estimated 22% ROE our valuation is further estimated (estimated being the operative word here) to remain well above the current price.  The comments here are for educational purposes only and not a recommendation.  Be sure to seek and take personal financial advice prior to engaging in any securities transactions.

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

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Over the next 20 business days, approximately 1,250 ASX listed companies will be reporting their full year (or interim) results to 30 June, 2012.

Twelve months ago, the consensus forecast for the year to 30 June 2012, was for 20% growth in earnings per share.

Over the past twelve months that number has been progressively downgraded to nil, nought, nothing.

For the year to 30 June 2013, the consensus forecast currently stands at 15% growth in earnings per share.

Insights from the outlook statements will be interesting and it wouldn’t surprise us to see consensus earnings per share growth forecasts for the year to June 2013 to follow the same downtrend as those for the year to June 2012.

At Montgomery, we will be using our proprietary fact-based investment process to analyse the results.

We hope this reporting season will alert us to some new companies which own extraordinary businesses trading at a discount to their estimated intrinsic value.

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

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