• Wesfarmers shows the risk of acquisition-based growth read here

Identifying rising stars

Identifying rising stars

At Montgomery, we focus our efforts on identifying high quality companies with bright prospects. When combined with a disciplined and patient approach on buying at a discount to fair value, we believe that in the long term, these companies provide an attractive combination of stronger returns with lower than average risk.


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Stuart is the Portfolio Manager of The Montgomery [Private] Fund. Stuart joined Montgomery in 2015 after spending 19 years in research roles with JP Morgan in Australia and in New York. Stuart was appointed Executive Director at JP Morgan in 2005 and for 8 years was Deputy Head of Research. Prior to this he worked as an analyst in the Australian Equities team at Bankers Trust Asset Management for 3 years. Stuart is a CFA® charterholder.

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.


Why every investor should read Roger’s book VALUE.ABLE


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  1. In Roger Montgomery’s book, Value.able, emphasis is placed on determining the Intrinsic Value of a share and hence the business.

    2 tables are presented (Tables 11.1 & 11.2) to assist with this determination.

    No problem.

    The one column on the tables is the Return on Equity – an essential requirement for the calculation of intrinsic value.
    However the tables stop at a Return on Equity of 60%.
    What if the Return on Equity of a share is higher than 60%?

    For example, the share, Tamawood (TWD) has a Return on Equity above 70%.

    Hence the tables 11.1 and 11.2 need to list Returns on Equity above 60%.

    Is there any source available to get an extension of these tables?

    Thank you.

    M. L. Beitz.

    • Stuart Jackson

      Hi Michael,

      The tables are derived from a formula The formula is a little cumbersome to set out in this forum but suffice to say that the ratio of intrinsic value to book value increases.

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