Is your portfolio filled with quality and margins of safety?
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I reckon 2012 will be the year to get set and fill your portfolio with high quality businesses, demonstrating bright prospects for intrinsic value growth and a margin of safety. That will be the topic of my talk today as I kick off the ASX’s 2012 Investor Hour series. Here are the details:
Topic: Buying opportunity
When: Tuesday 21 February
Where: Wesley Conference Centre, 220 Pitt Street, Sydney (venue location)
Time: 12 noon – 1pm. Please arrive by 12.00 noon for start
Details:
The time to get interested in share investing and make good returns is precisely when everyone else isn’t. But know that the key to slowly and successfully building wealth in the sharemarket is to avoid losing money permanently.
At this event Roger will set out his principles for stock selection.
Roger Montgomery is a highly-regarded value investor, analyst and author and a regular contributor and commentator across the media. Roger is an analyst at Montgomery Investment Management Pty Ltd.
Presenter(s): Roger Montgomery, www.Skaffold.com, www.Montinvest.com
Posted by Roger Montgomery, Value.able and Skaffoldauthor and Fund Manager, 21 February 2012.
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.
alan ferguson
:
Roger, I tried out Skaffold today. Truly wonderful. It takes all the spadework out of mining all the data requred to find and compare IV’s. I only wish I had planned to stay on it longer than I did, and that I hadn’t’t wasted one of my searches on a company that had a zero value. So it goes. However, I am now left feeling like the kid with his nose up against the shop window…
Have you any thoughts on reviewing your charging structure to increase the inclusiveness of Skaffold’s user base?
Kind regards as ever Roger.
Alan.
upendra Maganti
:
Do you think still GNG is at 45% discount to intrinsic value of 2.86 after this result roger. How soon does skaffold gets reflected with the latest results. Ie does the intrinsic value changes etc
Roger Montgomery
:
Between 12 and 48 hours depending on the market cap of the company. Microcaps and nanocaps sometimes take a little longer. Fortunately, aT the half year, the most important facts that change will be the earnings estimate upgrades and these will feed into the future valuations. These change every single day. Expect, for example, to see changes flowing through to SUL and SEK and many others. Oh and you will love what the Skaffold Development Team are working on to alert you to the changes!
David
:
I beat a few to the door today in selling my GR Engineering. I am guessing that it will probably be down for the next few days as well. I am very disappointed with the result, but mainly the fact that the directors did not maintain continuous disclosure. To provide a positive outlook statement and then say a few months later that profit is going to be half of what we are used to going forward is pretty bad. Even if the company gets back on track and addresses its “margin pressures”, I will still find it hard to trust management. The last time this happened, I joined a class action against Oz Minerals. This stuff happens far too often in Australia and there is little recourse. It was a tough choice where to stick the funds – Cedar Woods, Flight Centre and Monadelphous all looked pretty good. Its amazing how some mining services businesses are shooting the lights out and others are seriously underperforming.
John C
:
Yes David – Monadelphous is in my top 5, and at the very top of my favourite mining services businesses. I’m very glad to have bought them at $14.49. FGE & MIN have serious potential too, and aren’t as fully priced as MND, but as someone else commented here recently, MIN has recently been doing more mining for themselves (as owner/operators) so it’s wise to note that transition (not to view them only as a mining services company now) and the associated additional risks (commodity price risks) that brings with it. Of the other stocks you mentioned, Cedar Woods is good value (I hold), but I’m still not sold on FLT. I think there’s some low barriers to entry into that space. I don’t like WEB either, for the same reason. I think FLT have done well, but I’m not convinced that their future (5 years out) will be so bright. It was a good report though (from Flight Centre) on Tuesday… GNG were on my watchlist, not any more after their report. Busy Week!
I’m still trying to work out what happened yesterday with ThinkSmart (TSM). The rights issue price seems reasonable, but lets see what the SP does now, especially after they suspended their dividend for this year, after most comentators and analysts had them down for a double digit dividend yield this year AND next. Let see if the new investors who drove the price up after TSM was mentioned as one of “Money” magazine’s top 5 value picks for 2012 (discussed on the Today show also) will drive the price back down just as fast by selling out after only two weeks. If ThinkSmart are going to be in good shape in a year’s time (big “IF”), there might be a buying opportunity comming up real soon… I hold TSM, but it’s not one of my bigger holdings, and I’m undecided as to how I’ll play this one – probably watch and wait for a while, unless quick decisions need to be made. It would have been better if they were renounceable rights, like Cardno’s (CDD) are, which are each trading at $1.456 (under ASX: CDDR), so I can exercise the rights (buy my extra shares) or I could sell the rights on-market (556 x $1.456 = $814.41), and have $794.46 in my pocket (after brokerge) as a little compensation for the dilution of my holding. . That’s the sort of option that would have been nice to see with TSM. Not just a use it or lose it directive on the rights ussue.
As for the future IV of TSM… Any thoughts anyone?
Cheers!
John C.
Nigel
:
It appears TSM want to keep earnings for “ongoing investment in
organic growth opportunities” (refer to page 10 of their presentation) rather than distribute as a dividend. Value.able teaches us that a company is better placed if it keeps earnings for growth rather than distribute via dividends. Given challenging times, I believe they are doing the right thing. I was a bit worried about their prospects in continental Europe, and it seems they are too, hence the decision to pull out. With a ROE of approx 20% and no debt, I’d say they have very good attributes.
John C
:
Yes, and even more so now that they are trading at their rights offer price of 35 cents, and I see people are picking up shares today at $0.345 too. I think we may have shed some of the newer shareholders that I mentioned above… I exercised my rights and bought some more TSM on-market.
David King
:
Posted today for a conference today at noon? Looking for a PR representative. Roger? l
Roger Montgomery
:
That’s exactly what would help! Fortunately it will be online too.
Argi
:
Hi Roger, is your investment hour talk of today available somewhere?
thanks
Argi,
Roger Montgomery
:
It has been recorded so we’ll post it online.
tim clare
:
some other recorded ASX Investor Hour talks are available on their website.
paul
:
Interesting to see GNG NPAT down %37 PCP and the big sell off from founding shareholders mid December.
Roger Montgomery
:
Wrote a column on exactly that subject. It will be in the next edition of Money.
William A
:
Hi Roger, hope you are well.
Speaking of quality and Margins of safety, what are your thoughts on Apple (AAPL) ?
Operating margins, Net Profit margins, ROE & ROA are all looking good, however I am having difficulty in valuing the company and forecasting what the future ROE and ROA will look like 3, 5, 10 years down the track.
Can you start a discussion on this? Its been around a year since you touch base on AAPL .
Thanks Roger
Roger Montgomery
:
Ok. Good idea. Will have to be after reporting season ends.
Andrew
:
I will have to keep an eye out and try to make it to one of these in Sydney one day Roger. It’s been a while since i have had the chance to see you in action and found your last one very important to my development. It was the day actually i decided to investigate this value investing thing.
Completley agree with your comment about the best time to get into the market. It may seem all kinds of wrong logically especially for the beginning investor, but as long as you get into very high quality companies than the worst times prevent the best opportunities.