• Don't miss my recent interview with ABC Nightlife, where we delve into navigating market trends, the influence of Gen Z, and much more? LISTEN NOW

Latest Insight 25/09/2012

Latest Insight 25/09/2012


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.

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


find out more



  1. Friend of Foe ? – Looks like Mike Veverka from JIN in a very strategic move has demonstated Tatts, once and for all, is a friend not a foe with new reseller agreement signed with Tatts in the NT. Well done Mike !!

  2. ashley.little.581

    Just a few points on those comments Roger

    1) Why do you think my only homework on online internet sales is “Believing and then parroting CEO statements”

    Australia generally follows overseas trends so we know what the growth in online will be just by looking at what is happening in other countries overseas.

    In fact TTS may not be investment grade but they are not stupid. They appointed Mr Cooke because they are seeing the same thing as I am. The online pie is going to grow at a very nice clip indeed. My projections are lower than some and higher than others. What is your guess Roger?

    I think TTS couls have found a much better CEO than Mr Cooke but that is just my view and I hope he goes well

    2) It was well flagged by JIN that TTS was going online in 2013. Please see this ASX announcement in June 2011


    Given this annoucement I am actually suprised that you now think it’s a game changer. I would have hoped you read this annoucement before you invested in the company such a short time ago.

    3) I am a bit anal with my research so I just what to correct the statement of yours “Robbie Cook wasn’t at Tatts over the last 8 years he was at Wotif.”

    This is not true. Robbie Cooke started at WTF in 2007 so on my maths that is 5 years not the 8 as you say.

    Before that he was general councel at Unitab and work with Dick Mcilliwain who was CEO of Unitab at that time.

    Jobs for friends????????????????????

    Just a few facts and points I want to clear up


    • ashley.little.581

      I guess my point is the size of the pie is much mich more importsnt than how it is carved up.


    • ashley.little.581

      I forgot to mention that when Robbie Cooke took over as CEO of WTF ROE was circa 90% and now he is leaving it’s circa 60%.

      Hardly someone to fear as a competitor In my humble opinion.


      • You are right Ash. 60% – what a shocker. This idea of spillover (tatts won’t get all) is only true if the company is relevant to consumers. time will tell. Many of the stock’s supporters aren’t thinking at all about the dynamics of competition in business. Without having been in business they perhaps aren’t thinking like business owners with experience. This is a massive shift in the competitive dynamic and even the company didn’t anticipate this despite all the “we’re prepared” marketing (sorry ASX announcements) 16 months ago. Edited with apologies.

    • I graciously accept the correction. eight is not equal to five. Its not the thrust of the point though. But Thank you. As supermarkets grew in force (as their pie grew) their respective market shares changed dramatically. At a certain point the market share of some dominate so comprehensively that the smaller players simply aren’t viable and either get gobbled up (hopefully for JIN shareholders and Mr Cook has made references to acquisitions this week) or they go bust. In the latter case however there is Zero spillover from a growing pie and the ‘analysis’ of how big the pie could get is moot. The analysis needs therefore to be around the competitive powers of the respective players not estimating the potential size of the pie.

  3. Forgot to mention to that the benefit i see in the ROETA figure is that you are in effect bringing into the Margin of safety nearly all possible company specific risk issues including poor management decisions as write-offs and acqusitions can significantly impact ROE. This means the discount rate can be used to focus on the opportunity costs and non-company specific risk of the investment.

    Any thoughts about this or what i wrote above would be really good as there are some very intelligent investors here and i would like to hear honest thougths about this.

  4. ashley.little.581

    Hi Roger,

    The movement to TTS going online in July was well flaged.

    It has been very obviuos for a long time that TTS would promote online in future years.

    I think online will go from 7-8% to 20-25% in the next 5 years.

    Are you saying that more than 100% of this growth will go to TTS Roger?

    I don’t think so but that is what makes a market..

    JIN will get some of this.

    Your point about no longer partners is interesting. I will make 2 points

    1) TTS has been online competitor to JIN for 8 years via QLD lotteries and VIC lotteries. The resent changes are not a game changer since NSW went on line……(big deal) just like all other states.

    2) TTS have been online for a very long time but they still consider the newsagency network as their partner……………They are first risk

    You are probably right about competition longer term as when online approaches 20-25% things mat get nasty. But while they are below 10% it’s not an issue.What a waste……….. you have sold a good stock 2-3 years too early after only being in it for months or so.

    In Summary

    Given Lotteries shold go from 7-8% TO 20-30%. I would say that you have not done your homework.


    • Believing and then parroting CEO statements like “online should go from 7-8% to 20-30%” is not the result of homework. Robbie Cook wasn’t at Tatts over the last 8 years he was at Wotif. Maybe JIN grew in the absence of a worthy competitor. Nobody “knew” Robbie Cook was joining Tatts except Dick and Robbie. And in April this year when Jin discussed SA lotteries they made special mention of the “marketing Assistance with a link from salotteries.com.au” It seems they value the links Ash but Tatts have removed the link from nswlotteries.com.au. Plenty of traffic came from that link Ash. We copped a lot of flack when we told investors we didn’t like we were seeing at MCE as the cash flow deteriorated nor when we sold out. Happy to have disagreement and understand you have a position. If we are wrong we will have sold too early and sadly, we have done that before. We will make every kind of mistake before we are done. We don’t know what the price will do but we reckon the prospects are not as bright as they were for JIN and a powerful shift in the competitive landscape has changed any competitive advantages JIN might have had. Thats all.

Post your comments