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A lot has been written about the woes of the resources sector recently with a similar amount of energy spent trying to work out when is the right time to expect ‘mean reversion’. A simple theory that although sounds complex, really just suggests that prices and returns eventually move back towards the mean or average as time periods are extended. Given the resource sector has been a material underperformer of late, the theory suggests you should reallocate a portion of your portfolio to such businesses in the expectation (or hope) that if such an event occurs, recent underperformance will lead to outperformance.

Sounds good in theory.

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by Russell Muldoon Posted in Energy / Resources, Insightful Insights.

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“Revenue is vanity, profits are sanity and cash flow is reality”. That was a quote I heard from a very successful business man and a company I was fortunate enough to be researching in my formative years as an analyst. Thankfully, it stuck.

Poor cash management practices are the number one reason why businesses go bankrupt. Without the proper amount of cash on hand, reckless spending on unprofitable ventures or worse a business that doesn’t produce any, entities can run into trouble quicker than you think wreaking havoc on your portfolio. Continue…

by Russell Muldoon Posted in Insightful Insights.

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Previously we advised caution in investing in the education sector (see here) and noted that perhaps holders of securities in said sector may be taking on more risk than they’d first imagined (see here). Continue…

by Scott Shuttleworth Posted in Insightful Insights.

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The Federal Government is currently conducting a number of reviews into the healthcare industry. These include the Reform of the Federation White Paper, the Private Health Insurance Review, the Primary Health Care Advisory Group, and the Medicare Benefits Schedule Review. You might have seen recent media stories about an online government survey that the public can take to provide feedback on a range of issues and options for private health insurance reform. Continue…

by Stuart Jackson Posted in Health Care, Insightful Insights, Insurance.

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While I joined the speakers panel at the UBS CFO Conference in Sydney recently, several others from the Montgomery team attended the recent UBS company conference, taking notes from the presentations of many companies. The financial sector is one where we believe there is opportunity and growth and our holdings in fund managers such as Henderson, Magellan, BT Group and Challenger reflect the discovery of hitherto value in the sector as well as bright prospects. Continue…

by Roger Montgomery Posted in Insightful Insights.

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Australia’s most successful Resource service company, Monadelphous Group Limited (ASX: MND), has seen its share price decline by 75 per cent from $28.50 in February 2013 to the current $6.80. Continue…

by David Buckland Posted in Energy / Resources, Insightful Insights.

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It’s the mantra of the value investor, we should not only examine the potential returns that an investment can generate but also the potential for downside, i.e. how much of an investment could be lost and how likely is this to occur? Continue…

by Scott Shuttleworth Posted in Insightful Insights.

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We have warned many investors here and in the media about the ultimate impact on Woolworths from the increasingly successful threat of hard discounters like Aldi… Continue…

by Roger Montgomery Posted in Insightful Insights, Market Valuation.

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Earlier this week Sirtex (ASX: SRX) held its AGM and below we have noted some of the business’ highlights for 2015 and their expectations for the year ahead based on recent trading. 

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by Russell Muldoon Posted in Health Care, Insightful Insights.

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Yesterday we attended Citi Group’s ‘Fireside discussion’ with Tracey Fellows, CEO of REA Group Limited (ASX: REA).

Below we share a few noteworthy points from the conversation. Continue…

by Scott Shuttleworth Posted in Companies, Property.

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In this video Tim Kelley, highlights some uncertainty in the property market and indicates that a correction is possible. He mentions the impressive business REA Group. Watch here.

by Tim Kelley Posted in TV Appearances.

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The silence on the Montgomery blog around the Vocus Communications Limited (ASX: VOC) / M2 Group Limited (ASX: MTU) reverse acquisition was rather deafening, but as our funds are shareholders in each entity we had extensive due diligence to complete before any response could be warranted. Continue…

by Scott Shuttleworth Posted in Insightful Insights, Technology & Telecommunications.

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The S&P 500 -6.9 per cent; the Australian All Ordinaries Index -7.2 per cent; the Nikkei 225 -14.1 per cent; the MSCI Emerging Markets Index -19 per cent; the Shanghai Composite Index -28.6 per cent – it sure was a tough September 2015 Quarter. Continue…

by David Buckland Posted in Global markets, Montgomery News and Updates.

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The rewards in the stock market can be vast – why else would we spend so much time on it? But the risks can often go overlooked as we dream of retiring down at the beach tomorrow. One risk we would like to highlight is catastrophe risk. Continue…

by Scott Shuttleworth Posted in Insightful Insights, Investing Education.

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Barbara Drury writes an article about the mistakes made by the world’s most successful investor, Warren Buffett. She mentions Roger Montgomery and his experience of getting poor quickly at a young age. Read here.

by Roger Montgomery Posted in In the Press.

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In this article for the Switzer Super Report, Roger looks at the retained earnings of REA Group Limited. Read here.

by Roger Montgomery Posted in On the Internet.

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As many readers are aware, the Montgomery funds monitor the telecommunications industry on a consistent basis. With the development of the National Broadband Network over the next decade there appears to be an immense number of opportunities for valuation creation as the spend of each broadband consumer rises and the number of broadband users across Australia continues to grow. Continue…

by Scott Shuttleworth Posted in Insightful Insights, Technology & Telecommunications.

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While gold companies generally don’t meet our quality requirements at Montgomery, I thought I would nevertheless focus on a company going through a significant transformation. Evolution Mining (ASX: EVN), led by gold entrepreneur Jake Klein, has completed two significant acquisitions in recent months. Continue…

by David Buckland Posted in Energy / Resources, Insightful Insights.

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Let’s define the term ‘competitive advantage’, what does it mean? There’s unfortunately many definitions, confusing a vital tenant of investment theory. Bruce Greenwald of Columbia University defines it as “being able to do what rivals cannot.” We can extend on this in such a way to suggest that having a competitive advantage will enable a firm to earn abnormally high returns.

Interestingly, competitive advantages when defined in this light, can both be thought of as the same as barriers to entry. Continue…

by Scott Shuttleworth Posted in Consumer discretionary, Insightful Insights, Manufacturing, Market Valuation.

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For a quick recap on our last post on Veda Group Ltd (ASX: VED), readers might want to revisit our blog here and the reasons we decided to exit our holding late last year. Continue…

by Russell Muldoon Posted in Value.able.

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