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SMSF – Your questions answered – Roger Montgomery’s stock tips for your self-managed super fund

In the Press, Media Room | Comments (15)

SMSF – Your questions answered – Roger Montgomery’s stock tips for your self-managed super fund

Which stocks are the best bet for your self-managed super fund? Independent investment expert and Switzer regular Roger Montgomery shares his super fund strategies for long-term investors. Read article at www.switzer.com.au.

INVEST WITH MONTGOMERY

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.

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15 Comments

  1. Ron F
    :

    Hi Roger
    I just posted my answers for the homework that you kindly setup for us. That was my actual first posting since purchasing your book last August.
    I thought I needed to post a separate posting from the homework, because I believe it is justified. But I am not sure how to post a new blog unrelated to the latest postings, so please excuse me if I have gone out of whack.
    Although last year was a hectic one, I did fine time to read your posts and some of the blogs posted by other investors.
    I forgot to wish you and all the other fellow investors a Merry Christmas, which was rather poor of me, not do so. I do hope you and everyone had a wonderful Christmas and I hope the New Year will be a happy and successful one for everyone….And if anyone of you has been affected by the floods, I am thinking of you. The rest of us can help by donating generously to help them get their lives back on track as quick as possible and not forgetting all the other people that have also been affected.
    Roger, I can’t thank you enough for writing the book. You have written it in simple understandable layman terms passing on an immense amount of knowledge that has changed many people’s lives.
    The book is so aptly named Value.able. In addition to the book I think it is also very generous of you to write subjects of more examples of value investing on your website, and allowing us all to contribute to it. In short, the website valuably serves as a backup to test our understanding of your teachings that enriches us all.
    For all of us who purchased your book for only just $49.95, if you don’t mind saying so, I think the book and your website should be also known as “Invaluable” as one cannot put a price on it when taking the book and site into consideration, plus also taking into account your intrinsic values you listed for us for Companies, especially Matrix, Forges and others. That gave us valuable opportunities to invest in them for a significant return.
    I cannot thank you enough Roger….Also please pass on my thanks to Alan Kholer, Peter Switzer and the others at Sky Business Channel for allowing you to replay the interviews and to post subjects you wrote for them.
    If I may, I would to take this opportunity to say many thanks to all others who have contributed to site, and it would be remiss of me not to pass on a special thanks to the Graduates who have put in a big effort to help the Undergraduates which includes me.
    Hopefully, this year I can also contribute to providing some worthwhile posts.
    Regards
    Ron F

  2. Graham Bailey
    :

    Gday Roger, I bought your book last year. Also Roger during the GFC my super and my wife’s super lost over 50% but has recovered somewhat but still down about 25% on 2007.
    Both our Super Policies are with Colonial First State but I am considering transferring our Super to a SMSF and then use your book to identify A1 or A2 stocks on the sharemarket to invest in. It is a little hard to convince my wife to do this but I would like to take control of my own super. Do you see going into a SMSF as a good idea or?? Also I would imagine that I would have to open a separate SMSF for both myself and my wife.

    • Ben
      :

      Hi Graham

      In response to your SMSF question, you would not need a separate SMSF for yourself and your wife. You can both be members of the same SMSF.

      In terms of making the decision to start an SMSF you might want to consider the responsilibities involved as a Trustee (not insubstantial), as well as the costs of setup and annual accounting and audit fees (circa $3,000 pa).

      A $100,000 SMSF earning 10% pa would have that 10% return eaten by tax (up to $1,500), inflation ($3,000 assuming 3%), and fees (say $3,000), leaving a net return of $2,500 or 2.5%.

      A $200,000 SMSF with the same assumptions ($20,000 return, less $3,000 tax, less $6,000 inflation, less $3,000 fees) would have a net return of $8,000 or 4%. Perhaps some food for thought…

  3. William
    :

    Thanks for the confirmation Fred.

    CGF’s has nil recourse corporate debt. Its balance sheet should be looked at as an investment bank hence in my view the 700% + in debt to equity is somewhat misleading given the nature of its business.

    Could be worth looking in more detail for the astute Roger Montgomery followers.

    Would love to get Rogers view on this one!!!

  4. fred
    :

    Hi William,

    Regarding Challenger Limited ( CGF ) you are closer to the mark then me but the debt/equity ratio is to high for me.

    Thank’s

  5. William
    :

    Hi Fred/Room

    Thats interesting as for (ASX: CGF) Challenger Financial Group I got closer to $5.60 for FY11 est EPS 46cps?

    Possibly can other verify what they got for an estiamted FY 11?

    Please remember one must not use euqity of $1.34bn as you dont want to include the non-controlling interests.

  6. Ash Little
    :

    yep William I agree well done Ken

    But is is equally important to consider the future not the past.

    As WB say

    In the business world, the rearview mirror is always clearer than the windshield

    We are looking though the windshield………..The rearview mirror may not reflect the future

  8. William
    :

    Dear Roger

    I hope you are having an enjoyable Christmas & New Years break.

    I need your help with this one!!!

    Obviously to fundamentally work out the Intrinsic value of any enterprise, one must use the correct ROE figure!!!

    A stock I need help with is Challenger Financial Group (ASX: CGF). According to ComSec, their FY10 ROE was at 17.4%. However, having dwelled further into their balance sheet, I saw that Challenger carries $380.1m in Non-Controlling interests (Due to sale of their mortgage business in 2009. Obviously ComSec (& analysts for that matter) excluded this amount in working out their ROE figure.

    The fundamental question I have Roger is should we do the same and exclude this $380.1m in non-controlling interests when working out Challengers ROE? Because if one were to include it, ROE would be 13.55% on Net Equity of $1.72bn VS 17.4% on Net Equity of $1.34bn.

    So in a nutshell, companies who have a significant amount of equity in Non-controlling interest on their balance sheet, should one include this in their ROE figure?

  9. ken fraser
    :

    Duncan, I find it`s a lot simpler and less time consuming if I just concentrate on companies that have a consistently high ROE for the last 3 or 4 years. Ken.

  10. fred
    :

    Hi Duncan,

    Only had a quick look @ IMD! It looks similar to DOW .

    I use to buy company’s like DOW before value-able and now I don’t.

    I hope that helps Duncan.

  11. fred
    :

    Hi room,

    2010 was a very tough as far as knowing how to invest, at the start of the year I started heading in the right direction but just couldn’t put it together, I was lost. Then I found Roger and the jig saw fell together. I have had a nice break and now it’s time to work.

    Thank’s for all your help always Roger.

  12. Duncan
    :

    Happy New year all

    just had a quick look at Imdex IMD. the fiancials look very adverage upto now but the eps growth looks huge for the coming years. They provide drilling fluids and technical services to the LNG companies. it has had a good run and is expensive to current value. To be honest i’m too hot on valuing for up coming years so i think my figures are wrong. Have any of you had a look at this one? Another one is Mastermyne which i haven’t looked at but supposedly has excellent prospects.

    cheers for now
    Dunc

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