What stocks make it into the Peter Switzer Roger Montgomery portfolio?
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.
Peter
:
I have thoroughly enjoyed reading your book and putting it into
practice (especially forge group of late!).
I keep getting stuck on valuing Platinum Asset Management though. I keep getting a valuation of around $2.75 going up about 30c a year, which I know is way below yours. I use a required rate of 10% and roe 0f 60% with 38c
equity per share.
Thanks Again
Peter
Roger Montgomery
:
Hi Peter,
The ROE can sustainably be higher for a business like Platinum. I am using a higher ROE and a lower discount rate. I hope that helps.
Es
:
Roger
I note you stated you would replace BHP with two other stocks. I get a valuation on BHP of 100.5. This is based on ROE 35 %, RR 10 %, eps next year 3.574, dps next year 0.965 ( both from E trade ) and book value next year of 12.719. Have I calculated something wrong here ?. It makes sense that it would have a great value, as it has this high percentage of retained earnings and hence earns that strong multipler on table 2.
Please help
Roger Montgomery
:
Hi Es,
Your BHP valuation, doesn’t look quite right. There will be any number of Value.able graduates to help you out on this one. Don’t forget its a commodity business and commodities are cyclical. It could be a mistake to value it on cyclical high ROEs.
Wing
:
hey, my 2 cents observation and opinion.. I’m reading the FLT report at the moment, apart from the financials, I really like the idea that they put photos of their top sales staff on the report. Also, not only the photos but also let their managers wrote about how the business is performing under the Operational Review section. It tells me FLT really value and empower their staff which most of the companies would not do that.
Roger Montgomery
:
Great point WIng. True leaders empower their staff, give them a sense of ownership and build a wonderful culture. The staff have confidence to take the reins and even to make mistakes from which everyone learns and from which the business emerges even stronger. In the meantime a competitive advantage emerges.