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What’s the Big Advantage in a high return on equity?

What’s the Big Advantage in a high return on equity?

In the May 2012 edition of the ASX Investor Update Email Newsletter, Roger Montgomery outlines his Value.able framework for successfully investing in the share market. Read here.

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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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2 Comments

  1. John Asked:

    “Roger,

    How will you handle/adjust ROE for the following 3 different scenarios for the purpose of assessing (a) their competitive advantage and (b) the value of their future growth?

    (1) A company with a large part of its assets in goodwill

    (2) A company with a large part of its assets in goodwill
    and the company has been growing by acquisitions.

    (3) A service-based company (e.g. accounting, IT services) which isn’t capital intensive. (The “human capital” is not on the book.)”

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