Where to find the best returns for 2017
Humans are notoriously bad at picking turning points. We tend to believe the future will look like the recent past. That’s why so many investors make decisions about the future by looking in the rear view mirror. However, I believe the best returns over the next few years will come from buying high quality, high growth companies – many of which are now at beaten-down prices.
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.
John
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WIth higher US interest rates likely QBE Will benefit earnings wise
Andrew Mckenzie
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Hi Roger,
I know that Montogomery has liked Sirtex in the past. I was wondering if that is another company you expect to bounce back in 2017 or do you think they have bigger underlying problems?
David Buckland
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Hi Andrew,
I am writing on behalf of Roger Montgomery, who is on annual leave for the rest of January 2017.
Sirtex is a company we are looking for a good bounce from in 2017.
We believe the low dosage growth now expected to be reported for the December 2016 half-year is temporary.
Furthermore, the results from the 1,340 person trial – to be released in the next few months – could be transformational for the Company.
For example, if this is successful, the ability to opening up Sir-Spheres to first line treat (rather than salvage setting) is a market which is at least 5 times larger.
Thank you.
Adam Weeks
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Noticed that the Montgomery team had added the fantastic BWX to the funds.
Another well managed and under appreciated company by the market.
Done the homework on this one and I am already a holder and accumulating on weakness.
Looking forward to an update by the team on this one.
Adam Weeks
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Hi Roger. What about Altium also, sold down from highs.? I have recently added Healthscope to my long term portfolio and I also like the company CBL. A business that seems to fly under the radar of most investors. Is it business that the Montgomery team are interested in. ??
I am not a holder but it looks on the surface a well run and very profitable business.
Roger Montgomery
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Hi Adam, we have previously owned this insurer to the french building industry. For a fund like us, liquidity remains the primary issue in respect of CBL. The company is tightly held and trading volumes have been very low relative to market capitalisation.
stephen colless
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Be sure you put your feet in the right place. Then stand firm.
steven
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Hello
Just from a recent experience of instead of using the carsales website deciding to give gumtree
a try first. I sold my vehicle in 2 days for free, most of the other gumtree ads for my vehicle were for vehicles from dealers, why would the carsales website be preferred ?
Andrew
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Hi Roger,
What impact (if any) do you think the economic downturn in WA will affect the east coast? My second question is if Australia is facing economic headwinds has Montgomery increased its focus on those ASX listed companies with higher levels of exposure to overseas customers (I.e. rather than pure domestic)?
Roger Montgomery
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Hi Andrew, Some things are obvious (housing construction activity weakening, for example, in the next 18-24 months). Generally however, macroeconomics is very difficult to predict and even harder to invest on the back of. Peter Lynch once said if you spend 13 minutes a year on macroeconomics, you’ve wasted ten.
Joel Williams
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“I also fear for investors who have share portfolios filled with large cap companies like the banks, BHP and RIO, Telstra, Woolies and Wesfarmers. Things may look good ‘so far’ but things also look good for the man who has jumped from the roof of a building and is passing the 20th floor…
iSentia has declined more than 30 per cent in the last month as has APN Outdoor and Vita Group. Healthscope has fallen 32 per cent from a high of $3.14 to a low of $2.15, REA Group and Carsales are down 27 per cent and 28 per cent respectively from their highs.”
Hi Roger, I find it difficult to understand your ‘man who has jumped from the roof’ analogy. You say that “Now, you can see these sell offs as risk”, but unfortunately I see them as having decimated the value of my portfolio.
In the meantime, NAB and BHP have powered forward though sadly haven’t managed to offset the other losses. NAB has also been providing large dividends in the meantime, putting cold hard cash back into my pocket. With respect, have you considered that your investment philosophy may be off the mark with refusing no matter what to touch the likes of BHP when it’s share price has almost doubled this year? I really hope you’re right and there’s a massive turnaround with the above shares that you’ve spoken positively about.
Roger Montgomery
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Hi Joel, It would be wise to revisit the sentiment towards the very same investment philosophy during the tech boom of 2000. Here’s an interest quote from Janet Lowe’s Book: “In the last years of the twentieth century, Berkshire ’ s price nose – dived, kicked off the diving board by investors’ irrational exuberance over anything technology or Internet related, problems with the General Re acquisition, rumors of Buffett’s ill health and his inability to live up to his past brilliance. In mid – 1998, Berkshire was selling at a high of $80,000; by March 2000, it was selling for almost half that much. Buffett wrote in the 2001 annual report: “ Here ’ s one for those who enjoy an odd coincidence: The Great Bubble ended on March 10, 2000 (though we didn’t realize that fact until some months later). On that day, the NASDAQ (recently 1,731) hit its all – time high of 5,132. That same day, Berkshire shares traded
at $40,800, their lowest price since mid – 1997.” Further I have previously (in 2010) warned investors about using this blog as a source of ‘tips’; see http://rogermontgomery.com/is-the-tv-your-investment-strategy/
.
Charlie Dalziell
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I love the Magnificent 7 so much more than the 4 horsemen.
https://www.youtube.com/watch?v=V7GP3l5znc8
Roger Montgomery
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Nicely found Charlie!
Shaishav Patel
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QBE will be exception in this maybe. Reason being that it has large portfolio of cash they invest in bonds and bonds are raising so increases there earning prospective. So good stock to leverage against raising interest rate. New it when it was trading below 10 to added more.