Amazon Prime Day: Pay To Play?

Today, Australian shoppers are participating in one of the largest shopping events in the world – Amazon Prime Day. Whether the event can help restore Australians’ faith in the Amazon brand remains to be seen, but what we can say for certain is that Prime Day will be as lucrative for Amazon’s nascent advertising business as it is for its retail business.

Read More

If Content Is King, Where Does Spotify Stand?

Spotify, one of the world’s largest paid music streaming platforms, recently listed on the NYSE under the ticker SPOT at a valuation of $26 billion. The company, along with a handful of its competitors, are often credited with reviving the fortunes of the music industry by creating platforms on which consumers can digitally, and legally, consume music. But in a long-suffering industry where content is still king, does being the saviour make Spotify a good investment?

Read More

Do You Have The Patience To Buy And Hold?

One of the most common investment adages one hears is that “time in the market beats timing the market,” particularly when it comes to passive index investing. This advice is predicated on buying and holding – over a long period of time, the vicissitudes of the market wash out, and therefore you don’t have to worry about the initial price you pay for an index as historically, equities have always gone up over time.

Read More

The Decline Of The Overpriced Consumer Brand?

Global consumer packaged goods (CPG) companies have long leveraged their brand recognition to pursue an indiscriminate, pricing-driven growth strategy. Robust top line growth was all but certain through a mix of population growth and ever-higher prices, and cost reduction programs would drive even faster margin expansion to the benefit of the companies’ shareholders if not their consumers.

Read More

Looking For Value? Don’t Ignore The Large Caps

There is a prevalent school of thought in investing circles that since value investing is all about buying cheap stocks for less than they are worth, investors should focus their attention on small and mid-cap stocks. Many individual and professional investors alike believe that looking at large cap stocks is a waste of time because these companies are well-followed and therefore more efficiently priced, making it hard for an investor to have an edge.

Read More

Investors Vomit All Over Snap’s Earnings, Again

Evan Spiegel, the CEO of Snap Inc. (NYSE: SNAP) has proven once again that he does a better job as Facebook’s (other) Head of Product than as the chief of the “camera” company that he co-founded. Snap reported its third quarter earnings last week and once again disappointed expectations, sending the stock down as much as 20 per cent. The stock is now trading well and truly below its IPO price of $17, and serves as another stark warning against getting caught up in the IPO hype.

Read More

GE’s A La Carte Earnings Menu

Upon opening GE’s (NSYE: GE) quarterly earnings press releases, the first thing that readers see on the top half of the first page is the below image. What may strike first-time readers as unusual is that GE seems to report three different earnings per share (EPS) numbers. In fact, GE explicitly reports four different EPS numbers, hints at a fifth, and leaves prudent investors to calculate a sixth number.

Read More

Private Label Groceries To Private Label Indices

Just when we thought index investing couldn’t get any cheaper, State Street Global Advisors recently announced that it was cutting fees on fifteen exchange traded fund (ETF) products to as low as 3 basis points. This means $1 billion of funds under management generates a meagre $300,000 of management fees – hardly enough to cover the cost of licencing an index itself, let alone paying for any staff. So how does State Street, and other ETF providers, get around this little issue? Enter the proprietary index.

Read More

Can Quality Be Detrimental To Your Returns?

In the school of value investing, there are two broad investment styles: the deep value style espoused by Ben Graham, Philip Fisher and the young Warren Buffett; and the quality-biased style for which Charlie Munger and the old Warren Buffett are best known. Some investors will favour one style over the other, while other investors may prefer to mix it up. At Montgomery Global, we follow a value investing philosophy with a quality overlay, but we are very careful about how we define, assess and value “quality”, for reasons which we explain below. So, what do we mean by quality, and when can it be detrimental to performance?

Read More

Will New iPhones Solve Apple’s China Problem?

It’s no secret that the world’s most valuable company has been facing challenges in the world’s most lucrative smartphone market. Sales in Greater China, which helped drive Apple’s phenomenal sales growth in 2015, have been a drag on top line performance for the last six quarters. The big question now is whether the new iPhone 8, and particularly the new iPhone X, can turn around Apple’s fortunes in China.

Read More

Getting An Investment Edge

You’re probably familiar with financial commentators talking about an investment ‘edge’. But what is an edge, and how can an individual investor compete against the seemingly unfair advantages of the pros, algorithmic supercomputers making split-second trades, and the ‘black edge’ of insider trading? The good news is that it may be simpler than you think.

Read More

Dissatisfied Customers Will Be Key To Amazon’s Grocery Success

Amazon has been busy upending the retail sector lately. The company recently announced the acquisition of Whole Foods Market for US$13.7 billion. It also announced the launch of Prime Wardrobe, a service that allows Prime members to try on clothes before they buy. Finally, news emerged that Amazon and Nike would strike a deal for the latter to sell its iconic shoes directly on the Amazon website. These developments together have crushed the share prices of grocers, department stores, and apparel and footwear retailers. They also raise some questions – why has Amazon come full circle on brick and mortar retail, and what is Amazon’s plan?

Read More

Which Online Platforms Will Dominate The Future?

In our latest whitepaper, Andrew Macken wrote about online technology platforms. These platforms are the infrastructure upon which ecosystems are built, and we believe these businesses will dominate the future. But, like physical infrastructure, not all platforms are created equal. So, what are the traits of successful platforms, and how can investors separate the workhorses from the unicorns?

Read More

The US Now Has More Indices Than Listed Stocks

Here’s a surprising – and possibly alarming – fact.  According to Bloomberg, the US now has nearly 5,500 market indices. These indices outnumber the 4,000 or so listed US companies. The exponential rise in the number of indices has been driven by a tsunami of money pouring into “passive” investing.  Needless to say, some market commentators are getting concerned.

Read More

Looking For Value? Don’t Ignore The Large Caps

There is a prevalent school of thought in investing circles that since value investing is all about buying cheap stocks for less than they are worth, investors should focus their attention on small and mid-cap stocks. Many individual and professional investors alike believe that looking at large cap stocks is a waste of time because these companies are well-followed and therefore more efficiently priced, making it hard for an investor to have an edge.

Read More

Apple’s Other $25 Billion Business

Investors in the Montgomery Global Fund or Montaka will know that Apple (NASDAQ: AAPL) is one of our largest owned positions. For years now, we have identified Apple as an extremely high-quality business that has remained too cheap for too long. And despite putting on nearly 40% over the last nine months, we continue to believe the business is undervalued.

Read More

Is Snap Inc. Reshaping The Path To Augmented Reality?

Last week, bright yellow vending machines began appearing across the U.S. dispensing a small item to great hype: Snap Spectacles. These photo-shooting sunglasses allow wearers to record 10-second snippets of video and sync directly with the Snapchat app on their phones. This is worth following, as the manufacturer, Snap Inc., could be charting a new path towards augmented reality (‘AR’).

Read More

Two Cognitive Biases Investors Must Avoid

Recently, members of the global team have been reading Philip Tetlock’s book Superforecasting: The Art & Science of Prediction, which follows a group of “superforecasters” during a five-year forecasting tournament hosted by the U.S. intelligence community. This article summarises two cognitive biases that investors need to be aware of if they wish to become better forecasters.

Read More