Thinking About An Autonomous Future

Autonomous vehicles and the evolution of Transport as a Service (TaaS) are topics that we have spent a significant amount of time thinking (and writing) about in the past year or so. We see these developments as having a profound impact in many industries and have begun to remove from our portfolios businesses that we see as being on the wrong side of them.

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What Kind Of Investor Are You?

One of the features of active equity investing is its zero-sum nature (in aggregate). By that, I mean that when an investor “beats” the market, some other investor must get beaten. Averages being what they are, there needs to be an equal representation of investors who deliver above average performance and investors who deliver below average performance.

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Is Bitcoin A Rational Investment?

Bitcoin has enjoyed an extraordinary surge in both value and public attention recently. The chart below maps the rise in the price of a Bitcoin in USD over the last few years, and a similar chart could probably be plotted for the number of column inches, the number of internet searches and the number of experts confidently proclaiming it to be either a speculative bubble, or the gold of the future.

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Does It Make Sense To Own Wesfarmers?

Followers of our blog may raise an eyebrow at the sight of Wesfarmers (ASX: WES) recently finding its way into the top ten holdings in The Montgomery Fund. Over the years, we have written various articles on the headwinds facing the Australian supermarket industry, with a particular focus on the rise of discounters like Aldi, and more recently we have observed that Woolworths has taken steps to reverse a long trend of weak like-for-like sales performance, and begun to retake market share.

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Why We Think BWX Is Worth Watching

A little-known company we hold is BWX Limited.  This small Melbourne-based company owns a range of skin and hair care brands.  It also manufactures cosmetics for third parties.  Shares in BWX began trading on the ASX in November 2015 at $2.12.  They have doubled since then, and we think there’s more good news ahead.

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Reviewing Isentia

As many investors have noted, iSentia Limited (ASX: ISD) delivered a poor earnings announcement yesterday. The Montgomery Fund and Montgomery [Private] Fund both hold positions in ISD, and so this is clearly disappointing for us.  The combined holdings amounted to less than 2% of the assets in those Funds before the announcement, so the damage was contained, but nonetheless, disappointing.

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Can A Machine Read Company Announcements?

Regular readers will know that our investment process takes advantage of quantitative analysis to identify potentially interesting investment opportunities.  To do this analysis, we “train” a computer model to distinguish between strong and weak investment candidates using historical data, and then apply the resulting model to try to try to identify tomorrow’s successful investments. 

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Quality Inversion

The Australian equity market has been unfriendly to our style of investing recently.  We knew before we stepped onto the field that there would be years when we generated very large excess returns and years when we would suffer, but even when you know they will happen, the bad years are always painful when they occur.

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Why We Steer Clear Of Hockey-Stick Forecasts

At Montgomery, our investment approach is strongly evidence based.  We look for quality businesses with a history of positive earnings, and we steer away from those with negative earnings even when there is a ‘great turnaround story’ to tell. It means we sometimes miss out on making super-normal gains.  But, more often, it means we avoid being disappointed when a hockey-stick forecast falls flat.

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How To Assess JB Hi-Fi

The recent move by JB Hi-Fi (JBH:ASX) to acquire The Good Guys has a lot of investors excited. Largely, it seems, because the tie-up will help consolidate the retailer’s pricing power in an already concentrated industry. But while we’re happy to shop there, we’re not yet convinced JBH meets our investment criteria.

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