– Andrew Macken & Chris Demasi
We’ve seen a continuation of short-term equity market unpredictability over recent weeks. While this is ever present, for sure, it’s exacerbated by the modus operandi of the new Trump Administration.
Dispersion has also returned between stocks and sectors. While Materials declined by nearly 5 percent in February, for example, Utilities increased by nearly 4 percent.
Even within Montaka’s portfolio, KKR and Alphabet declined by approximately 20 percent, while Tencent increased by approximately 20 percent. Yet despite some large monthly stock price swings, the underlying fundamentals of Montaka’s investee company remain strong and highly-attractive on a forward-looking basis. We have been delighted by the quarterly earnings and disclosures provided by our companies over recent weeks.
Montaka’s assessment of long-term value remains anchored to the quality and long-term trajectory of investee company earnings power and free cash flow generation. Short-term deviations in stock prices tell us nothing about long-term value – but they do offer us tactical opportunities to buy and sell, based on updated assessments of risk/reward.
Speaking of long-term value, in Amazon’s Hidden Flywheel: Robotics Revolution, Lachlan shares a fascinating essay on Amazon’s emerging robotics business that is significantly driving down its retail fulfillment costs, while speeding up its delivery times. This is yet another ‘flywheel’ within the Amazon portfolio that is creating a better customer experience, access to new retail categories, and greater value for shareholders. And it’s only just getting started.
In Invest in Better Businesses in Better Neighborhoods, Andy reflects on the similarities between Blackstone’s evolution as an investor, and Montaka’s. Both have transitioned over time to high-conviction investors looking for “better businesses in better places”. In this essay, Andy shares how Montaka identifies opportunities by starting in the best “neighbourhoods” and filtering down to undervalued, advantaged companies well positioned within.
Finally, in this month’s Spotlight Series podcast, Chris interviews Andy about Montaka’s recent whitepaper titled: Unveiling Hidden Value: How 3 distortions mask the true worth of ‘advantaged’ stocks. They explore how standard company valuation multiples can so easily be distorted by (i) R&D expenses, (ii) future growth, and (iii) different capital intensities off growth. They share how, by making a few adjustments for these distortions, certain businesses with valuation multiples that appear high at first, such as Meta, Amazon, and Blackstone, are actually reasonably priced, in our view.
Sincerely,
Andrew Macken & Chris Demasi
Podcast: Join the Montaka Global Investments team on Spotify as we share real-time examples and investing tips that govern our stockpicks. Click below to listen. Alternatively, click on this link: https://podcasters.spotify.com/pod/show/montaka
Note: Montaka is invested in ServiceNow & Salesforce.
Andrew Macken is the Chief Investment Officer & Chris Demasi is the Portfolio Manager at Montaka Global Investments.
Update from the PMs – March 2025
– Andrew Macken & Chris Demasi
We’ve seen a continuation of short-term equity market unpredictability over recent weeks. While this is ever present, for sure, it’s exacerbated by the modus operandi of the new Trump Administration.
Dispersion has also returned between stocks and sectors. While Materials declined by nearly 5 percent in February, for example, Utilities increased by nearly 4 percent.
Even within Montaka’s portfolio, KKR and Alphabet declined by approximately 20 percent, while Tencent increased by approximately 20 percent. Yet despite some large monthly stock price swings, the underlying fundamentals of Montaka’s investee company remain strong and highly-attractive on a forward-looking basis. We have been delighted by the quarterly earnings and disclosures provided by our companies over recent weeks.
Montaka’s assessment of long-term value remains anchored to the quality and long-term trajectory of investee company earnings power and free cash flow generation. Short-term deviations in stock prices tell us nothing about long-term value – but they do offer us tactical opportunities to buy and sell, based on updated assessments of risk/reward.
Speaking of long-term value, in Amazon’s Hidden Flywheel: Robotics Revolution, Lachlan shares a fascinating essay on Amazon’s emerging robotics business that is significantly driving down its retail fulfillment costs, while speeding up its delivery times. This is yet another ‘flywheel’ within the Amazon portfolio that is creating a better customer experience, access to new retail categories, and greater value for shareholders. And it’s only just getting started.
In Invest in Better Businesses in Better Neighborhoods, Andy reflects on the similarities between Blackstone’s evolution as an investor, and Montaka’s. Both have transitioned over time to high-conviction investors looking for “better businesses in better places”. In this essay, Andy shares how Montaka identifies opportunities by starting in the best “neighbourhoods” and filtering down to undervalued, advantaged companies well positioned within.
Finally, in this month’s Spotlight Series podcast, Chris interviews Andy about Montaka’s recent whitepaper titled: Unveiling Hidden Value: How 3 distortions mask the true worth of ‘advantaged’ stocks. They explore how standard company valuation multiples can so easily be distorted by (i) R&D expenses, (ii) future growth, and (iii) different capital intensities off growth. They share how, by making a few adjustments for these distortions, certain businesses with valuation multiples that appear high at first, such as Meta, Amazon, and Blackstone, are actually reasonably priced, in our view.
Sincerely,
Andrew Macken & Chris Demasi
Podcast: Join the Montaka Global Investments team on Spotify as we share real-time examples and investing tips that govern our stockpicks. Click below to listen. Alternatively, click on this link: https://podcasters.spotify.com/pod/show/montaka
Note: Montaka is invested in ServiceNow & Salesforce.
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