Hiding in Plain Sight
“Hiding-in-plain-sight” is typically not a saying we would use to describe the accounting misperceptions we find when shorting stocks; uncovering these pearls usually requires much sleuthing. However, a new accounting rule might shed light on companies that were previously presenting their financial statements in a way that depicted a somewhat divergent representation compared to the […]
The rough seas of 2018
Choosing businesses in which to invest is, in many ways, like choosing which boat you would to take across a vast ocean. Some boats are bigger, sturdier and slower; while some are lighter, more agile and faster. But it’s not just the boat that matters. Anticipating the weather conditions is often just as important. Value […]
Mastering the Market Cycle
We recently finished reading legendary investor and founder of Oaktree Capital, Howard Marks’ latest book, Mastering the Market Cycle. While Marks’ value investment philosophy resonates with the teachings of Warren Buffett and Charlie Munger, the title of his book seems to be perpendicular to value strategies and Marks’ own teachings which discount macroeconomic factors (like cycles). […]
A misbehaving bond-substitute
For much of the last decade, many investors were lured to a particular class of equities which, as they believed, would deliver yields greater than what could be achieved in the bond markets but without taking significantly more risk. This was the environment of ultra-low interest rates which forced investors up the risk spectrum. Characterised […]
To Double-Down? Or Not to Double-Down?
Value investing teaches that when you see a dollar trading for fifty cents in the market, you should buy it. Theoretically, this will always be true. But in practice, are there times when the investor should not be so hasty? It is the marriage of risk management with investing that produces potential instances when undervalued […]
The Subconscious Mind is Not Always Our Friend
Human beings have evolved over thousands of years and while many of our automatic behaviors (“system 1”) were fundamental in keeping us alive, they can impair some of our cognitive reasoning (“system 2”) functions in the modern world. While much has been written on this topic and we sight Nobel laureate, Daniel Kahneman’s excellent work […]
Dealing with Rotation
At Montaka, we believe a little diversification makes a lot of sense; and a lot of diversification makes little sense. Through this lens, Montaka always remains somewhat globally diversified – but via a handful of concentrated clusters of exposure in areas in which we see opportunities. The table shown below illustrates this concept. It shows […]
The source of Montaka’s opportunity
Aren’t equity markets efficient? The short answer is no. And thank goodness for that – for your author would need to find a different job. By efficient, we are talking about the extent to which “price” and “value” are the same thing. We believe that price and value are two different things and can often […]
What can the Wizard of Odds teach us about investing?
Recently, I read the autobiography A Man for All Marketsby Edward Thorp, which recounts the author’s journey through the worlds of academia, gambling and Wall Street. He may not be a household name, but Thorp’s practical contributions to finance and applied probability cannot be understated. Amongst his various exploits, Thorp wrote the book on card […]
Risk Perception for the Modern Investor
“The essence of investment management is the management of risks, not the management of returns” – Benjamin Graham Investing is a commitment to a lifetime of learning. In an ever-evolving world, there are endless opportunities to improve your understanding of any subject. While personally I am still shifting up the gears as I move through […]
