Is valuation important?
Recently, I read a post by John Hempton on the Bronte Capital blog which concerned the topic of valuation as a component of investment analysis. The position advanced by Hempton was that valuation (a buy and a sell price) was not necessary for each and every stock in one’s portfolio, on the premise that such […]
Can you lose on purpose?
Despite the best efforts of money managers to apply skill to the stock picking process, the success of any investment will always be driven by both skill and luck. The proportion of skill and luck determining an investment outcome, however, is constantly changing. More accurately, the role luck plays in the success of an investment […]
As we start 2017…
Happy new year! Welcome to Montaka in 2017. As we say goodbye to 2016 and begin a new calendar year, it is worth reviewing what markets delivered over the last 366 days and how this compared to our expectations exactly one year ago. First the score sheet: the MSCI TR Index (the “global market”) delivered […]
Accounting for true motivations
Readers of this blog will know that we will never tire of discovering new instances of accounting trickery. We see it time and time again in the corporate world. CEOs and CFOs become masters in presenting the numbers of their businesses in ways that, all too often, create a better perception of the underlying economics […]
Dealing with the Margin of Danger (Part II)
How can investors deal with the margin of danger? The important thing for investors to accept is that the margin of danger comes hand in hand with the margin of safety. This means that we can never completely remove the margin of danger, but can only minimize the probability of the intrinsic value estimate being […]
What do we think about Europe?
The following is a transcript from a recent interview of Montaka’s Andrew Macken by an Australian journalist. What are the possible market-friendly political scenarios? The friendliest scenarios for markets are those in which right-leaning Euro-skeptic political parties or leaders do NOT come to power in major European nations such as Germany, France or Italy. Or said another way, […]
Dealing with the Margin of Danger (Part I)
Most investors are familiar with the margin of safety. Coined by Ben Graham and popularized by his disciples, margin of safety is the idea that you should buy a stock for less than your estimate of its intrinsic value. The bigger the difference between price and your estimate of intrinsic value, the more leeway you […]
Has Trump changed the game?
We have received a number of questions around our views on Donald Trump’s surprise victory in the recent US general election. While many are sick and tired of hearing about Trump, there are important aspects to consider from a portfolio management perspective. We outline our framing of the situation below and illustrate how our views […]
Earnings growth: the good, the bad, and the ugly
Imagine a hypothetical company that is able to grow its earnings by 20% each year. At this rate of earnings growth, $100 of earnings will increase to $250 in just 5 years. This is a fantastic rate of earnings growth, but is this company a good business? The answer is “maybe”, and to arrive at […]
Millennials are different and they matter
Much is written about the millennial generation these days. While members of alternative generations might not see what all the fuss is about, you should most definitely pay attention if you are an investor looking for opportunity. You see, millennials are not like other generations; and millennials – by virtue of their age – are […]
