Managing the Risks that Lurk
“Take a look out there at Port Phillip Bay. It’s so calm you could water ski across it. But who knows how big the shark is lurking just beneath the surface.” Powerfully capturing the investing backdrop of today, I would like to be able to claim these words as my very own. Or attribute them […]
Repositioning back to the US
We have recently increased our exposure to high-quality USD-denominated earnings streams and USD-denominated cash positions. This comes around six months after we increased our exposure to European assets following the result of the French election (and associated abatement of a significant tail-risk associated with a potential failure of the European Monetary Union). Informing this view […]
The most understated important thing
One area in which we believe we have demonstrated real strength is that of risk management. A topic which may sound perhaps a little mundane, we believe there are few subjects of greater importance in our line of work. We have a comprehensive risk management framework that encompasses portfolio exposures, the structure of the fund, […]
Not all revenues are created equal
Investors typically like revenue growth. This makes sense: the faster revenues grow, the faster profits typically grow. So what’s not to like? Well it turns out that some forms of revenue growth are more valuable than others. Below we examine four key drivers of revenue growth and assess the economic profitability of each. Price inflation […]
How big? (Part 3)
In the previous parts of this series we examined the factors and tools necessary to determine an appropriate position size for each individual stock idea. However, until now we have been working in a portfolio construction vacuum of sorts, treating each stock in isolation from the others. Today’s final instalment considers the broader context of […]
Misled by an (un)expected value
In a previous Montaka article on the differences between investing and gambling, the point was made that “when determining the value of any asset it is important to think probabilistically – that is, acknowledging that there are many possible outcomes that can eventuate in the future”. A thorough analysis of a business involves a consideration […]
How big? (Part 2)
In the first part of this series we explored the concept of a valuation range as the first critical input into determining an appropriate position size for a stock. As promised in the previous instalment, today’s blog will address how this input interacts with a second critical variable to form a “roadmap” that guides us […]
How Big? (Part 1)
As managers of Montaka, finding great individual investment ideas is only part of the battle. Once we have identified a stock with attractive future returns for the risks being assumed we must then determine an appropriate position size. We believe there are three key variables which should guide this decision. Today’s blog is the first […]
What makes a great short? (Part I)
In this four-part series, we will examine in detail the four specific characteristics that we think make an attractive short. The first of the four specific characteristics that we think make an attractive short candidate we call: Thematics or Structural Declines. Here, we are referring to multi-year, structural changes that we see happening – typically […]
Being wrong for the right reasons
Over the Christmas holiday period, many of you would have noticed a bombardment of advertisements for Fitbit (NYSE: FIT). Fitbit produces wearable devices that measure various health parameters such as steps walked, hours slept and even your heart rate. The idea is that such health information, once measured, can be used to better manage health […]