Students of Roger Montgomery's (Buffett's) intrinsic valuation method

[VSntchr]

I find it funny that all this criticism comes out once the market starts crashing!

Anyone who gets as big in the investing world (well, the local investing world) is bound to have their critics.

Like ROE states, he hasn't really come up with anything new. What he has done is show people the basics of value investing and given them some of the skills required to begin researching companies.

Yeah he has made a lot of money while doing this, but I know I'd do the same given the chance.

He has given quite alot of people at least a better understanding of what is involved in selecting companies and at what price....which is far more than what alot of spruikers out there have done

 

[McLovin]

I find it funny that all this criticism comes out once the market starts crashing!

If you think this is the market crashing, wait 'til you see the market crashing!

 

[Intrinsic Value]

After seeing the interest in Roger Montgomery on this thread, I listened to him speaking on "Your Money, Your Call" in March/April and two stocks he had interest in were Forge Group and Matrix CE. They had run a long way and as it turns out they had peaked.

These companies may come back and longer term the pull back could be a great buy but geez, buying in their infancy from ones own research is surely more rewarding than chasing them after a considerable run up.

To be fair to RM he was spruiking FGE and MCE when they were around 2 dollars and 3.40 respectively so even with the big pullback that has affected most of the market they are still substantially higher.

And in the long term they may go back to much higher levels. I think MCE is a better long term play than FGE but FGE still looks good at current buy levels. I think they are reporting next week and MCE towards late August so should get a better picture then.

 

[kreagh]

I believe its only a demo. It shows the vast majority of share purchases as being on the 30 june 2010, so i dont really know how much you could take from the results of what is just a demo account. last update i can find was for jun 15.

I cant seem to copy any of the information over.

But for 2010 it says ROI of 27.59%
2011 = 9.28%

The usual suspects are in there - JBH, COH, CSL, WOW, Reece, Platinum ass man, Matrix, ANZ, Vocus, Zicom.

Anyone interested can sign up for 21 day free trial with eureka report and see it.

Really enjoyed your posts so far craft, I like Roger Montgomery, and own his book, but feel there is so much more to stock and market analysis then valuable. For me personally I find the insights that can be gained from the likes of Soros and Jim Rogers is invaluable.

I agree with R&R. Thank you Craft for mentioning the various reading materials and providing a counter-balancing viewpoint. I get a distinct 'cult' feeling from the value.able forum too.

The basics of value investing which Montgomery publicises are useful and have helped me affirm some of my own thoughts on investing as I am new to share trading.

However, I am a little suspicious that he names stocks so readily and specifically - but is more vague in respect of the precise nature of his analytical method.

If it is just to protect the future growth of his own fund managing or stock tipping business I guess it's fair enough - but it means his more ardent followers will have an incomplete education if they don't read more broadly than his publicised method and stock tips.

 

[Muschu]

IMO Roger needs to offer potential clients far more information in order that they can make informed decisions.

The man but be very genuine but I prefer less intrigue and more disclosure.

 

[New Stratos]

I think we are going to have to accept that he isn't going to reveal the inner workings of his full model eg what tools he uses to arrive at the A1-C5 ratings, as if he does anyone vaguely useful at excel would be able to reproduce the technique. That would be goodbye to his business model.

At least he does share what he's been interested in/bought after the event. And discusses and encourages discussion of company valuations.

 

[notting]

I do love Roger. If there is an analyst I want to listen to it's him.
I used to think of Rivkin - it was funny how great stock pickers need only one thing to make money after they have baught, a follow_in _g.

 

[McLovin]

Have to agree to some degree craft. If you read through the many comments throughout the blog the large majority are simply praising roger as the almightly value prophet. There are some quality posts that you can pull interesting bits of information from but you really have to skim through and do your best to find it.

Case in point:

http://blog.rogermontgomery.com/what’s-your-stock-market-survival-story/

I mean isn't Roger preaching to the converted with posts like that. It has absolutely no benefit, aside from maybe flogging a few more books.

Roger's blog was pretty good about 18 months ago, he had some good thoughts and there were a few very good posters, now it is really nothing more than a way for him to get publicity.

 

[waimate01]

That would be goodbye to his business model.

Indeed.

And it's important to appreciate what his business model is. Our business model is to make money from stocks. Roger's business model is to make money from us.

Of course, that doesn't make him wrong or invalidate any points he might be making. But it does mean he's not in the same boat, and hence it's a mistake to think that his perspective aligns with mine.

I know Buffet cops a whacking elsewhere in these forums, but I'd pay way more homage to Buffet than Montgomery any day, because:
i) he does make money through investments
ii) he has been rather successful at it
iii) he says it isn't that hard and shares his wisdom for free

If Roger was so amazing at investing, he'd have more money than god and wouldn't be touting himself as clever-clogs for a living.

 

[New Stratos]

I don't entirely disagree with you Waimate01, I think you're mostly right on most of your points

I'd modify some of your points slightly though: PART of Roger's business model is making money from people looking for more certainty; I think the other part is investing and managing investors' money for them. Doubtless he is happily reinvesting the money he makes from book sales (which may not be much) and hopes to make from monetising his valuations through the much-touted A1 Service.

As for your Buffett list, Roger:
i) appears to make money through investments
ii) appears to have been rather successful at it (but over a much shorter period, so that could change)
iii) he says it isn't that hard and shares his wisdom for free, but wants to sell his valuation/data service

Roger is obviously quite clever and I don't have a problem with him trying to make money if the service he provides is decent.

 

[New Stratos]

Interesting stuff, Craft, were you one of the unfortunates?
Anyway, here are his recent results (sourced from his blog, so believe them or not, as you wish):

 

[zac]

Interesting stuff, Craft, were you one of the unfortunates?
Anyway, here are his recent results (sourced from his blog, so believe them or not, as you wish):

Considering he said most of his allocation was in cash/fixed interest until recently that chart is understandable.
Paints a narrow picture though as its not even a years worth of data.

 

[RandR]

Considering he said most of his allocation was in cash/fixed interest until recently that chart is understandable.
Paints a narrow picture though as its not even a years worth of data.

90% of the fund has been cash until 2 weeks ago ... comparing it to an equities index performance is a bit daft. A Ubank account is looking the goods in comparison ....

Anyway ... Roger disclosed on Your Money Your Call tonight ... the gold stock he is in, is Silver Lake Resources.

 

[Muschu]

... Anyway ... Roger disclosed on Your Money Your Call tonight ... the gold stock he is in, is Silver Lake Resources.

Disclosed after the event and was there any indication of the level of investment?

 

[RandR]

Disclosed after the event and was there any indication of the level of investment?

Not after the event because he let slip he's still in it. No indication of level of investment ... but my guess is it isnt/wasnt a significantly large stake of the montgomery fund at all.

 

[VSntchr]

Have heard him mention SLR when it was around $2.00 a few weeks back...today wasn't the first time hes spoken of it..

 

[zac]

Id love to understand how some people can tell when the market will slow or dip.
Roger seems to and I spoke to a guy last night that just before the recent crash said he switched his Super to cash and a week later the crash happened.

He said he does this quite often but I dont know how you can tell with much accuracy and therefore make use of all the rises.

 

[McLovin]

Anyway ... Roger disclosed on Your Money Your Call tonight ... the gold stock he is in, is Silver Lake Resources.

I'd been looking at SLR a bit over the last week, I guess I'll miss out now and it will shoot up 50% over the next week.

Wasn't he saying a few weeks ago that he will never ever disclose what company it was? He must have needed to get the price moving.

 

[kermit345]

craft i'm in the same boat as you, he can blow his own horn about performance and how excited and happy he is, but it seems that as a newly set up fund he was just lucky enough to not have all the cash deployed yet. I think its a little silly for most fund managers to compare to index's anyway as many of them have high cash, or holdings that don't relate to the index anyway.

If roger could show how the invested portion of the fund has performed vs the index and its out-performed then good on him. But i'd want to see that he could achieve outperformance over 3-5 years on invested funds, ignoring cash, before i'd start clapping my hands.

I think his approach has merit and majority of the companies he discusses are great companies, but there seems to be a lot of patting on the back before it can really be gauged how its performed.

Would he have shown the same chart if equities had gone through the roof and he was playing catchup with even say still 50% in cash? I doubt it.

 

[craft]

I have asked and administration has kindly removed my posts from this thread. I believe posts that have quoted my posts have also been removed I apologise for that and for any inconvenience caused to anybody who tries to make sense of the recent discussion at a future date.

Read widely, think critically

Happy and successful investing to all.