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 Any information on this blog is not advice. Information is of a general nature only and does not take into account your individual circumstances so can't be relied upon by you. Do your own research. These are only my views and opinions and may contain factual errors.

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STYLE ROTATION?

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  THE GROWTH SELL-OFF and the influence of STYLE INVESTING After the results season, I wrote a piece on SM titled “Result Season Lessons for Me”. The upshot was what I saw as the early signs of a sector rotation and the potential underperformance of quality growth stocks, which comprise a significant portion of my portfolio. Below is a table comparing the performance of my benchmark to the pride of the fleet (IMO) of Australian quality growth stocks. As we can see, almost without exception, there is solid underperformance. My benchmark is equal-weighted, not market-cap-weighted, as I have previously covered the reasons for this approach. So what's going on here to get this widespread negativity? The concept of Style Investing is useful in this regard, imo. I first came across style investing when doing the CFA course from 1998-2000. There is a book by Bernstein called Style Investing if you want to go down the rabbit hole. In summary, it abstracts away from individual sto...
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INVESTMENT CHECKLIST

  CHECKLIST FOR INVESTMENTS Overall I want this to be short enough so that I will use it and long enough to be useful. not War and Peace. In deference to Charlie Munger who continually suggested using a checklist, well I am getting on! Can be built up and on over time. Understandable business Do you understand the positioning of the business versus its competitors, customers and suppliers? What are the critical products, services and relationships? Is the size of the market(s) able to be estimated? Are there existential risks to the business, structural decline, or obsolescence? Operating History EPS growth, consistency/volatility is it forecastable? ROE/GM stability and level. Ability to manage margins. Total asset growth can the business profitably deploy assets. What has the reinvestment rate been? NPM level and stability. Does the business generate FCF, does CF reconcile to earnings? Given the above has the company favourable LT prospects? Management Condu...
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The Ozzie Growth Sell Off

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  ANOTHER LOOK AT THE GROWTH SELL-OFF Background My basic investing thesis revolves around backing companies that can add assets and maintain a high ROE. Adding assets while maintaining a high return propels eps higher and with it the SP. The maths is simple, the execution is not, management and investing. I do like frameworks, especially those that win, and if you can pick a company that adds assets and holds returns, while buying at a reasonable price, you will do very well. The hard part is picking those companies that can maintain returns. Investing is not easy. I’ve found buying them at a reasonable price is the easier part (takes patience). However, in my case, I find this framework immeasurably easier than finding a company that is yet to prove itself as a quality company; I find that even harder. Brief recap of proof point I've done this to death before, so it will be brief. To prove the thesis, I picked 12 high ROE companies and 12 low ROE companies. The thinking h...
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