Investments for Intermediaries
Stock selection?
Helping me as an intermediary?
Investment approach/philosophy?
Types of investment?
Investment managers?
Viewing my investments online?
What if I need to change investment strategy?
Reporting back to me?
Security of client assets?
Why/how are we different?
1. Stock selection?
Equity Selection
Montague Capital has a disciplined investment process which aims to achieve abnormally high absolute returns entirely from stock selection. We have constructed an investable universe of companies that have a history of creating a cash flow return on invested capital above their cost of capital, or the ability to undergo a fundamental change in strategy that will enable value creation. The stocks that pass the initial screen will have sustainable cash-flow and profitability, either through a global competitive advantage or operating in a non-competitive market. For these companies, a long-term discounted cash-flow model is constructed to estimate the intrinsic value and determine a target price. Finally, the timing of the decision is refined through analysing news flow, identifying valuation anomalies, monitoring revisions in consensus earnings estimates and applying technical analysis.
As part of the bottom-up stock selection process we have five key criteria, which companies must pass in order to be selected. These five key rules are as follows:
- Focus on core business.
- Leader in its industry segment (dominate or niche player).
- History of cashflow returns above the cost of capital (Holt).
- Growth in revenue over the past five years.
- Below peak valuation multiples (EV/Sales and EV/EBITDA).
2. Helping me as an intermediary?
As an intermediary we strive to enhance the relationship you have with your clients by delivering an investment proposition worthy of even the most wealthy or demanding clients.
3. Investment approach/philosophy?
Montague Capital’s investment proposition is to achieve high absolute returns by using a complex process that involves a careful balance of tools, techniques and styles. A robust framework is employed to ensure that research is both rigorous and creative. The fundamental framework provides the investment managers with a way of ordering their decisions.
The investment process is entirely bottom-up stock selection. This means that we identify undervalued companies and securities and invest in them. If a security becomes fully valued or an alternative security pick offers greater potential upside, the holding is sold and reinvested into either cash or the alternative security. Although Montague Capital maintains economic forecasts, they are primarily used as inputs into the individual corporate models. The asset allocation decisions are driven by the conviction in security picks. An individual stock pick is less complex and more reliable to forecast than predicting an index of stocks with an infinite combination of variables.
4. Types of investment?
We specialise in constructing personal investment portfolio’s from individual stocks and shares however we can manage most types of investment here at Montague Capital including;
Personal Investment Portfolios
Corporate Pension Funds
SIPP’s
SASS’s
FURB’s
ISA’s
PEP’s
Offshore Bonds
Mutual Funds and Collective Investments
5. Investment managers?
Bill Roden, the Chief Investment Officer, is qualified as a Chartered Financial Analyst, the highest industry qualification, and is a member of the Association of Investment Management and Research, the leading UK industry qualification.
He has over thirteen years of investment management experience in both private client portfolios and large institutional funds.
In his previous role, he was a top quartile mutual fund manager at one of the world’s largest investment managers.
His long-term consistent performance and low risk strategy was recognised by Investment Week. Subsequently, he was highly commended and nominated ‘runner up’ Fund Manager of the Year in the 2001 awards.
David Jones joined Montague Capital to focus on investment management and research.
He has over twenty-two years of investment experience, qualified as an Associate of the Institute of Investment Management and Research in 1983 and is a Fellow of the Securities Institute.
Prior to Montague Capital, David was an Investment Director at AXA Investment Managers and an investment analyst and institutional salesman at Barclays de Zoete Wedd.
6. Viewing my investments online?
Every client has the opportunity to have a secure login to montague.b10g.co.uk where you can view your portfolio statements on the internet. These are updated by 10am each morning to include latest share prices and valuations.
7. What if I need to change investment strategy?
We actively encourage intermediaries to have as much contact with our investment manages as they would like so in any circumstances if a change in investment strategy is needed it can be done efficiently and with informed decisions.
8. Reporting back to me?
Montague Capital provides a monthly report which includes a valuation, a cash statement, a transaction summary, an industry breakdown and a performance history. The client may have more than one account (a main portfolio, ISA, PEP, Trust, etc.), which could be consolidated into one simple portfolio for reporting purposes. There would also be a personal monthly letter, explaining the investment strategy, the outlook and portfolio performance. Some clients prefer this report quarterly and even half yearly in some cases but the frequency of reporting is entirely up to you and your client.
9. Security of client assets?
Montague Capital uses a third party custodian to maximise security of their client’s assets. Each client has a separate account held independently of Montague Capital. Ultimately, the client has control over their own account for additional security and segregation.
10. Why/how are we different?
Montague Capital uses a sophisticated and highly disciplined investment process which aims to deliver absolute performance by actively managing a portfolio relative to a customised benchmark. Profits are taken where appropriate and losses always minimised, as each security pick has a target price and a stop loss.
We actively encourage an entrepreneurial culture which takes on problems and delivers solutions. The culture empowers and motivates investment managers and shareholder involvement means ultimate responsibility.
An investment manager at Montague Capital is a member of the Association of Investment Management and Research (AIMR). The AIMR is the global leader in educating investment practitioners and sustaining high standards of professional excellence and integrity.
Investment is with a global outlook with the view to maximise returns and to lower risk through additional diversification. Not all the best companies in the world are listed on the London Stock Exchange.
Montague Capital has a portfolio administration system which can consolidate multiple portfolios (SIPPs, SSASs, Offshore, PEPs, ISAs, Trusts, etc) for simple reporting and measure the performance of the client’s portfolio for transparency. Each portfolio is valued daily and is securely available through our website montague.co.uk.
Managers outlook, investment performance, activity and portfolio statements are issued to the client monthly rather than the FSA requirement of six monthly.
A third party independent custodian (Royal Bank of Scotland International or OMX Securities) holds client assets and settles trades. Two duplicate accounting systems cross reconcile to eliminate human error.
If you have any questions about any aspect of investment management or any of our services please contact us
