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Montgomery goes for growth


Montgomery Investment Management, the firm founded by tireless Australian ‘value’ manager Roger Montgomery, has had a busy start to 2021. Sometimes compared to the doyen of value investing, Warren Buffett, the firm’s focus on investing in “companies, not stocks” and seeking “intrinsic value” has made it difficult to generate returns in a growth-oriented and bubbly market. This trend may be starting to turn amid signs of a vaccine-led recovery, with Montgomery’s “quality” companies likely to be among the biggest winners.

  • The group has stepped up its activity in recent years, launching the Montgomery Small Companies Fund in 2019, backing newcomers Montaka Investments to deliver a number of global long-only and long-short equity strategies, and this week, partnering with US$60 billion ($76.9 billion) global growth manager, Polen Capital, to bring its high-conviction strategies to retail investors.

    In January this month, Montgomery confirmed that its partnership with Montaka Global Investments was coming to an end. After backing the team in 2015, taking an initial equity stake and assisting with the client servicing and communication roles in the five years since, Montaka has agreed to acquire Montgomery’s interest and go it alone. This is quite common in the funds management space, with new teams requiring professional support as they get their foundations set and focus on the investment and fund-raising tasks.

    The more recent news, however, is likely the most interesting, being the launch of Polen Capital’s series of funds, due in early 2021. Polen Capital was founded in 1979, with its philosophy truly in the “growth” camp. According to the manager, it seeks to invest into companies with “exceptional earnings growth” that is driven by sustainable competitive advantage and powerful products and services, among other things. Similarly focused on “intrinsic value,” Polen believes that earnings growth is the primary driver, less so price.

    There are many overlaps with Montgomery, including that they both focus on seeking a ‘margin of safety’ from every investment that make as well as thinking like business owners, rather than index managers or asset gatherers. According to publicly available information, recent returns have been strong for this high-conviction strategy, holding 25 – 30 global leaders, and having delivered a return exceeding 16% a year since inception from the Global Growth Strategy since 2014.

    Whilst many may see this as a step to the other side of the camp, it appears more like a step sideways, partnering with a group that carries a similar philosophy, but has an entirely different skill set.

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