1 00:00:03,300 --> 00:00:06,360 Sean Aylmer: Welcome to the Fear and Greed Daily Interview. I'm Sean Aylmer. 2 00:00:06,600 --> 00:00:10,080 Sean Aylmer: This month has seen an absolute frenzy of dealmaking on 3 00:00:10,080 --> 00:00:12,809 Sean Aylmer: the Australian share market. At the larger end, the board 4 00:00:12,810 --> 00:00:15,750 Sean Aylmer: of Sydney Airport has rejected a 22 billion dollar bid 5 00:00:15,990 --> 00:00:19,110 Sean Aylmer: from a group of infrastructure investors, while Seven Group conducted 6 00:00:19,110 --> 00:00:22,590 Sean Aylmer: a masterclass in staging a takeover of Boral without paying 7 00:00:22,590 --> 00:00:25,710 Sean Aylmer: much of a premium. There's been plenty more with corporate 8 00:00:25,710 --> 00:00:30,840 Sean Aylmer: action involving Telstra, Tabcorp, AGL, Spark Infrastructure, Ramsay Health, Premier 9 00:00:30,840 --> 00:00:33,990 Sean Aylmer: Investments and Myer, Westpac, Challenger Limited, Crown Resorts and the 10 00:00:33,990 --> 00:00:37,260 Sean Aylmer: Star Group just to name a few. It's a combination of 11 00:00:37,260 --> 00:00:39,480 Sean Aylmer: pent up demand and low interest rates. Well, I think 12 00:00:39,479 --> 00:00:41,910 Sean Aylmer: it is. But is the money being well spent and 13 00:00:41,909 --> 00:00:44,670 Sean Aylmer: what does it all mean for investors? Roger Montgomery is 14 00:00:44,670 --> 00:00:48,750 Sean Aylmer: the founder and chief investment officer of Montgomery Investment Management. Roger, 15 00:00:48,750 --> 00:00:49,770 Sean Aylmer: welcome to Fear and Greed. 16 00:00:50,130 --> 00:00:51,600 Roger Montgomery: It's great to be with you guys. Thanks for having 17 00:00:51,600 --> 00:00:52,170 Roger Montgomery: me on the show. 18 00:00:52,500 --> 00:00:54,810 Sean Aylmer: So how do you characterise the last month or so? 19 00:00:55,080 --> 00:00:57,710 Roger Montgomery: Oh, it's not the last month. It really is this year. 20 00:00:57,870 --> 00:01:00,510 Roger Montgomery: So we're on track with a number of deals and 21 00:01:00,510 --> 00:01:03,210 Roger Montgomery: the value of deals that have been conducted since the 22 00:01:03,210 --> 00:01:06,750 Roger Montgomery: start of the calendar year to June 30, we're on 23 00:01:06,750 --> 00:01:10,650 Roger Montgomery: track for about eighty-five billion dollars worth of deals. And if it 24 00:01:10,650 --> 00:01:14,760 Roger Montgomery: continues to accelerate, as it has been most recently, particularly 25 00:01:14,760 --> 00:01:17,340 Roger Montgomery: over the last month or two, then we could break 26 00:01:17,340 --> 00:01:20,460 Roger Montgomery: the record we saw in 2011, which was about one 27 00:01:20,459 --> 00:01:25,320 Roger Montgomery: hundred thirty-four billion dollars worth of deals. So it's a function of 28 00:01:25,319 --> 00:01:28,020 Roger Montgomery: a number of things. Low interest rates obviously have a 29 00:01:28,020 --> 00:01:30,959 Roger Montgomery: lot to do with it. But perhaps more importantly, it's 30 00:01:30,959 --> 00:01:33,870 Roger Montgomery: the fact that we're in a low growth world, low 31 00:01:33,870 --> 00:01:36,960 Roger Montgomery: interest rates are likely to continue, and that's a function 32 00:01:36,959 --> 00:01:40,290 Roger Montgomery: of very little inflation. And I say that because I 33 00:01:40,290 --> 00:01:43,260 Roger Montgomery: don't believe wage inflation is going to take off any 34 00:01:43,260 --> 00:01:46,890 Roger Montgomery: time soon. And if it does, it'll be transitory. And 35 00:01:46,890 --> 00:01:51,090 Roger Montgomery: so in that environment, companies are looking and particularly super funds 36 00:01:51,390 --> 00:01:56,550 Roger Montgomery: are looking for income streams that are reliable, annuity style, 37 00:01:56,550 --> 00:02:00,360 Roger Montgomery: and dare I say, boring. And so we thought at 38 00:02:00,360 --> 00:02:04,320 Roger Montgomery: the beginning of the year that that combination of factors 39 00:02:04,710 --> 00:02:07,830 Roger Montgomery: would lead to a big year of M&A (mergers and acquisitions). It was 40 00:02:07,830 --> 00:02:12,000 Roger Montgomery: confirmed through some friends of mine that work in the 41 00:02:12,000 --> 00:02:16,380 Roger Montgomery: commercial law space that they weren't taking holidays between Christmas and 42 00:02:16,380 --> 00:02:19,470 Roger Montgomery: New Year. They were working through. And that was pretty 43 00:02:19,470 --> 00:02:21,660 Roger Montgomery: much for me confirmation that we were going to say 44 00:02:21,660 --> 00:02:25,200 Roger Montgomery: a big year of takeovers and corporate activity. And that's 45 00:02:25,200 --> 00:02:28,290 Roger Montgomery: exactly what you described in your introduction. That's exactly what 46 00:02:28,290 --> 00:02:30,660 Roger Montgomery: we've seen so far. And it's likely to continue. 47 00:02:31,169 --> 00:02:33,740 Sean Aylmer: So how big a role are the super funds playing? 48 00:02:34,139 --> 00:02:36,960 Roger Montgomery: Well, you've got to remember that they are trying to 49 00:02:36,960 --> 00:02:41,579 Roger Montgomery: enhance returns to their members. If you go overseas, members 50 00:02:41,580 --> 00:02:44,609 Roger Montgomery: are getting returns in the very, very low single digits. 51 00:02:44,850 --> 00:02:48,780 Roger Montgomery: And so in Australia, a lot of our stocks, particularly 52 00:02:48,780 --> 00:02:51,600 Roger Montgomery: the boring income stocks, are priced on yields of maybe 53 00:02:51,600 --> 00:02:53,429 Roger Montgomery: three and a half or four and a half per cent. 54 00:02:54,090 --> 00:02:57,150 Roger Montgomery: They can pay a substantial premium to that and still 55 00:02:57,150 --> 00:02:59,880 Roger Montgomery: deliver to their members two and a half or three 56 00:02:59,880 --> 00:03:02,850 Roger Montgomery: per cent. And that's a darn sight better than they can get 57 00:03:02,850 --> 00:03:05,820 Roger Montgomery: outside of that super fund. And so you can see 58 00:03:05,820 --> 00:03:08,070 Roger Montgomery: why the argument stacks up to buy things that are 59 00:03:08,070 --> 00:03:09,030 Roger Montgomery: listed in Australia. 60 00:03:09,750 --> 00:03:12,150 Sean Aylmer: So the question is, though, are they paying too much? And 61 00:03:12,150 --> 00:03:15,510 Sean Aylmer: I think there was an article about Telstra InfraCo being 62 00:03:15,510 --> 00:03:19,290 Sean Aylmer: bought by super funds as part of a consortium. The 63 00:03:19,290 --> 00:03:21,150 Sean Aylmer: argument there being that they actually paid a fair bit 64 00:03:21,150 --> 00:03:23,130 Sean Aylmer: and so much so that Telstra decided not to float 65 00:03:23,130 --> 00:03:24,869 Sean Aylmer: at all. It might as well just do a trade sale. 66 00:03:25,139 --> 00:03:26,730 Sean Aylmer: Are the prices a bit toppy? 67 00:03:27,340 --> 00:03:30,270 Roger Montgomery: Well, you do as a seller, you do intend to 68 00:03:30,270 --> 00:03:34,650 Roger Montgomery: feed the ducks while they're quacking, so to speak. So 69 00:03:34,950 --> 00:03:38,610 Roger Montgomery: you definitely you've got a more knowledgeable seller in most cases. 70 00:03:38,610 --> 00:03:40,920 Roger Montgomery: They're selling for a reason. They believe the price is 71 00:03:40,920 --> 00:03:44,640 Roger Montgomery: very good. But if they underestimate any aspect of the 72 00:03:44,640 --> 00:03:47,400 Roger Montgomery: synergies that are available to the buyer, then it could 73 00:03:47,400 --> 00:03:50,400 Roger Montgomery: be the value to the buyer is higher than it 74 00:03:50,400 --> 00:03:55,110 Roger Montgomery: would be to a passive investor or as a continuing 75 00:03:55,110 --> 00:03:59,610 Roger Montgomery: going concern. So there is an element of buoyancy in 76 00:03:59,610 --> 00:04:01,650 Roger Montgomery: the market at the moment. There's no doubt about that. 77 00:04:01,650 --> 00:04:05,370 Roger Montgomery: And there are pockets of irrational exuberance. But from that 78 00:04:05,370 --> 00:04:08,160 Roger Montgomery: you can't infer that the whole market is a bubble 79 00:04:08,490 --> 00:04:11,250 Roger Montgomery: and that all of these deals are expensive. You have 80 00:04:11,250 --> 00:04:13,470 Roger Montgomery: to look at each one on its merits and where, 81 00:04:13,470 --> 00:04:18,240 Roger Montgomery: for example, there are synergies able to be extracted or 82 00:04:18,240 --> 00:04:21,599 Roger Montgomery: where the buyer gets the outlook right for inflation and 83 00:04:21,600 --> 00:04:25,200 Roger Montgomery: interest rates. It could be that these things aren't expensive 84 00:04:25,200 --> 00:04:25,620 Roger Montgomery: at all. 85 00:04:26,460 --> 00:04:29,520 Sean Aylmer: It must be hard for some boards to know whether 86 00:04:29,520 --> 00:04:31,890 Sean Aylmer: to say yes or no. You think of the Sydney Airport. 87 00:04:32,700 --> 00:04:35,609 Sean Aylmer: Twenty-two dollars billion bid. That is trading a lot lower than 88 00:04:35,610 --> 00:04:38,370 Sean Aylmer: what it was pre-pandemic and it's kind of obvious why 89 00:04:38,370 --> 00:04:41,429 Sean Aylmer: that's the case. Yet they're being offered a big premium. 90 00:04:41,700 --> 00:04:43,680 Sean Aylmer: Now they've come out and said no to it. It 91 00:04:43,680 --> 00:04:45,479 Sean Aylmer: must be hard for a board though. They've got to have the 92 00:04:45,480 --> 00:04:47,400 Sean Aylmer: confidence they can get back to where they were. 93 00:04:47,790 --> 00:04:50,039 Roger Montgomery: Yeah, well, the case of Sydney Airport's an interesting one 94 00:04:50,040 --> 00:04:52,230 Roger Montgomery: because they're caught between a rock and a hard place. 95 00:04:52,320 --> 00:04:56,430 Roger Montgomery: On the one hand, it's a fair price considering the 96 00:04:56,430 --> 00:05:02,190 Roger Montgomery: circumstances with international borders closed and every international passenger, in 97 00:05:02,190 --> 00:05:05,580 Roger Montgomery: terms of profit, is probably worth five domestic passengers to 98 00:05:05,580 --> 00:05:09,360 Roger Montgomery: Sydney Airport and there aren't any international passengers to speak of. 99 00:05:09,480 --> 00:05:12,600 Roger Montgomery: So from that perspective, it looks like a fair bid, 100 00:05:12,870 --> 00:05:18,330 Roger Montgomery: but prior to COVID on an enterprise value to EBITDA (Earnings Before Interest Taxation Depreciation and Amortisation) multiple, when 101 00:05:18,330 --> 00:05:22,170 Roger Montgomery: the stock was at $8.80, it was significantly higher than 102 00:05:22,170 --> 00:05:25,200 Roger Montgomery: what's being offered today. So, you know, it might be 103 00:05:25,200 --> 00:05:28,950 Roger Montgomery: right for the board to dig its heels in and conclude, no, you know, 104 00:05:29,460 --> 00:05:32,880 Roger Montgomery: this is opportunistic given the circumstances. And if we were 105 00:05:32,880 --> 00:05:35,609 Roger Montgomery: to sell in normal circumstances, we'd be asking for a 106 00:05:35,610 --> 00:05:38,669 Roger Montgomery: takeover premium or a control premium as well, which is 107 00:05:38,670 --> 00:05:41,460 Roger Montgomery: not in the price of this particular bid. And so 108 00:05:41,880 --> 00:05:45,300 Roger Montgomery: I can understand their difficulty. They're playing a very serious game. 109 00:05:45,600 --> 00:05:50,219 Roger Montgomery: There's a lot more litigation and class actions against boards 110 00:05:50,220 --> 00:05:52,799 Roger Montgomery: these days than there was 10 or 15 or 20 111 00:05:52,800 --> 00:05:55,860 Roger Montgomery: years ago. So in order to reach that conclusion, in 112 00:05:55,860 --> 00:05:59,130 Roger Montgomery: order to reject a bid of that status or stature, 113 00:05:59,720 --> 00:06:01,739 Roger Montgomery: they would have done their due diligence as well and 114 00:06:01,740 --> 00:06:06,420 Roger Montgomery: done their work and to unanimously recommend shareholders reject. That's 115 00:06:06,420 --> 00:06:08,880 Roger Montgomery: a big deal. And they must have a very good 116 00:06:08,880 --> 00:06:11,460 Roger Montgomery: reason for believing that's the right approach. And then the 117 00:06:11,460 --> 00:06:13,530 Roger Montgomery: sceptic in me says, you know, they want to keep 118 00:06:13,529 --> 00:06:16,770 Roger Montgomery: their job, too. So there's a bit of that, no doubt. 119 00:06:17,430 --> 00:06:19,430 Sean Aylmer: Stay with me, Roger. We'll be back in a minute. 120 00:06:24,400 --> 00:06:27,190 Sean Aylmer: My guest this morning is Roger Montgomery, Founder and Chief 121 00:06:27,190 --> 00:06:31,000 Sean Aylmer: Investment Officer of Montgomery Investment Management. So you talk about 122 00:06:31,000 --> 00:06:33,969 Sean Aylmer: buoyancy in the market as opposed to a bubble. What would 123 00:06:33,970 --> 00:06:36,070 Sean Aylmer: cull the buoyancy, do you think? 124 00:06:36,670 --> 00:06:41,050 Roger Montgomery: Oh, I think a rapid increase in long bond rates, that's one. 125 00:06:41,170 --> 00:06:45,070 Roger Montgomery: Announcements by central banks that they're going to taper their 126 00:06:45,070 --> 00:06:48,489 Roger Montgomery: stimulus much more aggressively or their unconventional monetary policy much 127 00:06:48,490 --> 00:06:52,989 Roger Montgomery: more rapidly than the market's currently factoring in. If inflation, 128 00:06:53,170 --> 00:06:56,770 Roger Montgomery: which is spiking at the moment and is currently expected 129 00:06:56,770 --> 00:07:00,789 Roger Montgomery: by central banks to be transitory, if that, I think 130 00:07:00,880 --> 00:07:03,580 Roger Montgomery: it will be transitory, by the way, but if it settles 131 00:07:03,730 --> 00:07:07,030 Roger Montgomery: well above two per cent, then that would be a reason 132 00:07:07,029 --> 00:07:09,880 Roger Montgomery: to expect the yield curve to steepen. And if the 133 00:07:09,880 --> 00:07:14,050 Roger Montgomery: yield curve steepens, then that has a material impact on 134 00:07:14,050 --> 00:07:17,080 Roger Montgomery: the present values of businesses where the earnings are pushed 135 00:07:17,080 --> 00:07:20,050 Roger Montgomery: much further out into the future, or where, for example, 136 00:07:20,050 --> 00:07:22,750 Roger Montgomery: in the case of Sydney airports, there's just no earnings 137 00:07:22,750 --> 00:07:25,420 Roger Montgomery: at the moment. And so the earnings are in the future. 138 00:07:25,810 --> 00:07:28,570 Roger Montgomery: An increase in yield or an increase in the discount 139 00:07:28,570 --> 00:07:34,870 Roger Montgomery: rate has a detrimentally greater impact proportionately on earnings earnt 140 00:07:34,870 --> 00:07:37,600 Roger Montgomery: further away in the future on the more distant horizon 141 00:07:37,600 --> 00:07:41,770 Roger Montgomery: than next year. And so that would very quickly change 142 00:07:41,860 --> 00:07:47,200 Roger Montgomery: the circumstances or the metrics for a lot of these takeovers. 143 00:07:47,200 --> 00:07:49,810 Roger Montgomery: And in that environment, it would turn the tap off 144 00:07:49,810 --> 00:07:53,200 Roger Montgomery: or certainly go from a strong flow to a drip. 145 00:07:53,890 --> 00:07:56,080 Sean Aylmer: So many of these takeovers are very much based on 146 00:07:56,080 --> 00:07:59,380 Sean Aylmer: financial metrics. How do you think about something like a 147 00:07:59,380 --> 00:08:03,700 Sean Aylmer: merger between the Star and Crown Resorts where there's so 148 00:08:03,700 --> 00:08:06,520 Sean Aylmer: much noise on the back of the Victorian Royal Commission, 149 00:08:06,520 --> 00:08:09,340 Sean Aylmer: the West Australian Royal Commission, the fact that Crown hasn't 150 00:08:09,340 --> 00:08:11,590 Sean Aylmer: got a licence in New South Wales yet. I'm not 151 00:08:11,590 --> 00:08:13,330 Sean Aylmer: asking whether it's a good or bad thing. It's just 152 00:08:13,330 --> 00:08:15,760 Sean Aylmer: how do you factor that into your thinking when there are 153 00:08:15,760 --> 00:08:17,620 Sean Aylmer: actually very non-financial metrics? 154 00:08:18,250 --> 00:08:21,190 Roger Montgomery: Yeah. So it really you know, I wrote a book 155 00:08:21,190 --> 00:08:24,040 Roger Montgomery: on the subject, a few chapters on this subject in 156 00:08:24,040 --> 00:08:26,170 Roger Montgomery: a value investing book that I wrote some years ago. 157 00:08:26,530 --> 00:08:29,410 Roger Montgomery: And it really comes down to the profitability of the 158 00:08:29,410 --> 00:08:31,840 Roger Montgomery: equity and what you pay for that equity. So, for example, 159 00:08:32,110 --> 00:08:34,809 Roger Montgomery: if you've got a business that's generating 20 per cent return 160 00:08:34,809 --> 00:08:39,130 Roger Montgomery: on equity and you pay 10 times that equity, then 161 00:08:39,130 --> 00:08:41,830 Roger Montgomery: you're getting a two per cent return on your equity or 162 00:08:41,830 --> 00:08:43,089 Roger Montgomery: what you paid for that. 163 00:08:43,150 --> 00:08:43,380 Sean Aylmer: Yeah. 164 00:08:43,540 --> 00:08:46,960 Roger Montgomery: So really, it just comes down to what multiple of 165 00:08:46,960 --> 00:08:51,520 Roger Montgomery: equity you're paying and what profitability you can extract from 166 00:08:51,520 --> 00:08:54,630 Roger Montgomery: the business based on the multiple of equity that you've paid. 167 00:08:55,000 --> 00:08:57,880 Roger Montgomery: That's all it comes down to. When Wesfarmers just before 168 00:08:57,880 --> 00:09:02,290 Roger Montgomery: the GFC, when Wesfarmers bought Coles, they paid a massive 169 00:09:02,290 --> 00:09:05,080 Roger Montgomery: multiple of equity and I think they paid I have 170 00:09:05,080 --> 00:09:06,850 Roger Montgomery: to go back and have a look But the business 171 00:09:06,850 --> 00:09:10,179 Roger Montgomery: was generating about 23 per cent return on its equity. This 172 00:09:10,179 --> 00:09:13,240 Roger Montgomery: is Coles was doing 23 per cent return on equity. But 173 00:09:13,240 --> 00:09:15,850 Roger Montgomery: if my memory serves me correctly, I think they paid 174 00:09:15,850 --> 00:09:19,179 Roger Montgomery: eight times equity for the business. So if you divide 175 00:09:19,179 --> 00:09:21,819 Roger Montgomery: 23 per cent by eight, you know, you get a 176 00:09:21,820 --> 00:09:26,770 Roger Montgomery: really appalling number in terms of your return on investment. 177 00:09:27,070 --> 00:09:29,500 Roger Montgomery: And so it came as no surprise to me, and 178 00:09:29,500 --> 00:09:31,330 Roger Montgomery: I wrote about this at the time, but it came 179 00:09:31,330 --> 00:09:33,370 Roger Montgomery: as no surprise to me that the share price subsequently 180 00:09:33,370 --> 00:09:37,709 Roger Montgomery: for Wesfarmers subsequently fell from about forty dollars or forty-four dollars a share. 181 00:09:37,870 --> 00:09:39,939 Roger Montgomery: It went all the way down to about twelve dollars 182 00:09:39,940 --> 00:09:43,120 Roger Montgomery: a share. And yes, the GFC was involved in all that, 183 00:09:43,120 --> 00:09:45,190 Roger Montgomery: but it got hammered much more than a lot of 184 00:09:45,190 --> 00:09:48,520 Roger Montgomery: other stocks. And that's because they overpaid. Now, when they 185 00:09:48,520 --> 00:09:52,690 Roger Montgomery: spun off Coles this year, they basically made no return 186 00:09:52,690 --> 00:09:56,470 Roger Montgomery: on that investment over that entire period of time. So 187 00:09:56,590 --> 00:10:00,010 Roger Montgomery: it really comes down to just that. What multiple of 188 00:10:00,010 --> 00:10:03,729 Roger Montgomery: equity are you paying? And then, of course, another ball 189 00:10:03,730 --> 00:10:06,099 Roger Montgomery: in the air or another spinning disc, if you like, 190 00:10:06,100 --> 00:10:10,329 Roger Montgomery: is if you're issuing equity to make the takeover, you're 191 00:10:10,330 --> 00:10:13,900 Roger Montgomery: issuing your own equity, what premium above your equity are you issuing 192 00:10:13,900 --> 00:10:17,949 Roger Montgomery: those shares? It may be that you're diluting the equity 193 00:10:17,950 --> 00:10:22,120 Roger Montgomery: per share for existing shareholders if you're not issuing shares 194 00:10:22,120 --> 00:10:24,699 Roger Montgomery: at a high enough premium. So, you know, there's a 195 00:10:24,700 --> 00:10:27,219 Roger Montgomery: lot of moving parts to it, but that's the framework 196 00:10:27,220 --> 00:10:27,949 Roger Montgomery: that I think about. 197 00:10:28,450 --> 00:10:30,610 Sean Aylmer: So if I'm trying to set myself up to be 198 00:10:30,610 --> 00:10:32,679 Sean Aylmer: in the best position to take advantage of the activity 199 00:10:32,679 --> 00:10:34,690 Sean Aylmer: that's going on, and you've indicated that it's likely to 200 00:10:34,690 --> 00:10:36,520 Sean Aylmer: continue on for a little while anyway. 201 00:10:37,570 --> 00:10:39,280 Roger Montgomery: I think it will. I think this year and next year too. 202 00:10:40,809 --> 00:10:42,429 Sean Aylmer: Yeah. How, I suppose I want you to dumb it down for 203 00:10:42,429 --> 00:10:45,099 Sean Aylmer: me because I'm not a professional investor, how should I 204 00:10:45,100 --> 00:10:45,790 Sean Aylmer: think about it? 205 00:10:46,210 --> 00:10:50,100 Roger Montgomery: Yeah. Look, without dumbing it down too much, one easier 206 00:10:50,110 --> 00:10:53,079 Roger Montgomery: way to think about it. And I'm happy to do 207 00:10:53,080 --> 00:10:57,910 Roger Montgomery: all that math afterwards, but think about themes and which 208 00:10:57,910 --> 00:11:00,069 Roger Montgomery: are the themes that are likely to be in demand. 209 00:11:00,070 --> 00:11:04,510 Roger Montgomery: I think, as I mentioned earlier, income, boring, reliable annuity 210 00:11:04,510 --> 00:11:08,560 Roger Montgomery: style income streams will be in demand. Structural growth is 211 00:11:08,559 --> 00:11:12,070 Roger Montgomery: another one. So where a business is likely to continue 212 00:11:12,070 --> 00:11:18,190 Roger Montgomery: to grow, irrespective of the conditions for the economy and 213 00:11:18,190 --> 00:11:21,730 Roger Montgomery: irrespective of what happens with COVID, they'll be in demand 214 00:11:21,730 --> 00:11:26,380 Roger Montgomery: as well for a takeover. So I put companies in the 215 00:11:26,710 --> 00:11:31,240 Roger Montgomery: cloud computing space, for example, data centres is a classic 216 00:11:31,240 --> 00:11:35,440 Roger Montgomery: example where it ticks both boxes because you've got structural 217 00:11:35,440 --> 00:11:38,949 Roger Montgomery: growth and you've also got a boring, reliable income stream 218 00:11:38,950 --> 00:11:41,920 Roger Montgomery: once those data centres are fully tenanted and they're just 219 00:11:41,920 --> 00:11:45,699 Roger Montgomery: throwing off cash. So I see businesses in Australia like 220 00:11:46,360 --> 00:11:51,610 Roger Montgomery: NEXTDC or Macquarie Telecom, for example, being in the sights 221 00:11:51,880 --> 00:11:56,320 Roger Montgomery: of large overseas pension funds once they're fully developed and 222 00:11:56,320 --> 00:11:59,650 Roger Montgomery: producing that reliable, boring income stream. So I'd think about 223 00:11:59,650 --> 00:12:02,920 Roger Montgomery: it in terms of thematics, you know, what are the themes 224 00:12:03,130 --> 00:12:05,980 Roger Montgomery: that are going to do well? Where are their opportunities? 225 00:12:06,100 --> 00:12:09,280 Roger Montgomery: What stocks or businesses are currently on their knees, travel, 226 00:12:09,280 --> 00:12:13,329 Roger Montgomery: for example. So I see opportunities in travel stocks. Another 227 00:12:13,330 --> 00:12:16,800 Roger Montgomery: structural grower is the EV (Electric Vehicle) space and the battery metals. 228 00:12:17,110 --> 00:12:19,839 Roger Montgomery: You know, I note that Nev Power, who was the 229 00:12:19,840 --> 00:12:24,550 Roger Montgomery: former Fortescue CFO, he's just announced that he's joining or 230 00:12:24,550 --> 00:12:27,220 Roger Montgomery: actually it's been talked about for a year or so, but 231 00:12:27,220 --> 00:12:30,850 Roger Montgomery: he's joining a special purpose acquisition company in the United States. 232 00:12:31,510 --> 00:12:36,040 Roger Montgomery: And they will specialise in buying copper and battery mineral assets. 233 00:12:36,340 --> 00:12:41,800 Roger Montgomery: So that means that stocks like Pilbara Minerals, Mineral Resources, Orocobre, 234 00:12:42,250 --> 00:12:45,579 Roger Montgomery: for example, in Australia. They could be in play if a SPAC (Special Purpose Acquisition Company) 235 00:12:45,940 --> 00:12:50,439 Roger Montgomery: turns around and buys West Australian based or Argentinean Aussie 236 00:12:50,620 --> 00:12:54,550 Roger Montgomery: based battery metals producers. So, you know, you can do 237 00:12:54,550 --> 00:12:57,130 Roger Montgomery: the math. But really in this environment, I think it's 238 00:12:57,130 --> 00:13:00,700 Roger Montgomery: about the theme. And so it comes down to those themes. 239 00:13:01,120 --> 00:13:03,100 Sean Aylmer: Fantastic. Roger, thank you for talking to Fear and Greed. 240 00:13:03,980 --> 00:13:05,700 Roger Montgomery: Oh, no problem at all. Great to speak with you and 241 00:13:05,750 --> 00:13:06,850 Roger Montgomery: look forward to talking to you again. 242 00:13:07,240 --> 00:13:10,210 Sean Aylmer: That was Roger Montgomery, the Founder and Chief Investment Officer 243 00:13:10,210 --> 00:13:11,990 Sean Aylmer: of Montgomery Investment Management. 244 00:13:12,340 --> 00:13:14,439 Sean Aylmer: This is the Fear and Greed Daily Interview. Join me 245 00:13:14,440 --> 00:13:16,809 Sean Aylmer: every morning for the full Fear and Greed podcast with 246 00:13:16,809 --> 00:13:19,380 Sean Aylmer: all the business news you need to know. I'm Sean Aylmer. 247 00:13:19,900 --> 00:13:20,670 Sean Aylmer: Enjoy your day.