A Value Investing Blog

Posted on 15 Dec 2016 by Steve Johnson

ASX Listing Caps a Great 2016

ASX Listing Caps a Great 2016


The final approvals are in and the bell is ready to be rung.

Forager’s Australian Shares Fund will commence trading on ASX at 11am this Friday, 16 December. If you are an investor in the Fund, you will receive an email shortly with details about our new ASX:FOR investor centre and how to buy and sell units on ASX. The units will trade like any other ASX-listed security under the ticker FOR. You will also receive a welcome letter in the post, as well as a transaction statement with details of your listed holdings from our new share registry Link.

An estimate of the latest portfolio valuation will be released prior to the commencement of trade and we will be doing the same every trading day (with the exception of the Christmas to New Year period). Daily pricing is a rarity in listed fund world. And our investment philosophy is particularly long term. But we want a transparent and informed secondary market and, for those who do want to buy or sell units, knowing the underlying value of the units should help.

I’m not expecting any fireworks on listing. Over the next few months we hope to see the market find a healthy balance between enough liquidity for investors to add to or realise their investment, and long holding periods that you would expect from the same investors who have been with us the past seven years.

Continue reading “ASX Listing Caps a Great 2016”

Posted on 01 Dec 2011 by Forager

The Two Year Milestone (video)

The Value Fund turned two at the end of October—a milestone for our small funds management team.  After a busy November, I finally got the chance to sit down with Kate and answer some questions about the Value Fund. It's all in the video below.

If you have any questions, feel free to post them as a comment and if we get a sufficient number we might even put together another recorded interview.

Posted on 05 May 2011 by Forager

Melbourne Information Night Now on Video

You might remember we gathered enough support to host an information night in Melbourne when I was there at the start of April. We’ve finally edited the recording of that presentation – a big thanks to Stephanie for all her hard work.

The presentation has been broken into four web-friendly sections. I’ve included the first section with this post, but you can find all four parts on the Value Fund's Videos page. The quality isn’t perfect (particularly of my delivery) but I hope you find them useful.

To watch the rest of the presentation head to the Value Fund's Videos page.

Posted on 25 Mar 2011 by Forager

Melbourne Information Night – It's On!

There’s been sufficient interest in the proposed Value Fund Information night. It will go ahead on Monday 4 April, 2011. Numbers look to be more than what would be comfortable for an informal dinner, so we’ve booked a meeting room at the Oaks on Market. The address is 60 Market St, Melbourne.

We’ll kick off at 6.00pm and should be all wrapped by 7.30pm.

If you’d like to attend please email Kate ([email protected]) to confirm. Thanks to those of you who have already been in touch.

I look forward to seeing everyone in Melbourne on the 4th.


Posted on 09 Mar 2011 by Forager

Value Fund Information Night – Melbourne 4 April

We’ve had a couple of people contact us about another Value Fund information night in Melbourne. I’ll be in Melbourne for the ASA conference on 4 and 5 April and, if we get enough interest, we can put on a Value Fund presentation and Q&A session on the Monday night.

Rough details would be 6pm to 7:30pm in the city (likely somewhere near Crown Casino, where the ASA conference is being held) on Monday 4 April.

Email Kate ([email protected]) or let us know in the comments section below if you would like to attend and we’ll let you know if there is enough interest to justify booking a presentation room. If not, we can perhaps organise an informal dinner somewhere.


Posted on 20 Jan 2011 by Forager

Looking Back it Was Not So Easy (Video)

I'm posting something a bit different today. Instead of my regular written word, The Intelligent Investor's Greg Hoffman and I have put together a video reviewing my first 14 months of life as a fund manager.

It's about 20 minutes long, so you might need a cup of tea. Any questions or comments, let me know.

Posted on 12 Jan 2011 by Forager

Value Fund December Report

Christmas was good. The ankle biters weren’t too bad, after all my whinging. And I managed to knock a couple of books off the Christmas reading list. All the devils are here is well worth a read – I’ve been meaning to post something on Moody’s for ages and this book gave me further ammunition.

What I find interesting is not that the conflicts of interest caused such a stuff up, but that they took so long to come to the surface (Moody’s switched from a subscription model to an issuer-pays model in the 1970s). I’ll write something about that tomorrow.

For now, though, it’s back to work. We’ve just published our Value Fund report for the December quarter. It contains some of the stuff I blogged on before Christmas (It’s Time To Buy in The US), an update on the key events for the quarter, including RHG and Photon, and a look at our performance over the first 14 months.

Assessing investment performance is inherently difficult. Over a period of anything less than a few years, underlying business performance – which is what we’re focused on – is drowned out by market ‘noise’. Share prices move around for all sorts of reasons, many of them unrelated to the underlying performance of the business (Rob Fitzherbert wrote a wonderful feature article, Learn to be a better investor, for The Intelligent Investor on how this makes for a difficult learning environment).

So our focus is on the underlying business performance and how they are tracking relative to our expectations when we bought the shares. It’s been a mixed scorecard so far but you can read all about it in the December Quarterly Update and let me know your thoughts.

Posted on 23 Dec 2010 by Forager

Salmat Delivers My Christmas Present

Given it is the Value Fund’s largest position, it should come as no surprise that I think Photon Group is cheap. My conservative estimate of value was $0.15 and the shares are trading at a price half that. With $200m or so of debt still hanging over the company’s head, however, it also had its fair share of risk.

That’s why Salmat’s purchase of four Photon businesses is the perfect Christmas present. (I did have to chuckle, the Salmat announcement said they are buying $50m of revenue and the Photon announcement said they are giving up $30m.)

Firstly, it increases my estimate of the value. I was valuing the overall Photon business at seven times a conservative estimate of EBITDA. Salmat has paid nine times for the portion it purchased.

Most importantly, however, it substantially reduces the risk profile and will enable the company to get back to paying dividends relatively soon. Photon will use the $75m proceeds to reduce its debt to $122m. The interest bill will be covered more than six times by earnings before interest and tax and the debt-to-EBITDA ratio will be down to less than two times. Photon is now highly unlikely to go broke.

Even if EBITDA falls 10% from last year’s number (they were level pegging for the first four months of the year), I expect Photon to make $30m in post-tax, pre-amortisation profit. It’s going to take something dramatic for the current $115m market cap to look expensive. 

Posted on 11 Oct 2010 by Forager

Value Fund Performance

I received this comment on an earlier Bristlemouth post over the weekend. I thought it and my response might be of wider interest.

Hi Steve,

I would like to see on the yearly report or review whatever you call it a list of all the stock the fund holds and there purchase price. I cannot see reason why this should be kept confidential.

Just to say all are doing well and it is only PGA which causes the Value Fund erosion is really not enough.

Once the portfolio is posted it is then easier for those people who want to evaluate on their own to decide whether to continue staying invested or cut their losses.

I suppose some people invest in a fund because they lack the knowledge to invest on their own but not everybody falls in that category.
Should the disclosure of the funds share purchase prices and percentage holding not be possible I would like to know, because then I am out.



Hi Hans,

Given the overall portfolio was flat for the quarter and Photon contributed a 12% loss, it’s fairly obvious everything else performed well.

I’ve been very clear from the start that I wouldn’t disclose everything we own. We have a few stocks that I’m struggling to get enough volume in as it is – the last thing I need is a few thousand people knowing I’m trying to buy them.

I also want to emphasise that I was clear from the start that this would be a concentrated fund and that concentrated would likely lead to lots of volatility. If you’re thinking of ‘cutting your losses’ because of a 4% loss in a year, you need to consider how you would feel given a 20% loss – it’s possible in any portfolio but particularly in one like this. (In fact, the issue here is not that there’s not enough disclosure, but too much. If I had never mentioned Photon and reported a -0.04% return for the quarter, I doubt you would be concerned?)

I’m going to run the fund to maximise the returns for investors, not to maximise my funds under management. The reason I am good at this job and the reason many people have chosen to invest with me is that I can deal with volatility and invest in a way that many other investors are psychologically unable to do. They recognise the benefits of this approach and are happy to allocate a relatively small portion of their portfolio to me.

If that’s not for you, it’s not a problem. But I’m not going to be changing the fundamentals of what I do.



Posted on 02 Sep 2010 by Forager

Fourteen Rescue One in Value Fund

On 31 July this year, 10% of the Intelligent Investor Value Fund’s net assets were invested in Photon shares, based on the last traded price of $1.02. As of 31 August, those shares were trading at $0.098. All else being equal, you would expect the unit price to be down 9% for the month. We expected volatility such as this when we launched the fund – the small number of stocks and relatively large positions tends to mean a volatile unit price. We’re not, however, delivering it.

When we publish the unit price in the next couple of days it will, once again, show almost no change. The abysmal Photon performance has been offset by a stellar reporting season from the rest of the portfolio. The best performers have been Australian Vintage Group (up 36%), Prime Infrastructure (up 29%), Centrebet (up 27%) and ARB Corp (up 21%). MAp, 1300 Smiles, RHG and Spark Infrastructure all delivered results in line with or better than our expectations.

I’m not sure whether to be upset with the one mistake we’ve made or content that the rest of the portfolio is performing exceptionally well. Both, I guess.

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