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Steve Johnson

Chief Investment Officer, Forager Funds Management. Steve joined the Intelligent Investor business in 2003 and became a significant shareholder in the business in 2004. After managing the research business for the next six years, Steve started the funds management business that is now Forager Funds Management in 2009 and is now responsible for more than $300m of investor funds.

The Opportunity is in the Detail

Steve Johnson
Steve Johnson Forager Funds

Everyone wants to buy stocks for attractive prices. But why would anyone want to sell at that same price? Finding bargains is the key to successful investing, but it requires delving beyond the obvious. In this video, Forager's Alex Shevelev talks about some of the useful insights we glean from... Show More

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Animal Spirits to the Fore

Steve Johnson
Steve Johnson Forager Funds

In March this year, copper miner MMG announced that it had sold its Century zinc mine in Queensland for the grand total of $1. That $1 didn’t go far though. MMG agreed to pay the purchaser $34.5m to cover the costs of rehabilitating the depleted mine site over the subsequent... Show More

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Isentia Shows That “Good” Businesses Can be Risky Too

Steve Johnson
Steve Johnson Forager Funds

Isentia’s shares were trading at $3.50 this time last year. Yesterday the stock closed at $1.05. There’s nothing unheard of about a 70% share price fall. Forager investors have experienced a few of those over the years. What’s interesting about this one is that Isentia was supposedly a “high quality”... Show More

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The Looming Oil Shortage

Steve Johnson
Steve Johnson Forager Funds

Four long and mostly painful years. That’s how we feel when reflecting on for Forager’s investments in the oil slick. There have been a couple of successes, one disaster and an inordinate amount of volatility. Show More

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A big lesson for Aussie investors

Steve Johnson
Steve Johnson Forager Funds

Reporting season is a circus. For most businesses, more than half of their net present value will come from cashflows more than 10 years into the future. Why do we focus so much on one six month period? Show More

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How to Retire Happy, Comfortable and Property Free

Steve Johnson
Steve Johnson Forager Funds

My parents, some investors, politicians and a large number of journalists seem very concerned about me. I’m one of the renter generation, and everyone seems worried about us because they think we are going to retire without a roof over our heads. Show More

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Why We've Sold Reckon

Steve Johnson
Steve Johnson Forager Funds

A few investors have noticed Forager’s recent sale of our substantial holding in Reckon (RKN). We will provide more details in our September Quarterly Report, but to head off a few questions we have been receiving, our rationale can be summarised into four reasons. Show More

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Macmahon's Indonesian Adventure

Steve Johnson
Steve Johnson Forager Funds

Mining services company Macmahon has been in the wars for most of the past decade. As the largest holding in Forager's Australian Shares Fund, we are anticipating the next decade being better. In this video we discuss our recent trip to Indonesia, new contract wins and the importance of Macmahon's... Show More

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Amazon Turns Over the Grocery Cart

Steve Johnson
Steve Johnson Forager Funds

Online retail giant Amazon (NASDAQ: AMZN) has announced an agreement to buy one of America’s most successful grocery retailers Whole Foods Market (NASDAQ: WFM). The acquisition signals Amazon’s latest move as it searches for the optimal business model to compete against its biggest rival, Wal-Mart (NYSE: WMT). Amazon had recently... Show More

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Magic and Mistakes in Mining Services

Steve Johnson
Steve Johnson Forager Funds

My father used to take me to the horse races as a child. It became something of a father-son thing over the years – usually expensive but always entertaining. It never mattered which horse won. Dad had “looked at it” and “shoulda backed it”. It happened so often we started... Show More

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Italy: Crowded Out

Steve Johnson
Steve Johnson Forager Funds

Italy has been a wonderful hunting ground for the Forager International Shares Fund since inception in 2013, especially among smaller companies where we most often find an edge. The country has many world-class businesses and they have been cheap, until recently. Show More

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Too late to invest in Europe’s recovery?

Steve Johnson
Steve Johnson Forager Funds

In March I wrote an article for the Financial Review suggesting Europe was the last bastion of investment value. The three months since have been eventful, with a strong win for a progressive candidate in the French election and a shock setback for Theresa May’s conservatives in the UK. Most... Show More

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Don't Be Shaken from the Equities Tree

Steve Johnson
Steve Johnson Forager Funds

Fund managers are apparently winding up funds and returning cash to investors to avoid the coming crash. Bill Gross is telling us sharemarket risk is at its highest level since the financial crisis. You could be forgiven for feeling gloomy. Show More

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Change Equals Churn at TPG

Steve Johnson
Steve Johnson Forager Funds

Andrew Hansen once told me his eponymous billing software company had hardly ever lost a client. "That's the good news", he told me, "but we have hardly ever won one from an incumbent provider either". Show More

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A Baysean on Uber Suggests Less than 40% Chance of Failure

Steve Johnson
Steve Johnson Forager Funds

What are the odds Uber is alive in 10 years’ time? Just 1%, according to Hamish Douglass of Magellan. My guess is he was making a point using hyperbole – 1% is a very low number. But it is an interesting question. And one that we can learn a lot... Show More

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Active Fundies Harming Their Cause

Steve Johnson
Steve Johnson Forager Funds

The tide has turned. When I wrote Fuzzy Future for Fundies almost a year ago, the concentrated nature of the ASX All Ordinaries Index was the only thing holding back the index investing wave. Show More

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Want investment value? Europe's the last bastion

Steve Johnson
Steve Johnson Forager Funds

Our bottom-up approach to stock selection is telling us that Europe is the most promising investment market in the world. Show More

How to Assess a Successful Investment

Steve Johnson
Steve Johnson Forager Funds

I presented a webinar for Netwealth last week on value investing in small and mid cap stocks. Even after a couple of decades practising value investing, going back to basics gets me thinking about the fundamentals of what we do. And it helps, a lot. Show More

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Final Week in CIMIC vs Macmahon

Steve Johnson
Steve Johnson Forager Funds

Construction giant CIMIC (CIM) has fired its final bazooka in its attempt to gain control over mining contractor Macmahon (MAH). Yesterday it declared that it won’t be extending the bid beyond 9 March and it won’t be raising the price above $0.145. Show More

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I hope you are right and I am wrong. I have no financial interest and the more Aussie tech successes the better. But don't think for a second that because there is institutional money involved it has to all be legitimate. Check out the 1PG announcements and capital raise from 2015 if you need a good example.

On Livewire Christmas Cracker #13: Steve Johnson - Keeping your head -

I think most investors would prefer a 40c loss to a 45c loss. They new investors don't pay the performance fee, it was already accrued in the price they paid. You are right that 10c cash gets paid out, but on the day they invested they already got a 20c discount because of the accrued performance fee.

On More secrets… not all dirty -

Mostly valid points but your point on the accrued performance fees is incorrect. The gross value of the portfolio has fallen 25% in your example ($2.00 down to $1.50), whereas the investor has only suffered a 22% loss (1.80 down to 1.40) thanks to unwind of accrued performance fees. Had the fee been paid out prior to investment the unit price would have fallen to 1.35 instead of 1.40. The less frequent the payment of performance fees the better (for investors).

On More secrets… not all dirty -

Hi Hayden. We haven't been able to do anything different from others. We were kicked out of a place a couple of years back and moved to a better place 200m down the road. A hassle but a weekend's worth of hassle. We don't have children and neither of us have any interest in spending our weekends renovating ... so uniquely placed to be long-term renters. Depends who you are leasing from but my guess is a financial owner would be open to something longer as long as you were happy to sign up to annual escalation.

On How to Retire Happy, Comfortable and Property Free -

Thanks Karyn. Good points. My question is still whether that $1bn worth of their own infrastructure justifies the $6bn worth of intangibles implied by the share price. It might, I'm just asking the question. Btw a comment over on the Forager blog suggested they have thus far have only 16k active connections to their own FTTB infrastructure.

On Further thoughts on TPG -

Thanks Charles. That all depends on what I think they are going to do with the money they keep. If a company cuts its dividend and I think they are likely to fritter away the additional retained earnings then yes, it would decrease my valuation. But if I am confident they can reinvest at higher than my required rate of return, then my future cashflow stream (and valuation would be higher). Berkshire is a good example of a company that has never paid a dividend but has compounded the money internally at a very high rate. As I said to a reader on the blog though, it's important not to get too scientific about these things. If the stock is cheap enough it should be obvious. If you are adjusting discount rates or reinvestment rates to get an answer that works, then it probably isn't cheap enough. The general point was to focus on the business, not the share price. Cash returns are a great example of proof points, because you have the money in your pocket, but a company that had dramatically increased its sustainable earnings power would be just a good an example of a investment playing out to plan.

On How to Assess a Successful Investment -

Thanks for the comment Alan. Spot on. We write down a road map at the time of investment and review it every results. Sometimes we look fascicle but it is a worthwhile exercise.

On How to Assess a Successful Investment -

Fascinating stuff. I heard Kerr Neilson say something similar about his fund investors once. Has anyone done a broad study on the Australian market? We're probably self-selecting but our clients have historically put more money in during downturns.

On Buy high, sell low? -

The big issue with these statistics is that they should be weighted by accessibility. Did you try and get some Baby Bunting? Sealink perhaps? These offerings - which were clearly attractive investments - were massively scaled back (I'm talking 99%). So if you apply for every float, you will get lots of stock in the duds and almost nothing in the good ones. The average investor's return is not going to be anything like the average float return.

On The compelling story of Aussie IPOs -

Well ... whether it is good news or not remains to be seen! Let's call it a lucky start for now.

On Buy Hold Sell: Fallen Angels -

Just a quick caveat here. The share price was less than 40c when we recorded this video, 57c today. Not the same option value it was.

On Buy Hold Sell: Fallen Angels -

I still think it's a an interesting space at the moment. We're on the record as recent purchasers of S32 and are taking a good look a Whitehaven. Even if they are good investments from here, though, it won't change the fact that billions of dollars worth of shareholder wealth have been invested in projects that are never going to earn an economic return.

On BHP Billiton: Hole in the ground -