Rudi’s View: TechOne, Banks & Wesfarmers

Rudi's View | 4:52 PM

In today's edition:

• TechOne, Still The Number One
• Rio Tinto Opens The August Season
• Picking Winners Pre-August
• Banks: Expensive, Or Maybe Less So?
• How To Value The Wesfarmers Quality?

By Rudi Filapek-Vandyck, Editor

Still The Number One

TechnologyOne ((TNE)) has been a superior performer on the ASX, with a track record that looked so mechanically consistent it had to attract at least one nasty short seller who'd claim the books were carefully manufactured.

Because, you know, there is no such thing as near-perfect; it just had to be fraud.

That GMT Research report caused the share price to come unstuck back in 2020, when a whole lot more was going on, but ultimately the shares would reach new all-time record highs, until the world decided last year the threat of AI disruption to anything software-related was too much to bear.

Post-global carnage, TechnologyOne has been among the first, and the few, to experience a notable re-rating in the sector.

It is hardly a secret this company is, and has been for a long time, one of my personal favourites. Years ago, when questioned after one of my on-stage presentations, "Why do you like this company so much?", I responded: "Take a look yourself and tell me, what is there not to like?"

Your hardcore fundamentalist value investor will always have the same answer: it is too expensive.

In practice, this company has doubled in size inside five years over the past two decades (you can do the math), and I remain of the view that, following the de-rating from last year's peak pricing, the odds remain in favour of it doing so again over the coming five years.

Simply put: this truly is one special business. And since when should a Ferrari be priced like a second-hand motorcycle?

This week, I received a message from Chris, an investor who had taken my confidence on board and bought Tech1 shares at around $4. He didn't sell when they rallied above $40, nor did he buy any extra when they approached $20 earlier this year.

Chris is a happy chappy and, by now, a true TechnologyOne aficionado. He brought along a personal thank-you gift: a copy of The Coffee Can Investor by Neeraj Khemlani, published by Columbia Business School earlier this year.

Of course, I am honoured (that goes without saying), but what makes this book special is that it tells the story of one savvy American investor, Matt Ankrum, and his quest to find the best companies with the best odds of generating significant returns for loyal shareholders who can stay the course.

In easy-to-understand parlance: Ankrum wants to own 10 to 20 future 100-baggers as a gift to his three daughters.

His strategy involved screening 58,000 listed companies worldwide. And after all that work and effort, one ASX-listed company made the cut.

Of course, it is TechnologyOne.

I cannot tell you anything more. I have only just received my copy. But I very much feel obliged to write a review in due course. I must read it first.

Chris's three largest portfolio holdings are TechnologyOne, Macquarie Group ((MQG)) and Washington H Soul Pattinson ((SOL)).

All three are included in my research on All-Weather Performers and form part of the backbone of the All-Weather Model Portfolio.

Sometimes, from little things, big, gigantic things of beauty grow.

I will be wearing one big smile for the rest of this week, and beyond.