Buying Academies Australasia Group Ltd (ASX:AKG) & Integrated Research Limited (ASX:IRI)

I purchased starting positions in Academies Australasia Group Ltd (ASX:AKG) & Integrated Research Limited (ASX:IRI) recently. The directors of both stocks have been aggressively buying shares in their respective companies on market in recent months. Both companies reported strong interim results. AKG has a mixed past, but trades on a single digit forward earnings multiple and is growing nicely. IRI has a multi-year track record of improving profitability and generates strong returns on capital, but is more expensive trading on a high teens forward earnings multiple.

As with Easton Investments I need to do more work on both stocks, but suspect there is more chance of me selling AKG before IRI since AKG appears to be the worse business. I held AKG previously, buying for 14 cents in 2017 and selling for 44 cents less than a year later. I have long admired IRI and, although the stock was cheaper back when the Aussie was trading at parity with the US dollar (2014), it looks like a quality growth company selling for a fair price today.

For some months I have been decrying the lack of attractive investment opportunities on the ASX. Suddenly, I have bought three stocks in a couple of weeks. What's going on? I was aware of all three stocks previously. I was unwilling to buy two (AKG, EAS) of the three because I considered them to be poor quality. I dismissed IRI as I felt it was not growing quickly enough. So my standards have slipped.

I think this erosion is a consequence of allocating a large chunk of capital to a quantitative strategy. I'm confident that my three recent purchases will outperform the average stock in my rules based collection, at least in the near term, so am comfortable adding them to the AU Portfolio. Afterall, the goal is to maximise overall returns.

Comments

  1. I should have included a link to the 3 Wise Monkeys Podcast: Episode 9

    https://soundcloud.com/twmpodcast/9-integrated-research-xref-and-mailbag

    Andrew makes a case for IRI and Claude rebuffs - I think both arguments are strong.

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