Transcript QAV #436

QAV 436 Club

Cameron  00:04

The pro­duc­ers of this pod­cast would like to remind you that we’re pro­vid­ing gen­er­al finan­cial advice only. If you’re look­ing for per­son­al finan­cial advice or before you make any invest­ment deci­sions, please con­sult a pro­fes­sion­al finan­cial advi­sor.

Bat­ter­ies to pow­er. Wel­come back to QAV, Seafood, how are you today?

Tony  00:27

Good. You know I don’t like seafood, don’t you?

Cameron  00:31

Real­ly? The name or the cui­sine?

Tony  00:33

I don’t care about the name, not a big seafood either.

Cameron  00:37

Well, yes. Well, good thing you’re not on the Mediter­ranean diet like I am right because it’s most­ly seafood.

Tony  00:44

Is it?

Cameron  00:45

Yes.

Tony  00:45

I Kind of am but I do have red meat instead of seafood. Lots of [Inaudi­ble 00:00:50].

Cameron  00:51

I’m on the Mediter­ranean diet but I just replaced all the fruit and veg­eta­bles with can­dy and all of the seafood with red meat but apart from that.

Tony  01:00

You can eat red meat on a Mediter­ranean diet and I have lots of fruit and veg.

Cameron  01:04

A very lit­tle red meat you’re sup­posed to eat like it’s sup­posed to be a treat, maybe once a week, once a fort­night, some­thing like that as my under­stand­ing of it.

Tony  01:12

OK, well, I’m on a mod­i­fied Mediter­ranean diet.

Cameron  01:17

I have salmon prob­a­bly, a piece of salmon for din­ner once or twice a week and then I have smoked salmon bagels for lunch cou­ple of times a week. A lit­tle bit of tinned tuna, scal­lops–

Tony  01:30

I hate tuna, yuck.

Cameron  01:31

Once a week.

Tony  01:31

I– Just we’re grow­ing up with tin fish and it just made me sick every time I had it. I don’t mind fresh salmon on bagels when it comes that thin­ly sliced stuff. That’s good. We had that for the [Crosstalk 00:01:46].

Cameron  01:45

Fresh or smoked?

Tony  01:47

Smoked is fine as long as it’s good qual­i­ty.

Cameron  01:54

Yes.

Tony  01:56

We had that for the week­end, for lunch one day too but most seafood I don’t like.

Cameron  01:56

A bit of cream cheese, a lit­tle bit of some capers, lit­tle bit of dill. Oh, it’s good.

Tony  02:02

That’s nice.

Cameron  02:04

Well, I’m like you. I’ve nev­er been a big fan of seafood. I think it’s grow­ing up in Queens­land that dis to me just but it was just the amount of seafood that we ate as a kid.

Tony  02:12

Yes.

Cameron  02:13

The smell of seafood on my fin­gers all the time and I got sick of that but–

Tony  02:17

I can’t walk into a seafood sec­tion of a super­mar­ket now with­out get­ting sick.

Cameron  02:21

It’s dis­gust­ing right? Yes, I remem­ber walk­ing through the Vic mar­kets in Mel­bourne in the seafood sec­tion. I’d have to hold my breath away quick­ly too.

Tony  02:27

Yes. Same.

Cameron  02:28

But these days I’m into it more than I have been in the past.

How are you doing? Week– What is this? 27 of lock­down for you? 28?

Tony  02:38

13.

Cameron  02:39

Are you feel­ing that your rights are being oppressed? Tony, are you feel­ing rev­o­lu­tion­ary? Are you putting on your Che Gue­vara cap and get­ting ready to march in the streets?

Tony  02:53

None of those. No, my rights are being oppressed to the extent that if I don’t like the gov­ern­ment, I can’t leave and go some­where else so I have a bet­ter gov­ern­ment but that’s prob­a­bly it.

Cameron  03:03

Well, you can. You can leave.

Tony  03:07

Can you?

Cameron  03:07

Well, where do you want to go? To a dif­fer­ent state or a dif­fer­ent coun­try?

Tony  03:10

Dif­fer­ent– Well, dif­fer­ent state at this stage? You see my daugh­ter.

Cameron  03:14

I think–

Tony  03:16

That’s the biggest thing for me is just being away from peo­ple.

Cameron  03:19

Yes.

Tony  03:20

Can’t see it– I can’t see Jen­ny’s father who’s 87 or 88.

Cameron  03:25

Yes.

Tony  03:26

What a ter­ri­ble way to end a good life. Just stuck in a one-bed­room apart­ment in a nurs­ing home.

Cameron  03:33

Yes, it’s not fair.

Tony  03:35

No, and yes. I think but I just guess get sick of the mes­sag­ing and the spin the politi­cians keep throw­ing at us every day. Epi­demi­ol­o­gist, they tell it like it is. Mat­ter of fact. Yes, we’ll get to 3000 cas­es a day. No wor­ries. Of course, it will be like that and the hos­pi­tals will be full to over­flow­ing. Yes, maybe we won’t get out of lock­down to prob­a­bly [Crosstalk 00:04:00].

Cameron  04:01

That’s your prob­lem. You can’t lis­ten to the epi­demi­ol­o­gist. They’re all being paid by Bill Gates to put chips in your head, Tony. You’ve got to lis­ten to Fox News. That’s where you’re going to get the real facts from. Don’t lis­ten to sci­en­tists. What are they doing?

Tony  04:15

[Inaudi­ble 00:04:15].

Cameron  04:16

Yes. Any­way,

Tony  04:17

Any­way.

Cameron  04:18

We’ve just upset all of our Aus­tralian read­ers– The read­ers of the Aus­tralian who lis­tened to the show. Sor­ry about that.

Tony  04:27

Well, here’s a ques­tion. If a news­pa­per has­n’t made a cent prof­it in the last, what, 50 years since it’s been going, why does it exist?

Cameron  04:36

It’s for polit­i­cal influ­ence.

Tony  04:39

It’s pro­pa­gan­da, isn’t it?

Cameron  04:41

Yes. Any who.

Tony  04:43

Yes.

Cameron  04:44

Speak­ing of things that aren’t mak­ing any mon­ey. Let’s talk about stocks. C‑O-G. Tony, is it COG state or is it some­thing else?

Tony  05:00

Now, it’s COG Finan­cial. Some­one point­ed out when we– When I spoke about it last week, I used both com­pa­nies inter­change­ably and that was a mis­take. It’s C‑O-G, COG Finan­cial. There is anoth­er one called COG State which I was­n’t talk­ing about.

Cameron  05:18

Even though you kept say­ing COG State. Yes, and I did­n’t know that there was two com­pa­nies. I just thought it was all the same thing. I let it go.

Tony  05:27

And just to clar­i­fy– Fur­ther clar­i­fi­ca­tion on that to the– I spoke last week about some of the issues with the write down– There’s a write down issue and there was some­thing else from mem­o­ry which may lead to a qual­i­fied audit but the audits now out and it’s unqual­i­fied. The audi­tors are hap­py with the write downs and with the oth­er issue which from mem­o­ry was eval­u­a­tion issue, I think. No, sor­ry. It was a ques­tion mark over going con­cern because the part of COG, not COG State, COG Finan­cial that lends mon­ey to busi­ness­es. Has lots of short term lia­bil­i­ties but they’re matched against long term assets and strict­ly speak­ing, there was a ques­tion about whether COG Finan­cial could pay its bills this year and keep going as a going con­cern but the audi­tors haven’t raised any empha­sis of mat­ter on that. They have put both things into the key audit mat­ters but it’s not a qual­i­fied audit.

Cameron  06:26

Right. OK.

Tony  06:28

Good to go.

Cameron  06:29

How they– How are they doing? COG, are they hav­ing a good run?

Tony  06:33

Yes.

Cameron  06:33

We spoke about them, you did­n’t put the kibosh on them.

Tony  06:36

Let me have a look. Well, I don’t think I did a pull apart on COG. We did?

Cameron  06:40

I think we did. That’s what this was all about, was­n’t it?

Tony  06:44

Some­one asked the ques­tion about the impair­ments. No, it’s doing. They’re doing well. I can’t recall whether it was a pull apart or not but it was. It was. You’re right, sor­ry and she spoke last week. It was. You’re right. Sor­ry. Did you buy them?

Cameron  06:58

I already own them which is why I did­n’t want you to talk about them.

Tony  07:03

[Inaudi­ble 00:07:04].

Cameron  07:06

Well, it went from a $51 down to $44 but it’s back up to $48. That is half lift­ed, let’s say half a curse.

Tony  07:22

Half a curse is bet­ter than a full curse.

Cameron  07:26

You got some results of a new tri­al on pos­i­tive oper­at­ing cash flow?

Tony  07:30

Yes, must have been around this time. Last year, I had amus­ing about whether if a com­pa­ny went from a neg­a­tive oper­at­ing cash flow to a pos­i­tive oper­at­ing cash flow? Whether that was a good sign that the com­pa­ny would– The share price would out­per­form that? Fol­low­ing that, and I did some analy­sis and use the QAV stocks from August last year and then again from Feb­ru­ary. The half year reports in Feb­ru­ary and the results are mixed.

Just to sum­ma­rize them, there are great results from August last year that the stocks were up 109% that went from neg­a­tive to pos­i­tive oper­at­ing cash flow but from Feb­ru­ary, the six months fig­ures up 3% for those stocks that went from neg­a­tive to pos­i­tive. My guess is that this is maybe some­thing com­ing out of the COVID cough that we saw a lot of stocks maybe go from neg­a­tive to pos­i­tive cash flow or as part of the recov­ery and stocks gen­er­al­ly that the ASX had as well–The index had as well, from last year to this year. I’m not con­vinced it’s sta­tis­ti­cal­ly valid to progress any fur­ther.

Cameron  08:42

Right.

Tony  08:43

I know it’s only a sam­ple of two halves but yes, if it was clear cut, I’d keep going but I’m not.

Cameron  08:50

Right. OK. Tell me about appen­dix 4e Tony.

Tony  08:55

Yes. I’ve been try­ing to find a place where a qual­i­fied audit is record­ed and it does­n’t always hap­pen but in appen­dix 4e, there is a sec­tion. Appen­dix 4e is a return that comes out with the annu­al num­bers– With the annu­al fig­ures to the ASX and it gives a quick sum­ma­ry of it like a one page, be one page sum­ma­ry of it and it gives this snap­shot of key infor­ma­tion. It gives the div­i­dends, the net tan­gi­ble assets, prob­a­bly gives the earn­ings per share or that about 12 dif­fer­ent things in a sum­ma­ry form and one of the last thing that it asks for is, it has a ques­tion that the ASX wants to know about. Is the oth­er com­pa­ny fig­ures audit­ed and was there any qual­i­fi­ca­tion to it? It’s there. How­ev­er, I– And that’s where I go to first now if I want to try and see if it’s a qual­i­fied audit.

How­ev­er, some com­pa­nies just blind­ly say some­thing like the finan­cials have been audit­ed and I don’t go on to say what the sta­tus of the audit is. Bet­ter com­pa­nies will say that the com­pa­ny’s fig­ures have now been audit­ed and the audit has no qual­i­fi­ca­tions.

Cameron  10:12

And this is some­thing that’s pub­lished sep­a­rate­ly to the annu­al report. If you look in the list of doc­u­ments that they’ve pub­lished in Stock Doc­tor, this will be bro­ken out.

Tony  10:21

Yes, you’ll see. Some­times it’s with the finan­cials but it’ll say annu­al finan­cials and appen­dix 4e or some­times it might just say appen­dix 4e. Some­times it says appen­dix 4e pre­lim­i­nary finan­cials, pre­lim­i­nary being unau­dit­ed. You’ll see that as part of the 4e, it’ll say the num­bers are still being audit­ed and that’s anoth­er issue that it’s cropped up just in the last cou­ple of weeks with down­loads I’ve been doing is that appar­ent­ly, the ASX has giv­en a waiv­er for the require­ment to have the annu­al num­bers audit­ed by the end of August and I think that’s was some­thing that was loos­ened dur­ing COVID because it was dif­fi­cult get­ting audi­tors to out the com­pa­nies and things like that to do vis­its and check things and that’s still enforced. It’s been a cou­ple of com­pa­nies that I’ve checked recent­ly that don’t you have audit­ed fig­ures.

Cameron  11:15

Right.

Tony  11:16

Yes. When I’ve been fill­ing out the man­u­al­ly entered data sheet, I’ve been say­ing if they were audit­ed last half and it was clean, I still said qual­i­fied audit no, rather than leav­ing it blank because that would take it off the buy list straight­away.

Cameron  11:29

Yes.

Tony  11:31

But there may be some cas­es we should go back and check before we buy or sell stocks.

Cameron  11:36

Right. Mov­ing right along, GLEs results are out.

Tony  11:43

Yes. Good old.

Cameron  11:45

GLE.

Tony  11:47

I’d just raise it because it has­n’t come through on my down­load because the ADT, the Aver­age Dai­ly Trans­ac­tions is zero.

Cameron  11:56

Yes.

Tony  11:57

Even though the price has risen since the results came out.

Cameron  12:00

Right.

Tony  12:01

But it’s still 32 cents which I think was below its high point, which was about 37.

Cameron  12:06

Below what I sold it for too which was 33 cents.

Tony  12:10

No, good. OK.

Cameron  12:11

Yes. I got out just in time before it col­lapsed, anoth­er 10 or 15%, then it came back up. I did get an alert from hot cop­per I think the oth­er day say­ing that they had one of the direc­tors, I think had sold a bunch of stock 55 mil­lion shares or some­thing.

Tony  12:33

Cameron  12:34

Some major share­hold­er move­ments there and I thought, Oh, no, don’t tell me the share price is bumped up and I should have held on to it but so far, it’s all good.

Tony  12:44

Yes. I just raise it in case peo­ple won­der why it was­n’t on the buy list any­more but that was the rea­son.

Cameron  12:50

Yes. Speak­ing of the buy list, by the time peo­ple hear this, we will have put one out. Our first offi­cial score­card.

Tony  12:58

Yes. Look­ing for­ward to that again. Yes, we’re going to put it out. Just– It’ll go out with an email, I think in the email to peo­ple with the record­ing, won’t it? That’s the plan.

Cameron  13:15

In an email with the record­ings. Is that right? Sor­ry?

Yes. It’ll go out every Mon­day in the week­ly email. The pod­cast, this week’s does­n’t nor­mal­ly come out till Tues­day so they’ll get the email with this pre­vi­ous week’s pod­cast. For the peo­ple who miss it, they’ll get the email say­ing, hey, this was last week’s pod­cast, all the stuff we talked about then this week’s episode comes out the fol­low­ing day usu­al­ly.

Tony  13:41

OK, and the email that goes out will have the buy list in it though, right?

Cameron  13:45

Yes.

Tony  13:46

For our sub­scribers. Yes.

Cameron  13:47

It’ll go out on a Mon­day. Yes.

Tony  13:49

1. Yes.

Cameron  13:49

[Inaudi­ble 00:13:51].

Tony  13:51

Yes, good. Yes. Buy list is ready to go.

Cameron  13:55

Yes. Now, the one that we’re putting out this week, we fil­tered out stocks with zero ADT and stocks that are tied to an under­ly­ing com­mod­i­ty that price is in decline. Our iron ore stocks and I think our cop­per stocks we just took them out.

Tony  14:15

Below their sell lines. Yes.

Cameron  14:17

Yes, but every­thing else is in there. It’s a big list and one of the things that we want to make sure that peo­ple real­ize is that the scores and the rank­ings that these stocks get is based on the date of the down­load which is usu­al­ly going to be the day that it comes out or the day before it comes out. I think you did a down­load on Sun­day this week and you put it out on the Mon­day so before any­one makes any invest­ment deci­sions based on that list, they should at least check the share price. I mean, we would rec­om­mend do all your own research, again, your own scores. But if you’re not going to do that, at least check that the share price has­n’t gone up dra­mat­i­cal­ly before you buy it. Well, if it goes down, it makes it a prob­a­bly a bet­ter score, does­n’t it? Unless it’s gone [Crosstalk 00:15:07].

Tony  14:20

Well, it’s impos­si­ble at sell line.

Cameron  14:43

Yes.

Tony  14:46

It’s not a buy.

Cameron  15:09

Yes. Unless it’s crashed since you get it. Do some basic checks, obvi­ous­ly, before you make any invest­ing deci­sions.

Tony  15:18

Yes, and also too– We’ve left in stocks regard­less of whether they have fresh num­bers or we’re still wait­ing for some num­bers to come through. Be aware of that and I think the last thing is that it’s always a chop­py time to buy stocks as they go ex-div­i­dend. This in the– Around this time, prob­a­bly about start­ed going ex-div­i­dend last week or so and I’ll keep doing it for anoth­er cou­ple of weeks so just be care­ful of that because that can throw your tim­ing out and you might– You may need div­i­dends or you may not want them so just be aware of that and also too of a lot of stocks or some stocks are sell­ing close to their sell lines. If they drop down, add a div­i­dend back to that, at least until their div­i­dends paid so you can make a bet­ter deci­sion.

I’m usu­al­ly pret­ty for­giv­ing of a stock that falls just below its sell line at this stage of pro­ceed­ings because in some cas­es, not only are they going ex-div­i­dend and drop­ping by that amount but there are plen­ty of funds out there who just div­i­dend har­vest and we’ll move on to the next div­i­dend pay­ing stock and I’ll be sell­ing the stock as well. There is some extra down­ward pres­sure which does­n’t last very long, usu­al­ly.

Cameron  16:33

Right.

Tony  16:34

And the stocks will bounce back.

Cameron  16:39

Just want to point out for peo­ple lis­ten­ing to the free episodes in the newslet­ter that we send out to the free lis­ten­ers, I think you’ll get two stocks out of that list. We’ll prob­a­bly put out a small cap stock, the top small cap stock and the top large cap stock, depend­ing on where your lev­el of invest­ing is in your port­fo­lio but for the club mem­bers, you’re going to get the full list which I think today was 90 stocks in that list.

Tony  17:07

Yes.

Cameron  17:08

It’s a big list.

Tony  17:09

Yes, it is.

Cameron  17:10

Yes.

Tony  17:12

Very much. Inter­est­ing­ly enough, I went through on the week­end too and if you do fil­ter out com­pa­nies that haven’t giv­en us their June half num­bers and you fil­ter out the iron ore com­pa­nies and cop­per com­pa­nies and you fil­ter out those which so far this month have trend­ed down, which I tend to do as well. The list gets much short­er.

Cameron  17:32

Yes.

Tony  17:32

Yes, but as I say, I think the down­ward pres­sure this month is prob­a­bly going because of stocks going ex div­i­dend and it’ll turn around.

Cameron  17:40

Right. You left the Josephine’s in the list?

Tony  17:45

What’s the Josephine, again?

Cameron  17:47

Where they’ve trend­ed down. They’re above the buy line but they’re trend­ing down.

Tony  17:52

Yes, I’ve worked to leave [Sysco 00:17:52].

Cameron  17:53

Cor­rect. Well, OK. Well, that’s con­tro­ver­sial.

Tony  17:59

Well, that’s what I said. We can pull out a very short buy list but then if some­thing goes from trend­ing down to trend­ing up next week, the buy list is out of date or could change quite dra­mat­i­cal­ly, quick­ly.

Cameron  18:13

That’s why we put out a new one every week mate.

Tony  18:15

We can do that or we can just let peo­ple check it them­selves before they decide to buy and then they’ll have a day by day check on it.

Cameron  18:25

Yes, but one of the points of the buy list I think is over the last cou­ple of years we’ve been doing this, we get– Con­stant­ly get feed­back from peo­ple who play around with QAV for a bit, they do the two-week free tri­al, they sub­scribe for a lit­tle while and they’ll say, oh lis­ten. I love it. They appre­ci­ate every­thing you and Tony are doing but just– I just don’t have time to learn it and my Excel skills aren’t good enough and I can’t afford a stock Doc­tor sub­scrip­tion and this and that the oth­er and I can’t afford to do it.

One of the ideas of putting out this list is it’s for peo­ple who don’t want to do all the work them­selves. It gives them a list of sug­gest­ed stocks that we think are a good bye. I think we should do all the work for them here as much as we can so they don’t have to then go and check too many things any­way. Yes, I nor­mal­ly fol­low them on sen­ti­ment if they’re Josephine based on pre­vi­ous dis­cus­sions but if you think there’s good rea­son not to do it because of the whole ex div­i­dend issue this week, then that’s dif­fer­ent.

Tony  19:40

No, Jo– I think– The whole thing I think it still applies. I just want­ed peo­ple to make their own deci­sion and to check the stock at the time that they were going to buy it because like if there was because on Fri­day and check­ing out by all this then things may have changed in the next four days.

Cameron  19:57

Sure.

Tony  19:58

Yes, but I think I can take it out. I think I should take out the iron ore stocks and cop­per stocks. Any­way, I’ll start doing that from now on.

Cameron  20:07

Yes.

Tony  20:08

It’ll mean anoth­er col­umn in the mas­ter spread­sheet but I’ll send a new one, a fresh one through to you with that in it. It’ll mean I have to add a man­u­al­ly entered data col­umn to say, what’s the under­ly­ing com­mod­i­ty?

Cameron  20:20

[Crosstalk 00:20:21]. Yes.

Tony  20:21

In pos­i­tive sen­ti­ment or not?

Cameron  20:23

Yes, right.

Tony  20:26

But that’s OK. I can do that and I can also add anoth­er col­umn to say, is that trend­ing down this month?

Cameron  20:32

Well, should we be intro­duc­ing the com­mod­i­ty col­umn as stan­dard prac­tice now?

Tony  20:38

Yes.

Cameron  20:38

See­ing as that’s what we’re doing?

Tony  20:40

Yes.

Cameron  20:40

Yes, OK. We need an updat­ed ver­sion of the mas­ter check­list in the AF check­list that checks that we need to put it in the Bible as well.

Tony  20:51

Cor­rect. Yes. OK and then the ques­tion is, should we do that for Josephine’s as well?

Cameron  20:55

Well, Josephine’s. I did do that for my own check­list a few weeks ago but then I real­ized, well, it’s just sen­ti­ment checks any­way. I mean, every time I run a check­list, I check the sen­ti­ment. Any­way, if it goes from being a Josephine one week and then it spikes back up the next week, then it’s sen­ti­ment goes from neg­a­tive to pos­i­tive.

Tony  21:19

OK, do you want to just use the sen­ti­ment score for Josephine’s as well?

Cameron  21:25

Yes, that’s what I’m say­ing. That’s what I do because that’s what it is real­ly, right? That it’s just pick­ing up it sen­ti­ment. It’s just we’ve added a new ele­ment to sen­ti­ment and it used to just be is it above the buy line? But since then, we’ve said but if it’s above the buy line but it’s been declin­ing recent­ly, then no, it fails. Sen­ti­ment part be [Inaudi­ble 00:21:52].

Tony  21:50

Yes. Well, I guess it does fail but it’s– In my mind it’s been more of a hold. Let’s just keep check­ing it until it turns up again but and I think maybe we should call it out sep­a­rate­ly just so you don’t get lots of ques­tions around. Hang on. This is how I draw the buy line. Why is the sen­ti­ment– It’s above the byline? Why is the sen­ti­ment neg­a­tive?

Cameron  22:09

Or because it’s a Josephine.

Tony  22:11

I put the upward Josephine col­umn into the man­u­al­ly entered data so we can clar­i­fy it.

Cameron  22:17

1. You can do that. I mean, yes, look at but the prob­lem with the free lis­ten­ers, I mean, quite frankly, if you lis­ten to this for two weeks and you’re not ful­ly sub­scribed, I don’t know what your prob­lem is. I’m not sure this guy knows what he’s talk­ing about real­ly.

Cameron  22:32

How long is it going to take you to work out? But that, my point was going to be that they prob­a­bly don’t under­stand the sys­tem well enough to know to even check for a Josephine. To expect them to do that is prob­a­bly expect­ing a bit much.

Tony  22:53

Cameron  22:54

Then again, that’s their fault, right? They should. It’s on them if they don’t know because they haven’t got seri­ous about it yet. I don’t know. I mean, two minds.

Tony  23:06

I was too that’s why I did­n’t make the change before I sent through the buy list and that’s OK. I can do it.

Cameron  23:10

Good point. Tell us what you think lis­ten­ers.

Tony  23:15

Yes. Let’s get some feed­back from peo­ple too. Yes.

Cameron  23:20

Navexa. I want­ed to point out, we’ve just eclipsed the two-year anniver­sary of the port­fo­lio, Tony.

Tony  23:28

Wow, how we’re gone.

Cameron  23:31

Oh, not too bad. I think since– We have the offi­cial start date of our dum­my port­fo­lio as the sec­ond of Novem­ber– Sep­tem­ber, 2019 because that’s when we invest­ed all of our fake start­up cap­i­tal that we start­ed with. Since then, in that two-year peri­od, the ASX 200 is up rough­ly 10% and were up rough­ly 37%.

Tony  24:08

That’s 10% per annum and 37% per annum. That’s a com­pound growth. Yes, we’re up more than 37%. We’re up 50% because we were start­ed at 20,000 and now we’re at $30,000.

Cameron  24:24

Is it real­ly?

Tony  24:28

Yes.

Cameron  24:29

[Inaudi­ble 00:24:30].

Tony  24:30

It’s 30% com­pound growth and ver­sus 10% for the ASX.

Cameron  24:34

See that’s why you get paid the big bucks Tony as you– Just pay­ing atten­tion. You just don’t look at a graph and go, OK, well, I guess that’s what it is. Oh, yes. Of course.

Cameron  24:47

Well, that makes a lot more sense. Wow, 37% per annum. Holy shit. That’s impres­sive. Wow.

Tony  25:03

That’s why our sub­scribers have been post­ing those big num­bers in the leader­board.

Cameron  25:08

I was hap­py with the fact that we’re up 37% over two years but we’re up 37% a year over two years.

Tony  25:15

We start­ed with 20 odd 1,000 dol­lars and then what’s the port­fo­lio val­ue now? 30 Some­thing?

Cameron  25:21

Yes, 30.

Tony  25:22

Around 30?

Cameron  25:24

31, 32. Yes.

 

Tony  25:26

It’s up 50% in the last two years which is 30% com­pound growth.

Cameron  25:31

37. Yes, real­ly?

Tony  25:34

It sounds high actu­al­ly. No, that’s not right. We get to– I get to 37,000 so there’s some­thing wrong there.

Cameron  25:41

Hey folks, Cameron in the edit­ing room. To cut a long sto­ry short, Tony and I could­n’t work it out and I emailed the guys at Navexa and Navarre Trous­selot, the CEO of Navexa sent me an email say­ing, hi, Cameron. Hi– Let me start it again. Hey, Cameron, I’ll explain the cal­cu­la­tion does­n’t just take the start­ing val­ue and the end­ing val­ue of the port­fo­lio and deter­mine the per­for­mance. It indi­vid­u­al­ly cal­cu­lates the per­for­mance on every stock in the port­fo­lio, includ­ing the time that each stock and each posi­tion with­in the stock was invest­ed in order to cal­cu­late the over­all return. The annu­al­iza­tion is also not as sim­ple as count­ing the days between the first of Sep­tem­ber 2019 and the sev­enth of Sep­tem­ber 2021. The annu­al­iza­tion cal­cu­lates the num­ber of days each stock posi­tion was open for in the port­fo­lio and sums them togeth­er to get the aver­age years invest­ed or AYI. Is the AYI that is then used to ana­lyze the return.

This gets even more com­plex if you have stocks with mul­ti­ple open and closed posi­tions but all of that is han­dled. The 36.53% is made up of all of the above. If you want­ed to cal­cu­late it by hand, you need to cal­cu­late the per­for­mance of each indi­vid­ual stock and also cal­cu­late the AYI for each indi­vid­ual stock and then com­bine them. This cal­cu­la­tion is essen­tial­ly a big rea­son Nevexa exists in that it brings a pro­fes­sion­al lev­el cal­cu­la­tion method­ol­o­gy to the every­day investor and then he says, they have a page on their web­site that explains how it all works if you want more details.

Now, of course, I can’t make any sense of that. It just melt­ed my brain but I’ve asked Tony to maybe explain it in Eng­lish for us on the show next week. Hope that helps.

Well, either way, it looks like our port­fo­lio is doing well. It exact­ly how well com­pared to the all odds we don’t know but yes, good. It’s good. It’s three times, four times some­where in that vicin­i­ty maybe.

Tony  27:45

Yes, say­ing three times at the moment.

Cameron  27:48

Right.

Tony  27:48

Depend­ing on what they’re mea­sur­ing there.

Cameron  27:50

Yes. OK, your pulled pork this week, Tony, what is it?

Tony  27:56

Yes, pulled pork this week is Clearview wealth.

Cameron  28:00

Oh, no. Do I own them? Should I sell now before we do this?

Tony  28:06

I hope you do. I know because they’re doing well.

Cameron  28:08

I don’t know. I think I did at one point.

Tony  28:13

Real­ly? I’m glad you sold this. Well, they’re doing well prob­a­bly.

Cameron  28:19

Thanks.

Tony  28:19

You’re wel­come and you– They’re up 8% today which is Mon­day, the sixth of Sep­tem­ber.

Cameron  28:26

Right.

Tony  28:26

In fact, they’re climb­ing very quick­ly and what’s hap­pened, Clearview wealth is a com­pa­ny that it’s a finan­cial ser­vices com­pa­ny, basi­cal­ly a life insur­ance provider or sell­er. A sell­er of life insur­ance and– But it also has two oth­er arms to it, its busi­ness­es. It has a wealth man­age­ment busi­ness and a finan­cial advice busi­ness and I think the rea­son why the share price is tak­ing off is because they’ve just announced they’re going to sell the finan­cial advice part of their busi­ness.

They’re still retain­ing a stake in the com­pa­ny that’s buy­ing it and the merge. It’s also a finan­cial advice busi­ness and then it’s been merged togeth­er with them. But I think peo­ple are hap­py that the com­pa­ny is basi­cal­ly a life insur­ance busi­ness and the oth­er finan­cial advice was­n’t adding no heap to the com­pa­ny’s prof­its.

Cameron  29:30

Right.

Tony  29:31

That’s why it’s been– That’s where the share price has tak­en off since that announce­ment which came out with the annu­al results and just a bit of back­ground on that, it– Even though the direc­tors only look like they hold about 4% of the cap­i­tal for the com­pa­ny, there is a large share­hold­er on the reg­is­ter called Cres­cent cap­i­tal who own 54%. Cres­cent cap­i­tal are an invest­ment com­pa­ny and they are con­duct­ing a strate­gic review with the board on what this com­pa­ny looks like going for­ward and this is the sort of first out­come from that review which is to get rid of the finan­cial advice busi­ness and con­cen­trate on the oth­er two, par­tic­u­lar­ly life insur­ance.

That’s what’s hap­pen­ing with the com­pa­ny but it scores real­ly well. The QIV of 0.4 and this is based on a 61 cent share price which it was this morn­ing. It’s now up to about, it’s up to more than that. It’s up to 66.

Cameron  30:27

66. I sold it over 50.

Tony  30:32

Well done.

Cameron  30:33

Back in June. 21st of June. [Crosstalk 00:30:38]. Sold them at 50. I think it was a rule one thing, they went up, they went back down, and I saw OK and then they went, oh, God dammit.

Tony  30:49

Bug­ger.

Cameron  30:50

Bas­tards.

Tony  30:51

Yes, the QAV scores good 0.4 aver­age dai­ly trades, pret­ty small 27,000 and that’s large­ly because of that large share­hold­er on the books is not much free float. Qual­i­ty scores a lit­tle bit low 56% but then if you take into account that, OK, it’s not the founder own­er that has a large share­hold­ing but there is a vest­ed inter­est there with a large share­hold­ing which I’ve nev­er tak­en into account before but it seems to be hav­ing a pos­i­tive impact. Maybe the qual­i­ty scores a lit­tle bit under­stat­ed there. But any­way, price to oper­at­ing cash flow, very low, 1.4 times PE of three, net tan­gi­ble assets of 70 cents per share, or we use naps which is 73 cents per share. It’s trad­ing less than its net tan­gi­ble asset val­ue which is anoth­er great thing to be aware of in terms of val­u­a­tion. Con­sen­sus val­u­a­tion, I think there’s only one stock bro­ker cov­er­ing it, but they’ve got 96 cents as the price.

The growth fore­cast is down. That may have been depress­ing the share price and that may change after this sale of the finan­cial advice part goes through. What else can I say? It’s not a star stock but it does have strong finan­cial health from Stock Doc­tor. It’s not the high­est or low­est of the last six PE’s, it’s in the mid­dle and I’ve got it down as a new three-point upturn. It’s been trad­ing in and out for a while now but it was a sell recent­ly and we came back into being a buy since that since the lat­est uptick in the share price.

Zero. Equi­ties has­n’t been con­sis­tent­ly increas­ing so it gets a zero for that. That’s the pulled pork. Gen­er­al advice only, as we have to say, after our AFS license came through.

Cameron  32:41

For every stuff.

Tony  32:43

We have to say that every­body’s sup­posed to say as often as pos­si­ble but any­way.

Cameron  32:47

Right.

Tony  32:47

Gen­er­al advice on you do your own research. Yes, but scores well and the share price is tak­ing off. Have a look.

Cameron  32:54

Oh, very good. ASG, Tony. It’s crossed a sell line.

Tony  33:03

A cou­ple of more com­ments on stocks I came across doing a buy list on the week­end ASG which is auto sports group has been on our buy list in the past and I think it may even still be on it. I think it’s just crossed itself. I’ll just dou­ble check that again today because it’s gone up a lit­tle bit today. Yes, it’s right on the sell line today I think. Let me have a look.

No, I think it’s just crossed that sell line. I’m get­ting very close. I’m get­ting around 225 and well, maybe it’s a cent above the sell. Yes­ter­day, it was just below, it’s gone up a per­cent today. It’s right on the sell. I just want­ed to call that out. Be aware of ASG if you’re hold­ing it. It’s awful­ly close to a sell if it isn’t today.

Cameron  33:56

Right, and VER.

Tony  34:01

No, I’m sor­ry. I think it’s, what’s it called? VRS. I put in the wrong code in our show notes and again, I think this was on the buy list in the past. Maybe not. Let me just have a look.

Cameron  34:16

Yes, it sounds famil­iar.

Tony  34:18

Yes, I think it was. I’m just going to check its QAV score. Yes, it cur­rent­ly has a QAV score of 0.19 based on its lat­est fig­ures, how­ev­er, it came out with a qual­i­fied audit. I just want to dou­ble check that one again.

Cameron  34:36

Oh, Veris Geospa­tial Ser­vices here. I know these guys from my own con­sult­ing days. They were com­pet­i­tive to one of my con­sult­ing clients that’s why I know that.

Tony  34:46

All right. OK.

Cameron  34:47

Do a lit­tle LIDAR scan­ning and all the cool stuff that sur­vey­ors are doing these days.

Tony  34:56

Yes, that’s right. It’s a sur­vey­ing com­pa­ny, isn’t it? I’m just going to find the word­ing I’m after. Oh, this is anoth­er one that’s com­ing through. I’ve got this wrong again. How can that be? I can’t see the qual­i­fied audit now.

Cameron  35:13

Well, how many grannies were you drink­ing yes­ter­day?

Tony  35:16

I haven’t had a drink in like two weeks.

Cameron  35:19

I drink it all.

Tony  35:21

Cor­rect. I should get back on the drinks and get back on the drinks, I’ll make bet­ter sense.

Cameron  35:28

Who are you and what have you done with Tony Kynas­ton?

Tony  35:33

Why can’t I find that going con­cern?

Cameron  35:36

Cause you’re sober, that’s the prob­lem. What? You told me.

Tony  35:39

No, I found it yes­ter­day. It was last night.

Cameron  35:41

You said you bought all this new whiskey and you were doing a cou­ple of glass­es a night. What hap­pened?

Tony  35:48

I just stopped for a while. Try­ing to get healthy, try­ing to lose some weight. Oh, yes. Look, there’s a– OK.

Cameron  35:59

There’s no calo­ries in whiskey, Tony. It’s well estab­lished sci­en­tif­ic fact.

Tony  36:04

No, it’s actu­al­ly.

Cameron  36:06

I heard it on Sky News.

Tony  36:11

No, just tak­ing a break. I feel much bet­ter for it actu­al­ly too.

Cameron  36:14

Good for you.

Tony  36:16

Yes. OK, there is a going con­cern in the notes to the finan­cial state­ments. Note six, going con­cerns is raised by the direc­tors rather than the audi­tors. The group record­ed a loss from con­tin­u­ing oper­a­tions at 1.38 mil­lion. The net cash inflow from activ­i­ties was 6.7 mil­lion, includ­ing 5.1 mil­lion of job keep­er receipts.

Cameron  36:43

Job keep­er.

Tony  36:49

The direc­tors are pur­su­ing a demerg­er of Aqura, A‑Q-U-R‑A from the Varus lim­it­ed group through a poten­tial IPO sub­ject to reg­u­la­to­ry require­ments. This– The merg­er is expect­ed to raise addi­tion­al cap­i­tal to cap­i­tal to fund the com­pa­ny’s cash flow bud­gets. That’s what I– That raised the red flag for me, Cam. I’m just sur­prised that the audi­tors haven’t picked it up too. I’m just going to check that audit report again.

Cameron  37:21

It sounds to me like you’re search­ing for going con­cern in these doc­u­ments, find­ing it and going, yes. It’s not actu­al­ly a qual­i­fied audit. It’s just the direc­tors call­ing out some cash flow issues.

Tony  37:34

Yes, pos­si­bly. It’s– I’m sor­ry. I don’t know why I did­n’t look at the audit report cor­rect­ly. Maybe that’s what I did search for going con­cern and found it. OK, strict­ly speak­ing, not a qual­i­fied audit. How­ev­er, let me just see if it’s called out in the audit. Yes, it is as a key audit mat­ter. Yes, the audi­tors have raised it as a key audit mat­ter, they haven’t real­ly made it. They haven’t made an empha­sis of mat­ter and they’ve called in oth­er peo­ple with more expe­ri­ence to have a look at it and that’s pret­ty much all they’ve said.

Cameron  38:14

Right. Sounds like a big red flag.

Tony  38:20

Cer­tain­ly con­vinced me yes­ter­day when I was doing my analy­sis but strict­ly speak­ing, it’s not I want to make that clear. How­ev­er, if you’re rely­ing on job keep­er and or decou­pling a part of the busi­ness and float­ing it as an IPO to raise mon­ey to keep going, it does­n’t sound like you’ve got the strongest busi­ness in the world, does it?

Cameron  38:43

No, but they might have after that depends on– Maybe they’re.

Tony  38:48

Yes, I don’t want to be– I don’t know. Well, I’m pret­ty neg­a­tive on it based on that but I don’t want to be cat­e­gor­i­cal­ly neg­a­tive but well, I guess I have been I put it down as I’d ordered it myself.

Cameron  39:02

Alright, speak­ing of job keep­er, I hear Jer­ry Har­vey decid­ed to give back. He did a third of the job keep­er mon­ey that he got.

Tony  39:13

Six mil­lion dol­lars’ worth.

Cameron  39:15

Out of 22 mil­lion.

Tony  39:17

A record prof­it year for him.

Cameron  39:20

What a nice guy.

Tony  39:22

Yes. Thanks, Jer­ry. Before we move on, thank you very much.

Cameron  39:27

Before we move on to ques­tions I just want­ed to ask about MXI. Some­body in the Face­book asked about MXI last week, stock that I do hold had this five for one con­sol­i­da­tion and then has dis­ap­peared since then. Stock Doc­tor and also my stocks app, show­ing me any price changes in the last week or so. Now, some­body said that it was now the code of change to MXIDA but you said that was just like a hold­ing pack­age. [Crosstalk 00:40:04].

Tony  40:02

Now Max­i­TRANS is there, but every­thing is flipped over to the five times con­sol­i­da­tion. The share price is now 365. Where­as before the share price last time we looked at it was around 70 cents.

Cameron  40:19

Yes.

Tony  40:20

And what hap­pens dur­ing the inter­im is that the share code gets giv­en the suf­fix DA after it. MXIDA, which is a fair­ly com­mon thing for any­thing which is under­go­ing a restruc­tur­ing and it just means because of T plus two set­tle­ments, it makes peo­ple aware that if they buy shares at 70 cents today that they may be worth and will be worth $3.50 tomor­row or in two days’ time. It’s just they use that DA to say it’s– I think it’s offi­cial­ly call the third set­tle­ment but it may even hold up set­tle­ment by more than the T plus two days, while I get all the data to flow cor­rect­ly and reflect the new share price but that’s what it is.

Cameron  41:09

Oh, and I just real­ized look­ing in Stock Doc­tor that they issued a trad­ing halt last week. Pend­ing some that and the com­ple­tion of the sell of their trail­er busi­ness may be sup­posed to come out of the trad­ing halt on the sev­enth of Sep­tem­ber. We’re record­ing this on the sixth. That’s why it’s been flat lin­ing for the last week.

Tony  41:31

Right. OK. Yes, OK. That makes sense.

Cameron  41:35

Right. We should see the– Because last time I looked at it, I was like, Oh, and the share price has­n’t moved in a week. That’s weird and there’s been no trad­ing but that’s why it’s got a trad­ing halt. I should have thought of that ear­li­er.

OK, thank you for that. Right. Any ques­tions? Daniel.

Tony  41:55

It’s only been going for an hour.

Cameron  41:57

Yes.

Tony  42:01

Because I thought we had two ques­tions and I padded.

Cameron  42:04

Oh, is that what you did? OK, well, sor­ry about that. Daniel asks, CVW has now entered the top of the list, was hop­ing for some help with the bal­ance sheet and cash flows. I’ve noticed in the last cou­ple of years, there are oper­at­ing cash flows jumped up sub­stan­tial­ly to pre­vi­ous years and in effect, makes them come out with a nice QAV score. I’m won­der­ing if Tony could shed some light as to what’s behind this. It is a pret­ty poor qual­i­ty score rel­a­tive to oth­er high scores on the list. It’s tak­en on more debt in the last cou­ple of years which sounds coun­ter­in­tu­itive if it’s oper­at­ing well and direc­tors only have a small stake, which con­cerns me a lit­tle. I’ve noticed by sen­ti­ment, though, it’s look­ing as if it’s turned around and trend­ing upwards nice­ly, which makes me think I’m miss­ing some­thing.

 

He did send me this ques­tion last Mon­day and I did­n’t see it until after we’d record it and then it went up by 15%. I apol­o­gize for that. Daniel, I was meant to send you the ques­tion to get a– Like pri­vate email response but I got busy with AFSL legal doc­u­men­ta­tion and my apolo­gies, Daniel.

We’ve already talked about CVW. Is there any­thing else you want to add based on Daniel’s ques­tion?

Tony  43:14

Yes, just a cou­ple of points. The oper­at­ing cash flow for this com­pa­ny is, looks like it’s almost com­plete­ly dri­ven by the life insur­ance busi­ness. The receipts from cus­tomers are basi­cal­ly life insur­ance pre­mi­ums and when I say life insur­ance, I mean, life insur­ance and oth­er prod­ucts in that suite. Income pro­tec­tion, for exam­ple, would also be a life insur­ance prod­uct. It’s all– The oper­at­ing cash flow is dom­i­nat­ed by the life insur­ance busi­ness, lots of mon­ey com­ing in from the receipts from cus­tomers and then the major out­go­ing is claims for on life insur­ance poli­cies.

The big change in recent times looks like that the pre­mi­ums have gone up slight­ly over time but the claims have come down and that’s been a big dri­ver in the oper­at­ing cash flow going up and I’m talk­ing broad brush­es here. There’s some oth­er move­ments in there as well but that’s pret­ty much what it is. That was the- There was a ques­tion about why the oper­at­ing cash flow jumped up sub­stan­tial­ly in pre­vi­ous years. That’s the rea­son. I don’t know why the claims are going down and whether that will con­tin­ue.

Some­times, a lot insur­ance com­pa­nies can get big ben­e­fits by tight­en­ing up some word­ing in their poli­cies and pay­less claims, for exam­ple, but I’m not sure if it’s the case here or it’s just some­thing else going on.

Any­way, pre­mi­ums up, claims down, big tick for insur­ance com­pa­nies, and that’s a big dri­ver of the oper­at­ing cash flow. The– I would­n’t say that 56% was a poor qual­i­ty score and I think as I said before, even though man­age­ment only hold 4% of the com­pa­ny, the Cres­cent cap­i­tal holds over 50% and I have a rep­re­sen­ta­tive on the board. There is a lot of com­mit­ted cap­i­tal in the busi­ness which I think is a good thing, which isn’t reflect­ed in our qual­i­ty score.

In terms of tak­ing on more debt, I did­n’t see that when I had to look at the num­bers. I could­n’t see where debt was increas­ing, not marked­ly any­way, it might have been up by 5% or some­thing. The Stock Doc­tor score is still finan­cial­ly strong. The met­rics don’t or their analy­sis don’t con­sid­er the debt to be a prob­lem and I’m also won­der­ing whether, again, it’s an account­ing thing for life– A com­pa­ny that issues life insur­ance poli­cies because they will have to back up those poli­cies with col­lat­er­al so that it to allow pay­ments to be made on the claims and that could be fund­ed by issu­ing bonds, for exam­ple. It could be, and there are gov­ern­ment reg­u­la­tions around how much cap­i­tal you have to pay and just in sum­ma­ry, the way that works is that if I start a life insur­ance busi­ness tomor­row, I’ll start tak­ing pre­mi­ums in this year and I’ll have claims poten­tial­ly even from day two, which I have to find and if the pre­mi­ums don’t allow me to fund that, I said there’s a big climb ear­ly on.

I had the gov­ern­ment says I have to have a cer­tain amount of col­lat­er­al held to pay those ear­ly claims until you get to a stage where the pre­mi­ums are fund­ing but claims lia­bil­i­ty. That could be why the com­pa­ny was issu­ing or tak­ing on debt prob­a­bly by issu­ing bonds or with a thought to hold the col­lat­er­al to pay out claims on the life insur­ance poli­cies.

Cameron  46:44

Yes, I’m look­ing at their bal­ance sheet in Stock Doc­tor, long term debt under non cur­rent lia­bil­i­ties. Decem­ber 16, zero, June 17, zero. Decem­ber 17, zero. June 18, zero. Decem­ber 18, 15 mil­lion, then it goes 15 mil­lion, 34 mil­lion, 61 mil­lion, 91 mil­lion, and 103 mil­lion.

Tony  47:09

Sor­ry, where­abouts are you in Stock Doc­tor for this?

Cameron  47:12

Bal­ance sheets. Finan­cial State­ments bal­ance sheet under non cur­rent lia­bil­i­ties.

Tony  47:19

Yes. OK.

Cameron  47:20

Every­thing else looks like it’s track­ing pret­ty nor­mal­ly but there has been an increase in long term debt over the last three years.

Tony  47:27

Long term debt. Sor­ry, now I can see it. Yes. What I looked at when I made that state­ment before was the head­line num­ber for non-cur­rent lia­bil­i­ties.

Cameron  47:37

Yes, it has­n’t changed dra­mat­i­cal­ly. Has it changes much at all because they’ve got bil­lions. They’ve got 2 bil­lion in long not, long term or non-cur­rent lia­bil­i­ties.

Tony  47:48

Yes, which I’m guess­ing again, is col­lat­er­al being held for claims for the life insur­ance busi­ness.

Cameron  47:54

Yes.

Tony  47:54

And that’s gone from, since Decem­ber 19, from 2 bil­lion up to 2.– Near­ly 2.3 bil­lion now, which is an increase but not a huge one and when you’re talk­ing about this half a $100 mil­lion worth of long term debt. It’s not a big part of that num­ber.

Cameron  48:12

Yes.

Tony  48:14

Yes, I don’t see that that line item increas­ing as being a big issue real­ly.

Cameron  48:20

I think claims are down by the way just because peo­ple have been locked in their hous­es for the last year.

Tony  48:25

Quite pos­si­bly.

Cameron  48:26

They’re wear­ing [Inaudi­ble 00:48:28] and wash­ing their hands three times a day with dis­in­fec­tant.

Tony  48:32

Yes, well, it’s entire­ly pos­si­ble so it may reverse when we ever come out of lock­down.

Cameron  48:38

I know that’s why they’re say­ing there were no deaths from influen­za after about– Record­ed after like June last year. In Aus­tralia here last time I looked because every­one was in lock­down for win­ter and PPE and wash­ing their hands and yes, well influen­za just stopped in their tracks. There’s nor­mal­ly thou­sands of them and they just dis­ap­peared.

Tony  49:03

I know we can’t con­tin­ue in lock­down for­ev­er but I do hope that means that we keep going with some of the things we’ve learned dur­ing COVID to keep that influen­za death rate down, whether it’s QR track­ing and wear­ing masks or what­ev­er.

Cameron  49:18

Well, Chris­sy was–

Tony  49:18

I don’t know what it is.

Cameron  49:19

Chris­sy was telling me this morn­ing, she’s just decid­ed she’s just going to always wear masks in pub­lic, in shop­ping cen­ters, and places like that. She goes, yes, it’s no big deal and I like the fact that I’m less­en­ing my chance of get­ting sick and pass­ing out sick­ness­es to oth­ers. I’m just going to keep doing it regard­less of what the law says.

Tony  49:36

Yes, that’s what I do, too. I like that fact as well. It’s– I mean, it’s taught you a lot about hygiene, has­n’t it COVID?

Cameron  49:42

I tell you what I’m sup­posed to. I like most about it is I don’t have to see peo­ple’s faces when I’m out in pub­lic. I like that. I’m all for that. Like just every­one cov­er up as much as pos­si­ble. I don’t want to– I don’t want to have to look at you. It’s just.

Tony  49:58

I know when– When­ev­er I feel low and feel down, which does­n’t hap­pen much about myself. I used to go and sit in the front door of church and watch the peo­ple go past that cheered me up. I felt bet­ter about myself.

Cameron  50:11

Just look at your bank account, dude. Just look at your bank account go and yes, I’m alright. OK?

Tony  50:16

That’s so good. I have noticed I like wear­ing it like I did­n’t real­ize that most com­mu­ni­ca­tions I had with peo­ple’s eyes walk­ing through a build­ing or down the street was like a smile and a nod.

Cameron  50:28

Yes.

Tony  50:28

And now that does­n’t reg­is­ter so you’ve to actu­al­ly say, oh hel­lo to peo­ple and actu­al­ly say some­thing to them. Just– Well, just to be polite.

Cameron  50:37

Don’t have to. Just you get a mask with hi, how are you, writ­ten. A tip of the hat. You got to bring back the old tip of the hat, Tony. Just tip the hat. [Crosstalk 00:50:49].

Tony  50:48

Yes.

Cameron  50:50

Eric asks. Hi, Cam. Hope you’re well. I am. Thank you, Eric. I’ve made an obser­va­tion on com­mod­i­ty stocks, says Eric, It seems to me that there were two states when it comes to com­mod­i­ty price charts,. One, when the com­mod­i­ty price is mov­ing up or down and sec­ond­ly, when prices are con­sol­i­dat­ing side­ways. When the price is con­sol­i­dat­ing com­mod­i­ty stocks seem to behave like reg­u­lar stocks and stocks going up or down a trig­gered by news of all dis­cov­er­ies, increased vol­umes, etc. But when com­mod­i­ty prices move, this seems to over­ride any oth­er aspect of a com­pa­ny that direct­ly affects the sale of the met­al and hits the rev­enue direct­ly.

I’ve lim­it­ed expe­ri­ence. I’ve only done QAV for six months, but based on recent trend events like the end of the iron boom, we should be using com­mod­i­ty price as a proxy for share price. When prices go up, jump on the best scor­ing QAV stock for that com­mod­i­ty sell when price trend ends or go side­ways and due to the speed the prices move as we saw with the iron price decline, a short­er time­frame seems war­rant­ed. I’m look­ing at week­ly charts using the last two years. Would be inter­est­ed in your thoughts. Cheers, Eric. Eric the Arthur B. [Sysco 00:51:49].

Tony  51:58

Eric the Arthur B.

Cameron  51:59

That’s anoth­er ques­tion.

Tony  51:59

You just slipped in there. You did­n’t even email me that one.

Cameron  52:02

I did email you that one.

Tony  52:05

You did­n’t dude.

Cameron  52:06

I swear man. I swear to God, it’s.

Tony  52:11

Next ques­tion was from Wayne.

Cameron  52:12

No. Look at the email again. Seafood. It was in there.

Tony  52:20

1. All right. It is.

Cameron  52:22

Get back to drink­ing man. I tell you this is not good for you. This sobri­ety does­n’t suit you.

Tony  52:27

My eye­sight is going with­out drink­ing. Now, Eric, makes some good points and that’s pret­ty much what we do. We use a three-point trend lines on the under­ly­ing com­mod­i­ty.

Cameron  52:41

We’re not look­ing at two-year charts, week­ly charts, like he’s sug­gest­ing we’re doing five year month­ly still.

Tony  52:47

Cor­rect. Yes. I mean, I don’t have the answer as to whether two years would do bet­ter but I know five years worked well for us, pick­ing up iron ore when it was start­ing to boom and get­ting us out when it was down enough to cross its three-points sell line.

Cameron  53:02

Yes.

Tony  53:03

Same with gold and the same with oth­er ones, coal.

Cameron  53:06

Yes, and like you always say just gen­er­al­ly with three-point trend lines. Yes, you can do short­er time­frames and dai­ly, week­ly, instead of month­ly but it just means you’re going to be mak­ing deci­sions that are per­haps more volatile and that comes with its own prob­lems.

Tony  53:24

Cor­rect. Yes. Well Eric go for it mate and let us know how you go but yes, I use a five year month­ly for com­modi­ties and you’re absolute­ly right, they do dri­ve the stocks that mine them and sell them and not just met­al stock as we’ve seen with ing­hams. The poul­try price has been going up. There are oth­er under­ly­ing com­modi­ties that we look at as well.

Cameron  53:52

I thought for a sec­ond there you were say­ing that met­al prices and ing­hams were con­nect­ed. I was think­ing real­ly, do they like feed their chick­ens met­al or?

Tony  54:01

Yes. You just walk into the super­mar­ket with a large mag­net and walk out with a chick­en.

Cameron  54:08

Just for the new QAV lis­ten­ers, do you just want to remind peo­ple why you use five year month­ly as opposed to some­thing more tur­bu­lent?

Tony  54:24

Yes, just expe­ri­enced five year month­ly is less volatile. I have used– Stock Doc­tor uses a two-year week­ly chart and I have used two year week­lies before I have looked at mov­ing aver­ages over 190 days and 90 days and 30 days and yes, they just more volatile and volatil­i­ty can hurt you based on trans­ac­tion costs and cap­i­tal gains tax costs. The less volatile, the bet­ter has been my expe­ri­ence and the best.

Tony  54:58

Ide­al­ly, I’d like to Hold the stock for­ev­er. Not that that hap­pens but we hold it for– You want to hold on any­way for 12 months if you can and get the CGT dis­count that’s avail­able in Aus­tralia any­way. Yes, I use 5g month­ly but it’s main­ly around decreas­ing the volatil­i­ty.

Cameron  55:16

Right. Yes and the prob­lem with volatil­i­ty is that you will be sell­ing too soon because things dip and then come back up and when you sell, you’ve got cap­i­tal gains tax issues, bro­ker­age issues and you have to go through all the effort of replac­ing the stock with some­thing else. That may or may not do as well as this stock and all that stuff.

Tony  55:39

Yes, that’s right.

Cameron  55:41

Yes, and–

Tony  55:42

Yes, as we’ve seen in the last month, there’s been a lot of rota­tion, at least in my port­fo­lio out of iron ore stocks, out of cop­per stocks, into oth­er things. It was quite a– It’s a fair bit of work to do that. A fair bit of analy­sis to do that and to find the things to replace it with. Yes, it’s just more work to do it on a short time peri­od.

Cameron  56:05

Yes.

Tony  56:06

You become more like a trad­er rather than an investor.

Cameron  56:08

Yes.

Tony  56:08

That’s what I found any­way,

Cameron  56:10

By the way, I’m mak­ing a note for myself to email you a PDF of the notes from now on.

Tony  56:17

1. Rather than the Microsoft notes, what­ev­er it is. Is it Microsoft or?

Cameron  56:23

Wash your mouth out with soap and water, young Kynas­ton. Apple notes.

Tony  56:28

Yes, Apple notes.

Cameron  56:30

I always email Tony a link to my apple notes and for some rea­son, the ver­sion he got today was a cou­ple of hours out of date. Hence, he’s com­plain­ing. Wayne–

Tony  56:41

Who’s com­plain­ing?

Cameron  56:46

Wayne asks, Cameron, can you please ask Tony to explain the true rea­son a com­pa­ny will pay a return of cap­i­tal instead of a spe­cial div­i­dend? I sus­pect it is to reduce the share price to match the new expect­ed busi­ness lev­el. AVA is sell­ing its ser­vices divi­sion which is around 70% of rev­enue but 35% of prof­it. It is propos­ing to pay a return of cap­i­tal from the sell pro­ceeds equal to 30% of the cur­rent share price. I assume this will result in a drop in share price of a sim­i­lar amount. Should this be of any con­cern or is it just a man­age­ment tac­tic used when there are no frank­ing cred­its avail­able? Real­ly enjoyed the show. Regards, Wayne.

Tony  57:32

Thanks, Wayne. I think it was prob­a­bly a mul­ti-pronged rea­son for this. Cer­tain­ly return of cap­i­tal usu­al­ly reflects the fact that there isn’t frank­ing cred­its to hand out oth­er­wise, it’d be a spe­cial div­i­dend which would come ful­ly Frank.

In terms of some of the oth­er ques­tions you’ve asked, though, the rea­son for the sell and return of cap­i­tal is often impor­tant and it looks like in this case with AVA. Man­age­ment is say­ing it’s a non-core part of their busi­ness. It looks like when this com­pa­ny start­ed life as a sep­a­rate com­pa­ny, it was spun out of anoth­er com­pa­ny called Maxi­ck and it looks like that the busi­ness that AVA is now divest­ing is a lega­cy of that spin off when it was rolled out of Maxi­ck.

It makes sense. If it’s an encore busi­ness, it looks to me– I don’t know, the com­pa­ny very well. Looks to me like the com­pa­ny is a tech­nol­o­gy com­pa­ny pro­vid­ing mon­i­tor­ing ser­vices and the com­pa­ny that it– The part of that com­pa­ny that they’re sell­ing. The Lega­cy busi­ness looks more like it’s a secu­ri­ty busi­ness. It does­n’t have a tech­nol­o­gy com­po­nent to it or much of a tech­nol­o­gy com­po­nent to it. I kind get why they’re doing it.

I sus­pect. I don’t know but I sus­pect that the com­pa­ny may rewrite. I don’t know the com­pa­ny in detail but if it, for exam­ple, is seen as a tech­nol­o­gy com­pa­ny like a soft­ware as a ser­vice com­pa­ny, then yes, it may rewrite up rather than down when the non-core busi­ness­es sold off.

Cameron  59:12

What does that mean?

Tony  59:13

Because it might.

Cameron  59:14

What do you mean rewrite?

Tony  59:16

Yes. Cur­rent­ly, the busi­ness is, I don’t know this busi­ness but let’s talk hypo­thet­i­cal­ly, say it’s half a secu­ri­ty busi­ness where guys jump­ing cars and go around and make sure your fac­to­ry has­n’t been bur­gled and the oth­er half use tech­nol­o­gy that will send you a text mes­sage if your perime­ters been breached at the fac­to­ry and if you com­bine those two busi­ness­es togeth­er, the val­u­a­tion that’s applied might be half of one and half of the oth­er and the guys going around in cars to check the fac­to­ry busi­ness­es have a much low­er val­u­a­tion met­ric applied to it as opposed to the soft­ware busi­ness because the soft­ware busi­ness does­n’t involve much cap­i­tal, does­n’t involve much employ­ee as is every time you get $1 of rev­enue, it’s going to trans­late to a high­er prof­it than putting guys in cars, leas­ing cars, going around, and shin­ing flash flash­lights on the fac­to­ry walls for you at night.

I don’t know if that’s the case with AVA but I’m say­ing if it is, then if they get rid of the guys in cars going around to check fac­to­ries, the busi­ness may increase in share price because it moves on to a high val­u­a­tion met­ric and this com­pa­ny, for exam­ple, at the moment has an NTA of nine cents per share but its share price is much high­er than that. It’s not being rat­ed based on its assets. It’s being rat­ed based on a mul­ti­ple of its earn­ings and even though they’re giv­ing back, I think it’s about 16 cents per share. I’m not sure the share price will drop by 16 cents to match that return of cap­i­tal, it may. That’s the log­i­cal thing that will hap­pen but if the com­pa­ny gets rerout­ed dur­ing that time, it may actu­al­ly not dropped by 16 cents, it might actu­al­ly even go up. I’m not famil­iar with AVA to know what’s hap­pen­ing there but there are dif­fer­ent things that go on with these cap­i­tal returns and it looks to me like it’s sell­ing off a busi­ness which does­n’t have the met­rics that a soft­ware busi­ness would have and be as appeal­ing to investors in tech­nol­o­gy com­pa­nies as the oth­er half of the busi­ness.

I think that might be a rea­son behind that divest­ment as well and the third one, Wayne asked what the true rea­son for a com­pa­ny doing this thing is? I would­n’t be sur­prised, I don’t know if it’s the case or qual­i­fy my com­ments with that. I would­n’t be sur­prised if man­age­ment are reward­ed on return on equi­ty and the ROI for this com­pa­ny is cur­rent­ly 47% and once it sells off this busi­ness, it gets a lot of cash in, some­thing like 40 mil­lion bucks or 30 mil­lion bucks, which will sit on the bal­ance sheet unless it’s used which will depress the ROI.

They’re want­i­ng to get that cash out the door as quick as pos­si­ble, there­by decreas­ing the equi­ty part of the ROI cal­cu­la­tion and keep­ing it high which is attrac­tive both to investors but prob­a­bly also to man­age­ment who want to have incen­tives being paid based on ROI. I think I sus­pect that’s why it’s been returned to share­hold­ers quick­ly.

As a gen­er­al rule of thumb, I’m sur­prised that the com­pa­ny has­n’t found a way to deploy the cash that’s usu­al­ly what man­age­ment would do is they would­n’t want to give that mon­ey back to share­hold­ers. They’d say, hey, we’ve got a tech com­pa­ny to buy. I’m a lit­tle bit sur­prised it’s going back to come to share­hold­ers which leads me to think that it’s an era we play by man­age­ment to keep our way up for attrac­tive both to investors in the com­pa­ny who, as we’ve said, time and again, in the past look at our investors will often look at a high ROI com­pa­ny and give it a pre­mi­um in terms of its val­u­a­tion but poten­tial­ly also man­age­ment are also reward­ed based on that ROI met­ric stay­ing high.

Cameron  1:03:07

Yes. Bot­tom line is could be a range of things. Some legit­i­mate, some lit­tle bit self-serv­ing.

Tony  1:03:16

Yes. As it usu­al­ly always is.

Cameron  1:03:18

Yes. Well, deci­sions every­one always makes.

Tony  1:03:23

Yes, exact­ly.

Cameron  1:03:24

Good ques­tion Wayne. Thanks.

Next one is from Mantle’s aka Lee and Steve with VUK scor­ing so well, how would you draw its sell line seems to be cross­ing by the QAV let­ter of the law but also seems tough giv­en it’s basi­cal­ly a steep uptrend since the flat bot­tom l1 of 30 Sep­tem­ber, 20 and then a recent side­ways.

Tony  1:03:51

Yes, I’ve got the sell line because of the flat bot­tom, I’ve got the sell line as Sep­tem­ber 2020 and then there’s a cou­ple of troughs on the way up which that sell line then touch­es. Cur­rent­ly, I’m using the last of those, which is going to be July 2021. Which means it’s below its sell price cur­rent­ly. In fact, it’s– Sor­ry, not July. It’s — What is it? June 2021. There’s a trough there.

Cameron  1:04:22

Yes, well, does­n’t that puts it after it’s– Below its sell price.

Tony  1:04:28

Cor­rect. Yes. We sold it out of the port­fo­lio a lit­tle while ago.

Cameron  1:04:31

Right.

Tony  1:04:32

It’s a sell for us. Yes, the price. In fact, the price has dropped and it’s come back up again a lit­tle bit.

Yes, but it has­n’t come up enough to be a buy again. Yes, it’s a sell.

Cameron  1:04:43

Yes. The sell price is like 446. It’s trad­ing at 398.

Tony  1:04:51

What am I get­ting for a sell price? Yes, I’m get­ting around 450. I’m just doing it with the seg­ment draw­ing in Stock Doc­tor to get that. Yes.

Cameron  1:05:02

It scores well but is below its sell line so we would­n’t sell it if we owned it and def­i­nite­ly not buy it and it’s also a bit of a Josephine. It closed August at $4 for its cur­rent­ly at $3.98. Just a lit­tle bit down below where it closed last month.

Tony  1:05:24

Yes, and it’s a fun­ny one too. It’s one of these ones which has, it’s like a buy and sell at the same time.

Cameron  1:05:32

Right. It’s a Schro­ding­er.

Tony  1:05:35

Yes, it’s a Schro­ding­er.

Cameron  1:05:36

Yes.

Tony  1:05:37

It crossed its sell line so then we look for new buy line but it’s then had anoth­er sell line since then.

Cameron  1:05:43

Yes. Tech­ni­cal­ly a Schro­ding­er which for new lis­ten­ers, is a stock that is both a buy and a sell at the same time.

Tony  1:05:51

Yes, it’s above its buy line but it’s below its sell line. We don’t like touch­ing those.

Cameron  1:05:57

Yes.

Tony  1:05:58

Don’t touch needs to be about both.

Cameron  1:05:58

Yes.

Tony  1:05:59

That’s right and essen­tial­ly, what it’s say­ing to me just look­ing at the graph is that the steep­ness of that growth is com­ing out the share price. Appre­ci­a­tion since that low point in Sep­tem­ber 2020.

Cameron  1:06:04

Right.

Tony  1:06:15

It’s start­ing to roll over a bit.

Cameron  1:06:17

Right. OK. Thanks Mantle’s.

Dave asks, could Tony have a look at Humm and why the big change in the QAV score?

Tony  1:06:28

Yes, inter­est­ing one. Humm, the big change in the QAV score is it’s not on our index any­more because it has oper­at­ing cash flow which has now turned neg­a­tive. Decem­ber 20, Inter­im was a pos­i­tive $230 mil­lion worth of oper­at­ing cash flow but June 21 is in the neg­a­tive $110 mil­lion of oper­at­ing cash flow.

I haven’t real­ly fig­ured out what that change was brought about by. There’s a line item in the oper­at­ing cash flow in Stock Doc­tor which has minus 263 mil­lion against it and it’s just list­ed this op– Oth­er oper­at­ing cash flows. I haven’t had time to dive into the annu­al report but I can go quick­ly and have a quick look.

Cameron  1:07:18

Anoth­er one, I saw over a [Crosstalk 01:07:22].

Tony  1:07:18

I’m look­ing for a finan­cial note to see what that is if I can.

Cameron  1:07:24

Right.

Tony  1:07:26

I know that the busi­ness has changed quite dra­mat­i­cal­ly from– Well, it’s it still is but it used to be only a busi­ness which pro­vid­ed the in store cred­it for pur­chas­es. As we’re say­ing before about Jer­ry Har­vey, the– You often see on his ads, inter­est free for five years or inter­est free for three years or two years or what­ev­er and most of that was pro­vid­ed by this com­pa­ny, Flex­i­Group– Used to be called Flex­i­Group. Now it’s called Humm and as part of that change in name, they also got into the buy now. pay lat­er space. They have a prod­uct which I think is called Humm which also looks a bit like the after pay prod­uct.

Cameron  1:08:14

Har­vey Nor­man does­n’t need their mon­ey any­more because they just got $22 mil­lion of job keep­ers. Who needs to sell prod­ucts when you just get free mon­ey from the gov­ern­ment, right?

Tony  1:08:26

Well, I’m just look­ing at the what there’s an announce­ment here say­ing that– Let’s have a look. I can’t. I’m sor­ry, I’m just hav­ing a look at that. There’s been a rebal­anc­ing of the ASX and may have affect­ed Humm which is why the share price is down. Yes, Humm has been removed from the ASX 300 list. That would explain a lit­tle bit of a price drop in the–

Cameron  1:08:54

Because there’s a bunch of ETFs and funds that auto­mat­i­cal­ly sell it.

Tony  1:08:59

Yes, that’s right. There’ll be a lot of– Well, yes, ETS which would have a man­date for ASX 300 but also invest­ment funds as well, even if they’re active, they may still have a man­date for being in large cap stocks. OK, I’ve got the Annu­al Report. I’m just going to have a look at the cash flow state­ment quick­ly. If this takes too long, Cam, we’ll take it on notice and come back to you with an answer.

Just says receiv­ables is 211 mil­lion. I’ll see if there’s a note on what receiv­ables are. They’re receiv­ables and they’re neg­a­tive which is inter­est­ing as well. I’m not see­ing it quick­ly. Sor­ry. I’ll see if there’s a note on receiv­ables. Yes, it’s say­ing there was a decline in aver­age net receiv­ables over the year but I can’t imag­ine it was that much. It says receiv­ables and cus­tomer loans– The fair val­ues of receiv­ables and cus­tomer loans are esti­mat­ed by dis­count­ing the future con­trac­tu­al cash flows at the cur­rent mar­ket inter­est rate is avail­able to the group.

I’m won­der­ing if they’ve had to dis­count. Like if, for exam­ple, there’s been a big change in pur­chas­ing pat­terns that moved away from in store cred­it cards to fund a prod­uct pur­chase and move to the after pay style pay­ment option. I won­der if that’s caused them to have to dis­count their receiv­ables? Because they’re not going to receive as much income from the old style of busi­ness. Any­way, that’s just the case. Yes. I’m sor­ry, I’d have to real­ly read this in detail before I could work out what it was.

Cameron  1:10:40

Bot­tom line is they’re not look­ing good from a QAV per­spec­tive right now hold home.

Tony  1:10:46

Cor­rect. We don’t have a QAV score for them because they have a neg­a­tive oper­at­ing cash flow and this has been the first time they’ve had it that I can see. At least for quite a while. Yes, I’m going back. I’ve nev­er had a neg­a­tive oper­at­ing cash flow line before. It’s been dri­ven by receiv­ables which is neg­a­tive to $200 mil­lion but I can’t nec­es­sar­i­ly see what that is caused by. I’d have to read through the annu­al report in some detail to work it out but that’s what it is.

Cameron  1:11:23

Right. OK, well, I got out of them at 97 and a half cents. Hap­py days.

Tony  1:11:32

Yes, I think they became a sell around that price for us to0, did­n’t they?

Cameron  1:11:36

Yes, I think that’s why I got rid of them.

Last ques­tions are from Edward. Edward’s a new sub­scriber. Hi, mate. He writes, just test­ing the three-point trend with a few of my hold­ings. The first one he’s look­ing at is Collins foods, CKF and he asks, the three-point cal­cu­late is giv­ing me a sell at 11.389, cur­rent share price is 12.49. I imag­ine that if I did this exer­cise before the share price hit 11.389. I should have sold the stock well?

Tony  1:12:12

Yes, I’m not sure if we get the same num­bers as it would and first of all, well done for hold­ing columns food, they’ve been a resound­ing suc­cess dur­ing the COVID lock­downs as peo­ple buy lots of Ken­tucky Fried Chick­en and oth­er take­away food that Collins food sell so well but I’m get­ting an l1 point of Sep­tem­ber 16, which is about to roll off and then the l2 I’m going to use is the COVID cough of March 2020 which gives me a sell price of around $6 some­thing.

Cameron  1:12:47

Yes. Just for Edward’s ben­e­fit and any­one else who is new, the basic process for draw­ing a three-point trend line or sell line in this case is we start with the low­est trough on the five year month­ly chart which in this case, as Tony said is back in Sep­tem­ber 16. It’ll drop off at the end of this month but right now that is the low­est point and the sec­ond low­est point is the one the COVID cough of March, as you said that Edward uses his first point. It brings in a much low­er sell price.

Tony  1:13:25

Yes, I’m just going to have a look what that will look like next month after that trough rolls off. The low point after that is I think 511 and which means any­thing up to 551 is l1, sor­ry.

Cameron  1:13:36

Yes, 511 is the price, the one on May 17. Is that what you’re look­ing at?

Tony  1:13:42

Yes. How­ev­er, with the flat bot­tom rule of 8%. It actu­al­ly does make the COVID cough, l1.

Cameron  1:13:48

Yes, right. OK. With­in a few weeks, the sell line will look like the one that Edward Drew.

Tony  1:13:53

Yes, that’s right and it could be the case now, depend­ing on the graph it was look­ing at I’m not sure I’m using Stock Doc­tor which actu­al­ly goes back five years to the day, which means that we’re get­ting a trough at the start because there’s a bit of a month before.

Cameron  1:14:08

He’s using Stock Doc­tor graph.

Tony  1:14:10

Well, OK. You should see it too then. OK. Yes. All right. Once we roll past the month, end of month, then l1 will be the COVID cough. Let’s draw a line with using that.

Cameron  1:14:21

COVID cough for new lis­ten­ers is end of March 2020.

Tony  1:14:26

Yes.

Cameron  1:14:27

I don’t know. some­body sug­gest­ed that at some point last year, it just stuck. It’s the COVID cough.

Tony  1:14:34

Yes, if you use that then there would have been a sell. It would have been a sell in Novem­ber 2020 and then there would have been a buy after that. You would have had a sell per­haps when it was refer­ring to $11.40 in July 2021 but because there’s been a buy since then, if you look at the high­est point on the graph or the high­est peak on the graph is May 2021 and you can draw a line across to August 2021. It means that the sell line gets redrawn with l2 being July 2021.

Cameron  1:15:16

Yes.

Tony  1:15:16

It’s– The share price is cur­rent­ly above the cur­rent sell price of about $11.70 I’m get­ting. Yes.

Cameron  1:15:24

But just run me through that again. The pre­vi­ous sell line.

Tony  1:15:29

Yes, if you take the rule, which– The rule for draw­ing sell line says takel1 as the low­est, then l2 as the sec­ond low­est.

Cameron  1:15:37

Sec­ond low­est to the right?

Tony  1:15:38

Yes, to the right which would be Novem­ber 2020. If you draw a line through there, it was a sell in Novem­ber 2020 when the share price fell below the line. How­ev­er, since then, there’s a– There’s been a high price– The high­est price on the graph, if we want to draw the most recent buy line is May 2021 at a price of $12.60 and if I pick a point to the right, I’ve got– When’s that? August 2021 has anoth­er buy.

Cameron  1:16:17

I was going to say but the sell line today and the sell line six months ago would have had a sell price low­er than that. If you had owned it six months ago or back even Novem­ber 2020, as you said, it was not eight or nine months ago, you would­n’t have actu­al­ly sold them right? Because the sell price back then using the cur­rent sell line would have been around– I don’t know. $5.50.

Tony  1:16:46

Yes, true. Good point.

Cameron  1:16:49

All of this is arbi­trary.

Tony  1:16:52

Aca­d­e­m­ic yes.

Cameron  1:16:54

The sell line where it is today, where it has been for the last year, is down around five bucks and in three weeks, when that l drops off and we start using March 2020 is l1. This the l2 is where it is now which is July. The sell price is up around– Well, now it’s near just under 12 bucks. Prob­a­bly in a cou­ple of weeks, it’ll be a bit high­er than that because the line will go up to the right but yes, tech­ni­cal­ly, if you had owned it for the last year, it has­n’t crossed its sell line.

Tony  1:17:30

True. Good point.

Cameron  1:17:32

That’s why I get paid the big bucks, Tony.

Tony  1:17:36

I do go through that process of draw­ing buy­ing sell lines to see where the cur­rent ones are.

Cameron  1:17:40

Yes, and I think that took me a long time to under­stand. The whole buy line fol­lows the sell line fol­lows the buy line thing that you have to chart it out because it moves, right?

Tony  1:17:53

Yes, it does.

Cameron  1:17:55

OK, the sec­ond part of it was ques­tion is relat­ing to a dif­fer­ent stock, CAR. While you bring that up, he asks, what would Tony rec­om­mend I do today? I have a mind let it run con­sid­er­ing the six-month chart looks bull­ish. I assume these two stocks that he already owns and we can’t rec­om­mend.

Tony  1:18:17

Cor­rect.

Cameron  1:18:17

Give any per­son­al finan­cial advice, Edward. Yes, we can tell you what the QAV rules say. You make your own deci­sion. carsales.com.

Tony  1:18:27

carsales.com. It looks like Edward likes the growth stocks, the high PE stocks. I don’t think CKF or car sales have been on our buy list. Maybe for­ev­er, but at least what we’ve been doing it for the last two years.

Cameron  1:18:42

Well, as I said, he’s a new guy so he’s get­ting around.

Tony  1:18:46

He’s doing the right thing. If he’s got cur­rent hold­ings, he’s going to trade them using the three-point trend line and then migrate across.

Cameron  1:18:52

Yes.

Tony  1:18:53

Yes. Good.

Cameron  1:18:54

He would have done well.

Tony  1:18:54

OK though.

Cameron  1:18:55

If he’s held him for a while.

Tony  1:18:56

Yes, He has done well.  I’m get­ting a low point– Low­est point on the graph, again, is way back almost five years ago in Novem­ber 2016. Maybe, what’s that num­ber is? 10.36.

Cameron  1:19:10

No, it’s actu­al­ly Jan­u­ary 2017.

Tony  1:19:15

10.27 and I’ll just see what 8% above that is.

Cameron  1:19:19

Yes, no, it’s I think it’s the l1 is actu­al­ly Decem­ber 18 here.

Tony  1:19:26

10.82 and the COVID cost, yes, I agree with you. Decem­ber 18, 10.82 and that’s for Edward’s ben­e­fit. That’s because it’s a flat bot­tom. Decem­ber 18 isn’t the low­est point on the graph but it’s with­in 8% of the low­est point on the graph and it’s in the right most trough with­in 8% of the low­est point.

Cameron  1:19:48

For new lis­ten­ers, includ­ing Edward, the the­o­ry which is rel­a­tive­ly new in QAV, we’ve only been doing this for a few months is your regres­sion test­ing that you did with one of our interns Dylan indi­cat­ed that if you have a flat bot­tom or a flat top where you’ve got two prices that are with­in an 8% mar­gin of each oth­er, you should use the right most of those two prices as your start­ing point when you’re draw­ing a buy line or a sell line.

Tony  1:20:20

Yes, and if I can just add those prices don’t need to be near each oth­er on the graph, they can be a cou­ple of years apart like they are on this one and it’s– The rea­son for doing that research was that we were com­ing up with a lot of graphs that had flat lines, that for either the buy or the sell line which weren’t much used to us to make a trad­ing deci­sion. I was try­ing to find a way of draw­ing a less flat line, I guess and also to the oth­er thing, which I guess drove my think­ing was that we look at a five-year month­ly graph but some­times these trends in stocks towards their peak or their trough occurs over a num­ber of months. You get like a U shape or a V shape or an upside down U shape, I guess and there­fore, that what we might see is that one month­ly trough may not be the– A fair indi­ca­tion of the shape of the graph and yes, I’m look­ing for when the trend start­ed or when it end­ed, both on a peak and a trough basis.

Cameron  1:21:29

Right. Get­ting back to CAR then again.

Tony  1:21:35

It does have a flat sell line.

Cameron  1:21:37

Yes, even when you take out the flat line, it’s still as a flat line because it’s such a steep graph.

Tony  1:21:46

Yes, l1 as you said, Decem­ber 18, l2 was March 2020 and then a sell price of around $12.30.

Cameron  1:21:56

Cur­rent­ly trad­ing at about 26 bucks. Again, get­ting back to Edwards ques­tion, what would you do if you owned it, not what Edward should do, but if you owned it and you would­n’t because it would­n’t be a QAV stock but if you did, you just hold it right?

Tony  1:22:16

Yes, I would try that using the three-point trend line method and cur­rent­ly it’s a long way off its sell. I’d be hold­ing it.

Cameron  1:22:24

Yes.

Tony  1:22:25

Yes.

Cameron  1:22:26

Good. Thank you, Edward. Well, that’s all the ques­tions for this week.

Now, we go into after time where we just talk about the mind of a rich guy. What have you been watch­ing? What are you watch­ing, lis­ten­ing to, read­ing, eat­ing, drink­ing? No, you’re not drink­ing.

Tony  1:22:43

No, that’s right drink­ing is on hold for a minute any­way. Watch­ing main­ly haven’t– I still haven’t fin­ished that book rich­er wis­er hap­pi­er but I’ve rec­om­mend­ed. Not lis­ten­ing too much music wise but watch­ing May­or of East­ham which you rec­om­mend­ed to me which is fan­tas­tic.

Cameron  1:22:59

Good show. Only what six episodes I think lit­tle minis­eries but yes.

Tony  1:23:04

Sev­en was.

Cameron  1:23:06

Real­ly pow­er­ful show.

Tony  1:23:08

Yes. Good show if you’re a fan of Den­nis Lehane mys­ter­ies and they were turned into movies like Mys­tic Piz­za– Mys­tic Riv­er. Sor­ry, not Mys­tic Piz­za. That was the Julia Roberts’s first star­ring shot. Mys­tic Riv­er. It’s real­ly good. Yes, Kate Winslet does a great act­ing job in this play­ing a cop with lots of fam­i­ly prob­lems in the poor part of Penn­syl­va­nia and East town. There’s a sub­urb. I think it’s part of Philadel­phia. I might be wrong there but it’s very not the most afflu­ent part of the US, that’s for sure and all of the crime that brings and the pover­ty and the fam­i­ly issues brought on by those two things, I guess as well. But yes, grit­ty, full of twists and turns which—I like guy Pierce has a cameo in it, which is inter­est­ing. Did­n’t do much I did­n’t think but it was good to see an aussie up there on the screen.

 

Cameron  1:24:12

Two aussies actu­al­ly.

Tony  1:24:14

Yes. What’s in Anguri some­where I for­get the name.

Cameron  1:24:19

Anguri writes who plays her daugh­ter. Yes.

Tony  1:24:21

Anoth­er rosie rice. I keep think­ing is to go any­where. I think of Anguri rice.

Cameron  1:24:25

Yeas, I thought she did a great job as well. I think she’s from Mel­bourne or some­where been around for few years think, she’s in a spi­der man film or some­thing.

Tony  1:24:38

Act­ed real­ly well.

Cameron  1:24:38

Jean smart play­ing Kate Winslet’s moth­er. Fan­tas­tic. The grumpy old alco­holic moth­er. She’s had some great roles late­ly.

Tony  1:24:49

Yes, was she the star of hacks? That series. That was also I watched a cou­ple of weeks ago.

Cameron  1:24:54

I haven’t seen that. I don’t know but she was in one of the sea­sons of Far­go. She was– I saw her also when Legion, an x men spin off thing which was quite good. She was in the watch­men TV series that I watched a bit of. Oh, yeah hacks IMDb said she was in hacks. There you go.

Tony  1:25:18

Yes. That’s not bad. Like it’s a six out of 10 but worth watch­ing.

Cameron  1:25:24

Yes, right. Good. Well, I’ve watched a bit late­ly, but I’d say the thing that I would give a shout out to is Val Kilmer doc­u­men­tary.

Tony  1:25:35

Yes, I saw that.

Cameron  1:25:37

Oh, did you like it?

Tony  1:25:39

Yes, it was good.

Cameron  1:25:42

Sad. Real­ly sad.

Tony  1:25:44

Very sad.

Cameron  1:25:43

Yes. Not just because of his health issues but just his career in gen­er­al. He seems like despite his fame and the big roles that he had and the mon­ey that he made, nev­er was real­ly cre­ative­ly sat­is­fied.

Tony  1:26:00

And the mon­ey’s all gone,= too.

Cameron  1:26:00

Yes.

Tony  1:26:02

Yes, I’d seen stuff before about him. He was always con­tro­ver­sial about being dif­fi­cult to– Sup­pos­ed­ly dif­fi­cult to work with and retir­ing to his ranch a lot and how he was try­ing to build the artists’ colony there which bank­rupt­ed him in the end, I think from mem­o­ry. Yes, it’s inter­est­ing how it all turned out because he has­n’t turned out well, health wise either. That was a real shock, I think to see that.

Cameron  1:26:32

I think he had to sell the real estate to get his father out of trou­ble because his father.

Tony  1:26:41

Def­i­nite­ly had to sell it. Yes.

Cameron  1:26:42

Yes. His father– Accord­ing to the doc­u­men­tary, his father got them both into a bunch of dodgy deals and he had to sell every­thing to get his father, by his father out of jail.

Tony  1:26:53

Which did­n’t work. I don’t think from mem­o­ry.

Cameron  1:26:55

Oh, real­ly? Yes, very sad but Val Kilmer the man like us some great films. I mean, leav­ing aside even Top Gun what he’s prob­a­bly most famous for which inter­est he says in the doc­u­men­tary did­n’t even want to make but he was con­trac­tu­al­ly oblig­ed to the stu­dio to make it. He gave it every­thing that he had, and I think Ice­man was a great char­ac­ter in that heat. I think he was great with a small role that he had in heat. He was great in the one replayed, Doc hol­i­day, what­ev­er that was. [Crosstalk 01:27:23] Yes, cow­boy one with Kurt Rus­sell.

He made a lot of good a lot of and the doors of course, I mean, his per­for­mance or Stephen Mor­ris is it all was. Yes, that’s right. When I showed Chris­sy that she could­n’t believe that it was­n’t real­ly Jim Mor­ri­son, she and he did his own singing in the film too which was stun­ning, like his abil­i­ty to chan­nel Jim Mor­ri­son was fan­tas­tic.

Tony  1:27:57

Yes, and grew on over­stone for giv­ing him a chance to remem­ber that was con­tro­ver­sial as well that that Val Kilmer was going to car­ry a film again, after all these prob­lems.

Cameron  1:28:09

Right. I also watched the first cou­ple of episodes of the new Steve Mar­tin Short com­e­dy only mur­ders in the build­ing, which is bear pod­cast­ers. As I said you ear­li­er today when I start­ed pod­cast­ing in 2004, if you’d told me that, with­in 15, 16 years, peo­ple would be bas­ing entire big bud­get TV shows with Steve Mar­tin and Mar­tin Short about a bunch of pod­cast­ers or peo­ple mak­ing your pod­cast would have been would not have believed it. It was a scrap­py lit­tle thing. There was about five of us mak­ing pod­casts at the time and it was cut­ting edge.

Tony  1:28:54

There you go. Yes, right. Like that old joke about hav­ing the first fax machine. [Crosstalk 01:29:01].

Cameron  1:29:05

I’ve been lis­ten­ing to the Osmonds. Believe it or not. I’ve mar­ried a woman from Utah and she nev­er told me about the Osmonds. I mean, I knew him Don­ny and Marie were but I did­n’t know that the band that Don­nie was in when he was a kid actu­al­ly kicked some ass. They put out a cou­ple of albums in the ear­ly 70s which are just fan­tas­tic. They start­ed off as a boy band, Chris­t­ian, nice rock group, pop group thing and then when they got old enough, they rein­vent­ed them­selves when they were late teens, ear­ly 20s and chan­neled, it’s a bit Jack­son Five with some beegees, and a lit­tle bit of Deep Pur­ple thrown in bet­ter heavy funk. Real­ly groove and tunes. A lit­tle bit of Zap­pa in there as well. It’s phrasal.

Tony  1:30:00

Very cheesy look­ing guys though.

Cameron  1:30:02

They were– Well, they were wear­ing Elvis jump­suits and staff chan­nel­ing a bit of Elvis to a bit of brass chair, very good look­ing Mor­mon boys with big white teeth and the whole thing but the songs rock man and they actu­al­ly real­ly play the instru­ments they wrote them. I went down this Osmonds tall last week. Chris­sy can’t believe that I’m lis­ten­ing to the Osmonds. She’s like shocked to Mor­mon her­itage com­ing back but yes, but check out there. They’ve got an album from 1972 called crazy hors­es. Have a lis­ten to that, man. There’s a cou­ple of real­ly great tracks that blew my mind.

Tony  1:30:42

1. Inter­est­ing. Oh, well, I think of when– I think of Diane Mari­a’s I went to Pitts­burgh once around Christ­mas time when I first moved to Cana­da, maybe 5, 6, 7 years ago and there was these big pro­mo­tion­al bill. Not big bill­boards, but bill­boards up for the Don­ny and Marie Christ­mas show, which comes to Pitts­burgh every year and they looked old.

Cameron  1:31:07

Yes, well, that’s what hap­pens and I’ve been read­ing or Hey, look at.

Tony  1:31:12

Sor­ry, I’m going to say before I for­get, Mr. In between Aus­tralian crim­i­nal series real­ly good.

Cameron  1:31:23

What’s it about?

Tony  1:31:23

Fox­tel, it’s about a guy, a bit like the sopra­nos, a guy who runs a strip club, he hires a bounc­er, he’s also even­tu­al­ly becomes a hit­man like an enforcer. It’s just about he’s in between liv­ing a nor­mal fam­i­ly life and then going out and killing peo­ple. Or break­ing their legs or what­ev­er to col­lect mon­ey.

Cameron  1:32:48

Right.

Tony  1:31:48

Yes, and it’s real­ly well made. It’s fan­tas­tic act­ing. Scripts are great. I’m just look­ing at some Fox­tel it was sold to the FX net­work in Amer­i­ca. It’s prob­a­bly on some oth­er stream­ing chan­nels made by Nash Edger­ton, one of the agents and broth­ers. Yes, I think you have oth­er inter­est­ing fac­toid for me is one of our friends had her house used as the set of one of the one of the episodes too which was fun to watch on TV.

Cameron  1:32:21

I just look­ing at it on IMDB I see the Damon Har­ri­man is in it. One of my favorite Aus­tralian actors, he plays a char­ac­ter called Fred­dy in it is in 26 episodes appar­ent­ly. He played Charles Man­son and once upon a time in Hol­ly­wood.

Tony  1:32:42

Oh, OK.

Cameron  1:32:43

But he was he was—He was also in jus­ti­fied which a lot of peo­ple and that’s where Quin­ta knew him from actu­al­ly going from jus­ti­fied. The Tim­o­thy Olyphant show but he was also in one of my favorite shows of the last few years’ per­pet­u­al grace lim­it­ed. Have you checked that out yet?

Tony  1:33:02

No.

Cameron  1:33:03

Ben Kings­ley. Oh, man. Check it out. Great show. Just real­ly only ran for one sea­son, but it was just real­ly good. Jim­my Simp­son, Jac­ki Weaver, and Ben Kings­ley, and Dray­mond Eric. Yes. Real­ly clever writ­ing lit­tle bits of real­ly good stuff. Well, that’s after hours for this week after time. For any­one who’s inter­est­ed. What are you cook­ing tonight, Tony?

Tony  1:33:34

We’re going to get a prob­a­bly a land back strap and some veg­gies. Mediter­ranean diet.

Cameron  1:33:42

Wendy, Jeff, right. When do you go out to din­ner next?

Tony  1:33:47

Oh, God. Nev­er. Christ­mas.

If you lis­ten to the epi­demi­ol­o­gists, we might make Christ­mas day but they’re not hope­ful. If you lis­ten to the pre­miere.

Cameron  1:34:01

Oh, yes.

Tony  1:34:02

Then next month, we’ll all be out of lock­down and things will be eased and vac­cine rights are going great. Yes, but the sci­en­tists are say­ing not and giv­en that Nor­man Swann said we’ll be here till Christ­mas. He’s the mon­ey guy at the moment. He’s look­ing right.

Cameron  1:34:19

And he said that three months ago and we went Nah, no way.

Tony  1:34:24

When the lock– It’s right when the lock­down first start­ed. Yes. It’s all a bit depress­ing when you think about it that way but any­way, we’re good.

Cameron  1:34:33

You’re alive. You’re healthy. That’s what mat­ters.

Tony  1:34:36

Cor­rect. Yes. I can still talk to peo­ple on zoom and catch up on all that stuff. Sec­ond best, but that’s good.

Cameron  1:34:43

All right mate. Well, near­ly two hours again this week, when we had only two ques­tions as of nine o’clock this morn­ing. There you go.

Tony  1:34:54

Plus, we had a busi­ness meet­ing on zoom this morn­ing which was three quar­ters of catch up and talk­ing about after our stuff.

Cameron  1:35:03

You’re wel­come.

Tony  1:35:00

Take care. All right. Thank you, bye.

Cameron  1:35:11

The pro­duc­ers of this pod­cast would like to remind you that we’re pro­vid­ing gen­er­al finan­cial advice only. If you’re look­ing for per­son­al finan­cial advice or before you make any invest­ment deci­sions, please con­sult a pro­fes­sion­al finan­cial advi­sor.