QAV 438 Club

Cameron  00:15

Welcome back to a little radio show. Isn’t that what– That’s what’s his face says, Late Night Live old ABC guy been around forever. Back, dear listeners to our little radio show, Philip Adams.

Tony  00:30

Yes. He’s– I love listening to Philip Adams that syrupy late night voice.

Cameron  00:35

Yes, I’ve always thought of myself as the Philip Adams of podcasting, except for the intelligence and the syrupy late night voice.

Tony  00:44

I was going to say , that’s funny. I’ve never thought of you of the Philip Adams.

Cameron  00:46

A little bit of Philip Adams, a little bit of Roy and HG, little bit of– I don’t know– Some idiots. How are you TK? You’re– I mean, basically Sydney’s out of lockdown now from what I hear, it’s all guns blazing.

Tony  01:02

Oh, it’s a picnic here at the moment here. It’s great.

Cameron  01:04

Literally, you had a picnic yesterday.

Tony  01:06

I had a picnic yesterday caught up with my sister who I haven’t seen for over three months. It was good.

Cameron  01:11

That must be a big relief.

Tony  01:14

But it was good.

Cameron  01:15

Yes. Oh, good. Well, it’s been a rough stretch for you guys. I’m glad– Things– I’ve just hope the medical system handles it OK, and [Inaudible 00:01:26].

Tony  01:26

That’s the test, isn’t it?

Cameron  01:27


Tony  01:28

Yes. I’d rather– They had that as the threshold for loosening up rather than saying, OK, you’re all at 70% first jab, now go and have a picnic. I’d rather them say OK, the ICU is not turning away ambulances, now go and have a picnic.

Cameron  01:44

I’ve read an article before about some guy in somewhere in the US who got turned away from– Before he had heart trouble, rushed to hospital. 43 hospitals couldn’t take him and he died. They were just overloaded with COVID. They couldn’t get him into 43 hospitals.

Tony  02:01


Cameron  02:01

Hopefully it doesn’t get that bad here.

Tony  02:03

Plus, he had bad credit probably too.

Cameron  02:06

Could have been.

Tony  02:07

Have you seen that movie, Sicko?

Cameron  02:09


Tony  02:10

[Inaudible 00:02:11].

Cameron  02:11

Yes, I have that film, partially to thank for Chrissy. She saw that film before she met me and decided she was moving out of the United States and then she met me a couple of weeks later and thought he’ll do, free health care in Australia. Let’s go.

Tony  02:27

You’ll do. Yes. Grab your coat, grab your hat. You’ve scored. Let’s go.

Cameron  02:32

Hey, I’ll take it. Whatever it takes to get me out of here.

Tony  02:37

What did you say? Who? Me? What? Oh, OK.

Cameron  02:42

No, I said grab your things. I’ve come to rescue you. Come with me if you want to live in a country with healthcare. A little bit of Russian there. Well, we’re going to have a guest coming up on the show today. Tony, James Williamson from Wentworth Williamson.

Tony  03:00

Sound like Kevin Bridges there.

Cameron  03:03


Tony  03:03

Do you know the Scottish Comedian? I’ve been watching heaps of Kevin Bridges.

Cameron  03:06

No I don’t

Tony  03:07

Because he speaks with a Scottish accent. He slows it down and the famous one is like, I hired a personal trainer. He asked me what I ate? I couldn’t tell him I had chicken patties so I wrote down avocado. I don’t know what an avocado is.

Cameron  03:32

Anyway, James Williamson. Well, I read an article an interview with him in the Fin a few months ago and invited him on the show. He’s a value investor. It’d be good to chat to him.

Meantime, the big news for this week, Tony. It was actually last week but we didn’t get to talk about it, is the new theme for the podcast. That’s what everyone wants to know about. AKA Tony’s theme that you did. You mentioned it in after hours at the end and then you sent it to me and I worked it in.

Tony  03:59

You did.

Cameron  04:00

I liked it.

Tony  04:01


Cameron  04:01

I liked it.

Tony  04:03

I liked the way you went around my vocals. That’s a big improvement.

Cameron  04:08

I didn’t want to scare people too much.

Tony  04:10

No. Fair enough.

Cameron  04:11


Tony  04:13

You know what the recording session was like? Who’s going to sing on this? It’s like take one step forward, everyone else took two steps back.

Cameron  04:21

Right and here’s your– You’re the birthday boy. Right?

Tony  04:23


Cameron  04:23

You had to step up in here. That’s good but seriously, the big news for us this week is something we soft launched in beta yesterday which is the Brettalator, I think I’m going to call it. We need a name for it. Brett Fischer, QAV club member, long term QAV club member from Western Australia and IT Wiz has been working with you and by himself over quite a few months to develop.

Tony  04:52

Are you sure Brett’s from WA?

Cameron  04:57

I was until you said that.

Tony  04:59

I’ve got a feeling I met him at a Melbourne dinner but I could have it confused.

Cameron  05:03

Well, maybe he came to Melbourne.

Tony  05:05


Cameron  05:05

Hanging out. Oh, God damn it. Now, we have to look this up.

Tony  05:11

Because I think the Melbourne QAV group have been using it to test it as well before Brett showed me.

Cameron  05:17

God dammit. OK, Brett from Victoria. Well, I’ll get back to what I said, he’s going to come on the show next week or this week or something for chat. I said to him in the email, That’s eastern time, thinking he was in WA. Brett from Victoria. I’ve probably met Brett at a dinner down there too. Sorry, Brett. So many people, so many names to remember.

Anyway, back to that. Brett and you have been working together. Brett doing the work, you doing the–

Tony  05:47


Cameron  05:48

Yes, developing a three-point trend line. [Crossover 00:05:52].


Tony  05:55

Now, just write my name on the bottom.

Cameron  06:00

Oh, God. I’m going to get this story out sooner or later.

Brett developed a three-point trend Automatic calculator. All you have to do is open up the sheet– Google Sheet, plug in the code of the stock that you want to graph for and it draws the graph for you, tells you what the buy price is, tells you what the sell price is, tells you if it’s a Josephine, plots the graph, shows you the graph does it all for you 100% perfectly accurate every time. Except for the times it doesn’t because there’s a few issues mostly to do with Google Finance, not to do with Brett’s coding but we’ll talk through some of those but that’s the first step because we know that three-point trend line drawing has traditionally been probably the biggest challenge that new QAV club members have had and good on Brett for us. [Crossover 00:07:07].

Tony  07:07

I mean, it’s really good product and he’s been working tirelessly on it. We’ve just been iterating a bit on the rules and I– When I’ve been doing my downloads, I’ve been comparing them to Brett’s graph and then going back and saying, hey, what about this? What about that? And it’s been really helpful because it’s also helped– Just like working with Dylan’s has also helped nail down some of the three-point trend line rules. That’s been good but yes, as you say, I mean, we’ll get Brett on to talk about it. Please treat this as a beta version and before you buy something, check out your own graphs in Stock Doctor or Yahoo Finance or whatever you use because I mean– First of all, it’s a Google Sheet. When you get a copy, you save it to your own area because it’s a read only version and the one that we’re releasing but if you save as to your own file, it’ll become usable. That’s the first step.

Second step is it doesn’t handle small stocks very well. When– I mean, when I say small stocks, I mean stocks that have a decimal point in their shares, like if it’s 10.5 cents or 40.25 cents or whatever. The Google feed for the stock price doesn’t handle the decimal place so it rounds so that could be a problem and what else? Brett’s just coded to receive month end prices. If there’s a sentiments broken during the month, it may not pick it up, probably won’t pick it up but that’s another issue and yes, it uses yesterday’s closing price. If you jump on today and want to see if something’s reversed or gone ahead, you just need to be aware that it’s not going to pick up to those price.

They’re the ones that come to top of mind but yes, please treat it as a beta feedback, comments on any issues you have or improvements that could be made and yes, we’ll take it from there but well done, Brett. It’s fantastic. I was blown away and it’s been really helpful for me during company reporting season. It’s a real good product.

Cameron  09:01

Yes, and at the very least like when you’re using the sheet when it generates the graph, have a look at the chart and see if it makes sense to you and then you might want to open up Stock Doctor and compare it there too.

One of the other things that we picked up when we were doing the checklist this week– This morning, is that it also– it does pick up Josephine’s as was a recent thing that Brett added but he’s only looking at the end of last month’s price and the end of yesterday’s price and if the latter is lower than the former, it will flag it as a Josephine.

However, in some cases we were looking at this morning, the share price yesterday may be the same as the end of last month’s share price. It doesn’t pick it up. It just sees it as a flatline but I think we were looking at RVR this morning and it was quite obviously a falling knife. The price had been falling consistently since January. In some cases, like that, it’s not going to be 100% accurate picking up Josephine’s and falling knives if the downward trend, it goes back further than the end of last month.


Keep an eye on that but yes, and we’ve been talking– Well, ever since we started this thing about one day, being able to turn a lot of the stuff into code and the work that you’ve been doing with Dylan and the work with Brett and  the work that Andrew Flitman’s done, is all helping us start to figure out how to code this stuff and we’re going to try and hire a team of people to take this and progress it, come up with more and more sophisticated tools to make it just easier for us and the folks listening to get to a scorecard as quickly and as painlessly as possible.


Yes, whole team. We’re going to hire legions of coders to do it.


OK, we’re looking for one guy or girl who’s prepared to work [Crossover 00:11:02]. Work for likes or clapping, something. I didn’t want to be that transparent. I wanted to make it sound like we were taking this seriously but now that you’ve gone and done that, I guess.

Tony  11:17

We are taking it seriously.

Cameron  11:20

And the other thing I want to point out is we get to discontinue the shared manual data sheet now that we’re putting out the scorecard, and your scoring behind the scorecard each week. We’re going to discontinue the manual, the shared manual data sheet if for no other reason than pretty much nobody was adding to it too far from you, me, and I think Gary, maybe one or two other people but yes, don’t go looking for that anymore. I’ll take it down off the club member resources page because you’ve now got spreadsheets again to look at each week.

If you want to see the qualified audits which is the thing that I mostly use it for, you can go and check Tony’s spreadsheet to see if he’s been able to find one or not when you’re doing your own manual data.

Moving on, Gary– Speaking of Gary Maestro now. He posted his portfolio performance the other day, his paper portfolio I think as it’s tracking in Strawman, thank you and he’s killing it. 68.6% over 12 months. That’s pretty good, Gary.

Tony  12:22

That’s very good. Well done, Gary. Well done for sending it up on strawman and well done for having such an impressive results. It’s good.

Cameron  12:29

And he was still holding FMG when he posted that as well and still had that results.

Tony  12:33

Have you seen what happened to FMG today?

Cameron  12:35

Not today. No. What happened?

Tony  12:37

Last time I had look, it was down to like $14.50.

Cameron  12:41

Wow, I did read that. A lot of their execs leaving.

Tony  12:45

Oh, really? Hadn’t seen that.

Cameron  12:46

Yes, they’ve had a bunch of execs leaving. Something to do with bonuses getting cut or something like that. They just posted a $14 billion profit. I don’t know why that would be. Yes, the price has dropped from 18 bucks down to just below 15. It got lower but yes.

Tony  13:04

Yes, $14.63. I’m seeing Stock Doctor at the moment.

Cameron  13:07

Yes, 68 I’ve got. Yes. Wow.

Tony  13:11

You got to add the dividend back to take it up to 16.50 or 16.60 or so but still. Right. I hope everyone got out clean.

Cameron  13:19

Yes. Well, you did give everyone a warning a few weeks ago when we got out. That was a good call.

Tony  13:27


Cameron  13:27

What else? MYE had mine fatality last week and the share price took a big hit.

Tony  13:34

I mean, it’s always difficult to talk about something like that because of all the personal impacts it has on the people involved. The share price took a hit but it seems to have flat stopped going down. In fact, I think it was up today too in a lighting market. I mentioned there’s some buying coming back. I don’t know much about mastermind other than what I read and it’s a mining operator, a contract mining operator and a contract mining services provider.


Basically, providing contract to consulted mines and provide labor to mines but it has moved into running mines completely for in this case, I get it’s an overseas holder. They had a fatality so they’ll obviously be repercussions from that pretty hard to know what the impacts will be. There’s a couple of things sprung to mind when I had a look.

The first one is that they’re buying another company. I think it’s called Rybar, R-Y-B-A-R, which is another consultant– Mine contracting company and they’re going to– I think they’re either issuing shares or raising shares to– Raising money through a share issue. Either way, that’s going to be impacted by the price being 10% lower or whatever it is to what it was like before the incident at the mine. That might be a risk.

Another risk is that they’ve got two of these whole of mine contracts, possibly a third coming on but yes, it may be difficult for them depending on what caused the accident may be completely outside of their control but it may be– It may impact their work, the ability to tend to going forward or when tenders going forward. In the absence of anything else, there’s been no announcement since the initial announcement about the incident, no additional updates from the company. It’s pretty hard to know what’s going on and, of course, the news has moved on after the initial incident. In the absence of anything else, we have to be guided by sentiment and the sentiments stop going down. There’s slightly turning up. I don’t own the stock. I think if I did, I’d be holding on to see what happens.

Cameron  15:31

Yes, I guess the question I had for you which I think you’ve answered is whether or not it was a bad news sell. I guess it’s a different bad news.

Tony  15:40

Yes, it is. It’s [Crossover 00:15:43].

Cameron  15:43

Sorry, I was going to say it’s well above its sell line.

Tony  15:45


Cameron  15:46

But it’s not like the CFO suddenly resigned or the CEO suddenly resigned.

Tony  15:53

It’s also not like from day one, people came out like the mining union came out and said, let’s look at all their fault. I’ve got a history of bad management. They were cutting corners. They were working people too hard. No one said anything like that yet. It could just be an accident. Yes, we just don’t know.

Cameron  16:10

It was one of the better performance in my portfolio up until it plummeted last week. It was up like 20, 30%.

Tony  16:15

All right.

Cameron  16:16

Then it dropped. It’s back up above water but anyway, yes, it’s very sad for the families involved.

ZGL price update, Tony. We very bravely put ZGL up as a first stock of the week back on the seventh of September when it was at 12 cents. It’s now 10 cents. What do you want to say for yourself?

Tony  16:40

It wasn’t our first stock of the week. It was our first stock of the week that we started using after we had the– Got the AFSL license– AFS license, yes. Well, we’ve got to say for myself, nothing to see here.

Cameron  16:54

Right, move along.

Tony  16:55

Move along. Yes. Look, it’s down two cents a share. It’s in a small stock. It’s very illiquid like dropped and then it stopped. Nothing’s traded for a while. That’s the way these stocks work. The thing, I think it looked like that it may have dropped that those two cents which admittedly, it was about 15% based on the share price, I think it was like 11 and a half or 12 cents when it dropped. It’s a big drop percentage wise but not much in terms of sense but we recommend– I in retrospect, shouldn’t have recommended that before it released its annual results which came out like a couple of days after I recommended it but that’s how I do it.

Oftentimes, if they’re good on the QAV checklist, the results come out and the share price goes up, right? Didn’t in this case because the company had a loss, went from a profit to a loss. However, drilling into it, the operating cash flow generated by the company is still very strong. In fact, I think it’s even the record half for it which is why it’s scored very well and still does score very well, from a QAV point of view but they repaid a whole heap of debt about $17 million, I think from memory which is why they declare the loss. They basically use their record operating cash flow to pay down a whole heap of debt. I’ll give it a leave pass on that one. Even though it’s a loss, I can understand why.

Cameron  18:23


Tony  18:25

We’ll hold. We’ll see what happens with it share price.

Cameron  18:28

  1. CVW. We were talking about CVW. I think it was your pulled pork recently and then Murray on Facebook pointed out who I can confidently say is in WA.

Tony  18:44


Cameron  18:45

Murray pointed out that the figures in Stock Doctor were incorrect. You’ve looked into it a little bit?

Tony  18:53

Yes, looked into a little bit and also spoke to Stock Doctor and Murray’s right to the point that I think it affects the P&L part of Stock Doctor. What Stock Doctor told me is that because it’s an insurance company which is a bit different to most other companies that some otherwise got cross loading the p&l items into from the data provider into Stock Doctor. I’ll fix that but they have advised that may take one to two weeks but looking at to reconcile that myself that cash flow report still reconciles properly. Those figures are good. I don’t think our QAV score will change very much once the figures are actually righted by the data provider to Stock Doctor but yes, it does look a bit funny at the moment. PE looks wrong. The score may bounce around a little bit but the price operating cash flow won’t change which is the big driver for the QAV score especially in stock like this.

Cameron  19:49

OK, well, good pick up on that one anyway.

Tony  19:51

Yes, thank you, Murray.

Cameron  19:53

Duncan sent us an email with a bunch of graphs to check. This is before the Brettalator came out and–

Tony  20:05

You want a buy line, talk to me the Brettalator. That’s Mad Max, sorry.

Cameron  20:15

About three miles from here, I saw a rig that’ll pull that thing. Ya wanna get outta here, you talk to me. What a great line.

Duncan sent us an email with a bunch of graphs and I reviewed them and agreed with his call on some or disagreed with others but then I sent it to you and you shot me down on some of them.

Tony  20:41

[Inaudible 00:20:41].

Cameron  20:41

It was in your own nice way but it was a real education that I still have a lot to learn about doing three-point trend line graphs. Now have the Brettalator, yes, that’s one problem solved but can we talk about a couple of these? Because I just want to see your thinking on this. First, let’s have a look at KPT. KPT baby. You know me.

Tony  21:07

Kangaroo Island Timber, from memory.

Cameron  21:09

Yes. Now this one is one of these weird looking charts from memory and I think we’ve talked about it before on the show. It’s basically had a flatline basically, since what? March 2017.

Tony  21:27


Cameron  21:27

It was trading at $245 and then it dropped to a nice round like $2.36 and it stayed there ever since now. I mean, why the hell you would buy that? I don’t know but you said something happened and we have to look at a shorter timeframe. Right?

Tony  21:51

Yes, I don’t know what happened but something happened. It may even have just been some kind of share split. I know, in my research for the company. Certainly it wasn’t as far back as 2017 but this is a this is Kangaroo Island plantation timbers. It’s obviously a timber farm and sawmill and that was wiped out in the bushfires, what? 18 months ago now.

It has basically– I was going to say, sprung from the ashes but that’s a bad pun. It’s pivoted, they’re not going to try and replant the plantation timber. I imagine that would be a– Would take them many decades to get that back, they’re going to pivot to an agricultural company. I don’t know if it was something like that, that caused the big sell off in 2017. That would have been before the bushfires but perhaps there was something else that happened back then of a similar nature but anyway, the share price was either restructured or there was a big sell off and then again in–

Since then, there’s been the issue of the bushfires. It’s if you look at it on a five-year graph, all you see is a flatline as you said, but if you go back and look at it on a three-year graph which is an option in Stock Doctor, it starts to make sense and you can see that, again, it dropped down in September– The high point was September 2019, low point was June 2020. I mentioned it was a big drop from around February 2020. That would have been the bushfires, I guess wiping out the plantation but since then, they’ve done a fair bit to try and pivot the company to being an agricultural company and it’s the share price is starting to increase from there. The low was at eight cents. Is it? Yes, 0.8 cents of a share and it’s now back up to– Is that point– No, it’s 80 cents a share and it’s now back up to $17.

Cameron  23:39

The lesson here for me is if I see something that looks weird like the KPT anomaly, the big flatline, instead of just going, I should stop and think why does it look like that? And do some more work.

Tony  23:59

Yes, I mean, just from my experience, if you see that kind of graph, go to a three year one and see if there’s a better graph to work with because something’s happened in the longer term.

Cameron  24:08

And that’s allowable under QAV’s to look at a shorter time frame.

Tony  24:12

Yes, well, three years is still a long time frame. We’re still using a monthly graph and it makes the whole thing much clearer and better reflects the situation for this particular company.

Cameron  24:23

Yes, something dramatic happened and the company is a different company today to what it was before the pivot.

Tony  24:31

Pivot. Yes.

Cameron  24:33

  1. See, always learning, Tony. I’m always learning. I’m slow but I get there.

Tony  24:40

Slow. You’re a terminator mate.

Cameron  24:46

Yes, well, that’s it. I’m the slow terminator. I’m not like the T100. That’s just– The T1000 was just– I’m just the slow version like Arnie now as the Terminator like I’m in a wheelchair Terminator, slowly making progress. There’s a couple of others here that was interesting. RVR, we’ve already talked about in a way but WMC. This is another one where you wanted to unflatten the prices and I know we talked about this on the show just last week. Steve asked about it. We thought it was Western Mining Corporation and it was.

Tony  25:24


Cameron  25:25

Yes, again it’s a similar thing.

Tony  25:26

I think it’s a case where you need to use the three year to unflatten the graph or to make it more useful.

Cameron  25:33


Tony  25:33

Yes, it’s been on a long, steep decline for quite a while.

Cameron  25:39


Tony  25:40

And Yes, actually, in this case, still use the high point from five years ago like I think I did with Kangaroo Island too but Yes, if you just look at the five-year graph, you can’t see anything to put to anchor as h2. I dropped back to a three year and you can see that, again, the around the low point was May 2019 and that was at 70 cents and it’s now back up to $1.02. There has been some growth since then and you can see–

Cameron  26:13

What are you–

Tony  26:13

[Crossover 00:26:15] through the line.

Cameron  26:16

What are you using? Is h2 here?

Tony  26:18

Yes. This is a case of the buy line following the sell line. It would have been a sell. The l1 is May 2019. L– The first time l2 would have been used whether being March 2020 which would have made the sell around February or maybe even January or February 21 but I can get a sell line– Sorry, a buy line after that using the July 2021 peak is the h2 Peak.

Cameron  26:48

And where’s the Brettalator Put this.

Tony  26:52

I don’t know.

Cameron  26:53

I’m just bringing it up.

Tony  26:54

Brett’s got a buy line much earlier than me but he sits in a buy situation according to him, I think, what’s he got? Yes, he’s got a sell price of 95 cents and it’s currently $2 and a half.

Cameron  27:07

Again, the lesson is to just think, drill down.

Tony  27:16

Yes, it’s just experience really, the lesson is just you’ll notice after a while that you’ll see these stock graphs that fall off a cliff four years ago so use the three-year graph to see how it’s going.

Cameron  27:28

Yes, right. OK. Cool. That’s right. That’s good. Yes. Let’s move right along. You want to talk about corporate tax? We’ve got about probably five minutes before James is due to join us.

Tony  27:43

OK, let’s just run through a few things in. Corporate tax. We were talking before about the Buffet Ratio and how saying that it should be viewed these days between through the lens of low interest rates and corporate tax rates because corporate taxes were lowered under the Trump administration.

There is now a bill before the Congress in the US which is a $3 trillion on infrastructure bill but it also contains a corporate tax rate hike which isn’t receiving as much price over here as the $3 trillion infrastructure spend is. I guess the upshot is, I think Goldman Sachs came out and said that if the bill got passed, they think it would decrease corporate earnings by 5% next year, that’s going to be a hit to the market. Obviously, if earnings go down and the PE ratio doesn’t go down, then what doesn’t change, then the share price will drop. Just wanted to mention that that might be another factor to take into consideration when we’re thinking about the future that corporate earnings are probably going to drop in the US regardless of how well they do.

The other thing that came out in the last week or so was US inflation numbers which were north of 5% and expectations of inflation which is another survey that they do have of consumers is expecting that to get worse in the next 12 months. There’s a big debate going on around whether or not inflation is temporary or whether it’s entrenched, certainly the consumer thinks it’s entrenched and sometimes these things are just perception. Also, after the consumer thinks inflation is coming, they may well try and save more and spend less, they may bring spending forward to try and buy things now before they go up in price which means that they’re short of cash in the future.

There’s a few things going on here which are pointing towards a bright future. I don’t think anyway necessarily going forward for the share market but one of the harbinger of doom but these things are going on in the background that we should be aware of.

A couple of other things that happened during the week. We spoke about coal and uranium last week and how their three-point trend lines are going up which they are. One of the commodities stocks I didn’t talk about last week which had been on the buy list up until a little while ago. I think perhaps even up until its last results which caused the share price to improve is South 32. S32 is the code which does have coal mines in its portfolio but it also has– It also mines– They call it aluminum but I guess it’s bauxite and lead and zinc and all four of those are going up at the moment. It’s off the buy list. Now it’s got a QAV score of 0.07 the last time I had a look but people might want to and I own that too.

Don’t necessarily take that as a recommendation but if there is a bit of a period in the market where it does downturn a little bit, this one might come back on the buy list.

What else do I want to say? I did want to talk again about Apollo tourism and leisure not continue to poke the pig but I didn’t mention when I was talking about Apollo tourism last week that it has a shareholding in a company called Camplify which listed on the ASX and has done very well since listing and I think Apollo tourism owns about 17% of that. That will certainly help their share price going forward too. That’s just apropos of our general discussion about Apollo last week.

What else in the company round up? Myer is profitable again but the numbers aren’t in Stock Doctor yet. It’ll be interesting to see what happens to their QAV score when that– When those numbers get loaded. Midway, MWY has been out our buy list. I actually removed it during the download over the weekend and midway for people who don’t know, it is a relatively small wood pulping company in Victoria. I’m not exactly sure whether it has a plantation but it certainly takes logs and pulps them and sells the pulp to paper mills. It seems like what– When I did a bit of research into the company because I did recall reading some articles about lumber prices in the US dropping dramatically. They had been going up quite strongly but now they’ve dropped back. It turns out that there is a lumber graph in Stock Doctor. I’ll just call up and get its code and also–

Cameron  31:55

Hard wood graph.

Tony  31:56


Cameron  31:57

The hardwood graph.

Tony  31:59

Hard wood is it? OK. Do you have a code for it?

Cameron  32:02

No, but we were looking at it.

Tony  32:03

Yes, I’ll just call it something [Crossover 00:32:05].

Cameron  32:05

Hardwood and softwood.

Tony  32:06

Well, that’s an index Mundi. Index Mundi has in their sawn logs for hardwood and softwood and their five year graphs are all sells at the moment but there is also if you’re going to Stock Doctor and just as we would for other commodities, we can look up. Yes, there’s a lumber futures. LB# is the code and if we use that, that’s also– It’s gone past it’s sell line but it has turned upside so it may still probably 100 points away from its buy but it’s below its buy price at the moment.

I’ve taken off Midway, I’ve said it’s an underlying commodity sell based on the lumber futures contract but there’s also another four of those versions of that index Monday but they’re all in sell situations but we’ll have to monitor that one going forward.

A couple of other quick updates. SRG breached its sell line for anyone who is interested in SRG and then there’s one of the companies on our buy list is mineral resources and I’ve put a question mark onto the buy list. It’s a mineral resource is part iron ore and like I said last week, I don’t really have experience with these diversified miners and whether we should take them off.

Oh, that’s right. The thing with mineral commodities is it’s also a mining services company and provides crushing services to other companies, from memory. It’s not just in the commodities game but Yes, most of the profit in the last year has come from commodities, something like about maybe three quarters, even two thirds, three quarters and if I have a look at the commodities, it’s gold and lithium, as well as iron ore. There’s a couple of those which are not in the sell category, even though the iron ore is. I call it out. I’m not going to sell it yet as a three-point sell but the price has retreated. Maybe I should be taking these diversified miners and selling them based on the iron ore price.

If– I know we’ve got some people in WA with mining experience, I’d be interested to know what they think on these diversified miners and the last thing I want to talk about– Cam, I know it’s probably getting close to the time when our guests arrives but my– I just wanted to mention my personal returns because I know that we always talk about a 19.5% return over 25 years. Well, probably about 27 years now probably since we started doing the podcast. Anyway, my returns have dropped back to 19%. I just wanted to highlight that for transparency, partly because of the hit that a large part of my portfolio took when iron ore stock started to decrease before we sold them so they– I think Fortescue dropped from like 25 or $26 back to I sold it $20.50 or thereabouts and that was a large part of my portfolio as was champion Iron was in there as well.

And plus, I’m living off the dividends and I’m not reinvesting them the way I was now that my both Jenny and I aren’t working. I just wanted to call that out by pointing out a couple of things. I didn’t call out last year when that was above 19.5% but I did want to call it out now and secondly, over that same time period, which is a long time, the All Ords accumulation index was 7%. It’s nearly triple. I know we talked about double market but in this case, it’s still even though it’s fallen slightly back commodities route, it’s still nearly doing triple the awards.

Cameron  35:34

OK, good. Well, thanks for the transparency update. I’m not sure it makes much difference for most of us between 19 and 19 and a half percent but as long as you feel good about getting that off your chest.

Well, welcome to our guest this week. James Williamson from Wentworth Williamson management. I’ve got you from LinkedIn, James, listed as founder, Executive Director and Chief Investment Officer. On your website, it just says fund manager. You’re obviously very humble when it comes to how you present yourself on the website. I read an interview with you in the Financial Review. I think back in June that I really enjoyed. I thought, Oh, here’s what– He’s one of us. We need to get this guy on to talk about value investing. Welcome to the show and thanks for taking the time to join us. Where are you based James?

James Williamson  36:26

We’re in Sydney. They’re a relatively small team. We like to stay in that little hub of Sydney in a good little square.

Cameron  36:32

Are you enjoying your new freedoms in Sydney? Are you getting out and having picnics and stuff like Tony did yesterday?

James  36:39

Yes, I’m lucky. I’m living in Manly. I tried to get out and have a swim each day and I get into the ocean and you’re on your own out there. It’s fabulous. Definitely, I think looking at Manly and just looking outside too, you can see a little bit of– You can see people’s faces, they can– They look a little bit better. There was a time there, a month or so ago, people looked a bit down in the dumps.

Tony  37:01

You’re not supposed to see their face. They have to be wearing masks but anyway.

James  37:04

Yes, well, Tony [Inaudible 00:37:09]. There’s so many other people walking around without the masks.

Cameron  37:13

Yes. Let’s start with a little bit of your background. James, judging from the accent, you’re not from around these parts.

James  37:21

Yes, that’s right. I was born and did my understudies in South Africa and I went to London where I met my wife and I arrived here in the late 90s and I worked for a group called mercantile mutual investment management, you may remember them.

Tony  37:37

I do, yes.

James  37:38

There’s a well known figures there, David Paradise, Peter Mallet, Johnny Morgan, Greg Matthews [Sysco 00:37:45], a bunch of guys all went and did different things afterwards. It was a nice lesson. The late 90s is a little bit like I see things now and they ran a growth process– Growth at a reasonable price and when you’re a big fund, you’ve got to have a process when you pretend to everybody that is always going to spit out the right answers and of course, it doesn’t in different environments. It certainly didn’t when things changed. It was a very nice lesson for me.

There was a gentleman there who taught me a lot, the late brain [Sysco 00:38:16] and the Lubinsky [Sysco 00:38:16] and knew what I was and what I’m not and that’s half the battle here and my career went on from there but I moved to other countries for quite some time. Before coming back here.

Cameron  38:28

In the Fin interview, I read a great line from you. You said, in the late 1990s I was watching the late Simon Marais, I think it was in  Allan Graywhen they lost all their clients, bar won and I was thinking, man, I want to do that. I want everyone to dislike me and then be right. Is that what it takes to be a value investor, James?

James  38:51

Sometimes I’m too honest and I just got it, but there was those days because when I moved back from Australia to South Africa, I moved from the buy side to the sell side and of course, all this played out. You remember, we had the Asian crisis here which impacted Australia and then with the y2k and the tech bust but I saw these guys back then and they were going bankrupt and all their clients were leaving them but I also see them sticking to their guns what was sensible and I have to say, as a young analyst, as the stocks were declining, I would use a different methodology.

I would say, Oh, I used to pretend to myself I could do a 10 year plus DCF back in the day and then I was doing PEs and then I was doing– Eventually I was doing price to book for a retailer, pulling out all the tricks out of my toolbox to explain the price and the sell side analysts do this. I don’t blame them because they’re other pressures but I did it too. When it starts to go back up, then you find a reason to explain that price and the circus continues but I did a bit of this but I did see these guys and I quite admire them and I saw it all through in quite an extraordinary time and I was like, no this is– I know what I am, I can’t do this and I was made and although I stayed on the sell side for quite some time and in South Africa, I started to cover luxury goods overseas, Richemont, and LVMH, and then I started covering global beverages and the next minute I was in London, running global beverages because the head of research was a French guy. He said, there’s no way, it’s probably right. The South African can cover luxury goods is I think he’s totally right.


I stuck to a very value based approach which means trying to look after the– Look ahead over the next half, for the next year’s earnings. I really was trying to think, who’s better positioned over the next three to five years. It is quite rare, we’ve been pushed into be more and more short term focused. I would say now more than ever was, but it was definitely prevalent back then and the sells teams dictating with the money goes, you can see why that happens but that definitely shaped me. As I said, the late Simon Marais actually ended up working for him and he was, quite unrelenting in what he believed was right and what was wrong and that also brings you down as a value investor.

Sometimes you have to stand up, uncomfortably. Nobody likes conflict but sometimes you have to stand up and say, this is wrong. I find that’s also been lacking this last while, so I learnt a lot from him but I’ve got my own business. Now, actually, his son works for me which is a nice touch they’re continuing on and of course, I feel a little bit like they did in the late 90s because we’re there and I think this is the late 90s but on steroids, really, because we haven’t just had this growth bias which has been quite extraordinary. I mean, you just run through some of those companies and they are a long way from making proper cash flow and also you’ve had this huge prevalence of index funds which is money and its money pouring in and of course, it’s a lot of retail money, too.

We know that’s history too but that’s also pouring in. I can move around quite a bit but I find that slither the market that’s just outside the index hasn’t seen that. Give  you an example, like a Servcorp which I think isn’t– He’s good– I think Alf, whatever you might think of him because he’s quite colorful character. He’s built an extraordinary business that’s incredibly resilient and probably best in class in the world in what he plays in but it’s not caught up in US index flows.

I think if you look there, there’s a couple of reasons why it’s not in index. One is because you’re on so much the stock and there’s pros and cons on that but I think there’s a slither that’s still value. I say myself, it’s not easy out there. You have to really nitpick because a lot of it looks a little bit heated, especially if you want to go normal, multiple normal margin, just a plus simple thing. It’s hard because multiples have gone up and some margins out there look like they elevated relative to history. If you apply some simple value investing principles, it does make it quite difficult.

Cameron  43:03

But this time, it’s different, James.

James  43:07

Yes, I have been told that.

Tony  43:09

We printed that in our coffee mugs, James.

James  43:13


Tony  43:14

No it’s not.

James  43:15

Yes. Look, what the big– The thing is, just concerns me, nobody likes a credit crunch because that is very serious and we had elements of that in early 2020. Right? The beginning part felt like a bit of a credit crunch could be on its way and everybody loses. I think the best scenario for us is some of the heat comes out of these overheated areas or just flat and in real terms, you don’t do a hell of a lot for for quite some time and I think that’s going to come a shock to some people because they’ve done so well, just doing following the normal trends or spine bigger stocks, it’s been seemingly easy but if you go back in time, there’s– You can lose a decade.

I think we’re probably heading somewhere there. I actually feel that inflection point was probably late, the set is almost at the last quarter of last calendar year. It doesn’t feel like it because you had these swirling winds all the time but I think if you look back that could have been a bit of an inflection point but time will tell the reason was mentioned the credit crunch of course, is because I– There’s so much data out there, it’s frightening and eventually this– You got to pay it back or you accept much higher inflation. That’s the two things you’re going to have to face.

Tony  44:27

And potentially higher interest rates as well.

James  44:29

Well that would follow later. 100%. Can you imagine?

Tony  44:34

Oh, I don’t have to imagine. I’d been through it.

James  44:37


Tony  44:38

It’s not pretty.

James  44:39

It’s not pretty.

Tony  44:40

First house I bought was on a mortgage with 15.75% interest on it. That was the lowest in the market.

James  44:48

If you say that to young people today and the pressure for them or the FOMO to go get their first mortgage is so extreme and what they saying is, no, I’ll be OK but what if it goes up 1% and you’re not OK and I said, I’m going to be OK. Got more and more money. I’m going to have bonuses. I’m going to do this. They don’t know there is no safety net built into the budget team, right? If there is budgeting going on.

Tony  45:11

Right. Yes.

James  45:12

I doubt.

Tony  45:13

Yes. What happens if the wife has a baby and there’s one income coming in?

James  45:17

Somebody gets sick. In those days, interests were higher and remember in South Africa to do a double digit, my first house was also the same on those rates and they used to budget properly because used to move around, too. It seems to have gone out the window a little bit.

Tony  45:35

Yes, I noticed when I was reading your bios and the articles you’ve printed, not only is your style value focus, but it’s also contrary and maybe you could tell us a bit about why contrary and what’s an example of that?

James  45:46

Well, we are really quite a rare breed aren’t we? So Contrarian is we– I’m always interested in something that’s hated and this flies directly in the slice of this last couple of years of what we’ve seen. The more it’s loved, the more I’m like, I don’t want to look at it because it might go up a lot from now but the chances of it being good value have probably pretty slim and these guys are good at popping on and hopping off and all that that’s fine but real value, it’s probably slim but if it’s really hated, sometimes, not often, but sometimes there might be something interesting there left when it’s a fraction of what it normally be almost and I’ve got some examples, things that are in the ASX 300.

At one point, they were those stocks that I see today, in there today and there wasn’t really much of a business model in there, they certainly weren’t generating cash flow but there was some hype and years later when they’ve fallen to tiny market caps, when they’ve finally started to sort themselves out and they actually eat something, they start to make a little bit of money or very close to then that is, nobody’s interested and you almost got to relaunch yourself in some respects to get yourself going but if there’s something, a good RP in there or good people in there. It’s normally a journey, these things, then the Phoenix can rise again but it’s tough that one, but we definitely have a look and I look at it in reverse.

I remember chatting to some financial advisors there, sometimes they run their own stocks and they go get all the brokers say, buy. Just seven out of seven of the brokers coming to stock say, it’s a buy, must be a buy the stock. I think that’s a terrible way to invest. Actually look at it in reverse. Actually, if they all sells and they all think it’s the end of the world and I go back to my history and now analysts think, well, if they’re all sells and they’ve slashed the price process and that will everybody’s embarrassed and they’ve done so badly and the sells people are giving them a hard time. Go look there. It’s– You should probably hunt around there, you got a better chance, you just don’t invest for the short term thing. I think three years, just in case sometimes they run faster than you think but sometimes it’s three years just say get your psychology of your brain, right?

Tony  48:06

How do you approach the psychology of buying a stock in that situation but then it goes down lower  or it takes two years out of those three years to come good again?

James  48:15

I think that’s it comes down to backing your due diligence or your research that you’ve done. The complete opposite to what I’m saying is yet from a mate in the pub and the stock goes down, you don’t like the guy anymore and you sell your stock and a lot you don’t know work and that should really bother you.

Me doing work and understanding the fundamentals go down typically up are more. It’s a horrible feeling that if after three years you think you’ve made a mistake, that’s different and hopefully make fewer of those but I have made mistakes but most times, if you’ve done your work your homework properly, you’re going to be OK. Sometimes, and I hope there’s also rare, sometimes you have to do more work in it than what you expected. Like real work, put people on the board, get a little bit more involved but that also means that you’ve misjudged something but it’s fixable and the worst case is you’ve just made a total mistake and that’s not nice but I would say by far the majority of the time these things turn and all of a sudden end up being market darlings yourself and you’re like I can’t make good money is going up 100% again, and you can’t understand it. The sentiment seems to shift quicker than you think and quickly.

Tony  49:22

What would be a good example of that kind of turnaround that you’ve been through?

James  49:25

Oh, well, there would be plenty. I mean, I remember I was buying Wally at one stage at $3. I mean, that was a darling then it got– It was totally sold down. Then it went back up again and now it’s time to have another look would be at an example of that one that if you’ve run through the portfolio now, one of our bigger holdings now. Fleetwood would be one. Used to be an ASX 300, used to be a $12 stock.

That Searipple, it’s got three divisions in there but Searipple if you look through its history trades, it’s got 35% occupancy rates here. If you go back to 2012, much higher occupancy levels. 80% used to generate $15 million. Today generates $10 million. Even there is– Should have held it when it was $12 running a deficit of other earning occupancy levels? No. Should you be looking at it now when it’s low occupancy levels? Definitely Yes.

That would be a bread and butter investment for us. It’s got $16 million net cash which is roughly 28% of its market cap. It’s got 24% of its market cap in franking credits, three solid divisions in there or making money trading on 12 times earnings and can grow especially with the modular building business and simple sites and of course, I’m watching this Scarborough FID on the Woodside very closely because that’s important for that. I also own Woodside. It could be a bit longer.

Well, and of course, I owned MRM offshore which has also been a journey. I mean, that was a billion-dollar company at one point in time, also very much loved. It was trading on high earnings multiples on peak margins in a very cyclical energy industry, did a huge acquisition at the peak and took lots of debt. It’s almost like committing harakiri but today it’s the complete reverse. Its margins have been as low as you’ve ever seen in this industry ever, trading on a third of its tangible assets which have been written down about the newest fleet in the world and looks like there’s a couple of FIDs in our regional oil and gas but of course, you got this wind projects coming up to you which is just as good.

Offshore winds huge thematic and that needs to be serviced too. Again, you’ve had these companies that were stars at one point in time, very prevalent in portfolios and got sold often forgotten about completely out of the index, clearly. I’m hoping they will rise again and get back in and attract those kind of people again, and then I’m happy to say goodbye. The opportunities are there. I just think in this environment, you’re just forced to go deeper, other than oil which I think Woodside is a genuine opportunity in the large cap space. I think and some of the oil guys, you I think you just have to go deeper, it’s just the way it is.

Tony  52:05

Well, what metrics do you use to do evaluations? That sounds like it’s a whole suite of them rather than just price to book or discounted cash flow?

James  52:13

One thing we’re not generally is– I can do this job for hopefully for quite a long time but at my companies, my cash flow in that time. Some of these entities I see out there, I think you’re just dreaming, and everything has to go beautifully to reach these valuations and value guys are not that you can square away a lot of the market just by saying that. I’m going to say use the word normalized earnings because a lot of these companies have histories and on a normalized earnings margin for what they do. I want to be paid about 12 times earnings. 10, 11, 12, 13, I want those are my numbers I’m comfortable with. I don’t want to be paying 25, 30 times, these kind of numbers because a value guy looks for cash today.

He plays less focus on cash that’s in 10 years, 12 years because we know and can see you’ve around long enough to know that stuff happens in between now and then and one cash today, I do have a good look at the balance sheet and for various reasons, one is, I’m a little bit scared of too much debt. Whenever I’ve been completely carved out. It’s because there’s of debt. I’m careful and if there’s a good tangible asset backing, I’m thrilled. Doesn’t always be like that because depends on the business but if there is, it just makes me feel happier. That’s not to say I look at that and say, well, if it all goes pear shaped, that’s fine, you still lose money but you have some sort of say safety net at least but yes, I would say that a typical value guy doesn’t want to pay much– Too much today. He would pace quite a bit of emphasis on the balance sheet and some of us, the traditionalists prefer lower gearing levels, some tangible asset backing depending on the industry.

And the way I rationalize it and I think many of us do, is that our rationale is our downside also lower if we get it wrong which from time to time happens. Your real downside where you actually have to win us made that point about/ Sometimes I’ve made a mistake that’s real risk. We’re actually crystallize a real loss.

Tony  54:26

What happens to all of us not even buffer gets more than six out of 10, right? It’s going to happen.

James  54:31

I agree. More than percentage. I think if you get six or seven out of 10, right, I think you’re doing well. During this time as a value guy clearly obviously has not been easy time, especially in that area, we have to go hunting the most because I started looking there very actively 16, 17 because you could see the flows, a lot of my peers went bankrupt that it’s just carried on for several years.

Tony  54:52

How important is management to you? Do you interview management, you sit down with them, try and judge them somehow, look at their plans. What do you do there?

James  54:59

As I Getting all the you realize how important it is but it’s hard, I don’t need to tell you that. I had this one CEO I backed did very well, backed the same CEO in a different circumstance. Did terribly. It’s sometimes hard to go back through someone’s history and say how much was luck? How much was bad luck? How much did they generally good? There is that but yes, it makes a huge difference to find that right person and I’ve experienced some excellent managers, but equally, there’s been times where I’ve thought, Oh, my goodness, how did this happen? And also, you look at the board and sometimes, just to make sure because this board going to things go awry. They’re strong enough too but I’ve been surprised there too but it’s a crucial thing to look at and yes, we interview them. 100%.

Tony  55:42

In terms of value place, would you ever look at a growth company that was depressed? Like, the bottom of the COVID Outbreak– Companies like Afterpay were down to 20 bucks a share or whatever? Would you ever look at buying something like that or are you just strictly looking at cash flow?

James  55:58

The answer would be yes, I would look at it, Afterpay, they have done a brilliant job. Full credit to them. I never got those anywhere near those valuations. I think a lot had to go right and I think that to some extent being bailed out yeah?

I don’t want to talk about Afterpay anymore. You have to assume a perfect scenario for like 15 years to get to those numbers but yes, there was– I mean, I’ve got a position in our fund that other business that, in my mind is clearly a growth stock and it was backedoor listed. Had all the hype with ASX 300, chemicals, Fire retardant for the US Marines there were nowhere near there back then. Absolutely not. Now, it’s a tiny little business. I went and had a good look. I sent a consultant to the US to have a look at him. By that stage, they’d move the chemicals into the bedding industry and who does that? It was a 50 million market cap company and I send somebody there for two weeks but I managed to verify it. They’ve had real IP and phase change material and fire retardant.

Phase change material was their first revenues which means a cooling chemicals. In some big retailers, in fact the biggest in in the US in on the bedding industry, first of all, and it looks like now after two and a half years of hard slog. Got recapitalized that business and put some people on the board and as we said today, they’re moving into different verticals, with different players taking that coolant to ballistic vests and into heading into sportswear and now looks like in the bedding industry, the other sock on the bed reading with fire retardant and also working on various textiles fire retardant.

There was nothing in that business when it was an ASX 300 stock, literally, because I went back and had a look at some of those things that were said at the time and I’m like, my God, how did that happen? But I looked down where it is right now and I’m saying, OK, and you start doing the right thing, you get a proper board, you’ve got proper revenues, probably not going to be talking about a quarter, probably making money, some nice contracts sitting there which are imminent and that’s a proper thing and it’s got proper IP into two very big categories and topical categories and also moving on the eco  side taking from other hard earth chemicals which is going to get legislated but other than some rats and mice fluffing around, it’s just– It’s a little bit lost but that’s fine.

As soon as you start, you need to consistently kick your goals and you’ll be found and off you go again but I’ve played quite a big role there and sometimes I wonder, was it worth it? I’ll tell you in five years’ time.

It’s been a lot of work.

Tony  58:42

Which company is that called?

James  58:44

It’s a company called Alexium International and really they’re– It’s about 20 odd chemists scientists that sits in Korea and South Carolina. It’s listed here. It’s a complete anomaly. I think for the average guy to go verify all of that is next to impossible and really, if you’ve done all that damaging thing in the past even though it’s real new site now people don’t tend to believe you but they’re starting to work out some decent sells that were very recently starting to come through so I think that counts and I think that they’re starting to get noticed again but they just got to keep on delivering on the numbers then I actually don’t really care. Just keep on doing that.

It’s a strange thing. I don’t really want it just to run up higher than what it is. Do you have this ginormous thing I– Actually, there’s a part of me that just wanted to be. The share price to move sensibly in building up as they earn the right– Have the right share price, that would be my preference. If it spikes up and get stupid, I have to sell it and make a big profit. That is a part of me, I think so. This is your [Crossover 00:59:47].

Tony  59:48

I know that you’ve taken positions in uranium, which is something that we’ve talked about on this show recently because it’s starting to spike up. Is there a risk in being too early with an area like that?

James  59:58

Possibly. I don’t think we’re too early. We put our position. We sold out by the way.

Tony  1:00:03


James  1:00:03

We brought our positions in 2019. We just thought it was dead point. That sounds crazy now because these things are on Reddit and mean stocks like these, it’s attracting all this hype now.

Tony  1:00:15


James  1:00:16

And I’ll explain afterwards why we sold out but back then there was none of that. I was almost embarrassed to say that we’re in uranium. It was like just this value guy game. Value is almost a dirty word for not performing. Value guy buying uranium, why are you buying uranium? Everybody’s buying this. Why are you buying something nobody wants, in our mind, in our fundamental mind, it was just a matter of time before some of these guys were going to get contracted. In my mind, that was a five-year play. Honestly, these things take longer than you think.

Luckily, with uranium, there’s quite a bit of data out there. I was pretty confident that they had to start to reengage in in a reasonable period of time, which is my mind five years and I’ve been a bit– The market always anticipates a little bit earlier. That was also in my mind. We start to build positions. Now, a mandate which I need to look at is, I need to invest in Australia, New Zealand, which is quite problematic when you want to go to uranium because you’re buying juniors. Some guys haven’t even got it all set up to be miners yet, they still got to jump some hoops. You’re buying the stuff in the ground, it’s not even getting mined.

Paladin was probably the best out of it because the history but there’s some good guys there, boss and femi and so forth but I mean, there’s a lot to do. Let’s make no mistake and I decided that all five of these things and I expected capital raises which they were and you take small position or them as they come you go, you prepare yourself for this journey. What I really wanted was Chemico. Really the low cost miner and there’s two low cost guys like Kozaks and Chemico in Canada. I really wanted Chemico and I would have got a lot bigger. I bought this up to 5% in our fund but really, if I could have got Chemico, I would have got bigger because I saw them as much lower. They were low on the cost curve and properly establish mine making cash flow strong balance sheet but I had to do with what I had in front of me and our target prices were on contract prices which we thought were possible and putting a reasonable guesstimate on a DCF on there, there was no way around it.

That’s how you try to come to your– And I’m telling you now, these prices are nowhere near what I think are reasonable contract prices but I’ll look out for those guys, I’m wrong but I don’t know what people are tapping into their models. You have to put in pretty hot prices in there to get to these other prices. It’s clearly become a trend and it’s such a thematic.

Tony  1:02:47

Yes, it has. I mean.

James  1:02:48

And when you when you fitting people’s thematic on how they see the world, it can go anyway.

Tony  1:02:53

The ETFs which are popping up to buy uranium and hold uranium is doing that to a large extent. Yes, and I just wonder because like as you say, however many years ago when you first started buying uranium, no one was talking about uranium.

Cameron  1:03:06

Tony wants to know if you watched the rugby on Saturday night?

James  1:03:08

I did and my wife and my children are Aussies but it’s very hard for me to not support the Springboks, I was the Springboks supporter but I’m fit torn, I really liked the Springboks because I want to happen in with this change in the side and some of those guys where they’ve come from and what they did to get in that side but at the same time, I think Australia needs a wheeze once, I’m not really fussed. It was a good guy.

Tony  1:03:08

Thank you.

Cameron  1:03:49

Tony agrees. All right. Well, listen, just before you go, James, I’d like to ask two questions. Number one, if you had one piece of advice for people who are learning to become value investors, what would it be?

And then secondly, I’ll get you to just tell people, if they want to check out your fund, what they should do?

James  1:03:57

I guess the most important thing I would tell people is do your own homework and trust your instincts. I think as a value investor, you must understand human psychology and there is this thing with humans say, we– You feel more comfortable in a crowd and that’s just how we’ve been made. You got to resist that and just do your own homework and see if it stacks up. That’s my advice to young value investor would be.

In terms of us, our website’s We’ve got our deep value fund there and we’ve also got a credit fund which we lend money to doctors and dentists because they’re a great credit. You’ll find our value fund on there and we’ve got our quarterlies on and insight pieces and so forth on there.

Cameron  1:04:46

Is there a minimum investment that you were looking for?

James  1:04:49

Yes, every wholesale. It’s 100 on both. 100 count both.

Cameron  1:04:54


James  1:04:54

Thank you.

Cameron  1:04:54

All right. Well, thanks again for taking the time to chat. Congratulations on the fund and stay safe in Sydney.

James  1:05:01

Thank you. Thanks, Cameron and Tony, thank you so much for your time.

Cameron  1:05:05

Well, that was nice. Nice fella. Let’s quickly try and get some of the questions done. This first one is from Duncan. He posted on Facebook on the 14th of September. It was last week but does anyone have any idea why BLX fell nearly 7% today? You’re familiar with BLX, Tony?

Tony  1:05:27

Yes, Beacon Lighting. Yes, I’m not sure either but it did go ex-dividend on the night. That could have led to some of the selling.

Cameron  1:05:34


Tony  1:05:35

But Yes, I don’t know. Sorry.

Cameron  1:05:36

This is part of this thing you’ve been talking about recently, where we have to factor in dividends going ex.

Tony  1:05:43

Correct. Yes, and not just the dividend itself but I think as I said before, sometimes they just keep on selling because if they were holding it for dividend reasons, not capital growth reasons, they prepared to sell and move on to the next dividend company.

Cameron  1:05:57

Yes, dividend harvesting. I think you call it.

Tony  1:06:00


Cameron  1:06:02

Yes, I looked at BLX. I think at the time, I’m just going to try and find this post. Yes, I did pick up the dividend at the time. The dividend was 4.6 cents and the x date was the 10th of September.

Tony  1:06:22

I’m just looking at the share price now and in Brett’s spreadsheet and it’s almost back to what it was at the end of August. It’s one cent shy. That’s it. Whatever happened. It’s righted itself again.

Cameron  1:06:32

Right. Again, just the lesson for all of us is keep an eye on those dividend dates.

Tony  1:06:39

Yes and factor in the– If you’re a shareholder, you’re receiving that dividend even though it hasn’t hit your bank account yet. Factor that into your calculations.

Cameron  1:06:47

It would be really nice if Stock Doctor could throw those on the chart so we can see what is going on.

Tony  1:06:55

We could ask Brett but I think he’s done enough work for us this week.

Cameron  1:06:57

All right. It’s a good one. Leo on Facebook – bought CDM and then on the 12th of the night then on the 13th of the 9th, he went ouch 10% down today. I’m going to wait and see if it bounces back tomorrow. Hard to decide on rule number one when just bought sell line is still holding on any thoughts?

Tony  1:07:18

Yes. Again, this is a Cadence Capital which is an LIC, I actually have been taking it out of my downloads because it’s an LIC but just digging into it a bit. I don’t think it pays a dividend. I’ll just have a quick look for it on Stock Doctor. It may not be dividend related in this case.

The first thing I always look at is when it went ex-dividend. Oh sorry, this one does pay a dividend but it hasn’t been paid yet. 18th of October is an ex dividend so I don’t think it’s dividend related but I did notice in some quick research I did today is Cadence has something like 18% of its portfolio invested in a NASDAQ company. TMC is the code which listed on the NASDAQ and I noticed that it’s been quite volatile and did drop did go up and that was the birth dropped down again. That could be behind the movement and Cadence’s share price.

Cameron  1:08:08

Well, I guess he bought it. I don’t know when he bought it because it looks like the 12th was the weekend, I think yes. 13th was Monday. Closed on the 13th. Around about $20. It’s currently at a $16. I did just notice that on the homepage of CDM on Stock Doctor does have this next declared ex div date thing in the box number two there under star income criteria. Is that normal? They tell you the dividend is there. Is that when you find it?

Tony  1:08:41

Yes, that’s where it says the next dividend date. In this case, it’s helpful because it’s coming out but if we look at a stock that has declared a dividend, it’ll have the date be March next year. If you want the day that went ex-dividend, you need to go into the financial statements and then go down to the income section and you get the ex-dividend date there.

Cameron  1:09:02

Right. No easy way to find that?

Tony  1:09:06


Cameron  1:09:07

And one thing that you pointed out to me this morning is with these licks, taking them out is that you actually take them out of your spreadsheet when you identify a LIC so it doesn’t show up.

Tony  1:09:18

I take them out of manually– I take the ETFs and licks out of manually entered data so that when I do a download, Cadence capital, for example, comes up with errors when it tries to find it in the manually entered data sheet and I just know straight away then it’s an ETF or a LIC and I just delete it.

Cameron  1:09:34

Right. What I did with this morning for another one is I just coded it and color coded it red. The next time it’ll show up as that and I’ll know that there’s something fishy about it.

Tony  1:09:46

Yes, and look, to be fair, definitely with the ETFs. After I had looked at those, their operating cash flow was driven just almost solely by buying and selling and the ETF itself. LIC’s are a little bit different. I ay want to get some time. I’ll try and do some more research and just decide whether we should add them back in as operating companies or whether we just keep put them in the ETF bundle and leave them out.

Cameron  1:10:09

Yes. OK. Thanks. Daryl on Facebook asked about EHL. He said it seems to have reestablished its uptrend and over QAV score of 0.24 but it’s not on the latest QAV score card at all. Not sure if that was one of the ones that we looked at this year.

Tony  1:10:28

Yes. It’s a Josephine and so is ABA. The other one he asked about.

Cameron  1:10:31


Tony  1:10:32

That’s why they were deleted from the buy list but have a look, I think you’re putting out a more detailed version of the buy list. The summary one has the Josephine’s taken out.

Cameron  1:10:40


Tony  1:10:41

You’re also putting out the more detailed one, aren’t you?

Cameron  1:10:43

Yes, well, it’s in the same sheet. There’s– The first tab is just the short buy list.  Well, that’s not so short. When you do it. It’s like 36 stocks, I think this morning. The second tab is the unfiltered list where it has all of the scores and whether or not it’s a Josephine, etc. If people are wondering about that stuff, go to the second tab and you can find out.

Tony  1:11:04

Right. Yes, Emeco and ABA will be in the second tab then but I just had downturns recently which is why they’re off the buy list.

Cameron  1:11:10

OK, thanks, Daryl. Ange – since Tony already uses an SMSF, self-managed super fund.

Tony  1:11:18


Cameron  1:11:18

Sorry what?

Tony  1:11:19


Cameron  1:11:20


Tony  1:11:22

Avocado. SMSF.

Cameron  1:11:25

Can he impart any knowledge on how to ensure there’s no issues with the trust deed for investing QAV style, any traps trick or thoughts on having an individual a corporate trustee? How long he would spend himself beside accounts, etc. and ensuring everything is done by the book? And what their process is for him monthly and/or annually?

Tony  1:11:46

Yes, good question Ange. I think the first thing to note is in our SMSF, we only invest in shares. We’re either holding a little bit of cash or fully invested in Australian shares. That might be different to your SMSF. This is general advice and not specific but our SMSF is relatively simple because it’s just holding shares but I guess one of the important documents you’ll need to address is the strategy plan. If you’re the trustee of your SMSF, you need to lodge a strategy for that, how you’re planning to invest the funds and in my case, it historically it’s been a very simple strategy. It’s just saying, somewhere, the fund will hold somewhere between nought and 100% in Australian shares, and nought and 90% in cash.

I think I did get a question last year. I think the ATO doesn’t like that. I think I’ve now had to say nought  to 90% in shares and nought  to 90% in cash. Anyway, your accountant can help you with that or your auditor can help you with that. I don’t know what’s in your SMSF, you may already have some other assets in there, they may be shares, they may be property, you just need to take all of that into account when you’re documenting your investment strategy. That’s the first thing to be aware of.

The second thing is you asked about whether we have a corporate trustee and we do so it does add an extra layer of cost because you have to because it’s a corporation, you have to register it with ASIC and then do the return every year which is very simple. They send you an email and say give us 450 bucks, and we’ll have nothing else has changed. We’ll just keep your registration going for another year. That’s a cost but in corporate trustees versus personal trustees, and I’ve been both, there’s not much difference in them. Corporate trustee gives you a bit of flexibility. If you want to add new members or delete members, it’s easy to do it with a corporate trustee, that’s got something from memory to do with the way the assets are registered. If you’re a personal trustee for a Superfund the assets are held in your name, I think from memory in trust for the Superfund, whereas if it’s a corporation, they’re held by their own by the Corporation in trust for the Superfund and that just means again, if you’re a personal trustee and then want to change the trustee ship, give it to a spouse or somebody else to be trustee for you, there’s a bit of– A bit more admin in terms of reorganizing the ownership of the shares or the assets in the fund.

A corporate trustee helps from that point of view. What else can I say? In terms of extra workload, no additional workload, it’s another tax return. Again, there’s a bit of a cost there. Obviously, you have to audit the Superfund which is another cost and then I’ll send you the paperwork to file but that’s about it. So no, no additional ongoing work. For me, I don’t do anything differently in terms of investing for the Superfund compared to my family trust or personal names. No additional admin there.

That’s the thing you can’t forget, there are rules around you, if you already own the asset, you can’t– It’s got to be transferred in at the right value. Pretty easy to do with shares if you want to transfer them in because you get a transfer price on the day, difficult to do for works or even property sometimes.

And also to the third thing I want to say is there are the contribution rules. If you do transfer shares that are held, say in your own name into the Superfund, you’ve got to make sure that they fall within the contribution limits because you’ll be taxed along the way and potentially find if you’ve done if you’ve gone over the contribution limits for super funds and I know I think from memory in your case, Angela may not be an issue but if you’re an employee of a company they may already be making or they will already be making contributions to your super fund for you. Yes, transferring shares in may be an issue for you but again, you talk to your accountant, they’ll work it out for you but I think they’re probably all the only issues. There is a whole heap of issues which we haven’t encountered yet, which is the retirement side of things. Once you get to a retirement age and the superannuation rules flipping that there are rules around paying yourself a pension and how much you have to distribute from the fund every year but until then, it’s pretty straightforward.

And what else can I say? There are benefits to it. Tax benefits on the way in paying much less taxes as the on both on dividends and capital gains tax compared to any other structure that’s available and then of course, once you reach retirement, you’re paying no tax on those assets which might be good for you as well. Benefit then.

On the downside, once the money is in that you can’t get it out. You can’t decide to you know, sell a share and then gone buy a piece of property in your own name or something like that or pay off the mortgage for your house. You just can’t do it. It stays in the Superfund. Just be aware of that too.

I would say, if you’re not familiar with being a Superfund trustee or in running your own Superfund, there’s certainly somehow to guides which are out there again, I got one from my account and when we set up the SMSF. I think the ATO has a guide, is a few rules you need to be aware of, they generally don’t come into play. A couple of ones that springs to mind. We went overseas and if you’re an overseas resident, you can’t be a trustee for a self-managed super refund or you can’t control the self-managed Superfund. It has to be controlled by an Australian resident and I think there’s time limits on that. We did a bit of finding a different trustee for the fund in that circumstance, which, again, it’s not that difficult with the paperwork your accountant can fill out for you.


There are some other rules you need to be aware of. Probably the most prominent ones are related party transactions. You can’t, for example, buy an artwork in your super fund and then go and hang it on the wall. Can invest in art under certain circumstances but it’s got to be on a commercial basis and it’s got to be then rented out somewhere else will or hung somewhere else other than your own personal house or your own commercial premises.

Cameron  1:15:42

In my house.

Tony  1:15:43

And you could do it in your house. Yes.

Cameron  1:15:44

OK, if anyone–

Tony  1:15:45

Ideally, you should pay a rent for it and that way, it becomes an asset that’s providing an income for the Superfund but Yes–

Cameron  1:17:10

I’ll pay $1.

Haven’t you been retired for like 20 years?

Tony  1:17:46

You can, under some circumstances, write to the ATO and say, Look, I’ve been retired for 20 years and as long as you never have employment again, you can get access to your Superfund yes, or if you’ve been– If you’re been disabled or something like that apply to have it released early but it’s pretty rare.

Cameron  1:18:03

But you. I’m talking about you. You said you haven’t dealt with that yet because you haven’t hit retirement. You’ve been retired for 20 years. What’s retirement look like for you?

Tony  1:18:11

Yes, I could have. I did think about writing to the ATO but now–

Cameron  1:18:15

You’ve been. Well, I’ve been working harder than you’ve ever worked well for 20 years.

Tony  1:18:20

Three months. Correct.

Cameron  1:18:22

All right. Thank you Ange. Thank you, Tony. Max. He says he surprised you increase your position in NAB recently considering it was so close to such a steep sell line. I know we cannot forecast for such a steep sell line would really put the odds against NAB staying above it.

Tony  1:18:38

Yes, what can I say? I’m a thrill seeker.

Cameron  1:18:41

Buying it. This was very vague.

Tony  1:18:42

I think the hard thing for me in the last little while is just finding companies big enough on the buy list for me to buy.

Cameron  1:18:49


Tony  1:18:50

Yes, Max may be right but now it may well process buy line any day now if it hasn’t already today because the market’s down but Yes, I bought it because I have pretty much the only other option for me to buy.

Cameron  1:19:00

Right. You’re limited in what you can buy.

Cameron  1:19:04

Yes. Mark on Facebook ask, does anyone know why WAF is dropping? Can’t see any bad news. No dividend either. I’m considering dumping it as rule number one. It’s WAF.

Tony  1:19:04


Yes, I own West African resources too and I think the clue is in the name. There was a coup in Guinea, and which is in West Africa and the West African mines that we’re talking about here that belong to WAF are in a neighboring country called Burkina Faso. They’re not actually they haven’t been affected by the coup but I think just people have conflated West Africa and too and go on let’s get out of overseas mining. The downturn in WAF occurred the day after the court started the day after the coup [Sysco 01:19:48]. I think that’s a lot behind it but the gold price has been declining slightly to over the last month or so which is also driving it and Yes, like Luke or like Mark– Sorry, I’m also– It’s also getting tired– Getting close to a rule one sell for me, although the company’s well above its buy– Sell line, just generally.

Cameron  1:20:05

Right. Yes. Now it seems to be way above it. I just had a quick look.

Tony  1:20:09


Cameron  1:20:10


Tony  1:20:10

Yes, I think it’s more likely the gold price will be a sell before. WAF is a sell but who knows what will happen with the gold price?

Cameron  1:20:17

Right. Well, I’ve got a question here from next from Luke about what about the sell line for ZimPlats but now that we have the Brettalator, everyone should be able to answer sell lines for themselves now, right?

Tony  1:20:31

Yes. Although I think what Luke’s alluding to is the fact that it’s a commodity and why would I do a fudge because the sell line for ZimPlats is reasonably flat and a long way off, where the share price is now. I’ll just quickly give those I’ll use the what he called the breathalyzer– The bread-a-later. Sounds like a coffee perculator

Cameron  1:20:49

Not a breathalyzer. The Brettalator.

Tony  1:20:51

The Brettalator. I’m getting 31st of October 2017 as our one I shouldn’t say I am, Brett is, and then 30th of September 2020 at 8.99 as l2, they’re the sell lines for ZIM and that gives us a sell price of $10.74 when the share price is currently $20.49. It’s a long way off. I think what the question is asking is does I want to fudge it and start with l2 as it is and go up?

Cameron  1:21:21


Tony  1:21:21

But I don’t and I’ll tell you why because Luke needs to have a look in Stock Doctor, there’s a model the share price for platinum, which I’ll just call up and ZIM is obviously a platinum miner, I guess I don’t know. Do you mine Platinum or do you refine it? I’m not sure. Anyway, XPT_ is the physical Platinum graph in Stock Doctor and it’s a three-point trend line sell, in fact it crossed it a month or so ago.

Cameron  1:21:50


Tony  1:21:51

Crossed it about some time. Yes, towards the end of August. Luke, regardless of what the sell line is for ZimPlats, the underlying commodities or sell. If I owned it, I’d be selling.

Cameron  1:22:01

One of the commodity sells.

Tony  1:22:04

Correct. Yes.

Cameron  1:22:05

James on Facebook said I see copper futures TR# prices heading in the right direction and increases my interest in C6C and other copper miners, got any thoughts on where copper is at this week?

Tony  1:22:19

Yes, I’ve been watching it almost weekly, if not daily, in some cases, because the futures have been trending up the buy. I use copper physical to base decisions, the futures that are good trend for us as to what might happen but in every other commodity case, we use the physical. I’m going to use physical for copper. It’s just touching its buy line. If it goes up further from here, I think it’s going to be a rebuy. We did sell stocks off a little while ago when they became–

Cameron  1:22:46

C6C. Yes.

Tony  1:22:49

Yes, but if you have a look at I didn’t go back and look at C6C and sandfire was the other one that I sold. Personally, they’re still declining. I know that I’d feel uncomfortable buying C6C for example, even if the copper price does turn up if the share price graph or C6C is still going down. Unless you’re going to do like an average down or something as we were talking about with James before, you might be getting in a little bit too early. I would expect to see the share price graphs turn up once the copper breakout happens into the by going up but if you look at C6C, for example, it’s still well and truly into its buy territory but the it’s a Josephine. It’s a falling knife at the moment. I want to see it turn up a little bit before I bought.

Cameron  1:23:31

Right. I’m just looking now at XCU_, the copper physical. Now you’re drawing the buy line for this one because we had it as a sell. If I do the– Just recently, obviously, if I do the buy line follows the sell line.

Tony  1:23:51

Yes, the sell I’ve got crosses 31st of August 2021.

Cameron  1:23:57


Tony  1:23:57

Yep. Then the buy line I go back to May 2021 for h1 and then July 2021 for h2.

Cameron  1:24:05


Tony  1:24:06

And if I draw, it’s just around the current price. It’s just almost touching.

Cameron  1:24:11

Yes. OK.

Tony  1:24:13

It hasn’t crossed up yet but it may give the way the futures prices going.

Cameron  1:24:17

Yes, but it’s still below the sell line. It’d be a Schrodinger.

Tony  1:24:21

Sell price was 9388. I see what you’re saying is buy, whether sell line extends. Yes, it would be a Schrodinger. You’re right.

Cameron  1:24:28

Does the handle commodities?

Tony  1:24:32

It doesn’t unfortunately, no.

Cameron  1:24:34

Yes. OK.

Tony  1:24:35

It– I think for memory, handles three digit. It might handle more than three digit ones three alphanumeric codes, but it doesn’t handle these commodity ones.

Cameron  1:24:44

OK, copper would need to pick up and get above that sell line for us to start rebuying things like C6C.

Tony  1:24:53

And also too I think the underlying the C6C share price would need to turn up as well.

Cameron  1:24:58

Yes, right. Well, that’s all the questions that we have done for this week after hours. You’ve been watching more Hap & Leonard?

Tony  1:25:05

I love Hap & Leonard  man, that was a great discovery. Jenny loves it too. Season one is really violent but and sort of in a Tarantino style, I guess a bit cartoony but is very violent. I’ll warn people but season three god that’s good. That’s a great show.

Cameron  1:25:19

Good. I have to check it out and you’ve been reading some Stephen King you said?

Tony  1:25:24

Yes, I have a New Book from Stephen King called Billy summers which is good but it doesn’t fit the mold in terms of the horror genre. It’s a tale about a hitman eluding the mob which is quite interesting and well written.

Cameron  1:25:36

Oh, wow.

Tony  1:25:37

He’s a great writer.

Cameron  1:25:38

Wow. Yes. Well, for my end, I’ve mostly been watching Norm Macdonald YouTube’s for the last week since he passed away, Chrissy and I’ve been doing deep dives on Norm Macdonald every night after we finish our Italian and we’ve got half an hour to turn our brains off. I was been a big fan of norm for decades and finally I had been watching a lot of his clips before he died on follow a couple of Tick Tock channels where they just post Norm Macdonald clip. I’ve been really enjoying him. That was shock and sad to see him go so young.

Tony  1:26:09

Yes, definitely.

Cameron  1:26:12

And in terms of reading, I’ve been rereading Shantaram. You ever read Shantaram?

Tony  1:26:17

Oh, no. I’ve got a copy but I just haven’t gotten around to it.

Cameron  1:26:20

It’s been sitting on your desk down at Cape Schanck, I saw it down there.

Tony  1:26:25


Cameron  1:26:26

I think this is my second or third time reading it. I just wanted to get into some deep poetic story outside of all the other history and political stuff that I read. Yes, been enjoying that. It’s good stuff.

Tony  1:26:41

Good. Yes. Remember your record recommending it to me. I think when we first met.

Cameron  1:26:45

Yes, probably.

Tony  1:26:47

I must have made i get i get daunted by the book. It’s a bit of a tome.

Cameron  1:26:50

It is a tome. Yes and then he’s got the sequel that came out a couple of years ago, which is another tome on top of it but

Tony  1:26:57


Cameron  1:26:57

Yes, like I probably remembered I picked that book up the first one in a second hand, being at St. Vinnies or something literally the day, I was jumping on a plane to fly to Corsica to do the Napoleon event with Markham 13 years ago and it was this– I read it on the plane, it was my plane reading and I was halfway through it by the time I got there and it’s this great romantic story of an Aussie who escaped from prison is loosely based on the author’s real life. He escaped from pentridge, I think it was rid when on the lamb and ends up in India, where he meets, among other things, he gets involved in the drug trade and he works in a slum as a doctor and he has this incredible story. He ends up meeting this exotic woman but think she’s an American and she becomes his crazy love of his life kind of thing and I was reading that now. I met Chrissy this American Girl and Ajaccio when I wasn’t scaling from pentridge. Maybe it’s escaping from a marriage that no close, maybe.

Anyway, I gave her the book. Then after I finished it while I was in Ajaccio, I gave her, I said, you’ve got to read this which she did. It has a big– Played a big role in our story as well. It’s always nice to go back and reread it. All right, well, that’s the show. Big long one. Thank you for hanging in there, Tk. Have a great week, everybody. Tony, stay safe. Enjoy your newfound freedoms. When you get to go play golf?

Tony  1:28:32

I’m hoping in about a month’s time. The golf courses are open, you can go the ones which are 5K’s from home which is not the one I’m on a member of. There’s to be new support courses within 5Ks and they’re both always completely booked out. I don’t think I’ll be playing golf until I can get to my own club just in hopefully a month.

Cameron  1:28:49

Just stand out on your deck and hit some balls over the fence. On your deck.

Tony  1:28:54

Yes, it’s pretty quiet. I won’t hit anyone.

Cameron  1:28:56

Full. 36 stories down and landing Kings Cross somewhere.

Tony  1:29:01

Yes, just use [Inaudible 01:29:04].

Cameron  1:29:04

The QAV golf balls, just knock them over and do a bit of advertising.

Tony  1:29:10

Yes, I think I’ve used one of those like since you got locked.

Cameron  1:29:16

Tony. All right. Take care, man anyway,

Tony  1:29:19

All right. Thank you. Bye.

Cameron  1:29:38

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