QAV Weekly Update 2023-07-18

Cameron  00:08

Wel­come back to QAV. This is episode 628. We’re record­ing this on the 11th of July 2023. Last week was the brand-new finan­cial year, but it’s still a brand new finan­cial year as far as I’m con­cerned. Any­thing is pos­si­ble. Could be the great­est year of invest­ing ever. We don’t know. How are you, TK?

 

Tony  00:27

Yeah, good. Thank you. Yeah, it’s a love­ly day up here in Syd­ney.

 

Cameron  00:30

Here too. Have you hit a lit­tle white ball around today?

 

Tony  00:33

Not today. No. Tues­day’s QAV day, so I don’t have time to go out and play Golf. I played yes­ter­day, I’ll play tomor­row. Play­ing for the rest of the week with Rud­dy, he’s up here.

 

Cameron  00:43

After Wag­ga. Oh, he’s up? I thought you were going down.

 

Tony  00:45

I am, I’m going back when he goes back. But he’s up here.

 

Cameron  00:49

I want to start off by doing a shout out to Adi, new club mem­ber who jumped on Zoom with me for a how’s your father the oth­er day. Had a bit of a chat, it was nice. I always love chat­ting to the new mem­bers. Giv­ing them a lit­tle bit of an insight, show­ing them around. It’s like doing a house inspec­tion. I’m like, “here’s the club mem­ber resources page. Here’s the check­list. Over here behind this clos­et we have the Bret­te­la­tor.” It’s always fun. Port­fo­lio report: port­fo­lios still where it’s always been, 2.8 times the STW since incep­tion, when I checked this morn­ing. But I want­ed to point out LAU, because I saw LAU had a cork­er of a week. It was up 14%, I think, in the last week. It’s the new FMG in our port­fo­lio. We bought it in the dum­my port­fo­lio on the ninth of June last year, we bought it at 42 cents. It’s cur­rent­ly at $1.25. It’s up 202%. It’s had two div­i­dends, nice div­i­dends in that time. 200%. So, if we were rebal­anc­ing, we prob­a­bly would have sold it a long time ago.

 

Tony  01:59

Oh, yeah. And I haven’t checked the graph on LAU, but we could also have sold it out if we were using a trail­ing stop loss, I would think.

 

Cameron  02:08

Prob­a­bly. Yeah, it has­n’t always been steady and it’s down. It was up even high­er than that, I think, a month or so ago. It’s come back a lit­tle bit, but yeah, it’s it’s been a cork­er. So, in future when­ev­er we’re talk­ing about “would you bench Michael Jor­dan”, we can’t talk about FMG. Now we need to talk about LAU. It’s the new FMG. It’s the new super­star in the dum­my port­fo­lio. Again, it’s one of those things. I think I’ve bought and sold it a few times over the years, Lind­say, and I’m always like, “I don’t know, I’ve bought and sold this before.” But this last time, over the last year, it’s been a Cork­er.

 

Tony  02:42

Yeah. And before I for­get, too, some­one asked me, one of my friends asked me what STW was. That’s our bench­mark. It’s the ASX 200 Accu­mu­la­tion Index Fund.

 

Cameron  02:55

That’s right, yeah. The SPDR 200 Accu­mu­la­tion. We know the RBA held on rates last week, we men­tioned that dur­ing the show, and the mar­ket had a cork­er after that. The mar­ket was quite hap­py for a cou­ple of days, and then not so much after that. Just crashed after­wards. I don’t know what’s going on, Tony. The RBA says “no, we’re not gonna raise inter­est rates,” the mar­ket goes “you beau­ty!” And it goes up for a day and then it goes, “yeah, but you’re prob­a­bly going up in a cou­ple of months, aren’t you? Yeah, alright.”

 

Tony  03:30

That’s prob­a­bly what hap­pens to inter­est rates over­seas and what the spec­u­la­tion is there as well. There was some data in the US and spec­u­la­tion was there’d be two more inter­est rate rais­ings over there. It came through last week and that sent mar­kets down a bit.

 

Cameron  03:48

The US has to ruin all of our fun over and over. Only good thing I ever got out of Amer­i­ca was my wife. MQG, Tony, it’s still show­ing up on your list of hold­ings.

 

Tony  04:01

Not any­more. I just had­n’t updat­ed it. I sold it either Fri­day or Mon­day, Fri­day, I think.

 

Cameron  04:07

I was won­der­ing what was going on.

 

Tony  04:09

My fault. I nor­mal­ly just wait until I buy some­thing to replace it and then change the list once, which I have today, so it’s now updat­ed. There was noth­ing to buy on Fri­day. Every­thing was hav­ing a down day.

 

Cameron  04:20

Yeah. MQG is anoth­er one of these stocks. I’ve bought and sold it I reck­on half a dozen times in the last few years. I’ve nev­er had a win on MQG. I know they’re a great com­pa­ny, but I always lose mon­ey on MQG. I don’t think I lost this time, because the div­i­dend was paid and then it’s slunk below its three-point trend­line.

 

Tony  04:43

Well, the inter­est­ing thing about MQG was its oper­at­ing cash flow turned neg­a­tive at its last results, which we would have got a month or two ago. I remem­ber a cou­ple of years ago won­der­ing if that was a trig­ger for a sell and could­n’t get a defin­i­tive answer, but it’s bought us once again.

 

Cameron  05:02

Right. We talked about URW last week. We’ve talked about it for a cou­ple of weeks, actu­al­ly. You did a pull pork on it I think last week. We asked peo­ple to let us know if they’ve been able to buy it suc­cess­ful­ly. A cou­ple of peo­ple report­ed back. Steven report­ed that he bought it in the last cou­ple of days using Mac­quar­ie as the bro­ker. I asked him if they warned about CDIs and French fees and that kind of stuff. He said, “no alerts popped up when I made the trade. It went through the nor­mal trade. When I looked up the tick­et code it did write that it was a CDI in the descrip­tion but no more infor­ma­tion.” Dave said he bought it via Self­Wealth. There was a 0.3% French tax charged at the end of the month, but no tax on exit trades. So, you pay it on the way in but not out.

 

Tony  05:50

So, he’s exit­ed already, has he?

 

Cameron  05:51

I don’t know. Maybe they just told him there would be no tax. I don’t know. I want­ed to ask you about the wheat price, Tony. Sam, speak­ing of French tax­es, Sam picked up that the TE chart, Trad­ing Eco­nom­ics, one of the charts that we use to look at the wheat price dif­fers from the Stock Doc­tor futures chart for wheat. Then I went and had a look at it and tried to make sense of the dif­fer­ent charts. I could­n’t make sense of it. TE is report­ing the price of 660 USD a bushel, Stock Doc­tor was report­ing that it’s 106 AUD a bushel. Then I found one on businessinsider.com that said it was 253 USD a bushel. Then Sam also added there’s a pro­duc­tion pro­jec­tion: “Aus­tralian pro­duc­ers should have an above aver­age vol­ume but low­er than the last three bumper years in vol­ume. The US is in a drought, so pro­duc­tion is expect­ed to drop very sig­nif­i­cant­ly, which may affect the price in favour of GNC,” Grain­Corp, which I added to the dum­my port­fo­lio today. By the way, that’s what I replaced MQG with, I think.

 

Tony  07:05

Yeah, I did the same thing.

 

Cameron  07:07

“The sig­nals are mixed, so we’ll have to rely on the QAV rules as is most­ly the case,” he said. Are you able to make any sense out of all of these wheat price dif­fer­ences?

 

Tony  07:16

No, I can’t. And I’m not an expert, I real­ly can’t shed any light. The Stock Doc­tor graph looks strange. It looks like there was some kind of con­sol­i­da­tion a year or so ago, because the graph drops dra­mat­i­cal­ly. I’m real­ly not sure what’s right and the fig­ures were dif­fer­ent as you said. PE was 253 a bushel, Stock Doc­tor’s 106 a bushel, so I just don’t know what’s going on. I’m not an expert. I’ll have to do some research into it.

 

Cameron  07:43

I’ll ask Stock Doc­tor what’s going on. Mov­ing right along, James sug­gest­ed Michael Kemp a guest to come on the show. Appar­ent­ly, he has writ­ten a few books about invest­ing. He sounds like a bit of a val­ue guy. There was one book some peo­ple were talk­ing about, The Ulysses Con­tract. He’s an Aussie, he used to work for Scott Pape, I believe, the Bare­foot Investor. “The Ulysses Con­tract: how to nev­er wor­ry about the share mar­ket again.” Are you famil­iar with this guy at all, Tony?

 

Tony  08:15

The name rings a bell. I don’t think I’ve read any of his books, but I’ve got a feel­ing he used to either be asso­ci­at­ed with a writer that wrote a col­umn for some­one like Col­in Nichol­son, one of the ser­vices I used to sub­scribe to decades ago. Either Col­in Nichol­son Build­ing Wealth through Shares or maybe Your Mon­ey Week­ly, one of those any­way, he was fea­tured in. Yeah, hap­py to have him on the show for sure. Was­n’t there a Kemp who was the lead singer for ABC?

 

Cameron  08:41

ABC? The band? Shoot that poi­son arrow through my heart? Let me look. Steven Sin­gle­ton, Mark White, Mark Lick­ey, David Robin­son, David Palmer, Fiona Rus­sell Pow­ell, David Yarritu, Mar­tin Fry. No, no Kemp.

 

Tony  09:04

No Kemp? I got that wrong then.

 

Cameron  09:06

Do they have any oth­er songs? They only have that one song. “Shoot that poi­son arrow through my heart.”

 

Tony  09:11

Did­n’t they have Gold as well?

 

Cameron  09:13

No, that was Span­dau Bal­let.

 

Tony  09:15

Oh, that must be who I was think­ing of.

 

Cameron  09:18

“Gold! Always believe in your soul. You’ve got the pow­er to gold. You’re inde­struc­tible. Always believe it…”

 

Tony  09:24

Mar­tin Kemp is the guy.

 

Cameron  09:31

Real­ly? That was them. Span­dau Bal­let. There you go.

 

Tony  09:36

Well, get him on the show. We can ask him to sing Gold for us.

 

Cameron  09:43

He’s prob­a­bly not old enough to have ever heard of Span­dau Bal­let. Have to be our age. Hey, speak­ing of…

 

Tony  09:50

I think he.

 

Cameron  09:51

Oh, is he? Do you remem­ber the Wombles?

 

Tony  09:56

Yeah.

 

Cameron  09:57

I went on this deep dive about the Wombles yes­ter­day because we were sit­ting down to din­ner, and I was play­ing some Paul Simon in the back­ground. Fox says, “who’s this?” And I explained Paul Simon and then I explained Simon and Gar­funkel, and then we’re lis­ten­ing to a bit of Simon and Gar­funkel, and then Chris­sy men­tioned that she saw Gar­funkel live when she was liv­ing in Ger­many. I was like, I don’t even know any of Art Gar­funkel’s solo songs. So, I went on Spo­ti­fy, and the num­ber one song was Bright Eyes from Water­ship Down.

 

Tony  10:34

I thought that was Simon.

 

Cameron  10:39

No, it’s Gar­funkel. But the song was writ­ten by. I apol­o­gise to every­one shak­ing their head think­ing “what the hel­l’s going on.” That song was writ­ten by a guy called Mike Bat, and I looked up this Mike Bat char­ac­ter. He not only wrote bright eyes and the sound­track for Water­ship Down, which I loved as a kid, cried my eyes out when I watched Water­ship Down. But he has a great sto­ry behind him. So, he was com­mis­sioned in the ear­ly 70s to write the theme song for the Wombles TV show, and he waived the flat fee for writ­ing a sin­gle song and instead secured the rights to write songs under the name The Wombles. The band released sev­er­al albums and sin­gles, all four stu­dio albums when gold and four of the sin­gles reached the top 10 in the UK chart. The Wombles were the most suc­cess­ful musi­cal act of 1974 in the Unit­ed King­dom, and he not only wrote Bright Eyes for Water­ship Down, he also co-wrote the title song Phan­tom of the Opera with Andrew Lloyd Web­ber. A tal­ent­ed chap.

 

Tony  11:47

And busi­ness savvy as well.

 

Cameron  11:49

Yeah, smart. “I tell you what, wipe the fee, just give me the rights to use the name.”

 

Tony  11:55

The biggest sell­ing act in ’74 would have been knock­ing off Elton John…

 

Cameron  12:01

Paul McCart­ney, John Lennon, Queen. I don’t know who else was on.

 

Tony  12:07

That’s huge.

 

Cameron  12:08

Yeah, good for him. Yeah, I thought you’d appre­ci­ate that. So, I showed Fox and Chris­sy clips from the Wombles. They were like, “what?”

 

Tony  12:19

It was a pret­ty lame TV show. I seem to recall ignor­ing it when I was a kid.

 

Cameron  12:25

I loved it as a kid! It was real­ly mel­low. It was like, “hel­lo. What’s that? Oh, look, there’s some things over there…” It’s all stop motion ani­ma­tion, there were pup­pets…

 

Tony  12:37

And they had a good mes­sage. They were recy­cling every­thing.

 

Cameron  12:39

Exact­ly, yeah. I explained that to Fox.

 

Tony  12:44

Imag­ine explain­ing that to get a grant from the BBC to make a TV show.

 

Cameron  12:47

It was based on a series of much-loved chil­dren’s books, appar­ent­ly. Any­way, back to invest­ing. So, Michael Kemp. I’ll read his Ulysses book and we can get him on or invite him any­way. Now, a num­ber of our lis­ten­ers have post­ed results in the last week, which is nice. They’re all over the place. Jeff: “inspired to share. I haven’t learned more being a mem­ber of to QAV…” No, sor­ry. Let me start that again. “I have learned more being a mem­ber of QAV for a cou­ple of years than I did in the pre­vi­ous twen­ty-odd years as an investor. Sur­prised with the results because my port­fo­lios always seem a mess with pe-QAV stocks, too many over­all, uneven weight­ings and not always fol­low­ing the rules. I ben­e­fit­ed from writ­ing NHC and sell­ing just off the peak. Also sold SHL bought pre-QAV dur­ing COVID cough. Shows you only need one fly­er. My oth­er port­fo­lio gained 11.8% due large­ly to div­i­dends.” So, he’s post­ed a screen­shot from Stock Doc­tor here. His QAV port­fo­lio start­ing on the first of July 2022 was up 16.05%, beat­ing the STW which was up 14.78. So, he’s the only per­son I’ve come across yet who beat the index using QAV last year.

 

Tony  14:12

He did­n’t quite use it though. He sold out of NHC at the peak. That was good.

 

Cameron  14:20

Maybe that’s the les­son here, is you can do well with QAV in bad years, just don’t fol­low any of the rules. Trent post­ed his results as well. Con­grat­u­la­tions, Jeff. Well done. Cham­pi­on resolt.

 

Tony  14:32

Yeah, well done Jeff. And thanks for shar­ing, mate. Good.

 

Cameron  14:35

Yeah, I appre­ci­ate every­one shar­ing, whether they’re good or bad, and I think you set the bar for that. It was brave of you last week to report your results. Oh, by the way. My super results I think came in at about ‑7 after I man­aged to fac­tor in all of the div­i­dends, so not as bad as yours. But I was sit­ting on a lot of cash, had a lot of dou­ble posi­tions, too, in the super. It was a sucky year for a high ADT port­fo­lio. Any­way, Trent says, “I had an 8.8% return in the FY when includ­ing div­i­dends. With­out div­i­dends I went back­wards.” Yeah, div­i­dends have been real­ly play­ing a big role in our port­fo­lios the last cou­ple of years. I love this, he says, “cur­rent­ly hold ten posi­tions, four of which are in breach of rule one, but I live in hope. Over the finan­cial year have held twen­ty-one stocks and twelve pos­i­tive­ly con­tributed to the over­all return. Have sold eleven stocks in the last twelve months. Five of these made mon­ey but slight­ly neg­a­tive over­all. Three shares have done the major­i­ty of the heavy lift­ing: IGL, KGN, and WDS.” This is the bit I love the most: “the biggest ben­e­fit of QAV for me is hav­ing a sys­tem to sell. That month­ly process of look­ing at the 3PTL sell line has cre­at­ed a dis­ci­pline that I did­n’t apply before. Sec­ond ben­e­fit is hav­ing a buy list of com­pa­nies to research based on a sys­tem. I’m still get­ting my head around the buy­ing process; I still use a lot of my gut feels sprin­kled with some research to decide what to invest in rather than just buy­ing the next most suit­able ADT stock.” But then he said, “WDS is a com­mod­i­ty sell, so of the ten stocks I own, 50% are in breach of the QAV rules. Turns out I’m more of a loose can­non than I thought.” I was like, he said ear­li­er the biggest ben­e­fit is hav­ing a sys­tem that tells him when to sell, the next sec­ond, he says I don’t sell.

 

Tony  16:30

Well, what did he say he had? 8% for the year, which is bet­ter than us who applied the rules. It’s back­wards.

 

Cameron  16:37

There you go. Yeah. I think that’s what we’ve learned from all of this, is don’t fol­low the rules. “WDS, up 10% exclud­ing div­i­dends, but is a com­mod­i­ty sell. We use 3PTL with a 20% flat bot­tom fudge fac­tor to decide where I’ll sell. The remain­der of rule one breach­es are down between 12%-22% based on ini­tial cap­i­tal. A few of them pay div­i­dends, so total per­cent­age loss is less. Some are quite illiq­uid, so jump around a bit, and a cou­ple have been on and off the buy list, which I take to mean maybe one day the tide will turn.”

 

Tony  17:15

One day.

 

Cameron  17:16

In all seri­ous­ness, though, yes. Some peo­ple who did­n’t fol­low the rules have done bet­ter than we did fol­low­ing the rules. But long term, I would expect that fol­low­ing the rules is prob­a­bly the smart move.

 

Tony  17:30

I mean, these are two peo­ple as well. So, there could be a whole heap of peo­ple out there who have fol­lowed the rules and done okay, as well. So, there’s that. But I don’t have a prob­lem with what they’re doing, because the whole thing about QAV is empow­er­ing peo­ple to do it them­selves, right?

 

Cameron  17:43

Yeah, sure.

 

Tony  17:44

If you want to fudge the rules, go for it. The hard part is if you keep fol­low­ing your gut, you’re not even fol­low­ing your own rules, right? You haven’t made rules, you’re just fol­low­ing your gut.

 

Cameron  17:54

That is a rule: “I fol­low my gut.”

 

Tony  17:59

But is it worth­while… I know we put out the score­card every week telling peo­ple what new com­modi­ties are avail­able. Is it worth­while putting out a week­ly sum­ma­ry of 3PTLs and com­mod­i­ty sells as well, so peo­ple aren’t miss­ing out on sell sig­nals if they’ve just been dis­tract­ed for the week, or they’ve worked hard for the week and haven’t noticed their port­fo­lio?

 

Cameron  18:19

How would we do that exact­ly?

 

Tony  18:20

Just when Alex is putting togeth­er the score­card, she could just list any­thing that’s become a sell this week.

 

Cameron  18:26

Out of the entire ASX?

 

Tony  18:28

Yeah, I’ll have to think about it. There’d have to be some kind of com­par­i­son between last week’s buy list and the cur­rent buy list and what’s not there.

 

Cameron  18:36

But even stocks may have dropped off the buy list three months ear­li­er, you’d have to track every­thing.

 

Tony  18:45

Good point.

 

Cameron  18:46

I’ll ask Chat GPT.

 

Tony  18:48

Okay. Well, I had an inter­est­ing dis­cus­sion with Tay­lor when he dropped in a cou­ple of weeks ago and he said, “you need dis­ci­pline. You need to be account­able. We should be send­ing emails out to every­one to tell them exact­ly when to sell.” Yeah, that’s not a bad idea. But that’s gonna be hard to do.

 

Cameron  19:07

He wants us to make all of our lis­ten­ers account­able. He thinks every­one should turn up to a Skype call with me every day and swear that they’ve been fol­low­ing the rules, and if they don’t fol­low the rules, we should brand them or have a pub­lic whip­ping or some­thing like that.

 

Tony  19:25

Yeah, he said QAV should be like AA.

 

Cameron  19:30

I think he’s speak­ing from per­son­al expe­ri­ence. I think he’s still hold­ing stocks that are like 50% down and he just does­n’t sell them.

 

Tony  19:38

If peo­ple aren’t sell­ing because they miss their sell sig­nals, then maybe we can try and do some­thing to put out alerts or a week­ly sum­ma­ry.

 

Cameron  19:46

If they’re ignor­ing their Stock Doc­tor alerts, what makes you think they’re gonna lis­ten to alerts?

 

Tony  19:52

Which reminds me, it’s a new month. Update you Stock Doc­tor alerts.

 

Cameron  19:56

Maybe I can just buy a car­a­van, go on the road and knock on every­one’s door. Just sur­prise them in the mid­dle of the night. Knock, “who’s there?” “Cameron.” “Cameron, who?” “Cameron, have you checked your alerts this week.”

 

Tony  20:11

Car­a­van Cam.

 

Cameron  20:12

Yeah. The Ley­land broth­ers. Scott also shared his results for the finan­cial year. “I start­ed in Sep­tem­ber 22. Did­n’t ful­ly fund my account into Octo­ber 22. ADT greater than 15k and I’ve held fif­teen stocks. Result accord­ing to Navexa is ‑7.3%. If I cal­cu­late based off the bal­ance, I get ‑8.8%. I’m not sure why the dif­fer­ence.” Yeah, none of us under­stand how Navexa works, Scott, wel­come to the club. “I thought maybe frank­ing cred­its, but that’s not it. I fol­lowed rule one pret­ty well but did­n’t prop­er­ly under­stand the sec­ond buy line at the start. In say­ing that, I was look­ing okay in Jan­u­ary, most of the down­turn came after that. I had twen­ty-eight R1s. Anoth­er fac­tor is my account is rel­a­tive­ly small, so bro­ker­age is sig­nif­i­cant. The result may have been clos­er to ‑5.5% if I had a large account and bro­ker­age was­n’t so sig­nif­i­cant.” Yeah, that as we’ve talked about in the last cou­ple of weeks, that’s going to cut into your returns quite a lot of you have small par­cel sizes.

 

Tony  21:15

Yeah. But maybe — I don’t know who Scot­t’s broking with — there might be a cheap­er bro­ker out there as well. Bro­ker­age isn’t that expen­sive for small port­fo­lios these days, so that could be an option. But yeah, look, I think we’re hear­ing this from peo­ple who start­ed in the last twelve months, aren’t we? Or the last six to twelve months? It’s been a tough start. But as we’ve said before, hang with it, because you go through peri­ods like this and come out the oth­er end okay.

 

Cameron  21:40

Yeah, I think in the last eigh­teen months it’s been pret­ty tough. But the dum­my port­fo­lio is the evi­dence point for me. We start­ed it in 2019, it’s look­ing real­ly great ver­sus the index. What do we always say? The quote we stole. It’s not tim­ing the mar­ket that counts, but time in the mar­ket.

 

Tony  22:02

Cor­rect. It’s an inter­est­ing point, though, too. I’ve noticed over the years that fund man­agers who’ve start­ed at the end of a crash have always post­ed great returns. Which is prob­a­bly just the start date being low, which helps them boost their returns over the years.

 

Cameron  22:17

A lit­tle bit of luck in your start date, but we can’t do any­thing about that unfor­tu­nate­ly. Yeah, that’s all I’ve got for chit­ter chat­ter today, Tony, what have you got to talk about?

 

Tony  22:28

Noth­ing real­ly, I’ve just got a pulled pork to do.

 

Cameron  22:30

What are you doing this week?

 

Tony  22:34

The code is NZM, and this is a dual list­ing both in New Zealand and in Aus­tralia. The com­pa­ny is a media com­pa­ny in New Zealand, large run over there. A lot of print media. So, New Zealand Her­ald, but all the large cities in New Zealand have a news­pa­per put out by NZM. Start­ed off, inter­est­ing­ly enough, around the dot­com time. There was a kid who set up a com­pa­ny, or a web­site por­tal called stuff.nz which was like the yahoo.com of New Zealand. So, it was a por­tal, it would put con­tent out there and clas­si­fieds was prob­a­bly the biggest one at the start, any­way, and it sur­vived off adver­tis­ing rev­enue. It got big­ger and big­ger, bought out by Nine Enter­tain­ment, and then recent­ly sold back to the New Zealand… I think it was actu­al­ly a man­age­ment buy­out about three years ago in New Zealand, and they’re try­ing to make it work. This is just like we spoke about when we did Sev­en West Media as our deep dive, because it’s a media com­pa­ny, adver­tis­ing rev­enues are defect­ing to social media so they’re doing it tough. And the jour­nal­ists who bought it out have decid­ed to try and put as much behind a pay­wall as they can now. They’re see­ing that as the poten­tial sav­iour, but who knows. So, it is a media stock. It’s not with­out its risks for those rea­sons. Plus, the oth­er risks that this com­pa­ny faces is its biggest com­peti­tor is prob­a­bly Radio New Zealand, which is state run, so it does­n’t care what the adver­tis­ing mar­kets doing. It’s gonna keep churn­ing out con­tent regard­less. So, yeah, it’s a chal­leng­ing mar­ket, but it does come with a strong lega­cy of brands, not just the news­pa­pers and the por­tal which has clas­si­fieds and I think also car sale clas­si­fieds, and also home sale clas­si­fied. So, think of Stuff New Zealand as pret­ty much all of the indi­vid­ual ecom­merce brands in Aus­tralia like your Seek and your cars.com, and domain.com and real estate.com rolled up into one, plus add The Age and the Syd­ney Morn­ing Her­ald and some oth­er news­pa­pers. And then add Nova FM and the radio net­works that go with them. So, that’s pret­ty much what Stuff New Zealand is in New Zealand, and it’s called NZ Me. So, that’s the com­pa­ny. Like I said, it’s under­gone a man­age­ment by a lady by the name of Sinead Bouch­er, and they’ve just been restruc­tured to put more behind the pay­walls. By the num­bers, I’m using a share price of 85 cents. ADT for the stock isn’t that large, it’s $44,000. And that might be because it’s dual list­ed. It might have a big­ger ADT in New Zealand, I’m not sure. But $44,000 will suit some small port­fo­lios for our lis­ten­ers but won’t suit the peo­ple who need a big­ger ADT. It’s just crossed it’s 2BL, so it’s sec­ond buy line. I had a look just before we came on the show, and it’s just dropped back a bit today. So, it’s skirt­ing with becom­ing a buy again for us. Way above its buy price, but it has been a bit of a Josephine for the last six months or so. So, just check the price out before you do any­thing as part of the research you do before buy­ing. This com­pa­ny isn’t cov­ered by ana­lysts, so we have no con­sen­sus tar­get, which is usu­al­ly a good thing because we become our own ana­lysts and can get a jump on the mar­ket. A cou­ple of oth­er inter­est­ing facts; the yield on this com­pa­ny is 9.69%, so that’s a very large div­i­dend it’s pay­ing. Whether that con­tin­ues if they’re hav­ing prob­lems rais­ing with adver­tis­ing rev­enue decreas­ing if the pay­wall does­n’t work, that div­i­dend may be in doubt, but at the moment it’s high. So, it’s high­er than the bank rate, so we give it a tick. But it’s one of those stocks where the yield minus the PE is pos­i­tive, so it’s PE is 7.58. times, which is less than the yield that it’s pay­ing out. So, that’s always been, for me, an indi­ca­tor of deep val­ue. So, that’s a good thing, too. Stock Doc­tor finan­cial health is strong and steady, which is, in itself, inter­est­ing if the com­pa­ny is fac­ing risks and decreas­ing sales. It seems to be doing well, at least from the finan­cial risk man­age­ment side of things, so that’s good. Again, we’re buy­ing it cheap­ly, prob­a­bly because of all the risks I’ve talked about. The Pr/OpCaf is just under 4.5 times, so that’s nice and juicy. IV 1, how­ev­er, is 58 cents, and the stock price, as I said, was 85, so we can’t score it on that basis. There’s no IV 2, because with­out bro­ker cov­er­age we’re not get­ting any fore­casts for this com­pa­ny, so we can’t score it on that one. Net equi­ty per share is 70 cents, which is less than the share price. But if we add 30% to that, book plus 30 is 90 cents, so it’s just below its book plus 30, which is good. I could­n’t tell if it had an own­er-founder, which I thought was inter­est­ing. I’m not sure what’s going on, whether Stock Doc­tor is a bit out of date or what­ev­er, but Sinead Bouch­er who I spoke about before was the journo who led the man­age­ment buy­out, is now meant to be the exec­u­tive chair of the com­pa­ny. But I’m not see­ing her in Stock Doc­tor as any of the office hold­ers, so I can’t tell what her share­hold­ing is. It’s quite pos­si­ble her share­hold­ing may be through a com­pa­ny name, or it’s also pos­si­ble giv­en this was a man­age­ment buy­out that they geared up and they don’t have a large per­cent­age stake in the com­pa­ny even though they bought it out. I’m not sure what’s going on there, but I have to score it as a zero for own­er-founder, which is strange, because this com­pa­ny is now being run by the jour­nal­ists who work there. Hap­py if you had anoth­er point to the check­list based on that, but at the moment we’re not see­ing it in the num­bers, so I’m not scor­ing it. In terms of the man­u­al data, it’s does­n’t have con­sis­tent­ly increas­ing equi­ty, so it gets a zero. The PE, which I said before was 7.58, isn’t the low­est or the high­est in the last three years, so we’re not scor­ing it for that one. And it’s well above its buy line, so we’re not giv­ing it a recent upturn of that either. So, all in all, the qual­i­ty score for this com­pa­ny is nine out of twelve, which is 75%. And because the Pr/OpCaf is 4.49, we have a QAV score of 0.17. Which is not the top of the buy list, but not near the bot­tom either, it’s in the mid­dle. So, not too bad. As I said, it does come with risks. Gov­ern­ment com­peti­tor who does­n’t real­ly care about the declin­ing ad rev­enues. They’re going to be able to keep churn­ing out con­tent when NZM may have to cut back on jour­nal­ists, for exam­ple, is an issue, and then loss of adver­tis­ing to social media is an issue. How­ev­er, both in Aus­tralia and New Zealand the gov­ern­ment have just recent­ly brought in laws so social media have to pay news con­tent orig­i­na­tors for the news that they use. So, that’s going to help them a lit­tle bit. Yeah, NZM, not with­out its risk, but do your own research.

 

Cameron  29:25

It’s cur­rent­ly a Josephine, but very close to its 2BL.

 

Tony  29:29

Yeah, okay. It was actu­al­ly above the 2BL this morn­ing when I first looked at it.

 

Cameron  29:34

The Bret­te­la­tors got it as pre­vi­ous mon­th’s close 88 cents, cur­rent price is 87 cents. Good. Thank you, TK. Hi, Alex.

Cameron  1:08:28

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