On this episode we’re discussing Charlie Munger, pulled pork on ING, if QAV is based on momentum and minimizing losses.

In the club edition only: PRN’s guidance, ATP’s bump, ADT survey results, portfolio updates, RBA rate hold, MMS losing a govt contract, ASX 200 stocks with single-digit P/Es, thoughts about VYS giving their Managing Director an Interest Free loan.


QAV 650 Club
[00:00:00] Cameron: All
[00:00:05] Cameron: right,
[00:00:06] Cameron: QAV650 back with TK in the, in the studio,
[00:00:11] Cameron: in the booth, TK in the booth down in Cape Schanck, the Cape Schanck
[00:00:15] Cameron: booth. How are you TK?
[00:00:18] Tony: Very well, thank you. Enjoying my time down here.
[00:00:21] Cameron: Enjoyed your week off? Played some golf?
[00:00:23] Tony: played some golf. Yeah, we’ll talk about it in after hours.
[00:00:27] Cameron: Oh,
[00:00:27] Tony: Had, good fun.
[00:00:30] Tony: What do you want to talk about now? We can if you like.
[00:00:32] Cameron: well, you
[00:00:33] Cameron: can give, give people the highlights now and then we can talk about it in depth and after hours. So you played in a charity tournament, how did you
[00:00:40] Tony: won.
[00:00:42] Cameron: Wow.
[00:00:43] Tony: Yeah, it was good. We played, um, Uh, a couple of days of
[00:00:48] Tony: a
[00:00:48] Tony: course called Peninsular Kingswood!
[00:00:50] Tony: which is
[00:00:52] Cameron: Not the Kingswood!
[00:00:53] Tony: yeah, really good, really, um, up their course in terms of quality and presentation. [00:01:00] And they spent many, many millions on it recently. So that was good fun. But then the third day of our Melbourne trip is always back to Woodlands, uh, for a charity day to raise money for Leukodystrophy.
[00:01:11] Tony: And, uh, yeah, we won. It’s a modified Ambrose, so we all tee off
[00:01:15] Tony: and then we pick the best tee shot and we all play our
[00:01:18] Tony: own game from there. And the person with the best
[00:01:21] Tony: score on that hole, we score on the scorecard and we, we killed it. We played
[00:01:26] Tony: well.
[00:01:28] Tony: We combined Well, Hmm.
[00:01:30] Cameron: I mean, just nobody under the age of 50 is going to get my Kingswood joke. But, um, and the, uh, the modified Ambrose. I thought that was a sexual position, but, uh, it’s a, it’s a golfing thing, is it?
[00:01:41] Tony: it’s a golfing thing. Yes. Yeah, there were, I don’t, there weren’t, if there were some, there weren’t many females on our golf day, so
[00:01:50] Tony: Yeah. It wasn’t a modified sexual position.
[00:01:53] Cameron: Named after the, uh, Bishop of Milan in, uh, 480 [00:02:00] CE.
[00:02:02] Tony: I’ll take your word for that.
[00:02:04] Cameron: Yeah, actually 480, no, 380, 380CE, Bishop of Milan, Bishop Ambrose,
[00:02:11] Tony: Okay. Dunno who the golf wasn’t around then, so I dunno who it was named after. Americans called a scramble, they have a different word name for
[00:02:18] Tony: it, as they do for a lot of things in golf.
[00:02:22] Cameron: And just generally speaking.
[00:02:24] Tony: Yeah.
[00:02:25] Cameron: I thought that was a sex position too. Maybe there’s just, you know, all of my sex positions are named after golfing things.
[00:02:34] Tony: Yeah.
[00:02:34] Cameron: Tuesday night, Tuesday night in our house is Texas
[00:02:37] Cameron: Scramble Night. Sorry, I forgot which podcast I’m on. Charlie died, Tony!
[00:02:44] Tony: Yeah, what a
[00:02:44] Cameron: between when we last talked, and today, and
[00:02:47] Cameron: I did talk about him a bit last week, but I thought you’d probably want to throw your, uh, two cents in, so, uh, you know, you’re the person who first told me about
[00:02:58] Cameron: Charlie Munger many [00:03:00] years ago, I’d never heard of the guy before, but you told me about him, and told me that you thought he was even better than Warren, and that I should get a book and read it, and I did eventually, Tell me about your love life with Charlie Munger, your relationship with Charlie Munger.
[00:03:17] Cameron: How long ago did you discover Charlie Munger?
[00:03:20] Tony: say I was just. Talking to Alex about this before, I’d say mid 90s is when I discovered Charlie Munger, through Warren Buffett, through the making of An American Capitalist, the Roger Lowenstein book, which I heartily recommend for anybody. And then from there, I just kept vacuuming up all the stuff I could read about Buffett and Munger.
[00:03:44] Tony: But the good thing about, about reading about Munger is it wasn’t just about investing, it was about, there were lots of Philosophy of life things. There was lots of, um, Oh, well, I mean, he, he wrote a book called Lattice Work, um, or The Lattice, [00:04:00] I think it was called Lattice Work, about how you should try and understand as much as you can about all, all different, um, educational areas, cause they all.
[00:04:11] Tony: Um, they all interlink like a lattice and then that, that forms the backdrop to your investing decisions. Cause it, you know, he, he’d talk about how, uh, casinos would use psychology to get gamblers to, to gamble and how poker machines flash lots of lights and play loud noise to attract people to, to that particular machine.
[00:04:34] Tony: And, um, you know, he said, if you want to, if you, you shouldn’t gamble in casinos, but if you want to gamble in the casino, find a. The Quietest Poker Machine in the Darkest Corner. It’s probably the one they’re trying to hide that pays out the most. So just little wits and wisdoms like that have always, I think, been just, just little bonnets in life.
[00:04:53] Tony: He’s, he’s just been spot on. And, and the Poor Charlie’s Almanac is a great read. And I’ve got a copy at home, signed by [00:05:00] Charlie, actually. And, um, it’s based on Ben Franklin’s book, um, what was that one called now? Poor Someone’s Almanac. Uh, anyway, which was a book about Ben Franklin’s wisdom on farming. And we still use some of those sayings today about the oily bird catches the worm and you, you sow what you reap and all those kinds of things.
[00:05:22] Tony: Um, so they were like aphorisms that, that Ben Franklin used. And, uh, And then Charlie’s sort of had the same sort of style of passing on knowledge. It’s really, it does talk for hours and hours and hours, but the concepts are just distilled into a couple of couple of words and they’re always spot on. And if, you know, I went along to the Berkshire and Warren would talk for hours and he’d throw it to Charlie and Charlie would just say a very simple sentence, which would just sum up everything.
[00:05:54] Tony: And sometimes he’d say, I have nothing further to add. And that was,
[00:05:57] Tony: that
[00:05:57] Tony: was just as good. [00:06:00] So, uh, yeah, look,
[00:06:01] Cameron: Poor Richards almanac,
[00:06:03] Tony: thank you. Poor
[00:06:04] Cameron: because he used a pseudonym to publish it,
[00:06:06] Cameron: Richard Saunders.
[00:06:07] Tony: Right. Okay. Yeah, I haven’t looked at it for a long time. Um, but yeah, I was sad for his passing. I mean, it was expected. I mean, the guy was 99. He was a month shy of his 100th birthday. So to even get to be that old, I think, is amazing as well, because they’ve, they’ve never been, um Shy at eating about their diets, about how they eat peanut brittle and coke and drink coke and all that kind of thing.
[00:06:31] Tony: And, and I’m not sure about Charlie, but Warren loves a good steak and would often conduct business at Gorat’s Steakhouse in Omaha. So, um, yeah, it’s just amazing that they, they lived and I think, I think one of the reasons is though, I just didn’t. I just didn’t entertain any sort of bullshit at all. Um, I remember one of the answers that Charlie gave at the AGM that I went to was, uh, someone, um, you know, someone who just [00:07:00] graduated from college and stood up and said, uh, what kind of person are you looking for to employ at Berkshire Hathaway?
[00:07:06] Tony: And Warren gave a long winded answer and he threw it to Charlie and Charlie said, someone who sees it like it is. I just thought, yeah, that’s Charlie. He sees it, tells it like it is and sees it like it is. That’s a no bullshit approach to things. And, and I think that’s, um, you know, one of these, you know, um, bon mots that he just, he says so little, but you think about it for such a long time afterwards.
[00:07:29] Tony: Telling it like it is and seeing it like it is is such a powerful concept. But, you know, he, he taught me so many things. Um, and that’s probably the biggest thing I want to call, you know, out my indebtedness to Charlie for is, is that they shared their wisdom. They didn’t, they didn’t keep it quiet. They could have.
[00:07:47] Tony: Potentially made a lot more money if they just had to shut up and kept investing themselves. But they shared, they were happy to take people along, they were happy to talk to people. In the last couple of weeks since his passing, I’ve heard so many stories of [00:08:00] people who said, you know, I first met Charlie X many years ago and we sat down and spoke for four hours.
[00:08:05] Tony: Like it was just, he was always very generous with his time with people. And I think that was part of his learning as well. He was endlessly curious, as he says. He says to people, be endlessly curious and have a learning. And that’s, that’s important too. Now, I think he was, and, um, you know, he’s remembered for not just for his investing, but he’s remembered for his philanthropy and he’s remembered for his, um, you know, he got involved in architecture and designing,
[00:08:32] Tony: um, science labs that the university used to go to and all sorts of different things like that.
[00:08:37] Tony: And I think that’s also been a nice part about Charlie as well as Charlie. Died with a much smaller fortune than Buffett. I think it was about two and a half billion US or
[00:08:47] Tony: something of that order, which is probably, you know, many orders of magnitude less than what Warren Buffett’s worth because Warren famously never cashed in a Berkshire Hathaway share, but Charlie was happy to cash in and
[00:08:59] Tony: donate [00:09:00] or cash in and support his university or, or even just, you know, buy a boat,
[00:09:06] Tony: buy a better car, buy a better house.
[00:09:09] Cameron: Charlie’s Folly, and then what,
[00:09:11] Cameron: uh, Warren called his boat,
[00:09:13] Tony: correct. But Warren was happy to go out
[00:09:15] Tony: on it.
[00:09:19] Cameron: One of the, one of the, um, uh, anecdotes I used in the show last week was, uh, the, the law firm, MTO, I think that he set up before he, you know, went full time with Warren that still retains his name. One of the pieces of advice he gave the law firm before he left was choose your clients like you would choose your friends.
[00:09:41] Cameron: I thought there was so much in that. Like, just, he strikes me as a guy, as does Warren, who spent most of his life, uh, building the life that he wanted, um, as you said, like, no idiots, no dickheads, they sort of had a no dickhead rule, no, no bullshit, no stress, [00:10:00] um, they just built life, happily doing the things that they chose to do, you know?
[00:10:06] Cameron: hanging out with each other, you know, Warren, at least in the book, which the Poor Charlie Almanac book, which was a few decades old by the time he passed away. But Warren said, I think in that, that they’d been working together for, I don’t know, 40 years and had never had an argument.
[00:10:24] Tony: Mm.
[00:10:25] Cameron: We’ve disagreed on things, but we’ve never had an argument, which says a lot.
[00:10:30] Tony: And they talk many times a day, according to Warren and Charlie too. So it must’ve been scope. And, and, and Warren jokes about Charlie being the abominable no man, because he would always say, Warren was the ideas
[00:10:43] Tony: guy and Charlie would just keep saying no.
[00:10:47] Cameron: The abominable no.
[00:10:48] Cameron: man. That’s great. Yeah.
[00:10:51] Tony: So what a life, but I really, I mean, you know, hats off to Charlie. Thank you, Charlie and Valet Charlie. It’s, it’s been a wonderful [00:11:00] experience growing old with him.
[00:11:02] Cameron: Yeah, and I’m grateful that, uh, you know, since we’ve been doing this show, I had the opportunity to get to know who he was better and watch some of the last Berkshire Hathaway AGMs that he got to do and to have the opportunity to see him live and in real well. Was I live? Like it was probably the next few hours later when I watched it, but uh, to see him deliver his insights and wit while he was still alive, I’m grateful for that.
[00:11:32] Cameron: That was a joy to behold.
[00:11:35] Tony: And he didn’t hold back. He would, he would tell it like it is, you know, he, he held some very, um, strong views on, for example, China and its importance in the world and, and its, um, you know, possibilities as an investment destination, which weren’t, which were kind of against the mainstream sort of thoughts on the
[00:11:52] Tony: country at the time, and still are.
[00:11:54] Cameron: Yeah. And his views on Bitcoin
[00:11:57] Cameron: and gold and [00:12:00] EBITDA and we’ll remember him. You know, that’s, I mean, what a life. Well lived. Like he contributed much. Um, in terms of wisdom and humor and, um, inspiration and all those, plus the money that he donated, et
[00:12:15] Cameron: cetera, et cetera.
[00:12:17] Tony: but I also think too, there’s a couple of other points I wanted to make. I mean, um, it’s one thing to say you, you see it like it is and tell it like it is, but it’s another thing to do it. And you can, you can see Charlie’s fingers doing that all the time at Berkshire Hathaway. Um, and I, and I, you know, I was thinking about that this morning.
[00:12:34] Tony: It was, you know, if you look at. Berkshire Hathaway and the early days when, when Charlie joined and they would have discussions about how, you know, should the company have any debt? Should they be leveraging to borrow? And they both agreed that they shouldn’t and they shouldn’t take on debt. So then the question is, well, if we, if we accept that as a guiding principle, how do we fund this damn business to grow?
[00:12:56] Tony: And they just kept looking around and looking around and then they found the, [00:13:00] I think it’s called the Green Green Stamps Trading Company, I think it was called Green Stamps, Blue Stamps maybe, but it was basically a very early version of Flybuys where in the, in the 60s and 70s, um, people would get stamps when they went and shopped somewhere and then they could, they could lick them and put them on a sheet and send them into the head office and then get, redeem it for a prize or some goods or a discount or whatever.
[00:13:23] Tony: And, and Warren and Charlie, bought that very early on during that, I think probably just after they bought Berkshire Hathaway, but very early on, um, they bought it because they worked out there was all this money sitting in head office that was unredeemed from the trading stamps that hadn’t been collected and that was their funding.
[00:13:41] Tony: So then when they didn’t use that pool of funds to go and buy See’s Candy and they could do that because they worked out this way of funding their business without breaking their principle of going into debt. So it’s, it’s that kind of unrelenting Problem solving that also is a part of seeing it like it is and telling it like
[00:13:59] Tony: it is.
[00:13:59] Tony: [00:14:00] It’s all over Berkshire Hathaway.
[00:14:02] Cameron: So one of the questions I
[00:14:03] Cameron: had when I did the show last week is, uh, again, rereading Charlie’s speeches that are at the back of poor Charlie’s Almanac. Um, uh, he talks about Checklists, and pilots, and using a checklist, um, and I was, you know, trying to figure out if you got the checklist idea from him first, or when you read the checklist manifesto, and in fact, if you read that because of something Charlie said, or you got it independently,
[00:14:36] Tony: Yeah, it’s a good question. I don’t remember getting it from Poor Charlie’s Almanac. I got it from when I read the checklist
[00:14:41] Tony: manifesto. Um, so, which I think would have come out after Poor Charlie’s Almanac. Pretty sure it did.
[00:14:49] Cameron: right,
[00:14:50] Tony: But yeah, I mean, there it was, that idea was lying in plain sight
[00:14:54] Cameron: yeah, yeah, yeah.
[00:14:55] Tony: checklist manifesto.
[00:14:56] Tony: So if I hadn’t been on the ball, I could have done it earlier. But yeah, that just, and [00:15:00] again, that just shows how smart he is to have picked that up before the book about it
[00:15:03] Tony: was written.
[00:15:06] Cameron: Yeah, well, I guess we could talk about Charlie till the cows come home. We should, we should move on, but, um,
[00:15:13] Tony: Well, the last thing I wanted to say was, um, you know, he’s passed on a little bit about investing in the, in the, his most recent years and has reflected on how he does it as opposed to Berkshire Hathaway. Because there are differences. Um, and he, the way he started referring to Berkshire Hathaway in the end was one of his four stock portfolio.
[00:15:34] Tony: And he talked about having a four stock portfolio. He thought that was about the right sort of portfolio to have, but you had to, you had to live through the volatility and stomach it. But, um, he thought that was the best way to get returns. Uh, and, um, you know, he looked in the other companies he had in that portfolio.
[00:15:49] Tony: He looked for companies which obeyed his. He, I think he called it the 10 percent cap or 10 percent rule, but basically a company that could make more profits than 10%, but capped them [00:16:00] at 10 percent and gave the extra back in, in lower prices to customers and in better, um, you know, better payments to staff and, um, and I guess investing in the business.
[00:16:13] Tony: So he saw that as the sort of perfect business to invest in. Um, so there’s a bit of wisdom there if people are out there. Trying to copy Charlie. I’ve thought about which companies might be like that in Australia, and I think ARB comes to mind. Um, I’ve never heard them express that sentiment, but, um, looking at the company, I think they might be obeying that rule.
[00:16:35] Tony: So, yeah, so, um, I have been thinking a lot about the way Charlie invested as
[00:16:39] Tony: well, um, which he revealed more of at the end.
[00:16:43] Cameron: I think he talked about that principle in one of his speeches referring to Sam Walton and Walmart and why Walmart was able to, you know, defeat all of the competition.
[00:16:55] Tony: Yeah. Yeah. Keep profits low and keep giving it back to [00:17:00] customers and staff. Yep. And I think also flowing from that too, um, Charlie had a, another guiding principle for me, which was he always wanted to only be around people who were, I guess I’ll call it relationship driven rather than transactional driven.
[00:17:14] Tony: So he had no time for people who had a win lose mentality when it came to Business transactions. It always had to be a win win for both parties and a long term gain for both parties. And I think that’s a really good principle. I mean, if I think about all the people who I don’t respect, they’re the ones who just try and screw everyone.
[00:17:31] Tony: They’re just to make more money. And I think that’s wrong too.
[00:17:33] Tony: So hats off to Charlie for that one.
[00:17:36] Cameron: Yeah, I mean that’s one of the things
[00:17:38] Cameron: that I’ve always admired about Charlie and Warren is they do seem to conduct themselves with a high degree of integrity and they look for that in the people they work with and invest with, um, this high level of morals and values and integrity that’s the sort of companies, the sort of people that they wanted to [00:18:00] invest in.
[00:18:00] Cameron: Which, um, is a dying, um, value system, I think, in capitalism.
[00:18:08] Tony: Yeah. Well, it’s always been, it’s always been a part of capitalism, but it’s always, there’s always been the dark side as well. I think people who are just transactional based and, you know, all you are to them is, is someone to take money
[00:18:19] Tony: off rather than a partner. Yeah. Yeah. Mm
[00:18:23] Cameron: Speaking of taking money off things Uh, Parenti, Tony, uh, I went, I went long on Parenti over the last month. Well, it was one of the, it was one of the only things,
[00:18:34] Tony: Yeah.
[00:18:35] Cameron: particularly with a high ADT that was buyable for a couple of weeks there. I had a couple of trenches of it in QAV Lite, I had it in my super.
[00:18:45] Cameron: Their guidance came out yesterday, looked pretty good when I read it. Market didn’t like it, share price crashed by 8 percent yesterday, initially, then it recovered a little bit, [00:19:00] nearly, by the end of day, end of business, it nearly had come back above its 3 point sell line, but, so, by the close of business it was like, I think, 1 cent.
[00:19:13] Cameron: Under its, uh, uh, three point trend line, I think it was about a dollar five and I had the three point sell line at a dollar six. So I held it, uh, over to this morning and to see what would happen when the market opened and it went the wrong way. So,
[00:19:28] Tony: No. Okay.
[00:19:29] Cameron: and now it’s down to a dollar one. I think I got out of it at a dollar four this morning, but, um, did you have a look at their, their guidance?
[00:19:39] Tony: Oh, look, I did. And I think this is always the case with those kinds of documents. They gave us all the good news in the guidance, how, you know, and, and the language is important because they were talking about EBIT in some cases, and then EBITDA and then EBITA, which I’ve never heard of before as well. So they’re trying to paint the rosiest picture.
[00:19:59] Tony: Um, I [00:20:00] did a Google search after you sent through the question and um, I did see the West Australian News was the only news article I could find not commenting on it and they said that the, the market was upset because the guidance update revealed higher debt and lower CapEx spend next year and that’s what the market was selling their shares based on.
[00:20:22] Tony: But having said that, I went through it as well and the guidance wasn’t that bad and it looks like the um, If there is higher debt and lower capex, it’s not too dissimilar to what they called out before.
[00:20:34] Cameron: Right. I thought they said their debt was steadily decreasing when I went through the guidance.
[00:20:40] Tony: that’s what you would say if it was higher than what you forecast, wouldn’t you? You’d pick out the good news.
[00:20:46] Cameron: Right, a little bit of spin. Well, anyway, that’s the end of the PRN. We’ve had a couple of cracks at PRN and DDH over the last six months. I
[00:20:57] Tony: Yeah, I think DDH was a, [00:21:00] DDH was a good company. I’m not, I mean, PRN’s not too bad either, but DDH was a good, really good, solid, um, drilling company, and that’s why Parenti bought it, to try and, um, try and add that kind of
[00:21:11] Tony: stability to their other businesses.
[00:21:15] Cameron: Well, on the flip side of that news, when I had to offload PRN from the light portfolios today, I replaced it with a couple of things, but one of those things was ATP, Atlas
[00:21:27] Cameron: Pearls,
[00:21:28] Tony: yeah, good one.
[00:21:29] Cameron: very low ADT
[00:21:31] Cameron: stock, um, but I went through their news and saw that a day or two ago they’d announced
[00:21:36] Cameron: that they’d had a record price with some of their pearl sales,
[00:21:41] Cameron: but I thought, man, you know, the price had
[00:21:44] Cameron: spiked and I thought, well, you know, It is what it is.
[00:21:47] Cameron: Fundamentals are good. It’s up 12 percent today since I bought it. I hope, uh, some of the light people got in on it early when I sent the email out. But, um, so they’re [00:22:00] having a good day. It’s been a couple of shares that have had good days recently, but that’s a pretty good one.
[00:22:05] Tony: Well, you know, I had a look at Atlas Pearls because it’s having a good year. I had a look at Atlas Pearls probably six months ago. It’s been, it was top of the buy list for a long time, but it was such a small ADT I couldn’t buy any. I
[00:22:20] Cameron: Yeah.
[00:22:20] Tony: saying to myself, how do I get into this without being trapped and getting out?
[00:22:25] Tony: Um, because I could see it was doing well and
[00:22:28] Tony: it’s probably tripled its share price this year, I think.
[00:22:31] Cameron: A year ago it
[00:22:32] Cameron: was just under 3 cents and at the moment it’s just under 15 cents.
[00:22:38] Tony: Hmm.
[00:22:38] Cameron: five
[00:22:39] Cameron: times, five bagger.
[00:22:42] Cameron: Um, yeah, but very small. Like I
[00:22:44] Cameron: think the ADT is
[00:22:45] Cameron: 26, 000 or something like that. So
[00:22:49] Cameron: yeah, you’d, you’d be just using change you found in the back of your lounge to to buy them. Um,
[00:22:56] Tony: money to buy that one.[00:23:00]
[00:23:01] Tony: Yeah.
[00:23:01] Cameron: Uh, what else have I got? Oh, the ADT survey. Speaking of ADTs, so A few weeks ago we asked people to complete an ADT survey to see what the numbers came back like. The thinking was we wanted to figure out if QAV members were getting into the market in such big numbers that it could be affecting our buy and sell prices.
[00:23:26] Cameron: Um, only about 70 or so people completed the survey as of yesterday and so we broke the survey into brackets. Uh, under a thousand, a thousand to ten thousand, so we’ve, uh, got three people were under a thousand, twenty eight people, uh, so about, you know, roughly a third in the one to ten thousand bracket, thirty five, roughly another third, um, ten to a hundred thousand, no that’s more than a third, it’s more than half, [00:24:00] about half is ten to a hundred thousand, then we’ve got three between a hundred and five hundred and only one between five hundred and a million and nobody was over a million.
[00:24:12] Cameron: So, uh, last time you and I talked about that off air a couple of weeks ago, I think the numbers were slightly lower in terms of responses, but how do you think that fits into the discussion about people being able to influence the, uh,
[00:24:31] Tony: Yeah, well, it’s something we thought long and hard about when we set up QAV, and we’ve been thinking about it again since. Um, so first of all, thanks for filling out the survey. That’s very helpful, even with the number we’ve got. Um, and secondly, I spoke to my stockbroker, Alex Hay. I caught up with him before I came down here and had a coffee with him, and he thought we weren’t.
[00:24:53] Tony: QAV wasn’t moving the market. Um, my thought was if, if everyone’s buying a stock and it’s [00:25:00] 20 percent of the ADT, um, if there was six, if it happened to be six people buying a stock from QAV that day, then, you know, we’re taking up all the volume ourselves. And, um, if anyone else is in the market, combined with our push, we’re pushing up the share price.
[00:25:15] Tony: And the risk is we’re pushing it up. And then when we disappear from the market, it drops again, and that sort of creates a trend that might drop through a rule one barrier. Um, Alex Hay didn’t think that was happening. Um, I, I, given the small numbers at the top end, I don’t think it’s happening at the top end.
[00:25:32] Tony: It’s possible still happening in those, um, 1 to 10s and 10s to 100, because there were large numbers there. But, but, you know, we haven’t seen any evidence to support that. It’s only just that the performance has been weak for the last year or so, and I’m kind of trying to work out why that might be if QAV itself is affecting things, but I can’t see any evidence for it based on that.
[00:25:58] Cameron: Hmm. [00:26:00] Okay. Well, I guess that’s something. Um,
[00:26:06] Tony: Well, what I would say is that, you know, we’ve always said, um, As soon as you’re ready to buy, buy. And if you see it cross a buy line, for example, buy. Um, I mean, it might be worthwhile if people can go back through their own trades and look at how they perform to see if it is, if they’re in those sort of smaller bands, if they’re, um, if they are seeing the share price rise and then drop, and then maybe consider, you know, buying smaller parcels over a number of days, for example, it might solve the problem or.
[00:26:38] Tony: Or not jumping too quickly into the market when it crosses a line or something. I know, I know that can be a problem because sometimes they cross the line and shoot up quickly. But, but yeah, just, I guess, be a little thoughtful about your trades. You know, and maybe go back over your past trades and see if you think there has been a lot of buying around the time you’re buying.
[00:26:59] Tony: It might be
[00:26:59] Tony: [00:27:00] other QAV members in there as well.
[00:27:03] Cameron: yeah, I mean my theory when we started QAV was that, you know, people would start building their portfolios via QAV at staggered times. Which means they’d probably fill their 15 to 20 at staggered times and we wouldn’t all be selling and buying the same stocks because a lot of us would have full portfolios and a lot of people would still be building theirs and we’d be all looking at different stocks.
[00:27:35] Cameron: The, the, the choppiness of the markets over the last couple of years has probably seen a lot of us go to cash. I know Um, Alex F posted a poll on our Facebook page last week asking people how much cash they were sitting on. And it actually turned out that most people weren’t sitting on much cash at all.
[00:27:59] Cameron: [00:28:00] Uh, but I’m pretty sure over the last 18 months or so, a lot of us have been, uh, sitting on quite a bit of cash at the same time, which means we’re, and then the things to buy have been relatively limited, so we’ve probably been getting into the market right about the same time. That said, I did the, um, weekly portfolio report for the dummy portfolio this morning.
[00:28:20] Cameron: The, um, Dummy Portfolio, since inception, is still doing about double market, a bit better than double market. If I look at the last, this financial year, Dummy Portfolio is up 7. 7 percent per annum versus the STW up 2. 38 percent per annum. So we’re doing about Three times the STW for this financial year, which is only halfway through, but still. Um, and in the last 30 days, we’re doing a little bit better. Uh, we’re doing about 4.3 versus 3.8 or 3.9, I think for the STW. So the W [00:29:00] portfolio continues to. Do well. Um, you know, I think there was a period there where it wasn’t, I think 2022. But, um, you know, the last six months or so it’s been doing well still, despite all of that, but I know it, it sort of deals in a broader range of ADT stocks than you, you do, you do, or my super
[00:29:23] Tony: well, my performance hasn’t been as good as the dummy portfolio or the market. So there’s, um, I’m trying to work out why, if I can improve, um, it could just be that it’s my turn to underperform, which happens as well. So, um, but yeah, it’s, it’s also been very choppy over the last 12 months. So that was my reason for wondering whether.
[00:29:44] Tony: People were buying and selling at the same time. It’d be interesting to know, going back to your discussion about Parenti, how many people sold it yesterday, as soon as it crossed the 3pt trend sell line. Um, because as you said, it dropped 8 percent and it came back to almost zero on the same day. [00:30:00] So, um, whether that was a lot of fund managers selling it, or whether it was a lot of QAV people selling it as it went below its 3pt sell line, that’d be an interesting point to know as well.
[00:30:09] Tony: Mm
[00:30:09] Cameron: Hmm. But I mean, obviously the market dumped it before we found out about it. Then
[00:30:16] Cameron: some people jumped in, but yeah, it did certainly turned around and went the wrong way again today.
[00:30:22] Tony: Okay.
[00:30:23] Cameron: Yeah. It would be good to know. Maybe we should do a poll on that. How many of, yeah, how many people sold Parenti and when did you sell it?
[00:30:31] Cameron: It’s not a bad idea, actually.
[00:30:34] Cameron: I’ll make a note to do that,
[00:30:36] Tony: Okay. Again, more data so
[00:30:39] Tony: we can see if we have a, have an issue we have to
[00:30:41] Tony: guide people around.
[00:30:44] Cameron: Yeah. Uh, alright. Well, that’s all I’ve got. What have you got on your talkie list?
[00:30:50] Tony: My talkie list. Um,
[00:30:51] Cameron: Hmm.
[00:30:52] Tony: I was pleased to see the RBA held rates last week
[00:30:55] Tony: on Tuesday when they met. Yeah. Yeah. I mean,
[00:30:59] Cameron: Christmas [00:31:00] from Michelle Bullock.
[00:31:01] Tony: Exactly. I think that was smart. Um, there’s been an awful lot of commentary about, probably more about the US market and whether they’re going to start cutting rates next year and whether, whether the share market’s already building that in and whether it’s there for too soon and all that kind of stuff, but that’s all noise as far as I’m concerned.
[00:31:18] Tony: Um, I suspect if the US market, if the US Fed does start to cut rates, then we will too. So it’s, again, RBA is just a monkey copying. What overseas markets do? Why do we need to employ all these people? But anyway, that’s for another day. Um, the curse of the pulled pork struck again this week. Uh, Macmillan Shakespeare, which was the last one I did,
[00:31:42] Cameron: really?
[00:31:43] Tony: came out, uh, a day or two ago saying that they’d lost the South Australian government contract and the shares are down following that.
[00:31:50] Tony: So it was bad timing on my part again to do a pulled pork and I still own MMS, so it’s hurt me as well. Um, I guess the. The [00:32:00] interesting thing about this whole situation with Macmillan Shakespeare losing a contract and it going down is that the contract must have been picked up by someone. So I went and had a look and it was picked up by SIQ, Smart Group, one of its listed competitors.
[00:32:14] Tony: So it’s almost, I’m almost thinking that rather than buy one of these listed No Valued Lease Companies. I should just buy all three. So there’s Fleet Partners, Macmillan, Shakespeare, and SIQ, which I think is Smart Group. But that’s, so MMS was down, Smart Group was up. It’s almost like holding an index fund in this space.
[00:32:31] Tony: It doesn’t matter who wins or loses the contract. It just stays in the same circle. And over time, they all win and lose enough for the whole lot to go up. So, um, I might sell some of my MMS and buy the other two and just, uh,
[00:32:45] Cameron: set a, spread in horse racing, set a fun spread. ha.
[00:32:49] Tony: diversify, hedge my risk.
[00:32:51] Cameron: ha ha ha ha ha.
[00:32:52] Tony: But I thought, yeah, I thought it was funny.
[00:32:54] Tony: Like it was a big deal for Macmillan shareholders, but then I thought, hang on, someone’s got to have picked up the contract. And sure enough, Smart Group [00:33:00] had, and their shares are up. So
[00:33:01] Cameron: Are they on the buy list?
[00:33:03] Tony: no, Smart Group aren’t. They’ve had a very good run. So I suspect they’re, they’re highly priced now, but Fleet Partners and MMS are, they’re both on
[00:33:11] Tony: the buy list.
[00:33:12] Cameron: Yeah. But you wouldn’t have, you wouldn’t have come out of it on top if you had those two, unless FPS went up as well, for some reason.
[00:33:19] Tony: Fleet Partners, well, probably Fleet Partners was unaffected, because they didn’t lose or win the contract. So, Macmillan Shakespeare went down, Smart Group goes up,
[00:33:28] Tony: right, because the contract just goes from one to the other.
[00:33:31] Tony: And fleet partners? chugs along the same,
[00:33:34] Cameron: What’s fleet partners? Uh, FPR. Um, yeah, they, they went up on the 7th. They jumped from 2. 85 to three bucks. What
[00:33:48] Tony: Yeah, but I looked up,
[00:33:49] Cameron: go down? Oh, okay. Yeah.
[00:33:54] Tony: but I looked up Smart Group and Stock Doctor and sure enough, there’s an announcement saying they picked up the South Australian [00:34:00] government contract for no vated leases. And they’re up. A
[00:34:06] Cameron: Well, MMS actually, MMS is weird. Like it was, it dropped, but then it seems to have recovered
[00:34:19] Tony: little bit. Yeah.
[00:34:20] Cameron: mostly. Like I assume the announcement came out at the end of business on the 8th, cause it dropped a lot by the morning of the 11th, yesterday. But then, um, sort of picked up, oh no, it dropped earlier than that, so it dropped back on the 4th.
[00:34:37] Cameron: Is that, was that when they announced it?
[00:34:40] Tony: I’m
[00:34:40] Cameron: it was 18? Yeah, okay, it was 18 on the
[00:34:43] Cameron: 4th and then it dropped down to 16. 17 and then kept dropping. But if you had FP, if you had FPR, you would have kind of even stevened it out. So,
[00:34:55] Tony: yeah,
[00:34:56] Tony: That’s my point, right? And if you had SIQ, you’d be up. So, you might as [00:35:00] well just buy all three.
[00:35:02] Tony: Doesn’t matter who wins or loses
[00:35:03] Tony: contracts.
[00:35:05] Cameron: okay, interesting. interesting. We’ll have to think about adding that to the strategy.
[00:35:10] Tony: Yeah. Anyway, um, so that’s I think all I have to say, and I’ve got a pulled pork ready to go on, uh, if I find my notes. Pulled pork on Ingham’s,
[00:35:22] Tony: Ingham’s Chickens, ING.
[00:35:24] Cameron: I tried to buy Ingham’s for my Super Portfolio this morning, uh, and couldn’t. Cuz they’re
[00:35:31] Tony: lucky because I’m doing a pulled pork.
[00:35:33] Cameron: Yeah, but they’re not they’re apparently not top 300 not big
[00:35:37] Tony: Oh,
[00:35:38] Cameron: got them. Oh, yeah, they’re not and I think I’ve tried
[00:35:40] Cameron: And not been able to buy them before this is with Australian super. They’re not on the approved list But I I did my analysis on them this morning and was going well, they’ve had a Nice little run,
[00:35:56] Tony: I had the same thought. So, pulled pork on Ingham’s. I’m surprised they’re not [00:36:00] on the ASX 300 though, because the ADT
[00:36:02] Tony: is nearly 5 million per day.
[00:36:05] Cameron: yeah, I don’t know why,
[00:36:07] Cameron: don’t know why, um, OzSuper doesn’t allow them. Anyway, maybe they’ve got a Beef With The Chicken.
[00:36:14] Tony: A beef with the chicken.
[00:36:15] Cameron: Yeah, you like that?
[00:36:16] Tony: I do.
[00:36:19] Cameron: It’s the title for the episode, Beef With The Chicken.
[00:36:21] Tony: Beef with chicken, yeah. Red and white meat.
[00:36:27] Tony: They’ve been on the buy list before, too. I remember looking at them. I think I owned
[00:36:30] Tony: them about three or four years ago. So they’ve been around for a while, but they did suffer badly.
[00:36:35] Cameron: on them before.
[00:36:36] Tony: Oh, have I? I was trying to find
[00:36:37] Tony: something I
[00:36:37] Tony: hadn’t. If I had, it must have been a long time ago, I think.
[00:36:41] Cameron: Yeah.
[00:36:41] Cameron: Yeah. Yeah. I think like years ago,
[00:36:43] Tony: Yeah. Oh, sorry for repeating myself. I was trying to find something new. There wasn’t much I hadn’t done the pull the pork on. I was thinking about that today, too. I do one a week and there’s. 50 odd stocks on the buy list. I sort of have to recycle them after a year.
[00:36:57] Cameron: 8, 8th of June, [00:37:00] 2021. Tony.
[00:37:01] Tony: Okay. It’s like two and a half years ago.
[00:37:03] Cameron: Yeah.
[00:37:05] Tony: Oh, well, you can just, just cut that and put it into
[00:37:07] Tony: this
[00:37:08] Cameron: Put it in.
[00:37:10] Tony: We can talk,
[00:37:11] Cameron: had a, uh, Well, the CEO
[00:37:14] Cameron: had only resigned a couple of months earlier and the share price dropped. You sold it at the
[00:37:19] Cameron: time, wasn’t prepared for a CEO, it wasn’t a prepared for CEO
[00:37:23] Cameron: change. You said there was a bit of a red flag, uh, you said that the new CEO could make big changes clearing the deck.
[00:37:31] Cameron: So now you’ll be able to get us up to date. What’s the new CEO done? This is good.
[00:37:35] Tony: he’s done well.
[00:37:36] Cameron: This is, uh. Ingham’s
[00:37:38] Cameron: part two.
[00:37:39] Tony: Yeah, it is. Yeah, okay. Well, yeah, it’s been on the buy list before. Uh, it, it really suffered during COVID. So, it’s, this is a bit of a recovery stock at the moment. And, um,
[00:37:50] Tony: it’s just crossed this buy line again, so it’s back on the buy list.
[00:37:53] Cameron: People, people weren’t eating chicken during COVID?
[00:37:56] Tony: No, well, yes and no. I mean, [00:38:00] um,
[00:38:02] Tony: they, they had supply chain issues and constraints because I,
[00:38:05] Cameron: yeah, right.
[00:38:06] Tony: I think some of the feedstock to feed the chickens may have been coming from overseas. So they’ve done a lot of work now on, on their own, on producing their own feed. They, they, one of the strengths of this company is they like to be vertically integrated.
[00:38:18] Tony: So it’s, um, they own the process from hatch to dispatch, as they say. Um, so they’ve got the, the, they hatch the chickens and farm the chickens and kill the chickens and pack the chickens and refrigerate the chickens and
[00:38:31] Tony: send them off to the supermarkets or to KFC.
[00:38:33] Cameron: like, it’s not the human centipede, it’s the chicken centipede. It’s just chickens inside of chickens. It’s like a Tadurkan, but with chickens.
[00:38:43] Tony: Well they do do turkeys as well, funnily enough. I had a friend who worked for the government department called Births,
[00:38:52] Tony: Deaths and Marriages and she used to call it Hatch, Match and Dispatch.
[00:38:56] Cameron: Oh, that’s nice. That’s cute. Good. That’d be a good name [00:39:00] for a film. We should write that film. That’ll be our next, that can be our next film. I like that.
[00:39:05] Tony: All Weddings and Funerals, Hatch, Match and Dispatch. Yeah.
[00:39:08] Cameron: Whoa.
[00:39:12] Tony: yes, I, I’m not sure where they were constrained during COVID. They, um, so they sell a lot through supermarkets, but they also sell a lot through, What they call, I think it’s um, QSR, which is the Quick Service Restaurant, so Hungry Jacks and KFC and all those.
[00:39:31] Tony: So I think they may have also, um, suffered during the, during the Covid period as well. But anyway, they’re, um, they’re getting back, um, back to business and back to where they were pre Covid at the moment. Uh, what else can I say about them? Biggest chicken and Turkey breeder and distributor in Australia and New Zealand.
[00:39:49] Tony: Uh. They also now have a stock fee division, which is mainly for their own use, but also they resell to other primary producers like pig farms. [00:40:00] Vertically integrated business, as I said. I guess some of the interesting things that they call out, which makes a lot of sense, is the poultry market is growing.
[00:40:10] Tony: Both for health reasons, as people are recommended to eat less red meat, but also for price point reasons. So, um, chicken has. is one of the cheaper meats you can buy in the supermarket. And it’s much cheaper on a cost per kilo basis than red meat. So people are moving to that and these kinds of times when inflation’s hitting and belts are being tightened.
[00:40:39] Tony: And the last, I guess, potential Tailwind for this company is that the carbon footprint on farming chickens is five times lower than for red meat. So, because of all the methane the cattle produce. So, there is a certain segment of the market who are interested in eating white meat for that reason as well.[00:41:00]
[00:41:01] Tony: I think one of the good things about, uh, one of the, uh, one of the points the company’s called out in their latest results is, uh, they’ve been able to increase their prices to reflect the cost input inflation that they’re having. So, which is always a good thing to see. So as their, as their costs have gone up because of supply chain increases, they’ve been able to pass it on to the supermarkets and the, and the QSR restaurants, the quick service restaurants.
[00:41:26] Tony: So that’s a good thing. Um, I think, look, it’s a pretty stock standard basic business, so I can go through the pros and cons at the end, and the risks and positives, but to get to the numbers, because they’re pretty good, um, as we said, large ADT stock, 5 million a day traded, plenty of liquidity, uh, share price is 3.
[00:41:47] Tony: 90 when I did this analysis, um, That’s less than the consensus target, but it is greater than IV1 and IV2. Um, the yield on this company is 3. [00:42:00] 79%, so it’s not high enough to score for us, but it’s still reasonable. Uh, Stock Doctor financial health was, is strong, but the trend, they, they list the trend as deteriorating, which we give a minus one to in the checklist, but when I had a look, I couldn’t see why.
[00:42:16] Tony: So if you look at Stock Doctor for ING and look at its financial health, It’s been strong forever. It hasn’t changed and there was a forecast to go down. So I’m a little bit surprised at that. That may be an error. But anyway, it’s still on the buy list regardless. For people who are interested, it’s a high ROE company, 39%, which is very high.
[00:42:37] Tony: Unfortunately, so is the PE, 20. 4 times. But it’s not the highest or the lowest over the last three years. So we don’t score it negatively for that. But it is kind of high. Given that it’s on our buy list, uh, and also too, because the PropCaf, the price to operate in cashflow for this company is only four times.
[00:42:56] Tony: So I guess there’s a lot, um, a lot of costs to soak [00:43:00] up, uh, from the cashflow that’s coming in, but it scores well from a PropCaf measure for us. Net equity per share is only 54 cents. So we can’t score it, um, for. Being available to buy at book value or book value plus 30, because the price is 3. 90. The other interesting thing about this company, which I think is probably driving its share price, is that earnings per share forecast growth is 72%, which is huge.
[00:43:25] Tony: And I guess, I guess, again, reflecting this, um, return from COVID for the business. But growth over P is 3. 5 times, which is way over what we want to see in a business, and we score it well for that. Uh, Mr. Ringham isn’t around anymore in the business, so we can’t give it an owner founder. He was a, um, a big racehorse owner and breeder.
[00:43:44] Tony: So, um, anyone who follows the, the mags will know about the Ingham family and he’s, I think it’s his daughter, it might be his granddaughter, was an owner of Winx, um, one of the big, most successful racehorses going around in the recent times, um, the [00:44:00] company. Doesn’t have consistently increasing equity, and that’s largely for the COVID years.
[00:44:04] Tony: Otherwise, it has been going up consistently, but we don’t score it. Uh, it’s a new 3 point trendline buy since the last result, so we score it for that. So all in all, it’s 8 for quality, which is 50%. And as I said, I think Stock Doctor may have made a mistake. Calling it a deteriorating financial stock because I think it’s actually going to improve if not stay where it is at least.
[00:44:29] Tony: Um, so I think the quality score is undercooking it a little bit. Uh, QAV score is 0. 12, um, again, because of that low prop cap. So that’s good. In terms of the risks for this company, um, I think you’ve got to call out with any sort of primary producer company, there’s always, you know, agricultural based risks, um, so typically if the weather turns or if, you know, we go into a.
[00:44:52] Tony: Um, you know, very hot El Nino or there’s bushfires or there’s floods that can affect primary production. Probably chickens less than [00:45:00] most because they’re, um, I think they would be contained a lot to factories. Um, so that would help. Um, but it’s, it’s still, primary production is always a, um, a cyclical business because of the weather.
[00:45:11] Tony: Uh, to some, to some extent anyway. Um, and there are also, you know, with these businesses, biosecurity risks, it wouldn’t take a whole lot, um, for some kind of chicken disease. Avian bird flu or something to get loose in Australia and decimate the industry. Not that it has, and they do take stringent security, you know, protocols to stop that.
[00:45:36] Tony: But you just have to look at, say, the bee industry recently, which was hurt by a, um, An outbreak of a particular disease from Newcastle that spread quickly through Australia to look at how bad these things can affect an industry. Um, the weather, of course, is a risk for their feedstock and they’ve got their own feedstock business now.
[00:45:54] Tony: So that could be a risk if the, even if the chickens aren’t hurt by bad weather or fire or flood, that [00:46:00] it’s potentially Um, it’s more the grain side of their business. The feedstock side of their business is more prone to that. And that might be an issue. Um, of course, COVID hurt them badly. So any other sort of pandemic or something similar, um, which closes supply chains would be an issue.
[00:46:16] Tony: Um, and the last risk I’ve got down here is growth because if you take out COVID. from its results. This company hasn’t traded out of a sort of a range of around three bucks, you know, three to four dollars for a long time. Um, I guess if you take COVID out of it, it went down then. Uh, and I think that’s an indication of the fact that they pretty much own the market in Australia and New Zealand.
[00:46:39] Tony: And, um, it’s, it’s, that’s a good thing because it gives them pricing power and it gives them stability. Um, in the, in the hard times, but with these kinds of companies, growth is always an option. And you’ve got to be careful of that, that someone comes in and says, I know what to do to grow this business.
[00:46:55] Tony: I’m going to go and inquire something, which isn’t as attractive, or I’m going to try and [00:47:00] expand overseas, which has had a checkered result for Australia. So it’ll be interesting to see what they do, but they’ve definitely been focused on recovering from COVID. So that’s a good thing. And they’ve, um, uh, fixed up some of the problems that COVID identified in their supply chains and operational issues.
[00:47:16] Tony: So that’s a good thing too. Um, but the, the positives that go with this business is I think the, the tailwinds coming with the trend towards white meats for the various reasons. And I think also too, with this particular company, the vertical integration. So, um. It’s sometimes in primary production industries, you get margins on margins as, you know, someone, someone fattens the cow, someone kills the cow, someone takes the milk, processes the milk, someone, um, you know, cuts the cow up and refrigerates it and sends it, someone else sends it out to the, the supermarket.
[00:47:47] Tony: So there’s usually. You know, four or five margins in this value chain. So to take those out of the equation or to give them all to the one company is actually a very strong positive for, for Ingem. So I see that as a strength [00:48:00] too. So yeah, so take a look, it’s, it’s back on the buy list and it’s trending up and it’s, um, it’s not a bad business.
[00:48:05] Cameron: They needed to turducken their business model,
[00:48:09] Cameron: just
[00:48:10] Tony: Turducken.
[00:48:11] Cameron: Turducken their business model, like,
[00:48:13] Cameron: you know, vertical integration, stick it all, yeah.
[00:48:16] Tony: Yeah, well, that’s, I mean, that’s the thing. When does a new CEO come in and say, we should be buying stuffing? That’s our
[00:48:23] Tony: next acquisition. We don’t own the stuffing market.
[00:48:26] Cameron: Well, you kind of, you, you hinted at it earlier though, um, the, the COP28, uh, confab that’s going on at the moment, I saw in the ABC this morning, they’re saying we need to move away, the world needs to move away from red meat towards chicken. So, you know, if we all cut out eating red meat in Australia, there’s a whole new market for them
[00:48:48] Tony: correct. Yeah.
[00:48:49] Cameron: there, gobble up, yeah, with the turkey.
[00:48:52] Cameron: That’s the turkey and the chicken part of the
[00:48:53] Cameron: business, they
[00:48:54] Tony: Yeah. Eat one for QAV.
[00:48:59] Cameron: Really? [00:49:00] Is that our new slogan? Eat one for QAV? Yeah. Hello, Alex!
[00:49:07] Cameron: Uh, how are you? How are you, Alex? Hi, Darl. I’m going
[00:49:11] Cameron: to just call you Darl, so Hi, Darl.
[00:49:13] Alex: Sure. Hi. Good. Thank you. How are You We had an epic day yesterday. My mates live in St Kilda and Luna Park gave out free tickets to just the residents of St Kilda. So we took Well, I was included in a group of six of us just going and spending the afternoon. It was great.
[00:49:36] Cameron: I’m good.
[00:49:37] Tony: Park, did you go on any rides?
[00:49:39] Alex: Yeah, Scenic Railway was off, unfortunately, because it was kind of a weird, muggy, rainy
[00:49:46] Alex: day, but perfect for Luna Park. So I went on the Spider, went on everything, but the Scenic Railway. And the Ghost Train. It
[00:49:56] Alex: doesn’t matter how many toddlers I
[00:49:57] Alex: see on it, I still can’t convince
[00:49:59] Alex: [00:50:00] myself to get on the Ghost Train.
[00:50:02] Cameron: I have never been on a ride at Luna Park and I don’t think I ever will. I’d be more
[00:50:08] Cameron: inclined to go on the
[00:50:10] Cameron: one
[00:50:10] Cameron: at Dreamworld
[00:50:12] Cameron: where everyone got crushed to death a few years ago than go for a ride at
[00:50:15] Cameron: Luna Park. Luna Park just looks scary and rickety as
[00:50:18] Cameron: hell. Looks like it was made out of reclaimed timber 250 years ago from a ghost house.
[00:50:26] Cameron: So every time I’m down that way, I’m looking at it like, who are these people? Taking their lives into their hands going
[00:50:31] Cameron: on these rides. That’s more power to anyone who’s brave enough to do that.
[00:50:37] Cameron: So you survived Luna Park.
[00:50:41] Cameron: Hopefully you got a t shirt
[00:50:43] Cameron: for that. Do you have a question for
[00:50:45] Cameron: us,
[00:50:45] Cameron: AK?
[00:50:47] Alex: I have a question. Yep. No t shirt, but a question. Um, from Phil. So he asks, if QAV scores don’t differentiate returns, And he says on the last podcast, you talked about how the cutoff of [00:51:00] 0. 2 is potentially no different to a 0. 1 percent 0. 1
[00:51:03] Alex: cutoff. Does that suggest that the system is actually more based on momentum and minimizing losses?
[00:51:09] Alex: Easy
[00:51:10] Tony: a great question, Phil. Um,
[00:51:13] Tony: I think, I think, potentially at the moment, yes. Um, but over the long
[00:51:17] Tony: term, no. So, uh, I think this is one of the issues I’ve been calling out about research and these things is that we’re usually At the moment, fairly small timeframes to research them, and it’s been a, it’s been a choppy market, so, um, I think that might be factoring into the QAV cutoff score, because originally, we looked at this again, because Dylan, a few years back, looked at it over 10 years and found out there was a big difference between the QAV score of 0.
[00:51:46] Tony: 2 and 0. 1, um, so, that’s, that’s why I couldn’t be very definitive with the current research, um, and decided to set up my own trial portfolio
[00:51:55] Tony: to see. Um, and I’ll, you know, I need to pull that together [00:52:00] and present it at
[00:52:00] Tony: some stage. It’s been going for a while now. Um,
[00:52:04] Tony: but yeah, I think, I think you could, you could be right, Phil, for the moment.
[00:52:08] Tony: Um, I think traditionally in the past though, we have seen the other metrics on the QAV checklist had a big
[00:52:14] Tony: impact, um, on the, on the scores.
[00:52:17] Tony: Uh, might just be the sort of
[00:52:18] Tony: market we’re in at the moment that they’re being played down a bit.
[00:52:23] Cameron: Well, my question when I read this, Tony,
[00:52:27] Cameron: was that, let me start again. I, the way I thought about it was that, well, the, the QAV score, Surely does have a level of importance. Like if we, if we took away the cutoff and we were buying things with a negative QAV score, surely that would make a difference in theory to the performance.
[00:52:54] Cameron: I mean, I know that you came up with 0. 1 as a cutoff originally, just [00:53:00] because, you know, you, you, you felt like that was giving you enough. that you needed to play with was sort of an arbitrary cutoff.
[00:53:07] Tony: hmm.
[00:53:08] Cameron: The QAV score is based in part on the quality score and the quality score is measuring the company’s quality in a whole bunch of metrics that we look at.
[00:53:20] Cameron: So the lower the quality score, the lower the QAV score. The lower the QAV score, the less good, it’s my Bundaberg education coming through there, the less successful the business is in terms of its ability to generate cash and its performance over time and all of those metrics that we evaluated at.
[00:53:45] Cameron: I would say that the QAV score does differentiate returns.
[00:53:51] Cameron: What your report that we covered last week was looking at was whether or not there’s a big difference between a 0. 1 cutoff and a 0. 2 cutoff, but [00:54:00] that doesn’t say to me that the QAV scores don’t matter. I
[00:54:04] Cameron: think they do matter, it’s just the cutoff
[00:54:07] Cameron: that is a little bit arbitrary.
[00:54:09] Tony: Yes. I agree wholeheartedly with that assessment. Um, the risk, the research we did recently was to see whether you were more successful from buying from the bottom of the buy list than the top of the buy list, which was, um, it wasn’t even a test of whether 1 was a better score. It was just that. Uh, and, and it didn’t have a big difference in those results.
[00:54:29] Tony: And that’s been my experience too over time, but you’re right. Um, Interestingly, and look, there’s research that backs up the fact that value investing works better than growth investing and other types of investing. I think we had, um, the Stockopedia guy on who said something similar, but there were only three things that they’d found that outperformed.
[00:54:47] Tony: One was growth, one was momentum, and one was quality, which is the three stool, three legs to the QAV stool. So, um, that’s certainly been my experience as well. However, having said that, if [00:55:00] you, if you took, if you look at the QAV Lists that we produce and we have stocks. That go well below the QAB cutoff on the list.
[00:55:08] Tony: You can still find stocks that do well with a poor score, and that’s because you know, they’re growth stocks and people are buying into them based on the story or their prospects or whatever else they wanna get into. So it’s not like you should buy the highest thing on the QAV, buy a list and short the lowest thing they both can win.
[00:55:26] Tony: But over time, and I did this, remember we talked about this early on in QAB, I did a, a reverse QAB portfolio and put together a, a portfolio based on. Very, um, low and negative QAV scores, so the way at the bottom of our download, um, and they performed well for a time, but as soon as interest rates started to rise, they crashed, um, because they were gross stocks, right?
[00:55:49] Tony: And they were all, they were all based on people being able to have access to easy money to invest in a speculative stock. So, and that’s been my experience. Sometimes growth outperforms value, but value in the [00:56:00] long run does better than growth. And if you accept that, then you’ve got to try and quantify that.
[00:56:06] Tony: And that’s the other. The thing I like about QAV is I don’t have to go through and personally analyze the business prospects for every stock on the ASX, I can filter it and then put a score against things and then, and then stack rank it and look at the, look at the ones at the top of our list. So, yeah, so, um, I think, I think Phil’s right and I think you’re
[00:56:27] Tony: right.
[00:56:27] Tony: We are better off buying from the buy list end of the QAV ranking, but whether it’s 0. 1 or 0. 2 doesn’t seem to
[00:56:34] Tony: make a whole lot of
[00:56:35] Tony: difference. But I think it does to be a value
[00:56:37] Tony: investor over
[00:56:38] Tony: time.
[00:56:41] Cameron: Because it’s helping us identify the companies that have got a, what we would call a solid business in a,
[00:56:49] Cameron: traditional sense.
[00:56:51] Tony: that’s traditionally,
[00:56:52] Tony: that’s what happens in the stock market. The boring businesses get overlooked until there’s a recession or a crunch and then suddenly they’re [00:57:00] like
[00:57:00] Tony: gold. Anyone that’s making money is then highly sought after and then they, everyone rushes to
[00:57:05] Tony: them. So If you buy them when they’re out of favour and wait for them to get into
[00:57:09] Tony: favour, it’s
[00:57:10] Tony: a
[00:57:10] Tony: good way
[00:57:10] Tony: to make money.
[00:57:12] Cameron: Yeah. Like you’ve said, and I quote this all the time when I’m trying to explain QAV to people. Basically all the system does is it identifies the company, they’ve got a good track record of being well run, but also tells us when we can buy them at a discount.
[00:57:27] Cameron: An intrinsic valuation measurement,
[00:57:29] Tony: Yeah, correct.
[00:57:31] Cameron: and then it tells us when to sell.
[00:57:33] Tony: Yeah, which is important
[00:57:35] Cameron: part of it. Yeah,
[00:57:36] Tony: Most, most people who
[00:57:37] Tony: offer any sort of financial advice tell you when to buy, but don’t say a thing
[00:57:41] Tony: about
[00:57:41] Tony: selling.
[00:57:43] Cameron: Yes. Yeah, that’s sort of the, the other key part of it.
[00:57:47] Tony: Yeah, or they
[00:57:48] Tony: adopt rebalancing
[00:57:49] Tony: strategies, which I’m not a fan of either.
[00:57:52] Cameron: Mm. Um, thank you
[00:57:56] Tony: Thank you, Phil.
[00:57:57] Cameron: DJGPhil. [00:58:00] Um, and to the, the lovely Alex
[00:58:03] Cameron: for reading the question,
[00:58:06] Cameron: how’s my painting coming along? Alex, where’s it at?
[00:58:09] Alex: peasy.
[00:58:09] Cameron: Gimme a percentage. What percentage?
[00:58:12] Alex: 70%.
[00:58:15] Cameron: Okay. Do I have to, if I applied the
[00:58:17] Cameron: QAV checklist over it, what score to get? Is it quality
[00:58:23] Cameron: and am I getting it at a good price?
[00:58:26] Alex: It’s quality And value.
[00:58:29] Tony: In about 10 years time when
[00:58:31] Cameron: when you are, when you are
[00:58:32] Tony: for a million dollars, Yeah,
[00:58:33] Cameron: Yeah. Yeah, yeah. Lovely.
[00:58:37] Alex: We’ll
[00:58:38] Cameron: All right. Thank you, Alex. Thanks. Have a great week.
[00:58:42] Alex: No
[00:58:43] Tony: Bye, Al.
[00:58:43] Alex: See ya.
[00:58:45] Cameron: Don’t forget to drop that file in the, uh, file thing for me when you can.
[00:58:50] Cameron: It’s episode
[00:58:51] Alex: Yep. Easy.
[00:58:52] Cameron: it’s in the, uh, Google Drive folder, so you can do it whenever you’re ready.
[00:58:56] Cameron: Thank you.
[00:58:57] Cameron: Bye.
[00:58:59] Alex: Thank you.[00:59:00]
[00:59:02] Cameron: All right. Well, let’s get into question
[00:59:06] Cameron: time.
[00:59:07] Tony: Good ones this week.
[00:59:10] Cameron: Next question is from Matt. Uh, it’s not really a question, Matt, but it’s an article. I thought to share this article as potential material for an upcoming pod.
[00:59:22] Cameron: This is an article from Livewire. 23 ASX200 stocks trade at single digit PEs, but only six are projected to grow earnings. This is dated the 28th of November.
[00:59:35] Cameron: Since the last update, the
[00:59:36] Cameron: list of single digit PE stocks has shrunk from 26 to 23, this is by Hans Lee. He says, there is a pattern developing in our ongoing series looking at constituents of the ASX200, which have trailing price to earnings ratios of under 10, while the ASX barely moved in the two months since the last update.
[00:59:56] Cameron: date, it was up 0. 1%. [01:00:00] Four stocks have seen their respective PEs move into double digits, all of them for various reasons. And if you thought purely investing in the index has been disappointing this year, the one year share price performance of the stocks on this list may trump even that. Of the 23 names on the list, just three have recorded gains over the past 12 months.
[01:00:22] Cameron: Not this is, not that this has deterred the sell side community from continuing to price in significant upside for some of these stocks headed, heading into 2024 and beyond. In this piece, we’ll look at the current single digit PE list and uncover some interesting insights about what’s in it. And
[01:00:37] Cameron: in some cases, what isn’t in it.
[01:00:39] Cameron: Did you have a look through this list, Tony, and some familiar names on this
[01:00:43] Tony: Yeah, well some of
[01:00:44] Tony: the names on the list are on our buy list and that makes sense given that they’re low PE
[01:00:47] Tony: stocks. Look, it’s, it’s an interesting article and good food for thought. If I go through some of the Some of the names on this list that are on our buy list, or have been on our buy list, Credit Corp is [01:01:00] there, and their forecast earnings per share growth is negative 6%, Blue Scope Steel is on this list, their forecast earnings per share growth is minus 18%, Santos is minus 18%.
[01:01:12] Tony: Beach Energy is plus 1%, Coronado Global minus 32%, Grain Corp minus 53%, etc, etc, etc. So I think the trend is pretty clear that these stocks are probably trading on low PE ratios, which means their share prices are depressed because their forecast earnings growth isn’t great. Um, what does that mean for us?
[01:01:36] Tony: Um, yeah, potentially I’d have to do a lot of research on this, but potentially we should be putting more weight on the forecast. Earnings per share growth metric that we use, the growth over P. E. one, um, because a lot of these stocks. Uh, are ones that I’ve owned and they haven’t done well, so that could be a driving force for it.
[01:01:55] Tony: Um, I guess my experience to date has been that it’s one of, it’s only been [01:02:00] one of the things in the mix, and that if the market is, is depressing a stock because of its, um, It’s earnings per share forecast not being great, that makes it cheaper for us to buy, and if it scores well on all the other metrics and there’s still a bit of momentum for it, then it’s worth buying.
[01:02:16] Tony: Um, I think that still probably holds, because some of these stocks I’ve read out have negative sentiments, so we’re not going to buy them anyway, so we’re kind of, we’re kind of protected against that. Um, sort of, um, mistake, if you will, uh, buy that. The other thing, other comment I’d make is that forecasting earnings per share is never an exact science.
[01:02:36] Tony: And then I’ve seen plenty of cases where, you know, at the first sign of an interest rate cut, or the first sign of the economy improving or inflation dropping, some of these companies will suddenly have positive forecast earnings. So that’s going to be an issue too. And if we haven’t bought them by then, we miss out on the jump.
[01:02:51] Tony: So that’s another issue, but yeah, look, I think it’s worthwhile perhaps me taking this offline and doing a bit more research into forecast earnings per share [01:03:00] and whether we’re giving it enough rate in the
[01:03:01] Tony: checklist, um, enough rate, enough of a rating or enough
[01:03:04] Tony: weight
[01:03:05] Tony: in the checklist because of that so I think it’s good
[01:03:07] Tony: insight.
[01:03:09] Cameron: Is that a metric that any of the interns have looked at in their analysis over the last
[01:03:14] Tony: Yeah, Dylan did. He tried to look at all of the metrics and see what the weighting should be. And he thought the two biggest drivers for share performance, or the two biggest correlators to share performance was PropCaf and consistently increasing equity. So, but I think, I think what I need to do is to take a few of them like those two and perhaps this one as well and just create portfolios to go forward with and see how a portfolio of stocks that has a good forecast earnings per share or the top 10 or 20 shares with the highest forecast earnings per share on the buy list, how they compare to The dummy portfolio and the STW, um, going forward and for a couple of the other metrics as well.
[01:03:58] Tony: And just, you know, [01:04:00] see if we can rebalance the scoring to reflect that if we need to. I mean, it’s always been the case that, that, um, traditionally share market investors, and I’m talking about the fund, big fund managers here, focus on the future, focus on the
[01:04:14] Tony: forecast earnings. They want companies that are growing their earnings because they’ll be worth more in the future.
[01:04:21] Tony: For sure, that’s why, that’s why growth stocks are a thing. That’s why, um, people do that, but it’s always been such a hard thing to do to forecast earnings. And we speak about this a lot, that there’s no crystal ball in investing and all it takes is for, um, an interest rate change to affect the economy before all the forecasts are almost worthless.
[01:04:39] Tony: So it is a hard thing to do. And I think that’s why I’ve always favored, as you said before, buying
[01:04:44] Tony: quality companies at a decent
[01:04:46] Tony: price, let the forecast, you know, work itself out over time.
[01:04:50] Cameron: Hmm. I mean, we do score it, but it’s
[01:04:53] Cameron: only one out of 20
[01:04:56] Tony: Yeah. Well, it’s actually two. I think if you
[01:04:58] Tony: get a, if you’re above the 1. [01:05:00] 5, I think it’s a, it’s a double
[01:05:01] Tony: score, but
[01:05:02] Tony: yeah,
[01:05:03] Cameron: Well, I mean, it’s just, it’s one
[01:05:05] Tony: one metric. Yeah. Yeah.
[01:05:06] Tony: Correct.
[01:05:08] Cameron: We don’t like ignore it, but we
[01:05:11] Cameron: don’t
[01:05:12] Tony: Hmm.
[01:05:13] Cameron: give it a huge amount of weight
[01:05:15] Tony: Yeah. And look, it’s what it’s been on the list for a long time to get someone to research it for me, but I think I’m after going through. Hiring researchers, as good as they are, I’ve done it twice now, the, the findings aren’t that conclusive. And so I think, um, another way of doing it is to set up paper portfolios and see and try and isolate a particular factor and see how they go going forward and adjust the weightings in the, um, in the,
[01:05:41] Tony: in the score, the checklist to, um, to
[01:05:43] Tony: accommodate what we find.
[01:05:45] Cameron: Hmm. All right. Good, uh, good, um, suggestion, Matt. Thank you for, uh, that contribution. The only other question I’ve got this week is from Jordan. He [01:06:00] says, uh, he’s got a question about director loans. I’ve owned Vysan, V Y S, Vysan, Vysan, don’t know how that’s pronounced, for nearly a year now. It’s tripled in price, basically the only reason I’m breaking even.
[01:06:15] Cameron: I noticed in their latest AGM it was approved to give the managing director an interest free 750, 000 loan. to exercise 10 million stock incentive options, option price 7. 5 cents versus today’s 26 cents of the shares. Visan is saying that it is beneficial and aligns the managing director’s interests with that of the company.
[01:06:41] Cameron: Oh, I bet it does. But it is taking the 750, 000 out of the business until the loan is repaid and diluting the other shareholders by an aggregate. of 2.
[01:06:52] Cameron: 4%. I was just wondering what Tony’s thoughts are on situations like this. Thanks Jordan.
[01:06:59] Tony: Yeah, thanks, Jordan. [01:07:00] I’m not familiar with
[01:07:00] Tony: BISAN or this particular issue at BISAN,
[01:07:04] Tony: so I guess I’ll limit my comments to sort of generalities on this, but I’m not a fan of lending management money to exercise options, um, that, that, can create long term problems and the best example of those long term problems is probably what I can think of is Magellan Financial, who loaned a lot of staff, um, money to, um, to punt the shares.
[01:07:28] Tony: And then when the share price tanked, uh, the staff were very demotivated because they finished up, uh, having no little asset, but owing the company a lot of loan repayment and probably couldn’t even repay it. So, um, eventually Magellan’s worked out a deal where they’re basically foregoing the loans. And, um, I think that’s always the risk in these situations and potentially is a risk coming in the future for Vysant, but, um.
[01:07:55] Tony: I mean, first, the first question I’ve got is if the person has options, why can’t they [01:08:00] exercise them, sell what they need to and keep the rest? I mean, it’s, it’s been an issue with, with options that there’s a tax liability attached to them. So you often see CEOs of a company, um, sell shares. Um, at the appropriate time, usually around AGM season, and, uh, and they get asked, why did you sell shares in the company?
[01:08:19] Tony: If you, don’t you value it, or don’t you think it’s got good, good prospects? And invariably it’s to pay their tax bills because the options have, have worked out well for them. They’ve gone up in volume and they’ve got a tax bill for it, but they, so they can’t hold onto the shares. Um, Or, or, or they can’t fund a tax bill from their normal incomes or other incomes.
[01:08:38] Tony: So they invariably sell some of the, the exercise the options, convert them into shares, sell some of the shares to pay the tax off, and then keep the rest. And I can’t see why that wouldn’t be the case if it’s good enough for the, you know, see the Captains of industry and the big A SX top 20 companies to do it that way.
[01:08:54] Tony: I can’t see why the CEO of <INAUDIBLE> can’t do it that way. And additionally, the way that companies, you [01:09:00] know, usually sort this problem out is, is they, um. The CEO, um, exercises his options or her options, sells whatever shares they need to to cover their liabilities from a tax point of view, keeps the rest, and then gets another option, um, package from the company going forward.
[01:09:18] Tony: So they still have an incentive for those options to do well and their, and their, their, um, behavior is aligned with the benefits of the company. So this is a very strange case, I think. Um, good for Jordan to call it out. I don’t like it myself. Um, and would vote against the REM report if I own the shares or sell them.
[01:09:39] Tony: Because I very, very rarely get to the stage of voting at the AGM. I’ve
[01:09:42] Tony: usually made
[01:09:43] Tony: my mind up before then and gotten out. Yeah.
[01:09:48] Cameron: All right. Thank you, Tony. Thank you, Jordan. By the way, I did post a poll on our Facebook group about PRN, a couple of people have responded, but most of them have responded saying they don’t own it.
[01:09:59] Tony: Okay. [01:10:00]
[01:10:00] Cameron: One person said that they, uh, owned it, but haven’t sold it because they don’t follow the rules.
[01:10:08] Cameron: Well, that was the way I phrased the question.
[01:10:11] Cameron: Uh, the options are, I sold it Monday, I sold it Tuesday, I own it but haven’t sold it because I don’t follow the rules, and I don’t own it. Most people who voted don’t own it. One person said they haven’t sold it yet, and one person said they sold it on Tuesday, which was me.
[01:10:28] Tony: Oh, okay. There you
[01:10:28] Tony: go.
[01:10:29] Cameron: that’s it, that’s all we’ve got so far, but go up to,
[01:10:33] Cameron: so this is a post on Tuesday,
[01:10:35] Cameron: I’ll pin it actually to the top of the QAV Club group on Facebook if you wouldn’t mind filling that out, mostly if you’re a PRN.
[01:10:46] Cameron: Owner,
[01:10:46] Cameron: um,
[01:10:47] Cameron: it’s not really that relevant. Actually got two votes now for owner, but haven’t sold it because I don’t follow the rules.
[01:10:52] Cameron: So
[01:10:53] Tony: Is that right? Well, there you go. See,
[01:10:55] Tony: we’re, we’re trying to
[01:10:56] Tony: frame our, our decisions based on people following the rules, and we shouldn’t know [01:11:00] better about human nature, shouldn’t we?
[01:11:02] Cameron: Should know better than QAV club members. They’re like, ah, rules
[01:11:05] Cameron: are for pussies. Rules schmools and follow the rules. Well, good for you. Um, I hope it, I hope it works out well for you. Let’s see. Where’s PRN
[01:11:18] Cameron: right now? Uh, down to a dollar two. That’s better than a Dollar.
[01:11:24] Tony: there’ll be a question in six months time. What do you
[01:11:26] Tony: do if you hold
[01:11:26] Tony: on to a company that’s
[01:11:27] Tony: gone past its three point trend sell line? Should I sell it now
[01:11:31] Tony: or buy, buy more?
[01:11:33] Cameron: Well, actually, uh, Nick, one
[01:11:35] Cameron: of our club members did,
[01:11:38] Cameron: uh, leave a comment on this. He said GRR tanked a day or so after the three point Trendline, sell point the other week, and saw an unusually high sell volume. I didn’t sell, because I don’t follow the rules. I saw the outsized sell volumes, commodity price was still okay, and I was already down, so decided to hold and see [01:12:00] if it recovered, so far it is.
[01:12:02] Tony: Okay.
[01:12:03] Cameron: But, um, I don’t know when he, when he’s looking at because, uh, you know, a month ago it was trading at 52 cents and now it’s trading at 39 and a half cents. So not exactly sure what period, maybe it was on the 6th of December, it was down as low as 38 and a half. Then it crept back up to 42, but now it’s down to 39.
[01:12:27] Cameron: So when did I sell it? Uh, let me see, sold it on the 6th. No, that’s when I bought it. Uh, when did I sell it?
[01:12:42] Cameron: Like trades.
[01:12:48] Cameron: Yeah. G
[01:12:54] Cameron: uh, sold it on the 27th of November, [01:13:00] so that was just like a week or so ago. 27th of November. 27th of November was trading, uh, down at 42 cents, roughly when I sold it. It’s now down at 39. So I’m glad I got out of it when I did, but who knows. Yeah. And I, and I did that study, um, a few weeks ago where I went through all the light cells over 18 months
[01:13:22] Cameron: and selling it as not benefit us, but hasn’t hurt
[01:13:27] Cameron: us
[01:13:29] Tony: So it’s an insurance policy. Yeah. Well, the other one too that I was looking at over the
[01:13:35] Tony: last couple of days is CCP, which is still below its Sell price, but it has been kicking up lately. So I kind of suspected it would. It’s, it’s done this before where it gets sold, sold down heavily based on them always under promising and over delivering.
[01:13:53] Tony: And it sort of then slowly works its way up, but it’s still a fair way below a buy, but,
[01:13:58] Tony: um, I have been
[01:13:59] Tony: watching
[01:13:59] Tony: it lately. [01:14:00] It’s been doing well.
[01:14:01] Cameron: Yeah, It’s very cyclical. I know when I’ve looked at it before, it seems to be a very cyclical stock.
[01:14:08] Cameron: Well, let’s get into After Hours, TK. Tell us more about your charity day.
[01:14:12] Tony: Yeah, it was, it was a golfing trip. So last Monday, Tuesday, Wednesday, we went to Peninsula Kingswood, which, um, so the history behind it, it was two separate golf courses. I played Peninsula maybe 20 years ago. It was a nice course at the bottom of the sandbelt, um, 36 holes. Very traditional course, lots of trees, um, but they merged with Kingswood, sold off the golf course to a land developer and pocketed a large sum of money and have done up King, uh, Peninsula.
[01:14:41] Tony: So it’s got 36 holes, top, top rate, top rated golf courses now, um, fantastic facilities, good accommodation, restaurants, all the rest of it. So we had a good two days there, tough golf courses though, so I didn’t play that well. Um, great couple of days there and then we [01:15:00] go to, uh. Woodlands for the third day, which we do every year.
[01:15:04] Tony: We generally pay, you know, two of the top rated courses Monday, Tuesday, and then go to Woodlands, which is also a very good course, and play there Thursday and this modified Ambrose scramble and raise money for charity. So, um, we haven’t done well in the past for that, but we managed to win it this year.
[01:15:19] Tony: So that was good. We, you know, it’s a charity. So we got, I think we got backpacks as a prize and three golf balls. It wasn’t, we didn’t win much, but we do get to play in the final next year, which is an event that I won with a mate a couple of years ago and we flew to Fiji as our prize. So, um, if only it could be as good as that next year in November, when we go and play in
[01:15:39] Tony: the charity challenge final, but it was good fun.
[01:15:43] Tony: Good
[01:15:43] Tony: day. Good people.
[01:15:45] Cameron: So I’ve been waiting to talk to you to ask you who John Rahm is and why it
[01:15:51] Cameron: matters that he’s joined LIV.
[01:15:54] Tony: Yeah, so, um, this is, this is like, what’s happening in golf is like what happened when Kerry [01:16:00] Packer started up World Series Cricket. So there’s a breakaway group being funded by lots of,
[01:16:05] Tony: um, money enticements to golfers from the traditional PGA tours to come across and
[01:16:10] Tony: play
[01:16:10] Tony: live, which is backed by the Saudi, yep, Saudi
[01:16:14] Tony: money.
[01:16:15] Cameron: We’ve talked about it before, I think,
[01:16:16] Tony: yeah.
[01:16:16] Tony: and so, uh,
[01:16:19] Tony: I guess maybe six months or so ago, uh, anyway, a little while ago, right. Um, It looked like Liv and the PGA signed, well Liv and the PGA signed an MOU about working together in the future because it was, um, it was hurting the PGA, it was costing them lots of money to, um, in lawyers fees because they were, they were suing Liv and Liv was suing them and some of the players were suing.
[01:16:42] Tony: PGA. And it was getting expensive. Plus, as lots of good players were enticed across to live with lots of, which with very high money contracts. And we’re talking, I think, Cameron Smith, who’s an Australian golfer who won the British Open. Uh, he was paid 120 or 140 million or something similar to go across [01:17:00] to live.
[01:17:01] Tony: And live’s attractive anyway, because they play, they play a lower number of tournaments per year, and they play 54 holes, which is why they called it LIV, which is Roman for LIV, 54, rather than the four day 72 hole tournaments that the PGA plays. And there’s been sniping at each other for a long time. We all thought it was going to end, and they’re all going to sit down at the end of this year and work out a way of Um, living together, going forward, and then lo and behold, I think world number two, John Rahm, has just been poached for reputedly 500 million to join the Live Tour from the PGA Tour.
[01:17:39] Tony: So, um, it looks like Live are, um, back with their money poaching people, and it’s got to be a tipping point soon. Um, there’s rumors going around that there are another three or four or five players who are Being enticed with large sums to play for live. The PGA is going to find it difficult to continue with less, uh, less quality players, [01:18:00] uh, and they’re also trying to charge their sponsors more money to combat the amount that lives pain.
[01:18:05] Tony: Uh, it’s called a breakdown at some stage. So it’s, it’s very interesting to watch and, um. Yeah, endlessly fascinating as to who’s going to win, but it’s exactly like World Series Cricket. And if people remember back to that, if they’re as old as me, the Australian team or the Australian cricketing, um, traditional, uh, um, organization didn’t fare very well.
[01:18:28] Tony: And World Series Cricket went from strength to strength. And when they eventually got back together, it was basically on WSC terms, not the, um, not the Australian cricket terms, even though. Yeah, there was some mending of bridges, but they still had to allow one day tournaments
[01:18:42] Tony: and colourful, um, outfits and all that
[01:18:46] Tony: kind of stuff that Kerry Packard
[01:18:47] Tony: pioneered.
[01:18:50] Cameron: I see there’s, um, the 10 year old, uh, miniseries about that is, uh, streaming on Netflix at the moment. How’s that? [01:19:00] The, uh, Kerry, Kerry Packer’s War. I’ve never seen it, but it’s got a reasonably good rating on IMDB. I was thinking about, uh, giving it a look at some point if I run out of things to watch,
[01:19:11] Cameron: because I know, I remember a little bit about the story, but I haven’t
[01:19:14] Cameron: you know, I haven’t revisited it for a long time.
[01:19:17] Cameron: Cameron Smith, by the way.
[01:19:18] Cameron: Yeah, go.
[01:19:20] Tony: was going to say it’s a great story, Kerry Packer worked out that it was cheaper to
[01:19:23] Tony: televise live sport than it was to pay Hollywood for sitcoms or movies. The sort of cost per broadcast hour was way higher for a packaged, um, product that was bought from Hollywood than to put a van, a couple of cameramen at a cricket ground.
[01:19:40] Tony: And that’s why he pioneered, um, the, uh, you know, televising outside broadcast from cricket. Um, and, uh, when he couldn’t get his own way to do everything he wanted, he just, he sent plays into the dressing rooms with. brown paper bags full of money and tap people on the shoulders and said come and play for me and on [01:20:00] one day they all defected and went across and played cricket for Kerry and it was called a pajama game because he tried to jazz it up by putting different countries in different colored uniforms whereas traditionally they always always been in white and he pioneered day night matches which hadn’t been a thing before that and he pioneered one day cricket which is still around so um Yeah, uh, he got what he want basically in the end.
[01:20:22] Tony: The Australian cricket board was on its knees. They tried to field sides, um, without the Wall Street cricket players, which were always the best players. Uh, and they, they lost test match after test match after test match and, and, uh, eventually had to, um, capitulate and try and broker a
[01:20:39] Tony: deal. Because they always start off really haughty, you know, we’re the traditional game and And the Wall Street Cricketers won’t be able to play in the Ashes Test for England, and the WSC players all cried until their beer.
[01:20:50] Tony: They just loved it. They were
[01:20:51] Tony: getting paid so much, they didn’t care. They had to work one day rather than five
[01:20:55] Tony: days, so they loved it.
[01:20:57] Cameron: Yeah.
[01:20:58] Tony: Exactly the same as Lib. [01:21:00] And Lib’s headed up by Greg Norman,
[01:21:01] Tony: so he knows exactly what the Kerry Packer
[01:21:03] Tony: playbook is, because they were good
[01:21:04] Tony: mates.
[01:21:06] Cameron: Yeah. Right. Uh, Cameron Smith, I was just going to point out that we, he’s, the course that he grew up on, Wontima course is just up the road from our place. We drive
[01:21:18] Cameron: past it on the way to Kung Fu every day. They’ve got a big sign still up, you know, congratulations,
[01:21:25] Cameron: Cam Smith, Cameron Smith, whatever. But yeah, apparently he started playing there when he was two years old.
[01:21:32] Tony: Wow.
[01:21:33] Cameron: So there you go, his dad was the, uh, uh, club captain
[01:21:37] Tony: Mm hmm. Okay.
[01:21:40] Cameron: Well, what else have you got?
[01:21:43] Tony: No, that’s
[01:21:44] Cameron: watched anything?
[01:21:45] Cameron: that’s you?
[01:21:46] Tony: no,
[01:21:47] Tony: I don’t think so. We’ve just been, um,
[01:21:49] Tony: we’ve been playing golf
[01:21:50] Tony: and going to dinner
[01:21:51] Tony: most nights and then traveling.
[01:21:53] Cameron: Yes.
[01:21:54] Tony: nothing
[01:21:54] Tony: new. Mm
[01:21:56] Cameron: Well, I have got some stuff. Uh, I’ve been [01:22:00] watching The Romantics
[01:22:01] Cameron: on Netflix. It’s a Netflix, uh, documentary series on Bollywood.
[01:22:09] Cameron: Particularly, uh, a father son director team, director producer team, um, uh, Yash Chopra and his son Aditya Chopra, who, uh, sort of invented modern Bollywood. And uh, it’s full of Bollywood stars, and they’re going through the history of Bollywood and Indian cinema, and how it, um, really took off in the early 90s.
[01:22:36] Cameron: Uh, when there was this opening up of the Indian economy and they became more westernized and yeah, it’s fascinating. You’re like, and I see Letterman on his Netflix series, uh, the late, my next guest, his latest guest is Shah Rukh Khan, who,
[01:22:52] Cameron: He’s basically, as, as he says, he’s often gets called the Tom Cruise of India.
[01:22:56] Cameron: Like he’s, uh, the biggest movie star, probably [01:23:00] one of the biggest movie stars in the world, right? He and Jackie Chan are probably the two actual biggest movie stars in the world. Anyway, it’s good.
[01:23:08] Cameron: Tony’s waving to you. I don’t know if he can see you.
[01:23:10] Tony: Hi.
[01:23:12] Cameron: That’s fine.
[01:23:14] Tony: It’s Tuesday night already, is
[01:23:15] Tony: it? Is that the Scramble. position? Yeah.
[01:23:22] Cameron: else? Oh, well, um, I’m talking to Markham tomorrow. Markham and I are doing a Napoleon show tomorrow. It’s our first podcast in,
[01:23:33] Cameron: well,
[01:23:34] Cameron: many years. I don’t know.
[01:23:37] Cameron: No, I’m still working. You can’t just come in here. Get out.
[01:23:44] Cameron: Um.
[01:23:46] Cameron: Yeah, our first podcast in, I don’t know, 10 years. So that should be, that should be
[01:23:51] Cameron: fun.
[01:23:51] Tony: Yeah, well, say
[01:23:52] Tony: hi from me and from Jenny.
[01:23:54] Cameron: I will. He still is, um, bemoaning the fact that, [01:24:00] uh, you left Toronto. Says he should have never have let you go.
[01:24:03] Tony: Oh, I’m reminding it too. I love Toronto. I would have stayed there
[01:24:06] Tony: endlessly. It’s a great
[01:24:07] Tony: place.
[01:24:08] Cameron: Yeah?
[01:24:09] Tony: Had good friends and everything there. Yeah.
[01:24:11] Cameron: I’ll let him know.
[01:24:12] Tony: Mm. Yeah.
[01:24:13] Tony: Mm
[01:24:14] Cameron: Uh, what else? Well, reading Charlie got me into reading a book on probability. Like Charlie, in one of his speeches says there’s about a hundred models that you need to understand to know how the world works. And the first one he talks about is probability theory. Need to understand probability theory.
[01:24:29] Cameron: And I was like, yeah, probably don’t know as much
[01:24:32] Cameron: about that as I should. So I downloaded a book called Introduction to Probability that I’ve started reading, which is fascinating.
[01:24:38] Cameron: It’s one of those things that I’ve always wanted to know more
[01:24:40] Cameron: about, you know, and it’s, um, and, and he actually says in his speech, it’s
[01:24:45] Cameron: counterintuitive. It’s one of those things that you don’t, you know, the way our brain, our brains don’t handle probability theory very well. And, uh, it’s, it’s good to have a, you know, a basic understanding of how to think about [01:25:00] those sorts of problems. So I’m enjoying that. I’m reading Agatha Christie’s first novel. The mysterious incident at Stiles.
[01:25:09] Cameron: I’d realized I was talking to my mum
[01:25:11] Cameron: about Agatha Christie’s disappearance. You ever heard about the story where she disappeared for a couple of weeks?
[01:25:17] Tony: Yeah, there’s either a movie or a
[01:25:19] Tony: series I
[01:25:19] Tony: watched last year about it.
[01:25:22] Cameron: Oh, really? Oh, is it
[01:25:23] Cameron: good?
[01:25:23] Tony: Yeah, it wasn’t bad. Yeah, it
[01:25:24] Tony: was fine.
[01:25:27] Cameron: Well, we got, we got talking about that and then I realized I’ve never read an Agatha
[01:25:30] Cameron: Christie book in my life. So, um, yeah, I downloaded her first one
[01:25:37] Cameron: and. I think it was written in like 1921 or something like that.
[01:25:42] Cameron: And it holds up really well. Like The Mysterious Affair at Stiles, released in 1920. It’s a really riveting
[01:25:52] Cameron: read.
[01:25:52] Cameron: I’m, I’m like shocked. It’s nearly a hundred. Well, it is over a
[01:25:55] Cameron: hundred years old
[01:25:57] Cameron: and it’s very
[01:25:59] Cameron: good.
[01:25:59] Cameron: I’m really enjoying [01:26:00] it. You ever read
[01:26:00] Cameron: any of her books?
[01:26:01] Tony: I can’t say I have.
[01:26:03] Cameron: Yeah, there you go.
[01:26:04] Tony: I’ll check it out. Yeah, good. I do like going back to those old classics. I read a couple of the, um, uh, George Seminay ones, the French detective,
[01:26:14] Tony: um, Marguerite. Which were really good, too. Again,
[01:26:17] Tony: very old, but well written. Yeah,
[01:26:21] Tony: yeah.
[01:26:21] Cameron: I’ve got Simonese in my background. Maybe I’m related to him.
[01:26:25] Tony: Well, that reminds me, too, I think I guess the Christie’s disappearance was a
[01:26:27] Tony: part of a Doctor Who episode as well, from memory. They tried to tie it in that she went traveling with Doctor Who when she disappeared. And that’s what I have watched. We
[01:26:36] Tony: watched episode two
[01:26:36] Tony: and three of the latest series.
[01:26:39] Tony: Watched three last
[01:26:40] Tony: night. So
[01:26:41] Cameron: wasn’t, that was, it was crazy. It was absolutely bonkers. Bonkers
[01:26:46] Cameron: crazy. I love Shooty,
[01:26:48] Tony: too.
[01:26:49] Cameron: oh yeah, Neil Patrick Harris was just fantastic. He
[01:26:52] Cameron: was,
[01:26:53] Cameron: what a great role for him. But the whole bi generation and Shooty Gatwood coming out and Tenet flying off in [01:27:00] his own TARDIS. I was like, what? What? That’s crazy, but
[01:27:05] Tony: they’re
[01:27:05] Tony: having fun.
[01:27:07] Cameron: I thought Shooty Gatwood was, it was a good entrance. He’s, he’s He brings a different
[01:27:11] Cameron: energy
[01:27:12] Cameron: to the whole thing.
[01:27:14] Cameron: So, looking forward to see what they do with him, uh, come Christmas, Christmas Day.
[01:27:21] Tony: Yeah. That was good. I thought that was a bit soppy at the ending when David
[01:27:24] Tony: Tennant, you know, found his
[01:27:25] Tony: family and this is what he’d been running for for all his life and all this.
[01:27:29] Tony: But it was fun.
[01:27:31] Cameron: Yeah, I mean, how many David Tennants are there now with their own lives? Like, there was one that split off and he’s in an alternate
[01:27:37] Cameron: universe with Rose and her family, this one’s in this universe with Donna and her family, and
[01:27:43] Cameron: then,
[01:27:44] Tony: of a nod to all those other
[01:27:45] Tony: ones, wasn’t It
[01:27:47] Cameron: yeah, I don’t know, it’s a bit soppy, but hey. It was fun and scary. Fox got a bit
[01:27:53] Tony: yeah,
[01:27:54] Tony: The start
[01:27:55] Tony: was very scary, wasn’t it? The chuckles.
[01:27:57] Cameron: Stookie Bills, yeah, and all that [01:28:00] kind of stuff.
[01:28:03] Cameron: and
[01:28:03] Cameron: then somebody
[01:28:04] Tony: that’s classic Doctor Who, that’s how I remember it as a kid, being scared at the
[01:28:08] Tony: start of Doctor Who like that,
[01:28:10] Cameron: Yeah. yeah.
[01:28:11] Cameron: You should be scared. It should be scary. Rompy fun, I think, for kids. Yeah. Yeah.
[01:28:17] Cameron: Um, uh, what else? Oh, um, yeah, so Ray and I did our first show, Caesar show in a year last week where we, we stopped doing the Caesar show about a year ago. Last week was the 10 year anniversary of our first.
[01:28:36] Cameron: Caesar show.
[01:28:37] Cameron: So Ray and I have been doing shows pretty much every week for 10 years now. And, uh, we decided to pick up the Rome story. Um, so we’d finished a year ago with the death of Nero and we picked it up with the year of the four emperors last week, um, which is
[01:28:57] Cameron: A, uh, a rollicking good story. So it’s been a [01:29:00] little bit fun for me to slide back into ancient Rome and after taking a break for a year to clear my head.
[01:29:08] Cameron: So
[01:29:08] Cameron: yeah. So that’s been fun.
[01:29:11] Cameron: Uh, uh, what else? Yeah. That’s enough. I’ve, I’ve had a
[01:29:15] Cameron: busy, busy, week of reading and watching and, and, uh, my mum’s here.
[01:29:22] Cameron: She’s having a big surgery on
[01:29:24] Tony: Oh, Yeah, Good luck to
[01:29:25] Tony: that.
[01:29:26] Cameron: Be fun. Yeah. Thanks. Your eyes are doing
[01:29:28] Tony: they are. They’re really good Thank you. Yep.
[01:29:33] Tony: All, All,
[01:29:34] Tony: good here.
[01:29:36] Cameron: that’s good. That’s the show. Nice to have you back, TK. Have a good week.
[01:29:41] Cameron: everyone.
[01:29:41] Cameron: Happy share market,
[01:29:42] Cameron: Tony.
[01:29:43] Tony: Yes, happy ASX and thanks for
[01:29:44] Tony: looking after the fort last week. I haven’t
[01:29:48] Tony: gotten around
[01:29:48] Tony: to listening to it yet, but I will.
[01:29:50] Cameron: Well, thank Charlie for his timely passing, so I had something to talk about.
[01:29:57] Tony: Yeah, well, valet Charlie. what a life, what
[01:29:59] Tony: [01:30:00] a great
[01:30:00] Cameron: RIP, Charlie. Yeah. Thank you,
[01:30:02] Cameron: Charlie, for everything. Oh, well, we didn’t talk about this, but no, sorry. What, like, what do you think is going to happen? Somebody, uh, Brent, I think, uh, on the QAV club Facebook group in the chat room was like, maybe we should all go to the AGM next year.
[01:30:16] Cameron: We should do like a QAV party bus trip. I’m like, what’s it going to be like, do you think, without Charlie there. And secondly, I mean, like you hear about all these old married couples where one goes and then the other goes weeks later,
[01:30:34] Cameron: like, do you know, is either of them going to
[01:30:37] Cameron: be around by the time the next AGM comes
[01:30:40] Tony: Well, Warren’s what, six years younger, so he’s got six more years, but I suspect it’ll be like COVID when Charlie couldn’t turn up to the meeting and they had
[01:30:49] Tony: Greg,
[01:30:50] Tony: what’s his name, Greg somebody and, or Ajit Jain
[01:30:53] Tony: has a bigger role to play in it.
[01:30:55] Cameron: Yeah, but It’s not
[01:30:56] Cameron: the
[01:30:57] Tony: It’s not the
[01:30:57] Tony: same. No, it won’t
[01:30:58] Cameron: those guys who [01:31:00] I’m sure they’re
[01:31:00] Cameron: very smart and capable
[01:31:02] Cameron: managers, but they’re not
[01:31:04] Cameron: Charlie.
[01:31:05] Tony: No.
[01:31:06] Cameron: Charlie and Warren are irreplaceable
[01:31:08] Cameron: in terms of their, their humor and wisdom and all that kind of stuff. So yeah, I don’t know.
[01:31:14] Tony: I mean, that’s one of the reasons why I sold my Berkshire Hathaway shares after I
[01:31:17] Tony: went to the AGM, because they, like, they, they were pretty old then, like, and you could see it, um, and I wondered whether Berkshire Hathaway
[01:31:24] Tony: would take a dive, that
[01:31:26] Tony: SharePrice would take a dive after they passed, but it hasn’t seemed to
[01:31:29] Tony: with Charlie
[01:31:29] Tony: going.
[01:31:30] Tony: Um, maybe
[01:31:31] Cameron: Oh, I haven’t even looked.
[01:31:34] Cameron: Yeah, how’s the share price done since you sold it?
[01:31:37] Tony: Oh, one of the worst decisions of my life, I
[01:31:39] Tony: think.
[01:31:42] Cameron: What’s the, is it BSK their share price? Their share code? BRK.
[01:31:47] Cameron: Berkshire
[01:31:50] Tony: Or BRKA,
[01:31:50] Cameron: BRKA. oof. What did you
[01:31:55] Cameron: sell it at?
[01:31:57] Tony: I’m gonna say somewhere in the low
[01:31:58] Tony: 200s, 220 or [01:32:00] 230 US. Thousand? Hundred thousand?
[01:32:04] Cameron: 547, 000.
[01:32:07] Tony: Yeah.
[01:32:08] Tony: Yep, and that’s US dollars, so
[01:32:11] Tony: you can add, add 40 percent to that, converting it back to Australian. Yeah. And I thought I’d done well, because I did, I’d made sort of 80
[01:32:19] Tony: percent or something on
[01:32:21] Tony: the time I owned it.
[01:32:22] Tony: So that was about three
[01:32:23] Tony: years I think I owned
[01:32:24] Tony: it
[01:32:24] Tony: for.
[01:32:24] Tony: Yeah.
[01:32:26] Cameron: The share price has gone up since Charlie died. I mean, it
[01:32:31] Cameron: went down for about a week. I think everyone was in mourning and spiked back up today for
[01:32:37] Tony: Yeah, well, that’s the kind of reverse situation is there’s there’s always been speculation when Warren and Charlie go
[01:32:43] Tony: that Berkshire will get taken over and broken up, it’s worth more as the sum of its parts are worth more than the whole. So, um, well, the sum of the parts is worth more than the whole.
[01:32:54] Tony: So that’s
[01:32:56] Tony: potentially people are starting to position themselves for that.
[01:32:58] Tony: I’m not sure. All
[01:32:59] Tony: [01:33:00] right.
[01:33:02] Cameron: Well, we’ll see. All right, TK, I’ll let you go. I know it’s hot there. You can see the sweat dripping off
[01:33:07] Cameron: you. No, I’m kidding.
[01:33:09] Tony: All right. Thanks, Cam. You too. Bye.


QAV 721 – Dr No

In 721 we discuss the pain of FND, why Aussie investors keep investing in unprofitable companies, and TK does a Pulled Pork on SRV.

In the club edition only: the myth of the ‘new normal’, why LIC AFIC is selling below its NTA, how Aussie investors can benefit from the AI boom, what we should do about copper prices being up, how to interpret the number of buys going down, how often is TK is making purchases based on factors outside the numbers, and how to interpret the resignation of the PRN CFO.

QAV 720 – Boom!

The Budget cometh, Lessons in Kindness from Buffett, and a Deep Dive into Boom Logistics.

Also in the Club edition: Reflections on Jim Simons and Quant Investing, Navigating Market Fluctuations: FND and FPR Updates, Exploring VYS’s Surge, Elon Musk’s Suggestion to Warren Buffett, Marcus has a question about applying quality score to existing holdings, Jim asks about Life 360, Stock Doctor Data Integrity Issues, Nick asks about Josephine rules, Trent asks about AGL and LNG


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