This week, while the RBA meets, we talked about ABB dropping 20% in a day, steel and coking coal fall, China’s economy beats expectations in the West, regression testing update, Damstra (DTC) is taken over, and a pulled pork on MSV.


QAV 712 Club

[00:00:00] Cameron Reilly: Welcome to QAV 712, 19th of March, 2024. Has the RBA met yet, TK? Are you keeping an eye on the RBA? I know you love the RBA. RBA fan number one, aren’t you?

[00:00:26] Tony Kynaston: Yeah, I’ve got the binoculars out on the patio looking down at Martin Place, waiting for the, waiting for the grey smoke or the black

[00:00:33] Tony Kynaston: smoke or the white smoke to come out.

[00:00:35] Cameron Reilly: Out of the chimney. Ah, here we

[00:00:39] Tony Kynaston: on my high speed internet connection and sell everything or buy everything.

[00:00:44] Cameron Reilly: no, hold on.

[00:00:47] Tony Kynaston: It’s usually 2. 30 we get the news.

[00:00:49] Tony Kynaston: When they break.

[00:00:51] Cameron Reilly: Well, isn’t it? What time is it there now? Oh, it’s only 1. 45. Oh, okay. Yeah, right.

[00:00:58] Cameron Reilly: Um, okay.

[00:01:00] Tony Kynaston: But yes, they are meeting today. Everyone expects them to stay on hold. Well, we know they do nothing, but certainly, certainly in terms of contribution to the economy, they do

[00:01:12] Tony Kynaston: nothing. But anyway, yeah, a

[00:01:16] Cameron Reilly: had a choppy week, Tony, yet again. Uh, It was sort of, was recovering last week and then decided, nah, recovered enough, time to, time to de recover. Was it Friday? I think it took a big hit. And then recovered a little bit, uh, and then just been sort of muddling along ever since then. Uh, nothing really exciting, but ABB!

[00:01:45] Cameron Reilly: Wow, did you see what happened to ABB last week? Um, Origin sort of abruptly cancelled their, I think it was like a white label agreement. Origin Energy will terminate the white label wholesale agreement with ABB effective 12th of April 2024. And FY24, the Origin white label wholesale agreement is expected to contribute an estimated 14 million eBit per share.

[00:02:10] Cameron Reilly: Star under Origin’s most recent layer three wholesale proposal origin would’ve contributed an estimated 10 million EBITDA in the first year on current volumes with declining EBITDA margin percentage of future years. Anyway, they all of a sudden said, nah, and the share price dropped 20% in a day. That was, uh, kind of brutal.

[00:02:33] Tony Kynaston: a big ricochet because they’re still I noticed further on in that article that Aussie Broadband reaffirms its upgraded FY24 guidance. So they haven’t, they haven’t backed out that loss in their guidance yet, and they’ve reaffirmed it. So, which means that they have noticed it’s happened, obviously. So, um, yeah, surprising the market

[00:02:55] Tony Kynaston: cut it down like that.

[00:02:56] Tony Kynaston: Uh,

[00:02:57] Cameron Reilly: do hold it in one of the light portfolios. Bought it back in August and it was doing okay. Now it’s back to zero, but still adds 1 percent

[00:03:09] Tony Kynaston: Yeah. Okay. Yeah. Look, um, it was a good company on the buy list a little while ago. I actually, I mean, if you had said to me before, you know, before you bought this stock, should I buy it because they’re doing this deal with Origin Energy Retail Limited? I would have said, yeah, it’s not going to make any difference.

[00:03:26] Tony Kynaston: I mean, who’s going to buy mobile telephony from, or data from, um, An electricity gas company. I’ve never understood. I know they like to think they can bundle up products and sell them to their customer bases. And I guess if you gave the mobile broadband away free, it’s a good marketing offer, but it just, you know, in my 40 years of watching these things and being in business, I’ve never worked,

[00:03:52] Tony Kynaston: very rarely work.

[00:03:53] Tony Kynaston: Can’t think of a case where it’s ever, there’s kind of a bundled

[00:03:56] Tony Kynaston: product works.

[00:03:57] Cameron Reilly: people, you know, the brand loyalty. Tony, the people have for their electricity company. The love, the love for the brand is what it’s all about. You can’t beat the brand. Speaking of internet, I, um, I was, uh, you know, I use the, uh, the, uh, the ChatGPT, Tony, I don’t know if I’ve ever mentioned that, uh, use the ChatGPT and it’s got the, it’s, it’s got, it’s got the voice thing now where you can talk to it.

[00:04:23] Cameron Reilly: So I do that a lot, particularly with foxes around them. We’re asking it things and it’s been a bit laggy. A little bit choppy, the voice. And so I downloaded an app to test my, uh, network and it came back and told me that I had one of the lowest Wi Fi internet speeds and MBN speeds in Brisbane. Like lowest 25%.

[00:04:44] Cameron Reilly: And then it told me who the best one was and I went on to Reddit and looked it up and everyone was like raving about this company. So there’s a company called LawnTel out of Launceston, L A U N Tel. I was with Internode, which is now, uh, Been sold to, I don’t know, one of the others. I went on to Lawntel, had a look at their deals.

[00:05:02] Cameron Reilly: Upgraded, within 10 minutes they’d switched me over. My download speed went from about 80 megabits a second, 100 on a good day, to 400 within 10 minutes! Quadrupled! Nothing changed, no technology, nothing coming in the house, no, no, no, no, no. No new router. I was going to buy a new router. Actually, I lie. I had, I had to go get a Cat6 cable.

[00:05:28] Cameron Reilly: Had a Cat5 cable because for the last five years. Went, went down to Bunnings, bought a Cat6 cable to plug into the NBN box because I thought it was a bit slow. Yeah, four times my internet speed and triple my upload speed from like 10 to 30 megabits a second. So thank you Lawntail. Giving a free plug to Lawntail.

[00:05:48] Tony Kynaston: we can hear even

[00:05:48] Tony Kynaston: more from you going forward.

[00:05:51] Cameron Reilly: Well, and the funny thing is, when, the next time I went to use the voice thing on ChatGPT, still laggy. Yeah.

[00:05:59] Tony Kynaston: Well, it does have to go, it does have to go all the way to China and get passed and

[00:06:02] Tony Kynaston: then come back to Brisbane.

[00:06:04] Cameron Reilly: Well, speaking of China, Tony, We like to laugh about all of the media coverage about China’s economy. All I’ve been, all I’ve been hearing in the Western media for the last six months is how China’s economy’s just stuffed, no good, terrible. Then, all of a sudden, yesterday in the Financial Review, oil extends run as China growth surprises.

[00:06:30] Cameron Reilly: Oil ticked higher following the biggest weekly advance in a month. As macroeconomic data from China came in ahead of expectations and Ukrainian attacks on Russian refineries heightened geopolitical risks, China’s factory output investment grew more strongly than expected at the start of the year.

[00:06:47] Cameron Reilly: Figures on Monday showed the country is the world’s largest oil importer. So, um, there you go. I mean, I guess the, there will be some people that will say, well, China just makes up their numbers anyway, so, doesn’t

[00:07:01] Tony Kynaston: And I think there’s an element of truth in that. You can’t consistently keep making them up forever, but they do, I mean, the kernel of truth in the fact that, is the fact that China is the fastest country in the world to put out its economic stats. Like compared to Australia, I think China gets its numbers out, A month after they close off the order, or the month, um, Australian, the ABS takes like three to six months to get its figures out, um, which is an indictment on the ABS as much as it

[00:07:30] Tony Kynaston: is on,

[00:07:31] Cameron Reilly: it’s cause in

[00:07:32] Tony Kynaston: on anything on China.

[00:07:33] Cameron Reilly: shot. If you don’t get,

[00:07:34] Cameron Reilly: if you don’t get your figures out in a month, they take you out in the back and shoot you. It’s incentives. Incentives drive performance,

[00:07:40] Tony Kynaston: Incentives.

[00:07:41] Tony Kynaston: Yes, that’s right. Yeah. Yeah, but, uh, but no, I mean, and it’s also too, I mean, what do people expect? It’s a centrally run economy. Last, at the end of last year, they started putting stimulus into other sectors of the economy because the real estate side of things was turning down. And golly, it’s worked.

[00:08:01] Tony Kynaston: Why are we surprised?

[00:08:03] Cameron Reilly: well that, you know, you know, and I’ve banged on about this before on this and other shows, but I’ve read quite a number of books on. Um, the Chinese, uh, government and the, and, and how they’ve learned from Singapore. They sort of, I mean, China, China has been doing this for thousands of years. I mean, they’re, they’re not new at figuring out how to run a big country.

[00:08:21] Cameron Reilly: And, uh, then they also learned from what Lee Kuan Yew did in Singapore. And this whole idea of just getting the best and smartest and brightest minds from across the country, testing them in low ranking. Jobs and positions and the ones that perform well, you give them a bigger job and a bigger job. And it sounds like how corporations supposedly operate.

[00:08:46] Cameron Reilly: They just run the country like a corporation, which in the West, we often talk about that. Wouldn’t that be great if we could run our government as effectively as we run a corporation. When China does it, we go, ah, yeah, but it’s, you know. Can’t trust them, they’re Chinese.

[00:09:02] Tony Kynaston: Well, well here the corporations run the government. It’s kind of the other way

[00:09:05] Cameron Reilly: the other way around. I see, Yeah.

[00:09:08] Cameron Reilly: Anyway, look, I don’t know, I don’t know what to believe or what not to believe, but I do think, you know, they got a lot of, despite what you might, people might think about Xi Jinping or the Communist Party or whatever, The country is very, lots of people, lots of very bright people, and they find lots of very bright people and they put them in, Okay, your job is to run this part of the economy, figure out how to make it work, or else, and they do.

[00:09:33] Tony Kynaston: But yeah, look, all of that aside, I guess one of the benefits of a centrally planned economy is last year they said real estate’s going to take a hit. How do we make up for it? It looks like it’s factories. Okay. Let’s, let’s do whatever we can to, to push that sector of the economy. Let’s get, if we can’t get eight cylinders firing, let’s get seven cylinders firing and, and, you know, move the, move the pieces around the board to achieve that.

[00:10:01] Tony Kynaston: Compared to Western democracies like Australia or the US or whatever, where, you know, it can take. A year, two years for the government to enact legislation to support one particular sector over the other. And that’s after a bruising round of media scrutiny, um, corporate lobbying, watering down to do deals because you don’t have a majority, all that kind of stuff that goes on.

[00:10:23] Tony Kynaston: It’s a very, very

[00:10:24] Tony Kynaston: different sort of

[00:10:25] Cameron Reilly: Mm. Yeah, the book by Daniel, um, uh, something, the Canadian professor, his book I read, You know, he basically talks about how China tries to run its economy, um, well, its country. But the way that we talk about trying to run corporations in the West, you know, CEO makes a decision, it filters down, whips are cracked, and people get on with it.

[00:10:52] Cameron Reilly: It’s the way they do it, and um, you know, it doesn’t work necessarily 100 percent of the time as corporations, it doesn’t work in corporations 100 percent of the time as well, but, But they, and they also had that consistency decade after decade after decade too, because it’s one vision, pretty much. Since Dong, Dong Xiao Ping, one, one vision.

[00:11:13] Tony Kynaston: also too, to put some perspective around it, um, the numbers came out saying the Chinese economy grew by 7. 5 percent last month. Perhaps with the exception of India, that would have to be up there with one of the fastest growing economies in the world, but it’s been number one for, what, 15 years now?

[00:11:31] Tony Kynaston: Yeah, yeah, so, um, I, I, I accept all the criticisms that people have on China on various issues, but you can’t fault the management of the

[00:11:40] Tony Kynaston: economy.

[00:11:42] Cameron Reilly: Well, you can, but I’m sure people, sure people do. Um, I’ve got, I had a quote I was going to read here. Um, yeah, Daniel A. Bell, China Model, is the book, um, that I read. Um,

[00:12:02] Cameron Reilly: looking for the quote. Yeah,

[00:12:05] Cameron Reilly: yeah, this one, this’ll do. From Deng Xiaoping to Xi Jinping, China’s leaders have repeatedly stressed the need to study aspects of Singapore’s political model. Partly inspired by Singapore, China has evolved a sophisticated and comprehensive system for selecting and promoting political talent. As a result, the Chinese government has a high proportion of economists and scientists willing to experiment on the basis of trial and error, most of whom could not have been elected in a democratic context.

[00:12:34] Cameron Reilly: And several hundred million Chinese have been lifted out of poverty over the past three decades. The meritocratic ideal, the idea that government officials are selected and promoted on the basis of ability and morality, rather than political connections, wealth and family background, is still a long way from the political reality in China.

[00:12:54] Cameron Reilly: But if China continues to meritocratize and avoids the bad policy making stemming from voter ignorance in democratic countries, especially the United States, the powerful and populous country it is usually compared to, oh thank you baby, it will set a model for others. Uh, at the moment, China is not good enough in terms of governance, and the United States is not bad enough for China’s political meritocracy to exercise much soft power.

[00:13:22] Cameron Reilly: But he sort of compares, you know, the two countries side by side and talks about how their economies are performing over the last 20, 30 years, and you know, you can sort of see the divergence in the two. One’s going up, the other’s going down. In, in most metrics.

[00:13:40] Tony Kynaston: I think it’ll be interesting to see how India goes, I mean, it’s, it’s, um, I forget now the population difference. I think it’s got a bigger population than China from memory. Um, but a Western style democracy. Uh, and it’s starting its, its increase in, um, the middle class that China sort of did about 20 years ago.

[00:14:00] Tony Kynaston: So, um, interesting to compare and contrast the numbers from China where it’s a different style of management compared

[00:14:05] Tony Kynaston: to India going forward.

[00:14:08] Cameron Reilly: According to Reuters, India’s population by the middle of last year was 1. 4286 billion against 1. 4257 billion for China.

[00:14:19] Tony Kynaston: Okay, so neck and neck pretty

[00:14:20] Cameron Reilly: Yeah, couple of million between them. Well, speaking of China, steel. Uh, they use a lot of steel.

[00:14:28] Tony Kynaston: Mm hmm.

[00:14:28] Cameron Reilly: declared steel a sell on

[00:14:30] Cameron Reilly: Monday. Um, I declared it not a sell Monday afternoon.

[00:14:35] Tony Kynaston: believe her.

[00:14:36] Cameron Reilly: I did the numbers and it was, it was a notch and I didn’t want to have to sell BSL.

[00:14:43] Cameron Reilly: Well, I checked this morning and it was definitely below the sell line. Yeah, so I ran the numbers through the three point trendline calculator. Definitely a sell, sadly, this morning. Um, so I guess China’s construction industry not buying as much steel as I would

[00:14:59] Tony Kynaston: No, and the construction industry is a retail based industry, I think, if not about half the steel that’s used in China. Maybe a little bit more goes into construction, apartment buildings and all that kind of stuff. And there’s China rightfully is putting the brakes on all that stuff. So steel is going to have some issues, at least in terms of relying on China to give it a boost.

[00:15:24] Cameron Reilly: so anyone holding on to steel stocks, particularly BSL, you may want to think about that today. Um, speaking of resource stocks, I had to sell SMR out of the Lite Portfolio this morning. Um, it became a Rule 1 sell, it was up 40%! Not that long ago, and with the Coke and Coal price plummeting, it went with it and, uh, you know, went from 40 percent up to a Rule 1 sell.

[00:15:57] Cameron Reilly: That was heartbreaking.

[00:16:01] Tony Kynaston: Well, yeah, I mean, it’s, it is heartbreaking. Um, coking coal is going to

[00:16:05] Tony Kynaston: follow steel really, isn’t it? Coking coal is used to make steel. So they go hand in glove.

[00:16:12] Cameron Reilly: Yeah. So it’s one of those. One of those instances that we all hate, where you’ve got a stock and people go, Oh, I should have

[00:16:22] Tony Kynaston: I’d sold it when it

[00:16:23] Cameron Reilly: should have taken my profits.

[00:16:27] Cameron Reilly: But, oh, well, I was going to say, we know from regression testing that it works more often than it doesn’t. At least we think it does. Speaking of which, so I’ve mentioned a few times.

[00:16:38] Cameron Reilly: One of our young, savvy, programmer listeners, Matt Walker, has been working on building a regression testing system and I’ve been testing it with him over the last month or two. Um, I ran another test for his latest iteration over the weekend and I said to Tony off air, it only returned a 12. 5 percent CAGR.

[00:17:02] Cameron Reilly: It’s going from like 2016 to the end of 2023 is the data set that we’re running it on. And I thought that was bad, and I’ve been, I spent hours on the weekend trying to figure out why it looks, why it was so bad and couldn’t figure it out. Tony said, well hold on, what was the STW’s CAGR over that period?

[00:17:18] Cameron Reilly: And we worked it out, it was what, 4. 5%?

[00:17:21] Tony Kynaston: about 5%, just under 5%.

[00:17:23] Tony Kynaston: Yeah.

[00:17:24] Cameron Reilly: So, yeah, it’s like two and a half times better than the STW, so,

[00:17:29] Tony Kynaston: No, triple, triple

[00:17:31] Cameron Reilly: yeah, so I think that’s, uh, we might have a regression testing system that works.

[00:17:36] Tony Kynaston: Fantastic. Yeah.

[00:17:39] Cameron Reilly: uh, we can also, uh, I’ll have to chat to Matt, but with some of the data sources that we, uh, uh, we have discovered recently, we, we can probably put a lot more data into it too, like 10, 20 years of data into it.

[00:17:53] Cameron Reilly: The first step was just getting it working. And I think, uh, It is now. And, um, yeah, now we can, I mean, there’s a couple of things that it doesn’t factor in. It doesn’t factor in qualified audits. It doesn’t factor in commodity sales. Um, although I think I could probably introduce that. As well, if I, like, it’s, I’m trying to code the qualified audits thing at the moment, then I’ll try and code the historical commodity sells by downloading the World Bank data, which I think goes back 20 years.

[00:18:28] Cameron Reilly: But anyway, uh, We can start to play around now, I think, with some of the variables that, uh, you want to

[00:18:37] Tony Kynaston: Good.

[00:18:38] Cameron Reilly: So, I’ll get you to, uh, give, I mean, we can send you the code, or you can give me a list of test scenarios. Because the one I ran on, the one I ran on Saturday took 15 minutes to run. So, I can pretty much run, ha, we can run, Eight year set tests in, you know, 15, 20 minutes.

[00:19:01] Cameron Reilly: It’s, um, pretty amazing. So shout out to Matt, um, and his dad, Toby, for, uh, uh, putting that together. It’s

[00:19:13] Tony Kynaston: Yeah. Thanks,

[00:19:13] Tony Kynaston: guys.

[00:19:16] Cameron Reilly: Well, that’s all I’ve got today, Tony, what have you got left to talk about?

[00:19:21] Tony Kynaston: Oh, a couple of things. Uh, so I’ve got, um, an update on Damstra. We may, listeners may recall, we had a friend of mine, Jan Rousseau, on the show way back in our first year, I think it was. And he talked about how he had taken the company he was executive chairman of, to listing on the ASX. And now they’ve come full circle and they’re being taken over by a company called IdeaGen, which is a UK, looks like it’s a UK fund for investing in software as a service companies.

[00:19:55] Tony Kynaston: So, um, I raise it because Dampstra was on the buy list a little while ago. And if anyone had bought it then, uh, you would have made a nice profit. I think it was on the buy list around when it was about 17 or 18 cents and the takeover price is 24. So

[00:20:11] Tony Kynaston: you would have done well.

[00:20:13] Cameron Reilly: What’s the share code?

[00:20:15] Tony Kynaston: DTC, Damstra,

[00:20:18] Cameron Reilly: DTC.

[00:20:20] Tony Kynaston: a, it’s going through a scheme of arrangement, which means that there’ll be a vote, uh, next month.

[00:20:26] Tony Kynaston: And then if the votes, uh, passes and accepts the takeover offer then you’ll get your 24 cents or it’s been pretty much trading at 23 and a half 24 cents on the market now so if you feel like it’s all over there’s there’s always a chance of another offer coming through prior to that vote but um if you want to move on then you could sell on on market now for the price that’s being offered by Ideagen.

[00:20:50] Cameron Reilly: And if you’re one of the people who bought it back in October 2020 when it was trading at 2. 14,

[00:20:56] Tony Kynaston: Yeah!

[00:20:58] Cameron Reilly: you’re probably, you know, not happy.

[00:21:03] Tony Kynaston: Yeah, had a rocky ride. It listed at 90 cents and it’s been up and down since then. It went all the way back to 10 cents,

[00:21:09] Cameron Reilly: Wow.

[00:21:10] Tony Kynaston: uh, and then came on to our buy list, um, after it turned up from there at about 17 or 18

[00:21:15] Tony Kynaston: cents.

[00:21:16] Cameron Reilly: So is it time to get your friend back on to talk about that journey?

[00:21:20] Tony Kynaston: Yeah, I think that, I mean, I think he’s pretty busy at the moment, but maybe in a month or two, sure. He can tell us how he’s going to spend

[00:21:26] Tony Kynaston: his, uh, his windfall.

[00:21:28] Cameron Reilly: He’s got a windfall.

[00:21:31] Tony Kynaston: well, he owns, uh, I forget now how much, 10 percent of the company, something like that. A

[00:21:35] Cameron Reilly: Right.

[00:21:38] Tony Kynaston: lot less than when it was 2, but, uh, it gets out with

[00:21:40] Tony Kynaston: something.

[00:21:42] Cameron Reilly: Nice. Well, congratulations to anyone that’s holding that.

[00:21:47] Tony Kynaston: Yeah. And the last thing I’ve got to go through today is a pulled pork. We had a request last week for an update on Mitchell services.

[00:21:55] Cameron Reilly: Which we

[00:21:56] Tony Kynaston: And I did a pulled pork.

[00:21:57] Cameron Reilly: 2019, yeah.

[00:21:59] Tony Kynaston: Right. So I did the pulled pork back in 2019. Actually, I haven’t checked the share price since. Do you have a date for when that

[00:22:05] Tony Kynaston: was done?

[00:22:06] Cameron Reilly: Uh, yeah, I mentioned it last week. Let me see, um, MSV, oh well, um, no, I don’t. It’s in my email somewhere.

[00:22:17] Tony Kynaston: Anyway, I’ll put in 19th of March 2019. See what the price was. See how the curse of the pulled pork went since last time. Oh, OK, well, it’s gone down. So back then it was at 58 cents and today’s at 36

[00:22:38] Cameron Reilly: whoa,

[00:22:40] Tony Kynaston: Yeah.

[00:22:41] Cameron Reilly: not good. Uh, yeah, hold on, I did, yeah, it was May, 7th of May, 2019.

[00:22:47] Tony Kynaston: Okay. And yeah, 63. So about the same.

[00:22:51] Cameron Reilly: Wow,

[00:22:53] Tony Kynaston: Yeah.

[00:22:54] Cameron Reilly: 2019.

[00:22:55] Tony Kynaston: been dropping. Um, it’s

[00:22:57] Cameron Reilly: sure, I’m not sure back then we said it was a buy. That was back in the days when we were just trying to, I was still building my checklist and we were trying to Analyze stocks so I could understand what the numbers meant. So I’m not sure what conclusion we came to at the end of that.

[00:23:18] Tony Kynaston: Yeah. And I’ve got to say that I don’t do pulled porks as necessarily recommendations on stocks. I just do them to, to, uh,

[00:23:25] Tony Kynaston: show how I analyze

[00:23:26] Cameron Reilly: Well, you do them when they’re on the buy list. Usually these days, back then we didn’t have a buy list, so we would just do them and see what happened, I think, back then. Yeah.

[00:23:36] Tony Kynaston: Okay. Well, this Mitchell Services is not on the buy list and it has been at various times and it may well be because it’s, it’s, um, it’s scoring well from a QAV perspective.

[00:23:47] Tony Kynaston: It just has sentiment, uh, recent sentiment to overcome to get back on the buy list. And I should point out. point out it’s trading, I did my analysis at 36 cents and it’s trading at that today and that’s the right on the sell line. The sell price is 36 cents. However, the buy price is only 39 cents and as each month ticks forward the buy line and the sell line are getting very close to converging.

[00:24:17] Tony Kynaston: People who follow charts and charters and technical analysis analysts would say that that’s a triangle formation where the buy line and the sell line come close together. And it can only mean one thing that if the share price is either going to break up or break down above the buy line or below the sell lines.

[00:24:34] Tony Kynaston: And, um, If you believe the charters, they say that’s usually the start of a new trend, so we’ll see which way it goes. With the QAV score where it is, I’m hoping, or it doesn’t worry me either way, I shouldn’t say I’m hoping, I think it might go up, but that’s speculation and I can’t, I can’t, I can’t be 100 percent sure of that.

[00:24:55] Tony Kynaston: But anyway, I’ll go through it, we’ve had a request last week to talk about it, uh, and It’s, it, I also should say it’s a small ADT company. It’s only 63, 000 traded per day on average. So it’s not for everyone. Um, to give, give some background on Mitchell Services. It’s, it’s a drilling company started in Queensland back in 1969 by Peter Mitchell.

[00:25:19] Tony Kynaston: Uh, he, he bought, he had worked in the industry as a salesman and then decided to go off on his own, bought a truck and started drilling bores for Kingaroy peanut farmers. And then decided that wasn’t working by 1971, because every time it rained, they would cancel their bore contracts. And so he moved into the mining sector and got a contract west of Nebo.

[00:25:44] Tony Kynaston: And that was to the mining exploration company, Tees Peabody Mitsui. A couple of those names are still around in Queensland today, uh, and moved on from there. So it’s actually, I recommend people go to their website and have a look at the company history because it’s a lot of fun. In the early days, they were a bit of a cowboy outfit and, um, did some, did some interesting things like in 1972, Peter Mitchell was contracted for four months to drill for uranium in Arnhem Land, um, where he said it was very hard to find crew and, um, he developed the motto if it can’t be done, we’ll do it.

[00:26:22] Tony Kynaston: And, uh, they, so they drilled, he drilled for Uranium in Arnhem Land and Got out 1974. So they, um, they’ve had a, uh, a bit of a wild ride at the start. Lots of fun. There’s a, a few poems about bribing Indonesian customs officers when they were trying to get rigs into Indonesia to fulfill contracts, stories like that.

[00:26:47] Tony Kynaston: Uh, after about 25 years of building the, um, Building their equipment base, their drilling base, because this is a drill rig company, I should say, they hire out drills to mining sites in the main, but they’ve worked, they currently work in Australia, they’ve worked all overseas though, and they worked in PNG in Indonesia in about 19, I don’t have a day here, sorry, anyway, uh, So 25 years in, so that must be about, what would that be, 95, Nathan Mitchell the son takes over as CEO and a couple of years later it seems like, well I couldn’t get this straight in the, in the history of the company, it seems like they sold the Australian business to a company called AJ Lucas for 150 million and the parents took their money and retired to the Gold Coast and Nathan took over.

[00:27:43] Tony Kynaston: And it looks like he went overseas, um, basically because they helped pioneer the Gas boom, which was a big thing in Queensland back in the 90s. Uh, they had a special extraction method, which they took overseas to the US and China and Africa, Zambia, Mozambique, as well as Russia, Botswana. Um, then it looks like they, he came back into Australia and.

[00:28:11] Tony Kynaston: By 2013, they’d, uh, did a reverse merger and listed Mitchell Services again on the a SX. They, they were required by a company called Drill Talk, which was already listed, but then in reality it was a reverse merger. And then, uh, Mitchell Services took over and, and became MSV, the listed company, uh, a chap by the name of Andrew Elf was appointed CEO in 2014.

[00:28:35] Tony Kynaston: And, uh, through various acquisitions, they, um. They, they grew the size of the rigs that they have, uh, they began underground operations, including automated drilling underground, uh, they developed, uh, a company called RAGCO to, to pioneer that, uh, underground drilling part of their business, and, um, 2019 acquired another company called DeepCore Drilling.

[00:29:00] Tony Kynaston: So, Basically growing through, I guess, a bit of a boom through the coal seam gas explosion in Queensland. And if people can remember back that far, there was, it was a big boom in that sector of the, uh, the energy sector back then. Um, then now they were listed, they were bought out or they sold to AJ Lucas, they’re back, they’re online, sorry, they’re on, they’re on the boards again.

[00:29:26] Tony Kynaston: Um, what else can I say about them? Not, not a whole lot. Um, I think the, the thing to turn to now is their latest results. And it seems like, uh, they were indebted, which I’m guessing was partly due to COVID and partly due to Uh, the acquisitions they’ve been making, but in the last, uh, year or so they’ve been able to throw off lots of cash and pay down the large amounts of debt.

[00:29:50] Tony Kynaston: So their debt’s basically halved in the, uh, the last 12 months. And, uh, that’s, that’s a testament to how much cash they’re throwing off and also, uh, I guess the good management, but it’s allowing them to undertake a share buyback and also to start paying dividends. So lots of money flying into this company from its operations.

[00:30:12] Tony Kynaston: That suggests to me that if that continues anyway, they’ll either be acquired themselves or the share price will be discovered and it’ll take off because the numbers on this company are quite good. I’ll go through them now. The price I’m using is 0. 36. That’s only 64 percent of the consensus target on this, uh, this company.

[00:30:38] Tony Kynaston: So we, we often see companies trade below consensus target. In fact, the majority of them do, because brokers want the transaction business. But to see someone trading at 64 percent is, uh, is unusual. Uh, 0. 36, which is the share price, is, uh, just above IV1 of 0. 27 and below IV2 of 0. 48. Uh, the yield on this company is 11.

[00:31:01] Tony Kynaston: 3%, so a huge amount of money is coming in and going back out to repay the shareholders. And this is one of these companies where the yield is greater than the PE, which is, I think, a real shorthand indicator of value, uh, to me. Stock Doctor financial health is strong and steady, so it scores well for that.

[00:31:21] Tony Kynaston: I should say, sorry, the PE is just under seven times, which scores as a record low for the last three years, and it’s 6. 95, which is less than the yield of 11. 33, so, um, I like that. Uh, the other thing to say, of course, is that, um, this has been a family, uh, operated company for a long time, and the directors are still holding 30%.

[00:31:42] Tony Kynaston: Nathan Mitchell is still the chairman of the company and still involved on the board. So, we give it a score for being an owner founder. I guess Nathan isn’t the founder, his father was, but he’s certainly spent a long time running the business and working in the business and knows a lot about it. Uh, PropCaf, this is where the fun comes in.

[00:32:02] Tony Kynaston: PropCaf is 23 cents per share. Operating cash flow is 23 cents per share. Share price is 36. So, PropCaf is 1. 57 times for this company, which is amazing. It’s amazing you can buy a company like this on the stock market where you get your money back in 18 months in terms of the cash flowing out of it. Uh, it’s trading below book plus 30.

[00:32:23] Tony Kynaston: So, Net equity per share is 0. 31, book plus 30 is 0. 40, and the share price is 0. 36, so you can buy it for a very reasonable price in terms of the assets it holds. Uh, what else can I say? That’s probably it. Um, quality score for this company, and if I add it all up, is 11 out of 16, or 69%, and the QAV score is 0.

[00:32:45] Tony Kynaston: 44, so it’s gonna score well on the buy list. It just needs to get above that 0. 39. Buy price, and it’s only three cents off it, so certainly one to look at, and one to, uh, just, um, if you, well, you could have a look at buying it now, I guess, or you could wait for sentiment to confirm. Um, interesting sort of, uh, industry I should comment on.

[00:33:07] Tony Kynaston: Uh, pros and cons. Um, I might start with the cons first because they’re shorter. Uh, they, the Mitchell Services called out in the last little while, a year or so ago, that they were affected by bad weather. And so certainly the above ground drilling can be affected by bad weather. Bad weather. Um, so it’s weather dependent, which is an issue.

[00:33:27] Tony Kynaston: And one thing I did call out when I did this company last time is that in this kind of sector where you’re, you’re loaning out or you’re hiring out drilling rigs, utilization rates are important. And I was kind of interested that they make commentary on the fact that they have high utilization rates, but they don’t actually, in any of the work I saw, Um, uh, the presentations I went through, I couldn’t see the utilization rates.

[00:33:52] Tony Kynaston: So I thought that was a little bit interesting, but this is a business where when a downturn comes, it can come hard because as it probably did during COVID, which is why they, um, have had debt, which they’re paying off for one of the reasons anyway. But, um, yeah, you don’t want to be stranded owning lots of rigs if there’s a downturn in the mining sector.

[00:34:12] Tony Kynaston: Having said that, the pros are that, um, As they call out, their commodity prices are relatively high, um, and that drives demand in the mining sector to keep drilling, to expand mines. Uh, inflationary pressure is easing. Um, which is, which is again, their commentary, which will help their margins. Uh, they have almost, they’re calling out 40 percent exposure to the gold sector.

[00:34:38] Tony Kynaston: And as we know from other companies, we’ve looked at the gold prices is high, if not getting close to a record high. So lots of exploration going on in the gold sector, and they have no exposure to lithium or nickel, which is the two minerals, which are in the doghouse at the moment. So, um, that bodes well for them.

[00:34:55] Tony Kynaston: I think the share, the fact that they’re doing a share buyback. We’ll underpin the share price. Um, it’s a record high operating cashflow, which is, uh, you know, good and through with management. Debt’s halved, as I said, which is not just a good thing, but it’s reducing their financing costs, which improves margins.

[00:35:11] Tony Kynaston: Um, and I just wanted to call out the last thing. I did mention before they’re a possible takeover target, but this, this sector in the last year or two, since we’ve been looking at it on this show, has had a lot of consolidation, and I’m thinking back to two companies that were on our, three companies that were on our buy list in the past, uh, one was Zwick, Zwick.

[00:35:32] Tony Kynaston: Um, which was a drilling company which was taken over by DDH1, um, DD, I think the DD in DDH1 stands for Diamond Drilling, uh, and then DDH1 last year was taken over by Parenti, so there’s three acquisitions in this sector in the last year or so, and, um, Mitchell Services with all this Cash generation, you’d have to think was on the radar of a larger drilling company, but who knows.

[00:35:57] Tony Kynaston: So yeah, thanks for calling it out. I think it’s um, uh, looks like a ripper of a company, and um, if we can just, you know, perhaps rise two or three cents a share, it’ll be a buy on our buy list fairly soon.

[00:36:10] Cameron Reilly: Thank you, Tony. I pulled up the transcript from that episode back in May 19. Episode 10, it was. Episode 10. Uh, I was, uh, we sort of did line by line analysis, comparing your numbers in Stock Doctor to the numbers I was getting from Yahoo Finance or, or ever. The old painful days of me trying to, you know, manually build a thing.

[00:36:35] Cameron Reilly: We ended up, uh, the reason we did it was you said it had just turned up on the AFR’s 52 week high list,

[00:36:43] Tony Kynaston: mm hmm, mm

[00:36:44] Cameron Reilly: week high, and you thought that was

[00:36:45] Cameron Reilly: a good reason to have a look at it. We ended up giving it a score of 0. 07 in May of 2020.

[00:36:51] Tony Kynaston: ah, okay,

[00:36:52] Cameron Reilly: we said wouldn’t

[00:36:53] Cameron Reilly: be a buy for us at that particular point in time.

[00:36:56] Cameron Reilly: Share price was a bit too high. Um, and so there you go. And now share price is a little bit too low.

[00:37:05] Tony Kynaston: yeah,

[00:37:08] Tony Kynaston: but the score’s good.

[00:37:09] Cameron Reilly: Always the bridesmaid, never the bride MSV. But I think I have bought and sold it a few times.

[00:37:17] Tony Kynaston: Yeah, it’s been on the buy list for a

[00:37:18] Cameron Reilly: Well, RBA still hasn’t published anything. So that’s, that’s it. We’ve got no questions today. So it’s a short show. We just have after hours. So we’ll now talk for two hours about TV and, and music until I need to go to Fox’s parent teacher meeting.

[00:37:37] Tony Kynaston: Uh huh,

[00:37:38] Cameron Reilly: What has, what have

[00:37:39] Cameron Reilly: you been watching, reading, listening to this week, Tony?

[00:37:44] Tony Kynaston: Well, I’ve seen a couple of good movies, Ken, both featuring in the Oscars recently. Have you seen American

[00:37:51] Tony Kynaston: Fiction yet?

[00:37:53] Cameron Reilly: Never even heard of it. What is it?

[00:37:55] Tony Kynaston: Oh, okay. Uh, it’s a, it’s, I think it’s on Apple, Apple or Amazon, one of the streamers. It’s a movie, it stars Stephen Wright, um, not the comedian, but the actor, who played Felix Leiter in the more recent James Bond movies. Yeah,

[00:38:11] Cameron Reilly: Westworld, I was one of the main guy, I

[00:38:13] Tony Kynaston: he was in Westworld, that’s right, yeah. So this, this is his story. It’s about, um, well, he stars in the movie.

[00:38:20] Tony Kynaston: It’s about a, uh, an African American writer, Who gets upset that his very scholarly novels don’t sell well, but trashy black sploitation novels do really well. And, um, In a sort of fit of pique one night with a bottle of booze, he writes a blaxploitation novel which becomes incredibly popular in a runaway cellar and he kind of spends the whole time trying to, you know, point out that white people are terribly politically correct and they’ve got no brains and it’s, it’s a fun ride.

[00:38:57] Tony Kynaston: It’s a very gentle sort of movie, um, but, uh, reminded me of, I don’t know if you saw a movie called Continental Divide many years ago, back in the 80s

[00:39:07] Cameron Reilly: hmm, sounds

[00:39:08] Tony Kynaston: With Danny Glover and Kevin Kline, that kind of gentle satire commentary on current society. I mean, the opening scene is he’s in a, he’s a university professor teaching English and he’s teaching, in particular, Southern English history.

[00:39:25] Tony Kynaston: And one of your students objects to the word nigger being written on the blackboard. And it sort of, you know, he gets put on sabbatical from university for not being politically correct enough and hurting the student’s feelings, which kind of sets a time for the rest of the movie. But very good. I like

[00:39:43] Tony Kynaston: it.

[00:39:44] Tony Kynaston: Okay. Yes,

[00:39:45] Cameron Reilly: Good stuff. I’ll check it out. I’m just looking at it on Wikipedia. I noticed there’s an actress called Issa Rae in it. Um, I’ve seen her name pop up a lot recently. A lot of stuff that I’ve been watching. She’s a director or a producer or a writer. She’s a black lady, um, black lady sketch show. I don’t know if I’ve mentioned that to you before.

[00:40:12] Cameron Reilly: and I have been watching that for the last few weeks. She’s one of the people who’s involved in that from time to time, which is very good. Very funny. American fiction. All right. I’ll have to check that out. I do like Steven, right? He’s good. He always does a good performance or interesting, always interesting performances he has.

[00:40:32] Tony Kynaston: in this too.

[00:40:33] Cameron Reilly: Hmm.

[00:40:34] Tony Kynaston: And the other one I watched was Poor Things. Poor Things.

[00:40:36] Tony Kynaston: Have you caught that one

[00:40:37] Cameron Reilly: No, that’s the Emma Stone one, right?

[00:40:41] Tony Kynaston: Yes. Very, very good.

[00:40:42] Cameron Reilly: Yeah,

[00:40:44] Tony Kynaston: Yeah, I started watching it a week or two ago and got distracted. Something happened. I couldn’t finish it, but I finished it last night and gee, it’s

[00:40:51] Cameron Reilly: What’s it about? She’s some sort of, uh,

[00:40:54] Tony Kynaston: Well, it’s a sentence sort of a steampunk. Victorian era and Willem Dafoe plays the, it’s basically a retelling of Frankenstein, but he plays the Doctor Frankenstein and it’s very whimsical. It’s kind of David Lynch y, Terry Gilliam style movie, so all around his house are animals like pets with like a dog’s body and a goose’s head and they’ve been sewed together.

[00:41:21] Tony Kynaston: Anyway, someone, he pays people to bring him. recently dead bodies and one of them is a lady with a baby in the stomach and he, uh, takes the baby out and puts the baby’s brain in Emma Stone’s. Skull. And then revives, reanimates her with electricity, as they did back then. Revives her, and it’s basically kind of a morality tale of how she matures and deals with the world and deals with men and, you know, grows up, basically, working out, you know, deals with, with, uh, richness and poverty and just life in general.

[00:42:00] Tony Kynaston: And the sets are fantastic. The costumes are brilliant. Acting’s great. Um, and yeah, it’s, uh, it’s pretty raunchy, so I’ll just warn people about that, but I really enjoyed it. One of the most refreshing original movies I’ve seen for a long

[00:42:15] Tony Kynaston: time.

[00:42:16] Cameron Reilly: I’m just looking up who’s behind it. So it was written by Aussie Tony McNamara,

[00:42:22] Tony Kynaston: Mmm.

[00:42:23] Cameron Reilly: wrote The Great, created The Great. Uh, did you ever watch that? The Catherine of the Greats? Uh, it’s fantastic.

[00:42:31] Tony Kynaston: I didn’t. No.

[00:42:32] Cameron Reilly: This TV series, it

[00:42:33] Cameron Reilly: ran for three seasons, I think, um, based on a Play that he did. Um, it’s, it’s a very, very, very loose telling of the story of Catherine the Great, um, TV series starred Elle Fanning as Catherine and Nicholas Holt as Peter, and it’s just, you know, full of sex and swearing and violence.

[00:42:57] Cameron Reilly: And, uh, very, very.

[00:42:59] Tony Kynaston: As is Poor

[00:43:00] Cameron Reilly: Right. Very, very

[00:43:01] Cameron Reilly: funny. And Poor Things is directed by Yorgos Lanthimos, who did The Lobster. Did you ever see The Lobster?

[00:43:10] Tony Kynaston: I haven’t gotten around to seeing it yet. I need to, I need

[00:43:12] Tony Kynaston: to see it.

[00:43:13] Cameron Reilly: Fantastic. Like, it’s one of the weirdest films I’ve seen in the last ten years. One of the, Colin Farrell stars in it. Colin Farrell’s one of those guys I always say. Brilliant actor when he has good material. He sort of had a period of Hollywood films that

[00:43:29] Cameron Reilly: was, that wasn’t great, but then he sort of has ditched that and gone back to small indie films.

[00:43:36] Cameron Reilly: I still haven’t seen that last Irish one. I’ve got the, I’ve had that flagged. Yeah.

[00:43:41] Tony Kynaston: That’s brilliant. That is so good.

[00:43:43] Cameron Reilly: I can’t wait. Cause I love the one that they did Bruges. Um,

[00:43:48] Tony Kynaston: Yeah, that was good, too.

[00:43:49] Cameron Reilly: But he’s great in those films. Like, when he does indie films, he’s, you know, really, really, really good. Anyway, those two

[00:43:55] Tony Kynaston: hmm.

[00:43:56] Cameron Reilly: Tony McNamara and Yorgos, uh, rate highly in my, um, book.

[00:44:03] Tony Kynaston: Yes, I think you’ll really enjoy Poor

[00:44:05] Cameron Reilly: Yeah, thanks for putting that on my radar. And Steve Harley died. Didn’t

[00:44:12] Tony Kynaston: Yeah, I’m sad to hear that. Um, he, I think he toured here last year or recently anyway, but he was the lead singer for Cockney Rebels, Steve Harley and the Cockney Rebels. And they had a, a hit when I was young, come up and see me and make me smile. And I’m pretty sure it was a track on one of the first, Albums I ever got given as a kid for Christmas on Ripper, Ripper 74 or something like that or 76 or whatever.

[00:44:37] Tony Kynaston: Yeah. Um, and I’ve always loved it. I still love it. It’s one of the great tracks, I think, in pop music. It’s

[00:44:42] Tony Kynaston: fantastic.

[00:44:44] Cameron Reilly: sort of makes me think of, there was this band, I used to go see them, I don’t know if we’ve ever talked about the Melody Lords, have we ever talked about the Melody Lords?

[00:44:52] Tony Kynaston: I think I’ve seen them in Melbourne, the

[00:44:54] Tony Kynaston: cover

[00:44:54] Cameron Reilly: Yeah,

[00:44:55] Tony Kynaston: Yeah.

[00:44:56] Cameron Reilly: we might have been there at the, they used to play some little bar down in Richmond, in Bridge Road or somewhere in Richmond,

[00:45:04] Tony Kynaston: well, they’re in either the Central Club or the Corner. I can’t remember which one I

[00:45:07] Tony Kynaston: saw them

[00:45:07] Cameron Reilly: it was The Corner.

[00:45:08] Tony Kynaston: Yeah. Okay.

[00:45:09] Cameron Reilly: to go there like every week when I

[00:45:11] Cameron Reilly: was, when 18, 19 and watch them. And so for people listening at home, they were, uh, a glam rock band all done up as like, you know, mid seventies glam rock with a lot of. Um, you know, bisexual, gay talk between them. And there was always tiffs between the, the, the, the bass player’s name was Throbbing Glitterous.

[00:45:36] Cameron Reilly: The, and funny thing, like then, you know, 10 years ago, I was running Sunday Assembly up here. And one of the guys that was part of Sunday Assembly, one of the performers, this was a Church for Atheists that Chrissie and I ran for four or five years. Turned out he was a member of, Uh, Melody Lords down in Melbourne.

[00:45:53] Cameron Reilly: We got talking one day and he was the lead singer, uh, the second lead singer. They replaced lead singers. I can’t remember his name, but I had their EP and everything. But anyway, they used to do that. That was one of the

[00:46:03] Tony Kynaston: Eugene, was it Eugene Hamilton or

[00:46:05] Tony Kynaston: something like that? I can’t remember now.

[00:46:08] Cameron Reilly: The, uh, lead singer? Oh, not this guy. Yeah. It must’ve been the original one. And it’s one of the things I don’t, I mean, I don’t have records anymore, but I must’ve got rid of at some point. It’s one of the things that I’ve, I just wish I still had the EP that I had lots of friends and stuff in the eighties and nineties.

[00:46:26] Cameron Reilly: It would put out EPs and I’d had them on cassette or record and let them go and

[00:46:32] Cameron Reilly: kind of piss now. Cause you can’t, cause obviously you can’t, they’re not on

[00:46:36] Tony Kynaston: No, you can’t get

[00:46:37] Cameron Reilly: or anything, that kind of shit.

[00:46:38] Tony Kynaston: Yeah.

[00:46:39] Tony Kynaston: Oh, same with me and my album collection. I remember I held on to this album collection. Every time I’d move house, I had crates of albums and then they got put into a back shed when I got married and the shed had a leak in the roof and they all got destroyed. And then about a year later, Vinyl came back.

[00:46:56] Tony Kynaston: Oh, my

[00:46:57] Tony Kynaston: God.

[00:46:59] Cameron Reilly: well I never

[00:47:00] Tony Kynaston: could have given them to Alex or nieces and

[00:47:03] Cameron Reilly: ah, be worth a fortune now. I never really had that many records, never got into that phase. It was like CDs, by the time I was old enough to buy a music player, it was, everything was CD. In the early 90’s,

[00:47:16] Tony Kynaston: Okay. Now I had albums and one of them had Steve Harley on it. So sad to see him go.

[00:47:21] Cameron Reilly: He was. young

[00:47:22] Tony Kynaston: and yes, early seventies, I think. Yeah. Yeah. And he always called that, that song. He’s. His superannuation paid, paid all his bills and I heard him interviewed, he was on Rock Quizz when he came out last time. And you can, if you Google that, the YouTube clip’s fantastic.

[00:47:42] Tony Kynaston: ’cause he plays come up and see me live with the backing band from Rock Quizz. Um, and I think Victor and Linda are singing backup vocals or, anyway, someone is, it’s good. And um, but he said like, you know, the song isn’t a happy song. It was about the breakup of the. Cockney Rebels band, how they were all fighting and, um, it was a sort of a sad song.

[00:48:02] Tony Kynaston: It was a very bitter take on his thoughts on the rest of the

[00:48:05] Cameron Reilly: Nah. Well,

[00:48:06] Tony Kynaston: But it become a sort of happy, happy sort of single

[00:48:10] Tony Kynaston: for them,

[00:48:12] Cameron Reilly: Did they have a big hit and then break up?

[00:48:15] Tony Kynaston: possibly. I’m not sure what happened to them, but that was their one hit. So yeah, quite

[00:48:19] Tony Kynaston: possibly.

[00:48:21] Cameron Reilly: Well, speaking of record collections, I’ve just finally got into Robert Crumb. His.

[00:48:27] Tony Kynaston: Mm hmm.

[00:48:28] Cameron Reilly: and I watched the trailer for the, there’s a documentary on him and he had an insane record collection that I saw in the documentary. I was like, Oh, like one of these ones where it’s everything’s sort of labeled and organized in this massive thing.

[00:48:43] Cameron Reilly: You ever gotten to Robert Crumb?

[00:48:45] Tony Kynaston: Oh, look, I’ve seen his stuff. I wouldn’t say I was into it. That was, um, uh, what’s his name’s first movie? Um,

[00:48:53] Tony Kynaston: The Guy in the After Hours Now,

[00:48:55] Cameron Reilly: Uh, Paul

[00:48:57] Tony Kynaston: Giamattas.

[00:48:58] Cameron Reilly: Didn’t he play Harvey Pekar? Was, did he do Crumb or

[00:49:00] Cameron Reilly: Pekar?

[00:49:01] Tony Kynaston: Oh, sorry. I thought it was

[00:49:03] Tony Kynaston: Crumb.

[00:49:05] Cameron Reilly: I, I, in my head, I’ve got the two of those confused too. I,

[00:49:10] Tony Kynaston: Yeah. I,

[00:49:11] Cameron Reilly: I think it might have been Pekar that he,

[00:49:12] Cameron Reilly: anyway. Um, yeah, like, I’ve never got into Crumb before. It’s one of those things that I’ve always meant to do.

[00:49:17] Cameron Reilly: Like, I’ve been aware of him my entire life, but never So I went, I got a couple of his sort of compendiums and it’s interesting stuff, like very underground, sort of a lot of sex and politics and philosophy and, um, deep, deep stuff like deep, funny, rude, you know, rude, blue. Um, yeah, comics is an interesting medium for that kind of stuff too.

[00:49:43] Cameron Reilly: Anyway, sort of enjoying that. I’m reading a book on the history of the devil. Um, the concept. of evil in, um, you know, comparative religions and going right back. According to this guy, it came out of Zoroastrianism. It was Zarathustra who’s the first person recorded in history to come up with the idea of good versus evil gods.

[00:50:15] Cameron Reilly: Uh, you know, before that, whether it was Egyptian or Norse or ancient Greece. Um, the gods were all a little bit good and a little bit bad. I mean, all of the gods had their good days and their bad days. If they liked you, they’d do something good for you. If they didn’t, they’d mess your life up. You know, that was just part of the course.

[00:50:35] Cameron Reilly: As he says, they were all manifestations of the oneness. And they, they had all aspects of good and bad and everything in between. But it was Zarathustra. Sort of 600 BCE, roughly, that, um, came up with this great battle between Ahura Mazda and, uh, the Angria, the angry, um, god, which then seeped into Judaism, particularly the intertestamental period of Judaism.

[00:51:06] Cameron Reilly: Um, Second Temple Period, and then seeped into Christianity, you know, this idea of there being forces of evil, you know, it’s not just the one God that does the good and the bad, which you see in the Old Testament, if you go back and read the earlier books of the Old Testament, you know, there’s good and bad in the one guy, but there’s no mention of the devil.

[00:51:26] Cameron Reilly: in the Old Testament. Devil didn’t exist in the Old Testament, but, you know, and not as the devil anyway. There are, there are characters that they point at and they go, Oh, well, the serpent was the devil, or, you know, the adversary was the devil. But then what it was, they weren’t, um, depicted that way.

[00:51:44] Cameron Reilly: Actually, the Christians sort of reshaped it later on and decided that that’s who the Old Testament was talking about. But yeah, he’s seen his books, but his books from the seventies, some scholar talking about it. It points out that when our gods could be both good or bad, you know, it’s, and the gods are a reflection of us, it means that we all have that in our nature.

[00:52:09] Cameron Reilly: But when post Zarathustra,

[00:52:13] Cameron Reilly: we divided them into external forces that were trying to manipulate us, it, it took humans away from embracing the fact that, you know, I have my good days and my bad days, or I have my good side and my bad side. And thinking of them all as different. The, the, the part of who you are, um, and then to thinking about them as external to you and external influences.

[00:52:38] Cameron Reilly: And then the concepts of evil and evil people and Hitler and all that kind of stuff. You know, we, um, you know, I’m always banging on and the history shows, I don’t, I don’t really like the concept of saying somebody is evil or did an evil thing. I like to think of, Historical figures as, you know, mostly being rational actors.

[00:52:59] Cameron Reilly: They have goals, they have objectives for themselves or their nation or their race or their tribe. And they’re trying to achieve those things. It’s sometimes at the cost, at a cost to their enemies, you know, whoever they decide that they are. And, you subjectively from their perspective, they’re doing the right thing.

[00:53:21] Cameron Reilly: to save their people, or save their country, or save themselves, or build their economy, or whatever it is. I think classifying them as evil is sort of a, it’s a lazy, uh, lazy, because once you, once you declare somebody’s evil, you just, you can stop thinking about what their incentives or motivations or objectives are, really.

[00:53:44] Cameron Reilly: It doesn’t force you to think about them as being rational people trying to achieve something that they think is right and good and worthy. Yeah,

[00:53:54] Tony Kynaston: You make a good point, but how do you, how does that fit into things like the Holocaust? I mean, that was, how does exterminating Jews, Adolf Hitler, achieve his economic goals or the

[00:54:07] Tony Kynaston: goals for Germany? Hmm.

[00:54:11] Cameron Reilly: want to exterminate the Jews, he wanted to deport them, um, but no, no, no country would take them, you know, I always like to talk about the Evian Conference,

[00:54:21] Cameron: 1938

[00:54:22] Cameron Reilly: I think, um, hosted, well, well, set up by FDR. There was a meeting of all the foreign ministers from the world trying to work out what they were going to do about the problem of the Jews in Germany and Czechoslovakia, where Australia’s foreign minister, uh, the aptly named Mr.

[00:54:43] Cameron Reilly: White said, uh, we don’t have a, uh, racial problem in Australia and we don’t intend on inheriting one. They were like, really? Did you talk to any of the indigenous people, Mr. White, about the racial problem? yeah, so, you know, there was this conference and basically the whole world said, nah, we don’t want them.

[00:55:06] Cameron Reilly: I mean, it was not that long after the Great Depression but people were like, man, that’s not our problem. Hitler actually offered to pay. to transport the Jews to any country in the world that would take them. He offered to pay for shipping and the whole deal and the whole world went, no, not our problem.

[00:55:26] Cameron Reilly: It’s your problem.

[00:55:29] Tony Kynaston: was he trying to do that? What, you know, what, was this part of racial purification? Or what was his reason for deporting

[00:55:37] Cameron Reilly: He believed, and like most people in the world believed, that the Jews were, um, had infiltrated the economy, And the government and when manipulating it to their own advantage, you know, and the thing that we have forgotten today is it wasn’t just Hitler that was anti Semitic. The entire world was anti Semitic before the Holocaust.

[00:56:04] Cameron Reilly: You know, you read some of the stuff that, I’ve talked about this on the Cold War show, some of the stuff that FDR said about Jews in America. Like, I mean, in the days of Trump, maybe it wouldn’t be so shocking, but pre Trump, it would have been shocking for any American politician to say that out loud. You know, the stuff that he was quite happy to say, you know, relatively publicly back in the 30s about Jews and Jews, the way that they were always trying to.

[00:56:38] Cameron Reilly: Get things out of the economy and the government and trying to influence this, that, and the other. The vast majority of the way, and they’d always been anti Semitic. I mean, the history, I mean, you know, I met Chrissy at this, uh, when Chrissy and I first met in, at the Napoleon conference in Corsica, there were two 80 year old, you know, Israeli historians there.

[00:57:00] Cameron Reilly: And my first conversation with them on the first night, so pre me hooking up with Chrissy and getting distracted, we sat down to dinner and I sat down next to him. I said, right, explain antisemitism and explain antisemitism to me. Let’s go. Where did it start? Why did it start? And so we talked about the history of it over the last 2000 years, really.

[00:57:22] Cameron Reilly: And, um, you know, I’ve studied it ever since. I mean, it goes back a long, long way, but it goes back to, you know, the Rome, basically, and the Jews, when Rome took over Syria and Judea, the Jews sort of, Not getting on board with what the Romans wanted from them in terms of, you know, worshiping the pantheon of gods and the Romans having to crack down on that from time to time and Jewish rebellions and Jewish people getting kicked out.

[00:57:54] Cameron Reilly: Then they, they got kicked out of Judea. You know, sort of late first century,

[00:57:59] Tony Kynaston: hmm.

[00:58:00] Cameron Reilly: uh, under the orders of Nero, first Jewish Roman war, and then the second one 50 years later. And then they basically scattered across the diaspora across Europe, and when Europe became Christianized, the Christians, All blame the Jews for Jesus’s, uh, crucifixion.

[00:58:20] Cameron Reilly: So all of Christianity was anti Semitic from that, from then on, like for 1500 years, most Christian countries were anti Semitic and they, they kind of came and went in real waves of pogroms. Every hundred years or so, Russia, France, Germany. Um, right throughout, you know, Spain, Portugal, every hundred years or so, 50 to a hundred years, some Jewish merchants.

[00:58:51] Cameron Reilly: Uh, we’d start to make some money, bankers, merchants, financiers, they’d get a nice house, they’d get a lot of nice property, and there’d be a pogrom, ARGH! The Jews are doing this and they’re doing that, and they’d come in and kill them, take all their property, kick them out. It just happened, it was just par for the course, for centuries.

[00:59:12] Cameron Reilly: The oppression against Jews was just, you know. normalized for most of European history. But these days we’ve forgotten all that. We go, Oh, Hitler was an anti Semite, but you go back and you read what people were, you know, the views in the West about the Jews in the first part of the 20th century, it was terrible, horrifying.

[00:59:33] Cameron Reilly: Anyway, I don’t know how I got into that. So that was, yeah, it was just standard, pretty much standard anti Semitism, I think is my point. If you read Mein Kampf, it’s not that different from

[00:59:43] Cameron Reilly: what, you know, Uh, large percent, which is why they wanted a place of their own. It’s why Zionism existed, you know, from the late 19th century onward, they were sick of the pogroms.

[00:59:55] Cameron Reilly: They wanted to get away from the pogroms and find a place where they could run their own thing. Oh, haven’t they, haven’t they done a good job of that too?

[01:00:04] Tony Kynaston: I think they have.

[01:00:04] Cameron Reilly: Yeah. Yeah, they do.

[01:00:06] Tony Kynaston: Yeah. Anyway, well, I’ve read a good book during the week. I’ll change topics. Um, I was getting quite jaded about reading any more non fiction, so I picked up Breakfast at Tiffany’s and read that. Short read, 100 pages, fantastic writing, nothing like

[01:00:26] Tony Kynaston: the movie, and I had heard

[01:00:28] Cameron Reilly: Yeah. I’ve heard that. too.

[01:00:30] Tony Kynaston: yeah, nothing like the movie, and it’s um, it’s good, it’s a really good read.

[01:00:34] Cameron Reilly: Capote?

[01:00:35] Tony Kynaston: Uh, Truman Capote, yep, Holly Go Lightly is a poor, dumb farm girl who has a few good looks and knows how to manipulate men, makes her way through New York society, and eventually, eventually gets wrapped

[01:00:52] Tony Kynaston: up in a mafia drug scandal.

[01:00:55] Cameron Reilly: It is lovely, I like the film.

[01:00:58] Tony Kynaston: it’s nothing like the film.

[01:01:00] Cameron Reilly: Wow. Yeah.

[01:01:02] Tony Kynaston: a good, just, you know, I mean, good writing just drags me in.

[01:01:05] Tony Kynaston: It was great writing. And the other thing that struck me about reading a book from that vintage was there’s no technology in it. Like it’s all about how the characters develop and manipulate people and use their natural abilities to, to try and get ahead. Isn’t, you know, there’s no, Influencers, Search Engine Optimization, AI, nothing at all.

[01:01:27] Tony Kynaston: Hardly even telephones in it. And it’s just such a different focus, to focus on the characters so intently, to try and, you know, work out what drives them and their motivations. It’s really good.

[01:01:40] Cameron Reilly: The only book of his I’ve ever read was In Cold Blood, which was really good.

[01:01:46] Tony Kynaston: Yeah.

[01:01:46] Cameron Reilly: Hmm.

[01:01:48] Tony Kynaston: Yeah. So anyway, it’s a short read. It

[01:01:50] Tony Kynaston: was good.

[01:01:51] Cameron Reilly: Well, I read a novella too this week, The Machine Stops by E. M. Forster. You ever heard of that?

[01:01:58] Tony Kynaston: No. So Ian Forster.

[01:02:00] Tony Kynaston: Um, what else has he

[01:02:02] Cameron Reilly: Room with a View,

[01:02:04] Cameron Reilly: he

[01:02:05] Tony Kynaston: Yeah. Okay.

[01:02:05] Cameron Reilly: Early 20th century

[01:02:07] Cameron Reilly: British, like Truman Capote, gay, um, author, Room With A View, and another Merchant Ivory

[01:02:15] Tony Kynaston: Rides have revisited.

[01:02:16] Cameron Reilly: Really?

[01:02:18] Tony Kynaston: I think so. He was

[01:02:19] Tony Kynaston: that, wasn’t he? Could be wrong.

[01:02:21] Cameron Reilly: Anyway, this book, this novella, The Machine Stops, 1907, science fiction, takes place long time in the future. Quite stunning. Interesting. Um, people all live underground in Uh, basically, apartments, self contained apartments.

[01:02:45] Cameron Reilly: The, all of human civilization is run by a machine, basically, a supercomputer. Um, and it’s been so long that, sort of, seeing other people or physical contact with other people is considered, um, disgusting. Everyone’s sort of isolated. They talk to each other through basically FaceTime. They have video conferencing.

[01:03:13] Cameron Reilly: They give Zoom lectures. They communicate via Zoom. So people will give and other people will attend online lectures on topics. So everyone’s just studying and the, the currency is all about ideas. Everyone’s talking about, have you had any ideas lately? It’s all about ideas. Everyone’s isolated. In these hermetically sealed apartments, basically, where light and air and everything is piped in, food is brought to them, and everything’s wired up, et cetera, et cetera.

[01:03:44] Cameron Reilly: And everyone’s so far removed from knowing how to survive that when the machine stops, eventually, um, people stop figuring, they’ve forgotten how to repair the machine.

[01:03:57] Tony Kynaston: Yeah. Right.

[01:03:58] Cameron Reilly: Um, it all crumbles and you know, there’s a couple of, there’s the, there’s the rebel who’s trying to break out and get up to the surface.

[01:04:06] Cameron Reilly: They’ve all been told that the surface was destroyed and he’s trying to get up there and see what’s really up there. And that kind of typical sci fi trope. But this was 1907 and really, you know, A, I didn’t know E. M. Forster wrote any science fiction. B,

[01:04:24] Cameron Reilly: pretty spectacular sort of forecast of a century later, people isolating and communicating online.

[01:04:31] Cameron Reilly: So, it was, yeah, enjoyable. I heard, I think, Demis Hassabis, the founder of DeepMind, um, Google DeepMind mentioned it in a, in an interview and I thought, oh, I better look that up. So yeah, very early. Sci fi novel, um, surprisingly on the money.

[01:04:49] Tony Kynaston: Sounds like the silo of the series I watched a couple of months

[01:04:53] Tony Kynaston: ago. About people living

[01:04:55] Cameron Reilly: Yeah, you mentioned that. Oh, and Three Body Problem comes out, I think, is it this week on Netflix? Yeah,

[01:05:02] Tony Kynaston: Yeah, looking forward to it. Thursday, I think

[01:05:04] Cameron Reilly: I’m kind of, you know, you know, worried that it’ll be a debacle, but we’ll see.

[01:05:12] Tony Kynaston: And, uh, you know, what kind of perspective it’ll have, because Three Body Problem was written by a Chinaman and had a very Chinese CCP

[01:05:20] Tony Kynaston: perspective.

[01:05:20] Cameron Reilly: Yeah, just from judging by the trailer, there’s a bit of that, but they seem to have westernized a lot of it, watered down the Chinese perspective we’ll see.

[01:05:31] Cameron Reilly: Yeah, but anyway, I’m

[01:05:32] Tony Kynaston: I should,

[01:05:32] Cameron Reilly: that.

[01:05:34] Tony Kynaston: I should say Brideshead was written by Evelyn Waugh. I just looked it up. Not

[01:05:37] Tony Kynaston: Ian Forster.

[01:05:39] Cameron Reilly: and um, have you seen the Dune sequel yet?

[01:05:44] Tony Kynaston: No, is it out?

[01:05:45] Cameron Reilly: I believe so. Yeah. Not on the

[01:05:47] Tony Kynaston: know it was out. No, I haven’t.

[01:05:48] Cameron Reilly: the cinemas.

[01:05:50] Tony Kynaston: Yeah. Okay.

[01:05:51] Cameron Reilly: Can’t, I can’t be

[01:05:52] Cameron Reilly: bothered going to the cinemas anymore.

[01:05:54] Tony Kynaston: Yeah, I’m the same.

[01:05:56] Cameron Reilly: I’ll wait till it hits the streaming.

[01:05:59] Tony Kynaston: And I can’t, I don’t know how that business is surviving because I don’t even hear of many movies going

[01:06:03] Tony Kynaston: to the cinemas these

[01:06:05] Cameron Reilly: It’s all influencers. My boys go to, they took Fox to the Kung Fu Panda 4

[01:06:11] Cameron Reilly: premiere this week, um, where there was a massive Kung Fu demonstration on stage, so he loved

[01:06:16] Tony Kynaston: Oh,

[01:06:17] Cameron Reilly: Yeah, my boys go to like a private Screening. They get invited to one a week. They’re, you know, they go, they get invites to so many.

[01:06:23] Cameron Reilly: They don’t go to half of them cause they can’t be buggered. But, um, that’s, I think that they’re the only people who go to cinemas who people would get free tickets from influencers to go to cinemas

[01:06:33] Tony Kynaston: well, I’m asking for it. Hit them up for June, the sequel.

[01:06:36] Cameron Reilly: Well, the problem is the, the, like the studio people know them and they’re there at the thing.

[01:06:44] Cameron Reilly: So you can’t, it’s, you can’t really sneak in on somebody else’s ticket. If they get a plus one, they actually, they took me to the Napoleon thing as their plus one. But, uh,

[01:06:56] Cameron Reilly: I remember when I used to get invited to premieres all the time, back in the early days of podcasting.

[01:07:00] Tony Kynaston: Is that right? Wow.

[01:07:02] Cameron Reilly: Yeah, it doesn’t happen anymore.

[01:07:03] Cameron Reilly: People don’t care now.

[01:07:06] Tony Kynaston: I think I’ve been to maybe one or two premieres in my

[01:07:09] Cameron Reilly: No.

[01:07:12] Tony Kynaston: Not

[01:07:12] Cameron Reilly: Well, I gotta go, TK.

[01:07:17] Tony Kynaston: Yes. Enjoy your interview. Parent teacher

[01:07:20] Tony Kynaston: interview.

[01:07:21] Cameron Reilly: I will. And, uh, if anyone has any questions for next week, shoot them through.

[01:07:28] Tony Kynaston: Otherwise, we’ll talk for another hour

[01:07:30] Tony Kynaston: about what we’ve read and seen.

[01:07:32] Cameron Reilly: And we’re going to talk on Friday on the other show

[01:07:35] Tony Kynaston: Mm. Mm.

[01:07:36] Cameron Reilly: what are we talking about, the TikTok ban and, uh, China’s economy, Murdoch papers, different things.

[01:07:44] Tony Kynaston: Yep.

[01:07:45] Cameron Reilly: that’ll be fun. I’ll look forward to that. I’ll talk to you then.

[01:07:48] Tony Kynaston: All right.

[01:07:48] Cameron Reilly: Thanks, mate. QAV a good week, everyone.



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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