In this episode of QAV, recorded on April 23rd, 2024, hosts TK and Tony discuss recent market developments, personal real estate experiences, and investment strategies. They touch upon the slow real estate market in Sydney, highlighted by Tony’s unsuccessful attempt to sell his house despite a perceived market upturn. The conversation shifts towards the broader trends affecting property sales, including market saturation and changing preferences among Chinese investors. The hosts emphasize the importance of honesty in the service industry, using examples from real estate and drop shipping to illustrate their point. The episode also delves into a detailed analysis of the Bank of Queensland’s financial performance, addressing market rumors, share price fluctuations, and regulatory concerns. Additionally, Tony presents a deep dive into Joyce Corporation, evaluating its performance, growth opportunities, and potential challenges within its retail and franchise operations. The episode concludes with investment insights and reflections on the dynamic nature of markets and business strategies.

00:00 Welcome & Personal Updates
00:33 The Real Estate Market & Personal Anecdotes
02:02 Advice on Honesty in Business
02:24 Learning from Experience: Drop Shipping Insights
03:16 Bank of Queensland’s Market Movements
03:50 Analyzing Bank of Queensland’s Financial Performance
11:51 Portfolio Updates and the Power of Dividends
15:17 Deep Dive into Joyce Corporation (JYC)
28:26 Closing Thoughts & The Atlas Pearls Alert


QAV 717 Club

[00:00:00] Cameron: Welcome back to QAV, TK. This is episode 717. Uh, I think 23rd of April, 2024. Market’s up today. Uh, what’s up with you, Tony? Apart from the market.

[00:00:27] Tony: Yeah, not much. It’s been a nice, uh, nice week. Weather’s good in Sydney.

[00:00:33] Cameron: Sold your house yet?

[00:00:35] Tony: Nup, still trying. We had another meeting with an estate agent this morning. Send our rental furniture back, waiting for our stuff to come out of storage. Just a slow, painful process.

[00:00:47] Cameron: How long’s it been on the market now? Like three months?

[00:00:49] Tony: Yeah. Yeah, it’s unbelievable, isn’t it? Give it a little, every time I open a paper, it’s like record prices, markets upside dramatically. Yeah. So anyway, we’ll just keep progressing, I guess.

[00:01:04] Cameron: Is it the fact that people know that you have bodies in the walls? Is

[00:01:07] Tony: We don’t have bodies in the walls.

[00:01:09] Cameron: it’s an American psycho thing?

[00:01:12] Tony: No, no, I don’t know. There’s like, there’s about, um, there’s another couple of penthouses around near us, which aren’t selling artists. I think it’s just a market thing at the moment.

[00:01:22] Cameron: Bizarre.

[00:01:23] Tony: Yes, it is.

[00:01:24] Cameron: What happened to all the Chinese that were snapping up all the property in Australia? It’s

[00:01:29] Tony: I know. So we’ve been told Chinese don’t like this neighborhood. They like, they prefer Berangaroo and inner Sydney.

[00:01:36] Tony: But frankly, I don’t believe a word of what anyone tells me in the real estate industry anymore. They are so full of shit. It’s just, uh, I thought, uh, I thought my faith was, um, you know, placed in the right places. And, um, but yeah, just being let down time and time again.

[00:01:55] Cameron: Wow.

[00:01:57] Tony: And look, this is a, this is a, look, I shouldn’t bag people, but, um, cause it probably is the market, but look.

[00:02:02] Tony: Anybody out there who’s young and considering a career in any sort of service industry, don’t bullshit people. You might think it’s gonna get you a quick sale, but it just comes around to bite you again in the future. Just be, be straight, be transparent, be honest. If you can’t do it, say you can’t do it.

[00:02:20] Tony: Don’t, don’t bullshit people and lead them on,

[00:02:24] Cameron: I’ll tell you who’s had a crash course in that is Taylor. It’s interesting, like, you know, Taylor got started with the drop shipping and all those sorts of things and he saw, you know, very early on in his entrepreneurial career, a lot of shonky people doing a lot of shonky stuff and now he’s a few years into it and he’s, he’s just, you know, Developed a good sniff test on him now for all these guys that are waving their hands around and claiming big things.

[00:02:52] Cameron: And you know, they’re all talk. He’s, he was saying to me the other day, I was just like, they’re all just full of shit. Everyone’s full of shit. He knows, he sort of knows how to tell the real people from the bullshit artists now. So, which is I think good, you know, it’s good to have figured that out at 23 or whatever he is.

[00:03:10] Tony: yeah, absolutely. No, that’s great. Are you

[00:03:14] Cameron: Lot of shyster. Well, speaking of Shysters, bank of Queensland. Um, the actual

[00:03:26] Tony: calling my wife a shyster, are you?

[00:03:29] Cameron: yeah, well, I did have in my notes, not happy gen, but I think the Commonwealth, I’ve taken the Commonwealth Bank’s old slogan and changed it to not happy gen.

[00:03:37] Tony: No, that’s the Yellow Pages old slogan.

[00:03:40] Cameron: was it?

[00:03:41] Tony: Yeah, yeah, yeah.

[00:03:41] Cameron: I thought it

[00:03:42] Tony: What do you mean you didn’t get my ad in for the Yellow Pages this year? Not happy Jan.

[00:03:48] Cameron: Oh, well there you go, I had that wrong. So, as we talked about last week, I had to sell Bank of Queensland after rumours came out that their results were going to come out on the 17th and they were going to take like a 40 percent hit, and the share price crashed ahead of that, and last week I was like, what the hell’s going on, on people selling on rumours?

[00:04:09] Cameron: So I had to sell it, rule one it, results came out, share price jumped, and the results came out. Sell on the rumour, buy on the fact, or buy on the, whatever,

[00:04:19] Tony: right, yep.

[00:04:21] Cameron: um, I mean, it didn’t jump all the way back, so it was like at 6. 37 on the 4th of April, by the 16th, it was down to 5. 79, on the 17th, it shot back up to 5.

[00:04:33] Cameron: 99. 6. 15, dropped to 0. 05, back up, back down. It’s currently at 6. 20 today, so it hasn’t recovered all of where it was at. But, um, and I don’t remember what I bought it for. Let me see. Nah, I don’t want to go back. It just hurts too much. Don’t want to go back and look, but I am going back and look. I bought it at 6. 22 and 6. 41 in a couple of different trenches. So, um, I probably, what did I say it is? 5 what? 6. 27. I still would have held it if it hadn’t have tanked. So, um, what the hell happened? They did take a hit, right? They did, their results did. The rumours were right. They did, I think it was 33 percent or something.

[00:05:17] Tony: I’m going to read from a couple of, um, from an article on The Fin about it, and then a research paper from Ord Minnett, which LXA sent through. Uh, this is from The Fin. Bank of Queensland flags profit pressures after earnings surprise. This was last week. Bank of Queensland shares surged on their best day on the share market in almost 18 months after the regional lender beat half year earnings forecasts, despite Chief Executive Patrick Allaway warning that it could still fall short of a key turnaround target.

[00:05:48] Tony: Rallying against an unfair playing field that stopped regional lenders from seriously competing with bigger banks, Mr. Alloway said profit pressure at BOQ meant the bank had to consider additional ways to improve shareholder returns. We do not rec we do recognize that the challenge is large. And if the current headwinds are structural, we won’t be there, get there with the current pathway, he said.

[00:06:09] Tony: We are looking at multiple opportunities to get to where we need to be. So he’s referring to his internal targets. So basically, I think you’re right, Cam. And this is, you know, my question out of all this is where the f Frack is the ASX, because I know when Jenny received her board papers, and I know when the share price crashed, um, they’re pretty close together.

[00:06:30] Tony: Not saying Jenny did anything, but, you know, whether someone photocopied, was out there photocopying board. Agendas, or crunching numbers for the board, or someone dropped a board paper at the airport, or whatever. Um, it leaked, and only half the story leaked, because as Ord Minnett has, um, put in their summary after the results went out, um, about Bank of Queensland, statutory NPAT was broadly in line with expectations at 151 million, a significant increase on H123.

[00:07:04] Tony: Cash NPAT came in above consensus. which was 164. 8 million and the profit came in at 172 million. Uh, net interest income of 725 million decreased by 13 percent and was just below consensus by 5 million. But the, I think probably the biggest thing that I took out of, uh, the results was loan impairment expense of 15 million decreased 56 percent on the first half, equating to four basis points to gross loans and advances.

[00:07:34] Tony: The decrease was primarily due to lower collective provision expense. That’s a big one for me because I know banking analysts focus on what’s called the jaws of income. So the difference between the cost of borrowing and running the bank and what they can charge for mortgages. Um, and Bank of Queensland’s costs have increased dramatically this half, largely because they’re trying to remediate, um, issues that, uh, I think APRA, the regulator, have raised about governance and anti money laundering and that kind of thing.

[00:08:07] Tony: And, but also an investment in technology to get their costs down longer term. So the costs are up and the jaws are lower than what they, what they, what the other banks have, they, they, that they’re compared to. But It’s, I think the key indicator when looking at banks is their loan impairment expense. And the fact that they’ve written that down is actually a good thing.

[00:08:28] Tony: And for me, that’s always been a trigger, uh, in terms of when do I want to own banks? It’s when they’re reducing their impairments for bad debts on their mortgage books rather than increasing it. So I’m just going to call that out as something to watch. But, um, I think that’s why the share price jumped and it’s been sort of fluctuating around a bit because On the one hand, Bank of Queensland beat the consensus forecast.

[00:08:51] Tony: And on the other hand, it was a bad results, um, compared to last half. So that’s where it’s at. Having said that, I thought the bad news was already baked into the price. So I really think this gyration has been because of a leak. Those figures got out into the market somehow.

[00:09:13] Cameron: If it was the, an alleged leak of the results that caused the market to crash, But when the results came out, the market thought it was actually not too bad and the price shot back up.

[00:09:25] Tony: Correct. So the leak only got half the story.

[00:09:29] Cameron: yeah, right. By the way, I

[00:09:31] Tony: Sorry, the alleged, you’re right. I should call it the alleged leak. I’ve got no evidence at all to suggest a leak other than circumstantial evidence.

[00:09:38] Cameron: pretty big evidence. Um, you remind me of Trump’s defense attorney in his opening speech this week. Was, let me, let me tell you the truth about influencing elections. It’s called democracy.

[00:09:53] Tony: I thought the opening argument was, Mr. Trump, wake up.

[00:09:57] Cameron: Ha ha ha, stop farting. Apparently he’s sleeping and farting. Um, I sold it, I sold it, uh,

[00:10:05] Tony: blow his toupee off.

[00:10:07] Cameron: David Simon, the writer of The Wire, said, Well, when his mouth is, when his mouth is forced to be closed, the shit needs to come out of one end or the other. Something to that effect. I sold Bank of Queensland all three parcels as a three point trendline, uh, sell.

[00:10:22] Cameron: Not as a real one. 6. 08. Was the 3PTL sell figure. So, you know, it’s back way back above that now. It should have never gone down there. So it’s just really disappointing. And yeah, I, I, I want, I want heads to roll. Tony, not necessarily Jenny’s, but, uh, make sure she’s on that for me. Tell her I want heads to roll.

[00:10:45] Tony: I will. I’ll tell her

[00:10:47] Cameron: Heads on spikes. Yeah. Like.

[00:10:49] Tony: I want to hitch the roll at the ASX. Who the frack is looking after this stuff?

[00:10:53] Cameron: Yeah. I don’t know.

[00:10:55] Tony: There’s insane price, insane price movement just before results are announced, come on.

[00:11:00] Cameron: Yeah. As far as you know, has any questions been asked?

[00:11:04] Tony: No.

[00:11:05] Cameron: Is there a Please explain coming out of, uh, them at all?

[00:11:09] Tony: Nope. So the ASX clearly has their work cut out for them on a whole range of issues. The um, chest replacement system being number one, but also number two I think is new listings, and number three is they’re not doing their job when it comes to making sure that the market is well regulated. Allegedly. Actually if the ASX wants to come on and defend themselves, I’m happy to have that, but it’s getting, it’s almost getting farcical now.

[00:11:36] Cameron: I don’t believe those figures. Please explain. There you go.

[00:11:41] Tony: Yeah, thank you. Oh, you’ve just reminded me of Pauline Hanson.

[00:11:46] Cameron: Donald Trump. Pauline Hansen. Rolling out all the big guns. Well. Uh, in better news, Tony, uh, well, the portfolios, my super’s taken another hit this week, like, um, last couple of weeks. I got two stocks that I bought in February that are both nearly rule ones for me and my super. Generally, though, I did a portfolio analysis yesterday and today for the light and the dummy portfolio.

[00:12:09] Cameron: They’re all doing pretty well, actually. Surprisingly, we’ve had a good couple of weeks, most of our portfolios. But one of the things that I noticed this morning, Well, I’m pretty sure you’ve said stuff to this effect over the past, but, um, KSC, I noticed something really particular with KSC, K& S Corporation, added it to the dummy portfolio in August 2021, um, price was 1.

[00:12:40] Cameron: 60. Um, I bought about 1, 700 shares for the 700, the parcel at the time. The 1. 60, it’s now trading at just shy of 3, 2. 98. So, um, share prices gone up considerably over that time, but the dividends, we’ve got 1, 000 in dividends over that time, 984 in dividends.

[00:13:08] Tony: Wow.

[00:13:10] Cameron: Um, so it’s paid for nearly. Not quite half, but you know, 40 percent of the

[00:13:16] Tony: Mm hmm. Mm

[00:13:17] Cameron: trade just in dividends, let alone the nearly 100 percent increase in the share price over that period of time.

[00:13:26] Cameron: As well, and I just, you know, getting back to this idea of buying and just holding, not, uh, re balancing because a share’s done well or whatever. You know, it’s, uh, just looking at the amount of dividends that it’s

[00:13:41] Tony: Mm hmm.

[00:13:41] Cameron: over that period of time. I was like, wow, that’s, you know, if we hold it for another couple of years, it basically pays for itself.

[00:13:49] Tony: Yeah.

[00:13:50] Cameron: from the dividends, let alone from the capital appreciation. of the shares. Like that’s, um, I hadn’t really seen that happen in the portfolio before.

[00:13:59] Tony: No, I’ve definitely seen it happen over the years. It’s a good thing to have. And you’re right. The longer you hold the stock, the more the dividends, you know, go up. Matter. But it is, it is unusual to see a stock both have strong growth and high dividends. It’s normally one or the other in the share market.

[00:14:16] Tony: So like my experience is I’ve held stocks that have gone up, you know, maybe 10 times and therefore the dividends become significant because they’re still yielding it, whatever they were yielding it when they first, when I first bought them, you know, 3 percent or 4 percent or whatever. Yeah. But I, but it’s unusual to see a stock that has that much capital growth and a great dividend yield as well.

[00:14:35] Cameron: Well, the share price in, uh, a month ago was actually 3. 85. It’s dropped from that down to 3, uh, in the last couple of weeks. I don’t know why. I don’t know if it’s just the market or people have been, uh, taking their profits and getting out when the market’s been dicey or, or if it’s something to do with the business.

[00:14:56] Cameron: But anyway, yeah, it’s just really always, always just. I’m just, um, going through some of the dividends recently in a portfolio and that really jumped out at me. I mean, we’ve got a lot of stocks that we’ve held for a long time now in the dummy portfolio and that have delivered a lot of dividends, but nothing quite at that level.

[00:15:12] Cameron: So, that was an eye opener for me. I want to talk about, uh, regression testing, Tony.

[00:15:19] Tony: Excellent.

[00:15:20] Cameron: Um, yeah, so, Matt Walker, Matt Walker’s, uh, system, which, you know, he’s still working on tightening it up, but it is what it is. And I’ve been using the same basic system just to test a whole bunch of points to see what they deliver.

[00:15:40] Cameron: And he’s actually going to come on the show next week and chat to us. Indeed, he’s going to be a guest on the show, which will be great. Which would be great. But here’s what I’ve done in the last, uh, couple of days. So, um, just isolating checklist metrics for some of them. I isolated yield is greater than bank debt.

[00:16:00] Cameron: It returned about a 0. 045, uh, or 4. 5 percent CAGR, right? Um, record low PE returned about 11 percent CAGR, isolated, increasing equity. That’s 6%. Now, you’ll like this one, QAV scores 0. 2,

[00:16:26] Tony: Mm hmm.

[00:16:28] Cameron: 9 percent CAGR.

[00:16:30] Tony: Okay. That’s interesting.

[00:16:33] Cameron: Now again, this is coming off the, uh, I think the, the STW over this period we said was about a 2 percent

[00:16:39] Tony: Mm hmm.

[00:16:40] Cameron: over this time frame, which is 2006 to, to, uh, beginning of 2006 to the end of 2023.

[00:16:47] Cameron: So that actually is My second best result, narrowly beaten by the 20 percent rule 1, also at 14. 917, this is 14. 913.

[00:17:04] Tony: Right.

[00:17:05] Cameron: QAV score 0. 05, reducing the QAV score cut off, was 13. 8 percent CAGR. Eh,

[00:17:17] Tony: interesting. So it’s not paying a big difference in the result then, is it?

[00:17:23] Cameron: not

[00:17:23] Tony: One, 1 percent to 2%. CAGR.

[00:17:25] Cameron: Yeah. I mean, it’s 40, 000 or 35, 000 different capital return over that period of time with a 20, 000 starting point. So, you know, it’s a lot of money. But, um, in terms of the CAGR, not massive. Then I did QAV score of 0. 2. With a 20 percent Rule 1, thinking well that’s gonna shoot the lights out, that combo,

[00:17:50] Tony: Mm hmm.

[00:17:51] Cameron: 13.

[00:17:52] Cameron: 88%, 13. 9 percent roughly.

[00:17:55] Tony: Wow.

[00:17:57] Cameron: Um, Growth over PE isolated, uh, 8%, Price less than book, 14. 48 percent CAGR.

[00:18:08] Tony: So that’s the best returning metric.

[00:18:10] Cameron: Um,

[00:18:12] Tony: Individual. You’ve got the other ones, like you got rule one at 20%. Up there as well. So out of all,

[00:18:19] Cameron: health trend, just financial health trend delivered, uh, 14. 6.

[00:18:25] Tony: oh, okay.

[00:18:27] Cameron: Yeah, so that and price less than book, doing better than PropCaf, PropCaf was 11 and a half. Um, so,

[00:18:38] Tony: And you’ve only

[00:18:39] Cameron: I did,

[00:18:40] Tony: at seven though, haven’t you?

[00:18:43] Cameron: yes, yeah, yeah, yeah, I can’t twiddle the PropCaf things yet, easily in the code that Matt’s set up. But I thought, okay, QAV score 2

[00:18:54] Tony: Hmm.

[00:18:55] Cameron: good, what about 3?

[00:18:57] Tony: Yep. What about it?

[00:19:00] Cameron: 9. 2%.

[00:19:02] Tony: Really?

[00:19:04] Cameron: Yeah, so,

[00:19:06] Tony: Do you have a limit on, are you taking every stock into account or do you have a minimum ADT you’re looking for?

[00:19:13] Cameron: no, no minimum ADT, I don’t think,

[00:19:16] Tony: Okay. Cause I would think of the QAV score of 0. 3. You’re definitely at the top of the buy list, but you might have lots of small companies in there as well.

[00:19:25] Cameron: which, you know, should be good, yeah,

[00:19:28] Tony: Yeah. But that may not be realistic. Just the point I’m making.

[00:19:32] Cameron: oh, I see what you’re, yeah, we’re right. The last one that I did was PE greater than yield, which returned, uh, 4%.

[00:19:39] Tony: Okay.

[00:19:40] Cameron: So, uh, let me do my Letterman top 10. Um, and number 1 at 14. 9176939 is 20 percent rule 1, followed by QAV score 0. 2 at 14. 9131, financial health trend 14.

[00:20:00] Cameron: 6, price less than book 14. 48, no rule 1, 14. 42. QAV 0. 2, 20 percent rule 1, score 86, book plus 30, 13, price less than forecast, 13, financial health, just its rating, um, 12. 94. 10 percent rule one, 12. 8. That’s just our standard, um, standard set of rules, right? Standard config, 12. 8. 3PTL alone, 12%. I think that’s roughly 10.

[00:20:45] Cameron: So they’re my top 10, um, regression trials to date.

[00:20:51] Tony: So can I just understand that and drill down a bit? So QAV, as we currently know it, returned 12. 8%. Is that right? Okay, so then, uh, there was like 6 or so of things above 12. 8. So 12. 8 has got to be the base case, right?

[00:21:12] Cameron: Yeah,

[00:21:13] Tony: So the improvements on that were, uh, what’d you say? That was, uh, 20% rule one. Uh, QAV score of 0.2. What else was there?

[00:21:27] Cameron: Health Trend, Price Less Than Book, No Rule 1, QAV. 2 plus a 20 percent Rule 1, QAV Score 0. 05, Book Plus 30, Price Less Than Forecast, and Financial Health Rating.

[00:21:49] Tony: So is it possible to do a regression test with all of those metrics you just read out, given like a score of two or three and just see if, if that boosts the returns.

[00:22:00] Cameron: A score of 2 or 3 or just the regular scoring for each of those?

[00:22:04] Tony: No, I want to boost the scoring for those things you spoke about. QAV, or actually, so 20 percent rule one, QAV of 0. 2, but book plus 30 getting an increase in the score and price less than forecast getting an increase in score and financial health getting an increase in score.

[00:22:19] Cameron: Right, uh,

[00:22:20] Tony: Because we’re trying to beat 12. 8, which is the current scoring setup.

[00:22:24] Cameron: Yeah,

[00:22:25] Tony: And then I guess also too, if some of the things that you said didn’t score well, just start eliminating them and see if we even need to track them going forward. See if we can simplify the checklist.

[00:22:36] Cameron: so what you’re suggesting with the increasing score ones is keep everything else in it, as we normally do, just increase the score for those things.

[00:22:46] Tony: Yeah. So, um, book plus 30, for example, gets whatever it is now. I think it’s a 1. Give it a 2. And it’s hard to know what the score should be from that. You know, you give it a 5 maybe. Really boost the score on it and see if it makes a difference.

[00:23:05] Cameron: You want me to do it while we do the rest of the show and then give you the results by the end of the show?

[00:23:08] Tony: Oh yeah, cool. Okay.

[00:23:10] Cameron: Ha ha ha! Hold on, let me do this. Um, do do do do do do, might as well.

[00:23:20] Tony: And only our club members will get the results because we cut the show off after 30 minutes for the free episode.

[00:23:26] Cameron: Yeah, and no one else cares,

[00:23:28] Tony: No, exactly.

[00:23:29] Cameron: it.

[00:23:30] Tony: Well, do you want me to talk about one of my news articles while you’re doing that?

[00:23:33] Cameron: Yes. Oh, uh, no, before you do that, I just wanted to, uh, people probably already know, but just in case people haven’t read the email or seen the Facebook post or whatever this week, major issues with Stock Doctor data this week. Um, I noticed on our buy list that the top three stocks, which all had. Crazy good QAV scores, R.

[00:23:54] Cameron: E. D., J. A. N., and F. L. T., and all of which I’d never seen before on the buy list. Uh, um, I thought, hmm, I was about to buy red, actually, for one of our portfolios. I was like, maybe I should just, uh, you know, You know, maybe I should have learned from past experiences that if something looks too good to be true, maybe it is.

[00:24:14] Cameron: And because some, uh, of our listeners have pointed out in recent times that, uh, Stock Doctor’s had a history with shares outstanding, which has, uh, uh, rap massively inflated the QAV score of some stocks. Like I think URW was one. Um. That was the first place I looked and they all had dodgy looking numbers.

[00:24:36] Cameron: And then you noticed there were other dodgy looking numbers

[00:24:39] Tony: Mm hmm.

[00:24:39] Cameron: Stock Doctor came back to me and said, they’ve got NA for financial health for a lot of things for some reason this week. So, uh, just be really careful with your Stock Doctor checklist this week. Um, a lot of data, um, integrity issues and, um, yeah, don’t, don’t trust anything essentially.

[00:24:58] Tony: Yeah, no, I found it. I was preparing to do a pulled pork, and I used the weekly download, and I went, no, there’s a lot missing on this. And I ran another one this morning, and at least for the company I was looking at, a lot of it had been fixed. So it might be worth it if people need to buy something this week to run a download and just see if the data looks right.

[00:25:16] Tony: Yeah, but when I did my download today, There was still Flight Centre and RED and the other one on top of the list, so there’s still an issue with those. And I wouldn’t expect to see Flight Centre on our list, quite frankly. It’s always been a gross stock in people’s eyes.

[00:25:35] Cameron: Yeah.

[00:25:36] Tony: Rightly or wrongly, but it always has.

[00:25:39] Cameron: I’m going to go run a, go run a regression test. You can talk for a bit.

[00:25:44] Tony: Is that going to like use up all the power supply in North Brisbane?

[00:25:47] Cameron: Yeah. Yeah. Lights will flicker. Yeah. All over power will be going out, all over town. Yeah,

[00:25:54] Tony: the generator that you the

[00:25:56] Cameron: yeah, yeah.

[00:26:00] Tony: Okay. I got two stories, um, for QAV stocks in the news this week. I have, uh, one which supports the curse of the pulled pork theory. Which was on Karoon Energy, um, which I did a Pulled Pork on recently. And what’s happened with Karoon is, this was published by Stock Doctor with a really neat heading called Who Dat, Who Did This?

[00:26:24] Tony: Because Karoon owns a couple of Fields called HUDAT. Um, this came out 19th of April, latest key update, Brazilian oil producer Carun Energy released its third quarter 24 production update. The results fell short of consensus expectations and the company has disappointingly downgraded its FY24 guidance due to temporary operational challenges at Balluna and HUDAT fields.

[00:26:49] Tony: So the shares have gone down a little bit since we did the pulled pork. I did a quick look at the company announcement itself, and I think the emphasis is on the word temporary. They weren’t calling out any sort of, well I couldn’t see they were calling out any sort of long term problems with both fields, but it looked like the problem was with what’s known in the industry as an FPSO, so a Floating Production Storage and Offloading Facility, which is Um, in the oil industry is like a, an ex oil tanker that acts as an intermediate loading point near an off sea oil well and stores the oil and gas and I guess water that comes up in the well and tries to do an initial split of those.

[00:27:31] Tony: Sometimes it doesn’t, it just stores things. But anyway, it means that the The oil drill doesn’t have to invest in having a pipeline back to shore. So this kind of old oil tanker sits there, takes the oil that’s drilled and then loads it into tankers to send off to the refineries. They had a problem with their FPSO, which was shut down for a bit this quarter and it looks like it’ll be shut down again next quarter when they’re doing the forecast maintenance on it.

[00:28:00] Tony: So this may be a problem again next quarter, but it looks like That’s the update on Karun.

[00:28:09] Cameron: I had to sell them. I had to sell Karoon, rule one sell, in a couple of our portfolios, including the dummy portfolio. I’ve had to sell, like, a couple of things out of the dummy portfolio recently. Hadn’t had to sell anything in the dummy portfolio for ages. Chorus, uh, Karoon, and just this morning CLX, CTI Logistics.

[00:28:32] Cameron: Surprising. Usually the dummy portfolio is immune from those sorts of things, but, uh, there you go, not to be.

[00:28:40] Tony: Yeah, so, um, I think for what my two cents are worth, I think it’s a temporary problem with Karun, but it may last for six months. I guess it’s your definition of temporary is important here. And then the other stock, which is a good news story, um, is both for MacMahon, MAH, and Decmil. Uh, I’m not sure if Decmil’s been on the buy list for a while.

[00:29:02] Tony: I know I did own it many, many years ago, perhaps even decades ago, so I’m not sure if it’s been on the buy list lately. I owned Decmil back when it made its name building accommodation for fly in, fly out. miners in camps and then it kind of had a existential threat when all that initial development was finished and there weren’t that many new camps to build and it kind of moved into other mining engineering support services and it’s kind of limped along a bit from there.

[00:29:35] Tony: It has had some success in building wind farms, I think. I haven’t really followed it. Anyway, the story is that MacMahon have, uh, Uh, lobbed a share, uh, takeover, and Decmil’s board has blessed the scheme bid by mining services group MacMahon Holdings, which will swallow the Perth based engineering group at 0.

[00:29:55] Tony: 30 a share. A rise in demand for wind farms has buoyed Decmil Group. The buyout announced on Tuesday morning will see 528 million dollar MacMahon acquire 100 percent of Decmil’s share capital via a scheme of arrangement. Funded from existing cash reserves. and an extension of its existing debt facilities.

[00:30:14] Tony: Major shareholders Thorney Investment Group and Hawley Pty Ltd, which together control almost 27 percent of the register, have given their support. With Decmil shares trading, last trading at 17 cents, the MacMahon offer represents a 76. 5 percent premium. The 26 million market cap company builds a broad range of infrastructure projects, including roads, rail networks, and wind farms.

[00:30:38] Tony: So there you go. A big spike in its share price and MacMahon I think is, may even still be on the buy list as taking it over. But it looks like they’re not going to do a capital raise to do it.

[00:30:51] Cameron: I just bought some MacMahon today, but it’s the thing I replaced CLX with in the dummy portfolio. So, uh, it’s gone up 3 percent since I bought it this morning too. I just checked. I was like, oh no, cause I missed that news. I didn’t, must’ve checked the, um, whatever’s, the announcements.

[00:31:09] Tony: Yeah, well it’s interesting because oftentimes the acquiring company goes down when they buy something until they can prove the synergies all work and, and the transaction goes through. But um, sounds like it’s not happening that way for MacMahon. So that’s good.

[00:31:21] Cameron: Yeah. Anyway. Oh, that’s good. That’s it?

[00:31:25] Tony: That’s it for my news, I’ve got a pool of pork to do, but did you have anything else to talk about beforehand?

[00:31:30] Cameron: No, I did not. Um,

[00:31:34] Tony: Nothing from Howard Marks this week?

[00:31:37] Cameron: Oh, I did. Thank you for reminding me. I skipped right over Howard Marks. Marksy, good old Marksy. Um, Oaktree Capital founder had his, uh, one of his latest blurbs came out, memos from Howard Marks, April 17th, 2024, the indispensability of risk. I read this and I thought of you.

[00:32:01] Cameron: Because you’ve said to me in the past, well, no, you’ve said before, you know, you don’t mind risk. You don’t mind volatility. You know, that’s part of being an investor, right? Is you, you, you, you, you try and minimize your risk, but you walk into the risk. You know, you, you, you know, you, you have to accept that

[00:32:18] Tony: You don’t walk away from risk. Yeah.

[00:32:20] Cameron: he used a chess analogy, uh, today, which caught, now I know, That you, like myself and my sons, have been following very closely this week, the Candidates Chess Tournament

[00:32:33] Tony: I must have blinked and missed

[00:32:34] Cameron: out this week. It was actually quite exciting. It’s like, Taylor was texting me yesterday, holy shit, are you watching this?

[00:32:43] Cameron: I was like, I was trying to concentrate and I was flicking, I had to keep muting it because, you know, the commentary on chess games now is like, I don’t know, boxing commentary. They’re like,

[00:32:54] Tony: Oh, really? Are you ready to rumble?

[00:33:00] Cameron: like that. So the candidates tournament, uh, for people who don’t follow chess is, uh, sort of the, the world championship before the world championship. It’s the, it’s to see who’s going to play the world champ, who at the moment is Ding Loren from China. Although everyone knows it’s really Magnus retired.

[00:33:18] Cameron: So it’s Ding Loren and it was down to, there was two games playing, I guess the last two semifinals. And the way the points had been scored is, um, somebody needed a win in order to get enough points to end up playing, uh, playing Ding. And the first game that played was between this 17 year old Indian kid called Gukesh, who was the second youngest Grandmaster ever in history when he got his career.

[00:33:47] Cameron: title at 12 and a half.

[00:33:49] Tony: Oh, wow.

[00:33:51] Cameron: Um, there’s another kid who’s was like a month younger than him, another Indian kid who got his grandmaster last year. Um, and he was playing, um, Hikaru Nakamura. Who is probably the biggest chess YouTuber, Twitch streamer on the planet, Japanese American. Um, very He’s the world champion Blitz player, so like, 3 minute games.

[00:34:14] Cameron: He’s an absolute boss at that. Don’t often see him playing at this level in standard Time Controls, but it was between the two of them and that finished first and they drew and we were like, Oh, Gukesh isn’t going to win because the other game that was being played by Nepo, Russian, Ian Nepomniachtchi, who has played in the last two world championships, first against Magnus, which he lost, and then against Ding, which he lost last year.

[00:34:40] Cameron: And, um, Fabio Caruana, American, um, we were watching that, but they drew, which meant. Gukesh, at 9 points, even though he got a draw, is the winner. So, the World Championship this year will be between a 17 year old Indian kid And a 31 year old Chinese guy, the two biggest populated countries in the world fighting it out, which has never happened before.

[00:35:08] Cameron: Um, it’s pretty exciting. India versus China. It’s like this new era of chess.

[00:35:13] Tony: Yeah. Modern Cold War.

[00:35:15] Cameron: yeah. Right. Um, I mean, China’s had some great players for years, and so has India, uh, including a world champion, I think, but, um, or a contender for world champion, at least at some point, um, but, yeah, this is really exciting, you know, it’s, um, uh, uh, big thing.

[00:35:33] Cameron: So anyway, back to that one, Marks.

[00:35:35] Tony: I, I, I mean, our listeners would never forgive me if I didn’t mention the, um, anal beads. Has that been a part of the World Championships this year? I

[00:35:44] Cameron: No, but, that guy, Hans Niemann,

[00:35:48] Tony: I wonder if Trump has anal beads in his, in his, uh, earring.

[00:35:53] Cameron: that guy, Hans Niemann, Um, Taylor’s been talking to him, uh, Taylor connected with him on Snapchat or Instagram or something and they’ve been having a bit of a backwards and forwards chat over the last couple of months. Taylor’s determined to take him on as a client. Taylor wants to

[00:36:12] Tony: Right. Yeah.

[00:36:13] Cameron: Hans Niemann.

[00:36:14] Cameron: And if he does that, he’s going to totally try and convince him to sell his own range of

[00:36:18] Tony: Yeah.

[00:36:19] Cameron: He’s like, dude, yeah, like you’re missing out on this incredible opportunity. Like you don’t fight it. You embrace it. You, you own it. Yeah, own it! Like, you can sell millions of anal beads, vibrating anal beads.

[00:36:34] Cameron: Oh, Taylor’s like, dude, you won’t have to worry about chess. You’ll be so rich. Be like, we were talking off air about Ryan Reynolds and his mobile phone company and his gin company and the soccer team and all that kind of stuff. Anyway, back

[00:36:48] Tony: told me a great story about Snapchat. I’m sure you won’t mind me telling it here. You may have heard it. He came, we caught up for, um, Brunch a couple of weeks ago when he was in Sydney last and it was really nice catching up with him. Um, but he is telling a story about how he took his influencers, he’s got a stable of influencers he manages, and they went to one of the wineries in northern Victoria, um, for a Snapchat.

[00:37:12] Tony: Marketing conference. Yeah. And when it started, the Snapchat manager asked everyone in the room to sit down in a drum circle and go around the room and, and mention two things. Firstly, what pronouns they like. And secondly, one thing they’re grateful for. And it got to Taylor’s influencer. And one of them said, well, the pronoun I like is me, and I’m grateful for women.

[00:37:38] Cameron: Yeah. He’s, he’s decades got, that’s Adam. He’s got 20 million followers on TikTok and most of them are him going up and chatting, chatting women up in front of the street when they’re with their boyfriend and hitting on women. He’s like the hitting on women guy. That’s his, uh, that’s his brand. Um, uh, I was going to tell you that Taylor just had his one year anniversary with, um, his girlfriend, Amy, who lives in LA.

[00:38:05] Cameron: She’s an actress. And, um, for the last like six months, he’s been trying to convince her that when she does an audition, she should send the casting director afterwards, a mariachi band with a thank you note, just to go to their office and do a song. And she’s like, you’re insane. That is the worst idea ever.

[00:38:27] Cameron: So for their anniversary,

[00:38:29] Tony: No, I think,

[00:38:30] Cameron: one

[00:38:30] Tony: I think the Chess Master’s Anal beads is the worst idea ever.

[00:38:35] Cameron: second worst idea ever. So for the, for their anniversary, he got one of her best friends. To take her out of the house down, she lives in an apartment complex, to go out to like a restaurant. Um, and then he had a mariachi band turn up and play to her for 30 minutes as they’re walking around the streets in this shopping mall, just this mariachi band.

[00:39:03] Cameron: Which I thought

[00:39:06] Tony: have, I would have offered them double to stop following me around for 30 minutes.

[00:39:10] Cameron: Yeah, yeah. He’s a funny dude. Anyway, Howard Marks, I’m gonna get to this if it kills me. The indispensability of risk. Often times, we’re best able to understand something we’re interested in through analogies that clarify the matter by establishing connections between it and other parts of life.

[00:39:29] Cameron: Tony Kynaston’s coffee shop analogy. all the difference to me. That’s why I’ve written a memo comparing investing to sports in each of the four decades I’ve been writing memos and one connecting investing and card playing in 2020. The motivation for this memo comes from an article in the Wall Street Journal of April 12th that my partner, Bruce Karsh sent me.

[00:39:51] Cameron: Entitled Chess Teaches the Power of Sacrifice by Maurice Ashley, a chess grandmaster who’s been inducted into the U. S. Chess Hall of Fame. Few people know that Bruce is a chess player and I hadn’t thought about this fact for years, but the article provided a good reminder and moved me to As is obvious from the article’s title, the piece is mostly about the role of sacrifice.

[00:40:13] Cameron: Ashley says, Many positions cannot be won or saved without something of value being given away, from a lowly pawn all the way up to the mighty queen. Intentionally losing a piece as part of one’s game plan is the sacrifice that Ashley is referencing. He describes some sacrifices as shams, A term coined by chess master Rudolf Spielmann in his book, The Art of Sacrifice in Chess, where, quote, one can easily see that the piece being given up will return concrete benefits that can be clearly calculated.

[00:40:48] Cameron: Others are deemed real sacrifices, where, quote, giving away a piece offers gains that are neither immediate nor tangible. The return on investment might be controlling more space, creating an assailable weakness in the opponent’s position, or having more pieces in the critical sector of attack. The analogy to investing begins to become clear.

[00:41:10] Cameron: Buying a 10 year US Treasury note is a modest or sham sacrifice. You give up the use of your money for 10 years, but that’s only an opportunity cost, and accepting it brings the certainty of interest income. Most other investments involve real sacrifices, though, where the risk of loss is born in pursuit of gains that are neither immediate nor tangible.

[00:41:32] Cameron: And it goes on. Um, it’s a long article, I won’t read the whole thing, but, um, I’ll just read the end here. He quotes from this chess champ. Taking a chance doesn’t mean there will be a successful outcome, nor does it require it. If the reasons are sound, the risk should be taken almost reflexively. The more often we trust our judgment, the more confidence we gain in our decision making capacity.

[00:41:58] Cameron: The courage to take risks becomes a worthwhile end in itself. And then Howard finishes, The bottom line on the quest for superior investment returns is clear. You shouldn’t expect to make money without bearing risk, but you shouldn’t expect to make money just for taking risk. You have to sacrifice certainty, but it has to be done skillfully and intelligently and with emotion under control. I really like that. I thought it was a really good article.

[00:42:27] Tony: Yeah, no, I agree. And yeah, and I think the other quote, which I couldn’t find, and I just had a quick look, but it said something like that when we buy a share, we expect it to go up, but we also know that only about, um, 60 percent of the shares we buy Go up. So it’s how do you reconcile that, which I think is, is the key to it.

[00:42:48] Tony: It’s like you need, you need to have a framework which tells you over the long term that works. You have, you’ve done your homework, you’ve done your research, and you can trust in the process.

[00:43:00] Cameron: By the way, I tried to write some code last time. Week to analyze all of the trades that I’ve done to see what our win loss ratio is. And I haven’t got it work, haven’t got it working yet, but, um, it, it was something I was thinking about over the last couple of weeks just to see if there was a way to see all of the trades that I’ve done in all the light portfolios and the dummy portfolio over the last few years.

[00:43:24] Cameron: Um, what the win loss has been. Um, he does also quote. Oh, he mentions Buffett and Munger here. He says, um, Here’s how I describe the basis for the success of Berkshire Hathaway and few losers or more winners. I believe the ingredients of Warren and Charlie’s great performance are simple. A. A lot of investments in which they did decently.

[00:43:48] Cameron: B. A relatively small number of big winners that they invested in heavily and held for decades. And C. Relatively few big losers. No one should expect to have, or expect their money managers to have, All big winners and no losers. Investors must accept that success is likely to stem from making a large number of investments, all of which you make because you expect them to succeed, but some portion of which you know won’t.

[00:44:15] Tony: That was the quote I was looking for.

[00:44:17] Cameron: There you go.

[00:44:18] Tony: Yeah, which is that idea that, yeah, I’m going to buy a share, in the back of my mind I know it’s got a 60 40 chance of winning, so I’ve worked out the probabilities, but uh, when I buy it I expect it to, to improve. And that’s the risk, that’s the risk taking in it.

[00:44:35] Cameron: And for me though, too, it’s like the, the long termism of the strategy. You have to, you know, understand and accept and steel yourself for the fact that there are going to be periods when things won’t go your way. They will look bad, like my super portfolio for the last couple of years. It’s been dismal performance, but I believe that the strategy works over the long term. My job is just to diligently follow the system and not question it, you know,

[00:45:11] Tony: Yeah, and that’s another thing.

[00:45:12] Cameron: where we can, but you know.

[00:45:13] Tony: Yeah, that’s another thing about risk taking, it’s always the long term you’ve got to be focused on as well. You may have a lot of, you might have a lot of stutters when you first start, but it’s the long term you’re focused on. And we’ve proven that with the dummy portfolio for the last five years, it’s nearly, well it’s, I think it is double market.

[00:45:28] Tony: My experience over 25 to 30 years is double market. So yeah, I think it’s, but there have been periods along the way when you have a bad year. For sure.

[00:45:40] Cameron: And the dummy portfolio, I mean, apart from trusting, uh, your experience when we started, the dummy portfolio has proven to be Without a doubt, even though, okay, it’s only five years in. So, you know, it’s not 20 years, but, um, even with that five years, just following the rules, it’s just one, like not just beating the market, but double market.

[00:46:01] Cameron: Like that’s crazy, really.

[00:46:06] Tony: Yeah, I think that’s, it is crazy. It’s, but it’s interesting how it has been repeated in our two cases. Um, yeah, and it’s, you know, the other risk I think, which wasn’t mentioned in the article, but it’s the risk of getting it wrong, um, because there’s nothing worse than starting off in your investing life, um, particularly if you’re, you know, a late stage investor like both of us are, and 20 years down the track going, huh, I’ve actually done a really bad thing here.

[00:46:35] Tony: I shouldn’t have. I shouldn’t have used that, um, shouldn’t have followed that advice, shouldn’t have used that fund manager, shouldn’t have put it in that super fund or whatever, because you can’t wind it back and, and fix it. But, um, I think that’s the power of having a system like ours, is that, you know, we’ve, it’s been worked for me, it’s, we started it five years ago, it’s worked for the dummy portfolio.

[00:46:56] Tony: Um, there’s nothing which I’ve seen which will say it won’t continue to work in the long term, you know, for people going forward too.

[00:47:04] Cameron: And the thing that guts me is just seeing people that get a couple of years into it and then just market has a. Bad period and they pull out and sell, sell low. Yeah, man, why? We’ve, they’ve been listening to us talk for years about sticking in it for the long haul and letting the cycles play out and just for whatever reason, can’t stomach it.

[00:47:28] Cameron: It’s, um, heartbreaking, but anyway, that’s

[00:47:32] Tony: Which again is risk, which is how, which is managing risk, isn’t it? And managing your emotions. I like the fact that Howard Marks said that part of the way of managing risk was to manage your emotions.

[00:47:42] Cameron: Yes, of course, with emotion under control.

[00:47:45] Tony: Yeah.

[00:47:46] Cameron: Anyway, I like that, not only for the chess aspect of it, but, you know, you’ve said to me over and over again over the years that risk and volatility are your friend. They’re not, they’re not, they’re not your friend. The enemy, right?

[00:47:59] Tony: Yeah. If the market was risk free, it wouldn’t return much because why would you give it the money? Yeah.

[00:48:05] Cameron: Yeah. Yeah. That’s buying a bond, right?

[00:48:08] Tony: But even then, like if you bought a bond a couple of years ago, bonds have gone down. The yield’s gone up, which means that the money you’ve invested has gone down. So bonds aren’t risk free either. You’ve got to still stomach that. Yeah. But I mean, I guess the distillation of what Howard Marks is saying is that there’s risk in the market, but there’s risk in yourself.

[00:48:28] Tony: You’ve got to tame both risks. And I’ve always called them strategic risk and execution risk, right? So a number of times I’ve seen that. You know, like just going to the racetrack when, you know, if you go to the racetrack and back the wrong horse, that could be strategic risk. But I’ve seen plenty of examples where people have gone to the racetrack and on the way out there, they’re real excited about backing a horse.

[00:48:51] Tony: And when they get there, they change their mind and they back the losing horse and the original horse they picked wins. So there’s always strategic risk and operating risk. And, you know, I guess another word for operating risk is, is behavioral risk. It’s the risk of you doing something silly. It’s just as important as the risk of, of having the right strategy when you invest.

[00:49:12] Cameron: that’s, that’s Howard Marks. You want to do your pulled pork?

[00:49:17] Tony: Yeah, yeah, I do. So thanks to PC for a request for this one today. Um, I’m doing it on a company called Joyce, which has a code called JYC. And I’m not familiar with this company or their retail offerings. So it was, it was a bit of fun to go through and explore a new company. And I guess the reason why I haven’t come across them before is that they are a Perth based company.

[00:49:41] Tony: Um, they are expanding onto the East Coast in Queensland and New South Wales, uh, and they operate three businesses. They’re a retail group, uh, it’s broken down basically into what’s called the KWB group and Bedshed. So, KWB operates Kitchen Connections and Wallspan, which, um, I guess they’re, what they do is in the name, Kitchen Connections, makes and sells kitchen renovations and Walspan, uh, manufactures and sells wardrobe installations.

[00:50:14] Tony: So that’s a large part of their business. And then Bedshed, which I think may have been the oldest part of the, this company’s history, is a bedding store. Um, Again, based in WA, but they have expanded to the east coast as well. They do have a third business, which is, um, just in its infancy. It’s called Crave, and it operates, um, furniture rentals and staging, um, in the Perth area.

[00:50:43] Tony: It’s a small, it’s a very small part of their business, but I guess there’s synergy. If you’re selling furniture, you might have some spare stock you can rent out, but it’s, in my mind, the question is whether that will ever be a large part of their business, given it’s, I think it turned over about half a million dollars in its first year of operation.

[00:51:01] Tony: Um, Interesting split between those businesses. So the bedshed franchise, sorry, the bedshed business is both franchised and company operated and the kitchen and wardrobe showrooms, uh, is again split between those two. But on the bedshed side, uh, the franchise operations made a profit of 2. 7 million and the company operated operations, which was the larger part of the business made a profit Profit of 2.

[00:51:27] Tony: 3 million dollars. So that says to me there’s a bit of um, upside in the, in growing the franchise business because uh, it’s making the same as the company operated business. Um, and I’m, I’m not sure how bedshed franchising works. whether they own the store and put an operator in it or not, but usually franchising has a capital is less capital intensive than owning and operating yourself.

[00:51:52] Tony: But again, I’m not familiar with the operations here. Uh, the kitchen and wardrobe showrooms though, which I thought was interesting. This is the newer part of the business, but that’s making 25 million in the last 12 months. So that’s where the profit is. So the traditional betting business is making about 5 million, but the kitchen and wardrobe showrooms are making 25 million.

[00:52:13] Tony: So. You know, I think, um, uh, this company is doing a pretty good job of moving away from, or I shouldn’t say moving away from bedshed, but getting into, uh, a new business which, um, has, uh, better margins for it, um, and better return than what traditionally it’s operated. Uh, the wardrobe business Walspan only has three stores and they operate in South Australia.

[00:52:36] Tony: So I’m not sure what their plans are there to roll out that business or not. Um, but the, the big. Big businesses, Kitchen Connection has 22 sites in Queensland and New South Wales, and uh, Bedshed has 6 company operative stores and a further 37 franchise sites. And as I said, Kitchen and Wardrobe has 25 sites bringing in 25 million in profit.

[00:53:03] Tony: Bedshed has 28 sites contributing 5 million in profit. And it is the Joyce do see the expansion coming in KWB. They expect to double their kitchen and wardrobe stores in the longer term. But they still see growth in bedshed increasing by 20 stores in the foreseeable future. Interesting. I just find that kind of thing interesting from a management point of view.

[00:53:31] Tony: You know, they’re playing around with different types of models and different types of areas and will, I guess, be able to manage the growth based on their profit returns and capital requirements in those. Uh, but the latest figures have been good. So, um, revenue is up 6 percent half on half and EBIT is up 23 percent half on half.

[00:53:52] Tony: So that’s good. And the shares are doing well. Um, lately, so, good on PC for highlighting this company, and I hope he’s bought it, um, earlier on in the year, because they’ve jumped quite dramatically in the last month or so. I would say on the back of their profit results, um, That’s, that’s, I did a quick search on the news on the company and I couldn’t find much else but that, which would probably, um, lead to it growing.

[00:54:16] Tony: It’s possible that there’s not much brokerage coverage on this stock, so it’s also possible the stockbroker upgraded their recommendations, um, and their clients have been buying, because it’s only a small company. In terms of QAV numbers, uh, I’m doing the analysis at a price of 4. 13. This is a small company, market cap’s 117 million.

[00:54:35] Tony: ADT is 26, 000, uh, so won’t suit everybody listening, um, may suit some. No consensus target, uh, on price for this one, so we can’t compare the current price to consensus target. Uh, IV1 is 1. 61. There’s no IV2 because we don’t have any earnings forecast coming from brokers, which is, you know, I think is probably a good thing.

[00:55:00] Tony: If people like this stock, they can get in before many of the brokers. I only found one EUROS who was covering this, which is a Perth based stock broker. So yeah, opportunity to get ahead of the pack on this one. Yield from this company is currently trading at 7, over 7%, 7. 07%, which scores well for us. Stock Doctor financial health is strong and steady.

[00:55:23] Tony: Um, and the, sorry, the financial health is strong and the trend is steady. So that’s good. ROE, if anyone’s interested is nearly 26 percent for this company, which is also good. PE is 12. 8 times, which is not the highest or the lowest over the last three years. So we can’t score it for that. PropCaf is, uh, only is less than five on this one, 4.

[00:55:43] Tony: 97 times. So that’s a good thing. So this company on the metrics is well managed. So ROE of 26 percent and PropCaf of less than five. It’s really throwing out some, some cash flowing there, which is great. Net equity per share is 1. 29 and book plus 67, and the share price I’m doing analysis at was 4. 13, so you can’t buy this anywhere near book price, so we can’t score it for that.

[00:56:05] Tony: It does seem to have an owner founder by the name of Dan Smetana, who looks like he was the former Bedshed chairperson and possibly set it up, um, but certainly when it emerged into, or merged, or took over Joyce, um, he still currently holds 39%. Uh, or actually I think a little bit less than that. There’s a couple of other directors who hold a little bit.

[00:56:27] Tony: I think he has 37%, but we score it for Owner Founder, which is good. Can’t score it for Consistently Increasing Equity, even though it came close, but it’s a zero for that. Uh, all in all, then on the quality side, we give it 9 out of 11, or 82%, and 16 for the QAV score. I like the, I think the, in my mind, the um, pros and cons are the interesting part of this stock, and I, I, Struggled to put some things into both camps.

[00:56:56] Tony: So I think the pros for this company are to grow the franchising opportunity. If it is a capital lightweight way of growing the store network, it is returning, uh, as well, um, as well in terms of profit sense as the small number of company operated stores are. Uh, I could have that wrong. Maybe if they had more company operated stores, they’d be making more profit, but, um, franchise seems to be working well for them, uh, definitely rolling out more KWB stores.

[00:57:22] Tony: The kitchen and wardrobe stores looks like a. I think East Coast Expansion has got to be a positive for them. Bed Shed seems to have a history in WA, but you know, I’ve got to, I couldn’t, I can put it in the pro column, but also the cons column, because If they’re based in Perth and they’re seeing growth on the eastern seaboard, there’s going to be a lot of management overhead lying back and forwards, or at least, at least setting up some kind of management hub on the east coast to service those, those stores.

[00:57:53] Tony: So that may well have a cost impact at some stage. They may have all taken care of it, but, um, I know when I was working, uh, in my executive career, like, flying to Perth was actually further than flying to Auckland, so, when you’re based on, in Sydney or Melbourne, so, um, it does come with a cost. Uh, I think, um, on the con side, this business grave, the, the furniture rental business, it’s, it’s tiny, it may have some upside and it may have some synergies by cycling furniture, which they can’t sell.

[00:58:26] Tony: Um, but, uh, you know, having just been through the whole issue of renting furniture for a sale, it’s, it’s not a big business, it’s, um, you know, we went out to the place that we rented from, there was one factory, um, you know, it’s, it’s done 500, 000 for this business. There’s only so a certain number of companies in the market that are up, sorry, businesses in the houses in the market that are up for sale that need furniture rental and it tends to be short term.

[00:58:56] Tony: So you’ve got the cost of putting furniture around and taking it back all the time. Um, and it tends to have established players. We knew who to go to in Sydney. It was only a couple of players in Sydney. So anyway, look, it might have some synergies at the back end, but I don’t see it as being a growth potential for them.

[00:59:11] Tony: Um, in the kitchen. Renovation business. It’s, I would think there’s plenty of competition doing that now and IKEA springs to mind where you can go and order a modular kitchen and they come in and replace it for you. But there are a lot of, a lot of small operations who do well in that space now on a local basis.

[00:59:30] Tony: Um, perhaps the potential is to take some of those out and become a roll up with this business, but, um. I would think that they would face competition on the kitchen side and likewise on the wardrobe side. I know it’s only three sites for them, but I can’t see that being a huge business because again, if you’re in the market for a new wardrobe, you’re probably getting a builder in to do some kind of renovation and they’ll have their own supplies for that, but I could be wrong.

[00:59:55] Tony: Um, I, I think the biggest risk that I see is that this is a small company. Its revenues were only about 140 million. The last 12 months, um, I know they’re growing, so that’s a good thing, but my experience in investing in companies with sort of circa a hundred million dollars or less is that, uh, when times are good, they, they’re fine, but they don’t have the sort of size to be able to continue operating for very long if there’s a downturn in their markets.

[01:00:25] Tony: You know, if you’re a, if you’re a large company doing a billion dollars in sales and there’s a, there’s a downturn, A couple of years of a downturn in the retail market, in the residential market, then you probably got some reserves to be able to ride that out. But a company with a hundred million dollars or 140 million in revenue is going to do it tough.

[01:00:41] Tony: There’s not as much, um, capacity to ride through a downturn. So I’ll highlight that as a risk. It’s always been my rule of thumb to be careful of these small companies because of that. But on the flip side, it seems to be well managed, so perhaps that they, they, they will grow in time to, to get out of that, that sort of, um, trap of being a small revenue company when the, when the residential market turns down.

[01:01:05] Tony: Um, the other question I had, and I hadn’t, hadn’t, didn’t have time to do a deep dive into this, but the ownership structure of this company is a bit opaque. What I mean by that is it seems like. Either through acquisition or through necessity, these different types of businesses like Bedshed and the Kitchen One are in separately owned companies and I wasn’t sure whether Joyce owned 100 percent of each of each of those or owned enough to be able to consolidate the financials.

[01:01:34] Tony: So I’m not sure about the ownership structure here and whether there may be some ongoing partnership issues with the other owners in these businesses or whether there’s an opportunity there to buy them out at some stage, but that was something which, uh, I guess did need a bit more research on that.

[01:01:49] Tony: But yeah, that’s Joyce. It’s, it’s had a good half and it’s growing well now. And it seems on our QAV metrics to be, um, to be worthy of consideration.

[01:01:58] Cameron: We own it in two portfolios. One of my, my Stockopedia portfolio bought it back in November at 2. 99. It’s up 35%. And then the end of February in one of the live portfolios, it’s up about 15 percent since then bought it at 3. 51. So showed up in both of those checklists quite a while ago, late last year, early this year.

[01:02:26] Cameron: It’s done well.

[01:02:27] Tony: Yeah, good. Well, hopefully the curse of the pool pool doesn’t work with this one.

[01:02:31] Cameron: Well, I’ll tell you who has been cursed today. It just popped up in my alerts. Atlas Pearls ATP,

[01:02:39] Tony: really?

[01:02:39] Cameron: which I have in a light portfolio, down 32 percent today.

[01:02:45] Tony: Wow.

[01:02:46] Cameron: And I just looked up what’s going on. They had, uh, an auction in Kobe, Japan. Which, um, according to their result, they said they had 104, 000 pearls on offer. But then, in the process of reviewing bids, the company formed the view that the prices submitted did not reflect the true worth of the goods being offered.

[01:03:14] Cameron: The company therefore chose to accept bids for only 68, 786 pearls, at an average price of 68. 60 per piece. For total revenue of 4. 66 million, while this is below the unprecedented high of 112 apiece achieved at the November 2023 auction, and it is above the pricing of auctions prior to FY23. So they go on to say that all auctions, you know, the, the price they’re getting is better than any price they got up until FY23, but it was below what they had expected and below the record.

[01:03:52] Cameron: So, um, yeah, their share price dropped 32 percent this afternoon after that came out,

[01:04:01] Tony: Yeah, and when I did my research on Atlas, I don’t think I ever did it as a pulled pork. I may have, but I was thinking about doing it as a pulled pork. Um, I couldn’t find any sort of commodity graph of pearls. I guess that’s a very small market. Um, but yeah, it does seem to be driven by these auctions which get held from time to time.

[01:04:20] Cameron: You haven’t done it as a whole pork, I just looked it up.

[01:04:24] Tony: yeah, okay. I remember doing some research on it to think about doing it as a pull pork and I had a very small ADT, but it was also, seemed to be driven by, as you say, the sale of the pearls at these auctions. And I couldn’t find a commodity graph which I thought was a bit dangerous buying something that’s going to be influenced by a commodity that we can’t track.

[01:04:42] Cameron: Well, turns out you were right. Um,

[01:04:45] Tony: But it has done well over the last year or two. It was top on the buy list a couple of years ago and it was very small. It was like a thousand dollars ADT back then or something like that.

[01:04:55] Cameron: right. Yeah, I think it’s still up like 300 percent over the last year, but, um, just not since I bought it. SGI Stealth is also, uh, Stealth Group Holdings is also down 10 percent today, making it also a rule one sell for me. So there’s nothing in the announcements for them since the end of February when they came out with their H1 results.

[01:05:18] Cameron: So I don’t know what’s going on with them. But with the ATP thing, it’s one of those situations now where I’m like, do I sell it or do I just hold on to it now and wait for it to come back? Because it does this on a regular basis. It falls, then it rebounds, then it falls by 30%. Like if you, um, if you, uh, pull up its news in Yahoo Finance, there’s an article from two weeks ago from Simply Wall Street saying why we’re not concerned about Atlas Pearls Limited 32 percent price plunge. They must have been predicting today. And then four weeks before that Why we’re not concerned yet about Atlas Pearl’s 33 percent price plunge. Nine weeks ago, there’s no escaping Atlas Pearl’s muted earnings despite a 29 percent share price rise. Uh, so, you know, I don’t know, man, like, it’s very, very volatile share price.

[01:06:24] Tony: Yeah. Well, it is, and it’s got a sell price currently of 4 cents, and the share price is 12 cents,

[01:06:30] Cameron: yeah,

[01:06:31] Tony: so it could go down further before we’re forced to sell it. But yeah. But I’ve always used the three point trend line as a way of resolving these kinds of problems in the absence of news.

[01:06:43] Cameron: but, you know, this is well and truly fallen through my rule one.

[01:06:47] Tony: Oh, okay, we’ve got to sell it then.

[01:06:49] Cameron: Do I though, because, drumroll. I just finished running the regression test with all of the new metrics that you said before.

[01:06:57] Tony: Yeah,

[01:06:59] Cameron: Uh, the TK Special, I’m calling it. Um,

[01:07:03] Tony: one with the lot.

[01:07:05] Cameron: yeah. Uh, 14. 9252 CAGR.

[01:07:12] Tony: Okay.

[01:07:14] Cameron: So not a huge improvement over just 20 percent rule 1 and QAV score 0.

[01:07:17] Cameron: 2. Um, but uh, you know, slightly better.

[01:07:24] Tony: And just on that, so I should also mention on that QAV score of 0. 2, I’ve been running a dummy portfolio, which is beating the market as well. Um, but it’s hard to find stocks to buy with the QAV score of 0. 2, above 0. 2. Much harder than 0. 1. So, um, And I, I mean I think from memory I put like a 500, 000 ADT on that, so there must be lots of, because I know there are lots of small stocks at the top end of the buy list, but um,

[01:07:54] Cameron: yeah,

[01:07:55] Tony: I was getting concentrated I think into Fleet Partners and ASG were a couple of the stocks that come to me from memory

[01:08:02] Cameron: right.

[01:08:03] Tony: in running that portfolio.

[01:08:05] Tony: Not a bad thing if you concentrate into stocks, which are doing really well though, by the way.

[01:08:10] Cameron: Yeah, sure. Cool. I’m just trying to bring up the, um, results, of these tests. I’m looking for the 20 percent rule 1 test.

[01:08:21] Tony: So for, I, I haven’t gone through and updated this from, for this month. I do it at the end of every month, but, um, my test of QAV scores at 0.2 since 26 of a, oh, and that’s actually a year ago when I started, has returned 23% as of today.

[01:08:42] Cameron: Hmm.

[01:08:43] Tony: I, I do hasten to add, I haven’t gone through. in April and look for any buys or sells for the month, um, which is how I’ve been running it, uh, and that compared to STW for the same time, I’ve got 4.

[01:08:59] Tony: 56 percent which sounds a bit light, but anyway, um, certainly doing well at 23%, but as I’ve said before that the In trading the portfolio, two or better stocks, and the ADT cutoff I’ve used is 50, 000, not 500, 000, so it’s not too bad. Um, I’ve got, I’ve got, uh, a position in Fleet Partners, which is more than half of the portfolio.

[01:09:29] Tony: So I’ve just been double buying and double buying and double buying Fleet Partners. Metals X has a position and Whitehaven Coal has two positions, a double position.

[01:09:41] Cameron: Right.

[01:09:41] Tony: And that doesn’t include dividend payments, that’s just the capital improvement, so I know Whitehaven has got a good yield, I think. I know Fleet Partners doesn’t, but Whitehaven does.

[01:09:51] Tony: Oh,

[01:09:52] Cameron: Well, I’m looking at the 0. 2 trades for the regression test that I ran a few days ago. Um, it’s seems to be trading reasonably regularly, but it’s, uh, you know, obviously got a much lower ADT. Um, but it’s buying the most recent buys that it did at the end of 2023 were GRR and PRU. Um, PGH shows up before that.

[01:10:21] Cameron: A-S-G-M-A-H speak of the devil. URW, uh, KAR. Speak of the other devil. MLX you just mentioned. K-S-L-P-R-N-Y-A-L-M-Y-R-Q-A-N-W-H-C.

[01:10:39] Tony: that reminds me, the, we should mention the regression testing you’re doing doesn’t include a commodity price graph check.

[01:10:46] Cameron: It doesn’t, that’s right. Yeah. Anyway. Um, so what do you make of that, uh, TK special result tk.

[01:10:55] Tony: Well, it hasn’t really improved things, has it?

[01:10:58] Cameron: Oh, hmm.

[01:10:59] Tony: It’s interesting, isn’t it? I like the idea of a QAV. 2, it’s working, like it’s working for me. And I like the idea of a Rule 1 20%, which has also been working for me in my sort of, um, benchmark testing or my, uh, you know, kind of, Non regression testing, I’m trialing them, I guess.

[01:11:16] Tony: Uh, so yeah, I don’t know where to go from here. I’d like to get a hold of the data and just play around with it and see what I can come up with.

[01:11:25] Cameron: What data? The buys and sells?

[01:11:27] Tony: No, no, no, the regression tester and, you know, the coding for it and, um, because it’s going to take a lot of time to try and get the, optimize the checklist numbers, I think. I think that’s where Things like, and maybe the way to go is to, you said the current QAV was 12. 8 percent I think was the benchmark, is to start deducting things and see if that helps to improve it, or what impact that is.

[01:11:54] Tony: Because we, at least we can simplify the checklist if we can’t improve returns out of all this.

[01:11:59] Cameron: Hmm. Um, well, let’s talk about all that with Matt, I guess, when we get him on next week.

[01:12:06] Tony: But I like have, have you run a QAV of 0.2 plus rule one of 20%.

[01:12:12] Cameron: well, that’s what I just did, but with all the other special scoring in there as

[01:12:16] Tony: Okay.

[01:12:17] Cameron: So yeah, it had all the rest of the metrics with increased scores for the things that have done well. Um, but I, before that, no, sorry, even before that, the other day I did normal scoring for everything, but then a 0. 2 score for QAV, QAV score on a 20%, it returned 13.

[01:12:37] Cameron: 88%. So, A point less CAGA than the one that I just did and them individually.

[01:12:46] Tony: and a but a point more than Qav is that currently exists.

[01:12:50] Cameron: Yes.

[01:12:51] Tony: Yeah. Interesting.

[01:12:54] Cameron: So back to ATP, it’s broken through my 10 percent rule one, but not my 20 percent yet.

[01:13:00] Tony: Mm-Hmm

[01:13:01] Cameron: And I’m gonna, you know what, I’m calling it. I’m gonna make a special exception for ATP. Because it’s just got this history of dropping 30 percent and then coming back by 30%. Like within weeks. Like I’m not talking about 6 months either.

[01:13:15] Cameron: Like, you look at the chart, over 3 months, this is the third time in the last 3 months that it’s dropped substantially and then rebounded. And we’re, you know, it’s, it’s, it’s only a few cents here or there, right, because it’s only trading at 12 cents now,

[01:13:36] Tony: Yeah. Yeah.

[01:13:38] Cameron: by 5 cents, then it goes up by 5 cents, and then,

[01:13:42] Tony: Well maybe make it a 20% rule one test. See if

[01:13:45] Cameron: it is a bit of, a bit of a falling knife, though, now, to be honest, mid February, it was trading at 21 cents, now it’s down to 12, so it’s recovered, but every time it’s recovered, it’s, hasn’t recovered back to where it was, but at least I could maybe get out of it at least. 10 percent loss rather than 32%.

[01:14:05] Cameron: Well, it’s only a 10 percent loss anyway. Yeah. Oh, I don’t know. What should I do, Tony? Follow the rules. Stop trying to

[01:14:12] Tony: a, if it’s a rule, if it’s a rule one, sell it.

[01:14:16] Cameron: Okay. God damn it.

[01:14:18] Tony: well, so the thing is, it’s always, if it’s still on the buy list and it turns up, you can always buy it again if it comes up as your best buy.

[01:14:26] Cameron: And then sell it again.

[01:14:28] Tony: Yeah,

[01:14:28] Cameron: Then it goes up by 30 percent and they’re like, woohoo. And then it drops. I’m like, ah, damn it. Anyway, I think that’s the, uh, that’s the guts of the show, Tony. Um, quick, quick, uh, quick, quick after hours. Cause I’ve got another, another show to do.

[01:14:45] Tony: Okay,

[01:14:47] Cameron: have you been up to? What have you

[01:14:49] Tony: well I’ve already, already told you that Dune Part 2 was, didn’t do it for me, so I wasn’t,

[01:14:54] Cameron: me that before we went to

[01:14:56] Tony: before we started recording. So I watched Dune Part, I’ve actually paid for 2 Rentals, June Part 2, and Argyle. Don’t worry about Argyle, it’s crap. It’s really bad. Which was terrible, because it’s got a great cast. It’s a spy drama comedy thing, but had a great cast with Samuel L.

[01:15:18] Tony: Jackson, and um, Uh, oh, what’s her name? Richie, uh, Howard, Dallas Bryce, Bryce Dallas Howard. Uh, and uh,

[01:15:29] Cameron: John Cena, Richard E. Grant.

[01:15:32] Tony: Yep. Great cast. Terrible movie. Awful. Yeah.

[01:15:36] Cameron: Bryan Cranston,

[01:15:38] Tony: Yep.

[01:15:38] Cameron: Rob Delaney.

[01:15:40] Tony: Yep. And, uh, who’s the lady from Canada who was in Home Alone? Um, Catherine

[01:15:46] Cameron: Oh, Catherine O’Hara. Yeah, the mother from Schitt’s Creek. Did you watch Schitt’s Creek?

[01:15:52] Tony: No.

[01:15:53] Cameron: Oh, dude, Schitt’s Creek, one of the best

[01:15:56] Tony: Really?

[01:15:57] Cameron: sitcoms made, yeah. It’s, the setup is, um, her and, um,

[01:16:07] Tony: Eugene Levy?

[01:16:08] Cameron: Eugene Levy and Dan Levy. And who’s the crea here, the two Levis, father and son of the creators of the show, and um, uh, who plays the daughter, she’s really great too, um, she’s been, we’ve seen her in other things, Annie Murphy, uh, Chris Elliott’s in it, so the family, They’re like rich New Yorkers who suddenly go broke.

[01:16:32] Cameron: Something happens, huge disaster, and they apparently own, one of his investments was this little town in the middle of nowhere that he owns, somehow it’s the only thing that the creditors haven’t taken, so they go to this little country town in the middle of nowhere, you know, some country bumpkin town where they’re trying to fit in, but they’re just like completely spoiled, horrible human beings trying to live in this Little Ten, and then it’s all about actually the country folk with their country folk attitudes and their country folk morals, sort of shaping these rich, spoilt New Yorkers and actually turning them into decent people.

[01:17:09] Cameron: But it’s really funny. Yeah. Chrissy put me on it. She watched it all when I was working and I caught up with a bit of it. Yeah. Anyway, Argyle, no good. And it’s a Matthew Vaughan film I just saw, directed by Matthew Vaughan.

[01:17:22] Tony: Mm.

[01:17:23] Cameron: Who’s, you know, got a reasonably good track record, coming out of his, uh, Guy Ritchie ears.

[01:17:31] Tony: Yeah, right. Yeah. I, I didn’t like it. And Dune Part 2, I, I wouldn’t say I didn’t like it, but it doesn’t live up to the hype, unfortunately. And maybe it’s because I really enjoyed Dune Part 1, but, um, Part 2 just ends. in the middle of an action sequence, um, for no apparent reason. Doesn’t have a couple of key things I liked about the book and the David Lynch version, like the I Will Bend Like a Reed in the Wind scene in one of the knife fights and the knife fights were, I found, pretty ordinary.

[01:18:01] Tony: In, you know, Hollywood knife fights follow a, you know, The same script, always. The good guy gets wounded by the bad guy, fights aggressively, and then somehow regathers and wins the day. But these were probably more realistic, but they just didn’t have any oomph to them I didn’t find.

[01:18:20] Cameron: And these are like iconic knife fights. I mean the Steel Knife fight is iconic for sci fi lovers. I mean it’s highly original, the way that you use the knife with the shield, you have to move slowly through the shield and all that kind of stuff. That’s like one of the set pieces in a Doom film that you’re, you know, doing.

[01:18:39] Cameron: Hanging out for is the Stillknife battle.

[01:18:41] Tony: Yeah. It didn’t do it for me, unfortunately, which was a shame. Austin Butler was good. He played the, he played the part of that. Uh, nephew of Harkonnen who fights Mawad Dib at the end, um, he, he was probably the highlight of the show I thought, he was good, um, Chris Walken’s in it, playing the Emperor, he’s great, and he has a small part though, but yeah, and it, it, the ending differed from my memory of the book too, like in the, in the, Book Chani and Paul Muad’Dib, you know, I don’t think they’re married.

[01:19:13] Tony: I think he marries the emperor’s daughter for political reasons, but he sticks with Chani. And, you know, they help the Fremen recapture June and control the spice and all that kind of stuff. But the movie didn’t. She, she, Chani goes off into the desert, pissed off that Muad’Dib’s asked for the emperor’s daughter’s hand in marriage.

[01:19:31] Tony: And, uh, that’s it. Um, in the book I’m pretty sure it ends with not only the defeat of the Emperor, but also of the other houses. Um, but it doesn’t end that way this time. Paul Muir Dibb sort of turns to his band of warriors and said, Now it’s on to the fight against the other houses who are circling the barricades.

[01:19:50] Tony: I planned it and off they go, but I didn’t even start them going, it’s just the end. I did, yeah. And also too, I think Chalamet is a bit cocky in this. He’s, he’s become a bigger star, and um, in the first, in the first I thought he was good playing the sort of unsure nervous type who was kind of fitting into his role as the messiah and learning his, um, his powers and all that kind of stuff, but like, now it’s all fully realised, he’s just super cocky in this one, which I didn’t like.

[01:20:19] Cameron: I thought, I mean, to me that sounds like Paul’s arc too, like he does, I mean he becomes a power man, I mean he, it’s not a, it’s not a story of a sane guy, I mean, Paul becomes the God Emperor of Dune, like he does become completely crazy, right?

[01:20:42] Tony: yeah, it becomes that, but not in the first book. And in the first, my, my enduring sort of love of the character in the first book was he’s getting glimpses of the future, trying to control that as a power, trying to learn to live with the fact that everything that happens to him, he’s already foreseen, including every time he sleeps with his wife.

[01:21:01] Tony: And, you know, everything that happens around the court every day, he knows exactly what’s going to happen beforehand. And I mean, that’s enough to drive anyone crazy, really. It’s like, it’s like Groundhog Day every day for this guy, but. You know, he’s kind of learning to live with it and grow with it and use it.

[01:21:16] Tony: But Chalamet just comes off with this conky sort of saviour of the planet. But anyway, that’s just, I guess that’s my criticism. Some great sandworm scenes where they’re riding through the desert on the back of sandworms, kind of treating them like these boats in the desert, which is kind of cool. yeah, but, uh, you know, left me, left me fairly.

[01:21:36] Tony: Yeah, left me wanting my 25 bucks back from Amazon or whatever it was to wait until it became a free episode.

[01:21:44] Cameron: Yeah. Well, I’m going to wait. Cause

[01:21:47] Tony: yeah, you should.

[01:21:48] Cameron: bucks, but, uh, yeah.

[01:21:51] Tony: I did like, however, um, I watched the first episode of Shogun, which I like. You put me onto that one, which was good.

[01:21:56] Cameron: I didn’t like it.

[01:21:57] Tony: that. No, I thought

[01:21:58] Cameron: gave up after the, well, no, I watched the first, I’m a big fan of the books. Um, again, you’re like, I read them the same age when I read Dune. It was, you know, my 15, 14, 15 sort of thing. I didn’t like the first episode, but Taylor watched the whole thing and he’s been raving about it. So he said, nah, you need to, you need to watch the whole thing.

[01:22:17] Cameron: It’s really good.

[01:22:18] Tony: I like the first one. I’ll probably keep watching it. I did like Fallout. Have you seen that?

[01:22:23] Cameron: No, but a couple of guys at Kung Fu were raving about it and the, and the twins were up here raving about it on Sunday. I mean, I love Walton Goggins, always. Walton

[01:22:32] Tony: He’s good.

[01:22:33] Cameron: just, yeah, everything he’s ever done, from The Shield through to Vice Principals and the Righteous Gemstones and the Tarantino films.

[01:22:42] Cameron: Actually, he had a TV show a while back there that wasn’t that good, but, um, Where he was like a single dad rebuilding himself. I got one episode into that and, you know, turned it off, but he’s, he’s, you know, really great talent. Yeah. Shane, he’s always Shane from the shield for me. He’ll always be Shane.

[01:23:00] Tony: Yeah. So he’s good in it. Kyle McLaughlin has a part in it. Speaking of, Paul Moir did. Yeah. Yeah. And so it looks like, um, I didn’t read the credits, but it looked like Nakel Nakels has a, Lieutenant Uhuru from Star Trek has a small part in it too. Yeah. Yeah. But yeah, I really enjoyed it. I watched the first three episodes of that and I’m enjoying it.

[01:23:23] Tony: It’s worth watching.

[01:23:23] Cameron: of thing I would expect. Like, it’s based on a game, right? Not the sort of thing I’d expect you to get into.

[01:23:28] Tony: Well, it’s sci fi, so I often enjoy good sci fi. Yeah. But that’s me. And then lastly, uh, we got a horse running on Anzac Day at Flemington called Poifect. So, um, looking forward to her first start again. Best prep.

[01:23:42] Cameron: Good luck with that.

[01:23:43] Tony: Yeah. Thank you.

[01:23:45] Cameron: Well, I watched, well, we watched a bit more of, uh, 3 Body Problem and, you know, I’m enjoying how they’re depicting aspects of it. I loved the scene with the ship. That was kinda cool. Brutal to see, but kind of cool.

[01:24:01] Tony: It’s a good scene. It is a great scene, isn’t it?

[01:24:04] Cameron: Yeah, yeah, yeah. Like it really, you really sort of feel the, you know, what’s going on.

[01:24:11] Cameron: Um, I watched a bit more of The Gentleman. Like we just haven’t watched, my mum’s been here, she just left. So we haven’t really watched a lot of TV, um, for the last couple of weeks. But, and I’ve had a lot of, a lot of insomnia. Recently, like I had like two or three nights with, with like no sleep and didn’t get much sleep last night, but that was more of a Fox thing, but woke me up a couple of times.

[01:24:33] Cameron: But yeah, it just said it every now and again, I have this really bad run of insomnia where I just, my brain just, it’s not that I’m thinking about anything. It’s just, it’s just awake. You know, I’m like, they’re going, just go to sleep. Why won’t you just go to sleep? And then eventually, you know, on the second night, I just got like at 2am, I was like, ah, screw it and just started coding.

[01:24:54] Cameron: And that’s when I solved them. I solved a lot of coding problems between 2 and 5am, you know, it was actually really good. Um, but, uh, I’ve been reading, still reading the, oh, I’ve been reading the Don Xiaoping book, but then I started reading, um, Medium Raw, um, one of Bourdain’s books.

[01:25:20] Tony: Oh, right. Yep.

[01:25:21] Cameron: And, uh, god damn that guy could write.

[01:25:25] Tony: Mm

[01:25:26] Cameron: such a good writer. So visceral, and funny, and sarcastic. Um, so I really enjoyed, uh, I got halfway through that and then realized I hadn’t read Kitchen Confidential. So I’ve gone back

[01:25:41] Tony: Oh, okay.

[01:25:41] Cameron: started Kitchen Confidential and then I’ll finish this one later. But the Don Xiaoping book is great. I’m just up to the point where I mean, Mao’s dead, and Hua Guofeng is still running things, but Dong is really reshaping, he’s in charge of the economy, and the military, and stuff like that, and it’s just going hell for them, they’ve just sent, uh, a group of, um, economists, and business leaders, or whatever, mostly economists I think, And ministers, economic ministers and whatever, to Japan and Europe in the mid 70s, um, to late 70s, 60s, 76, 77, and they’re just shocked at not only how far ahead of China are.

[01:26:25] Cameron: All these, uh, capitalist, uh, economies are, but also the fact that the capitalists are just showing them everything and, and, and offering to loan them billions of dollars to, you know, rebuild their infrastructure. They’re like, hold on, they’re still in this cold, the Chinese are still in this cold war mentality and the capitalists, they expected all of the capitalist economies to be.

[01:26:49] Cameron: You know, defunct and oppressing the people and struggling and they go around and they’re just like, holy shit, we are so far behind, this is ridiculous. And they’re just taking us into their factories and showing us all their secrets and telling us everything and offering to help us build our own, uh, economy.

[01:27:07] Cameron: Because they realized they were overproducing. They needed trading partners. They wanted China to be, you know, economically able to become a major trading partner of Europe and then eventually the United States. They haven’t normalized relations with the U. S. really at this stage. They’re still working on that, but they’ve normalized relationship with Europe and with Japan.

[01:27:28] Cameron: Yeah, it’s fascinating to just learn more about that period in the

[01:27:32] Tony: Mm hmm.

[01:27:34] Cameron: Um, I’m not really that aware of, and just Dong’s story, like how many times he was punished and se you know, sent out to the sticks during Mao’s days and just, just stuck to his knitting, just had a vision for what he was gonna do if ever he got the hands on the wheel, and when he got his hands on the wheel, he just went hell for leather to build China up, and um, he’s not a young man at this point, like he’s in his, he’s Early seventies, I think, and he’s just going full speed ahead.

[01:28:08] Cameron: They, they come back from this thing of Europe and says they’re willing to loan us 18 billion and a lot of the, a lot of the Chinese ministers are worried about getting into, you know, some sort of debt slavery and Dong’s response is 18, let’s go for 80.

[01:28:24] Tony: Yeah.

[01:28:25] Cameron: let’s try and get 80. Like we have no time to lose.

[01:28:29] Cameron: We need to invest in infrastructure and factories and we need to build up our manufacturing capability and all that kind of stuff. So yeah, he’s a really interesting, really interesting character.

[01:28:42] Tony: It’s really great to read about those characters, currently I guess, but also in history, who just have that ability to know what they need to do and just put the pedal down to do it. Because like these days, you know, it’s like, All the bloody news is full of is one side or the other. You know, my vision for America is to eliminate all the woke liberals or, you know, whatever.

[01:29:02] Tony: It’s not, it’s not, no, no, we have to do this and, and we need to do it hard and fast. Yeah.

[01:29:10] Cameron: And I, and I think he felt a lot of responsibility for his role in the Great Leap Forward, which had been a huge disaster. And, uh, you know, Mao knew that he was critical of that and that he hadn’t supported the Cultural Revolution. And I think Dong felt that he had to. In fact, he said publicly at this juncture, um, we have failed, he’s talking about the Chinese leadership, we have failed the people and we need to address the failures and, you know, we need to do it quickly.

[01:29:45] Cameron: So, you know, it takes a, it takes a big man to admit that level of culpability and failure, Mao wasn’t able to do it for all of his genius. And Mao, I think, was a genius. It’s interesting, you know, when I got to the point of the book where he died, I went to the New York Times archives and looked at what they were saying about him when he died.

[01:30:07] Cameron: And Gerald Ford was the president, Republican at the time, was talking about Mao as a genius and a visionary and one of the greatest men who ever lived. Kissinger was singing his praises as a great man and all that sort of stuff. It was very different. era of American Chinese relations. But he was very flawed and, and, um, screwed up a lot of things in that last, you know, 20 odd years.

[01:30:35] Cameron: But, uh, before that, like, what he managed to do with the revolution and, uh, you know, building. You know, pulling China out of imperialism and, um, the, the, the century of humiliation and getting them onto some stable footing of a population of 500 million people and all that kind of stuff. Um, turning it around, he, he did an amazing job, but he couldn’t, couldn’t ex, couldn’t execute the last part.

[01:31:07] Cameron: Required dong. Anyway. Oh, I just got a Charlie horse. Just got a cramp in my Oh, Oh, Oh, I need a banana and some magnesium. I think I better go.

[01:31:21] Tony: All right.

[01:31:22] Cameron: got 10 minutes before my next show too.

[01:31:25] Tony: Okay.

[01:31:26] Cameron: Thank you, TK.

[01:31:27] Tony: that. I’ll talk to you next week.

[01:31:29] Cameron: Uh, you can talk to me Friday, but we’ll talk about that off air. All right. Cheers.

[01:31:34] Tony: Cheers. 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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