QAV 719 — Peaking at 99

QAV 719 Club

[00:00:00] Cameron: Wel­come to QAV episode 719. It’s the 7th of May. Tony, how are you doing? I believe Poi­fect had anoth­er win. I know this

[00:00:20] Cameron: because One of our lis­ten­ers emailed me and said that he won some mon­ey on Poi­fect over

[00:00:26] Tony: cool. That’s good. She did. She won the Ade­laide Guineas. And that means that hope­ful­ly she’ll be rac­ing up your way in a cou­ple of weeks in the Queens­land Car­ni­val. But yeah, it was a good win. Very strong win. Strong, strong per­for­mance. She looks good.

[00:00:43] Tony: Looks like she’s got some poten­tial.

[00:00:45] Cameron: So that’s two wins in a row.

[00:00:48] Tony: Mm hmm. It’s a streak.

[00:00:53] Cameron: so last week you said, I asked you if it was a big win, is like cel­e­brat­ing or like, that’s, it’s nice. This is the site. It does­n’t depend on the race and what the win­nings are,

[00:01:02] Tony: Oh, absolute­ly. So Sat­ur­day, the first one was just a provin­cial. Brace. Um, so the prize mon­ey was prob­a­bly dou­ble this time on Sat­ur­day, um, which was a list­ed brace. And if she looks like she’ll go up to Bris­bane for a Group 3, which is sort of step­ping up the lad­der. And if she does well, then she may go to the Queens­land Oaks, which is a Group 1.

[00:01:25] Tony: So we’re hop­ing to get her to a Group 1 this prepa­ra­tion, which is the pin­na­cle of rac­ing in the high­est prize mon­ey. So yeah. Look­ing for­ward to that. I mean, fin­gers crossed. You nev­er count your chick­ens in this busi­ness. You might, um, step in a pot­hole tomor­row and not race for six months. So yeah, we’ll see.

[00:01:40] Tony: But yeah, it was a great win. Real­ly, real­ly pleased and proud of it. Good win.

[00:01:45] Cameron: Hmm. Oh, that’s good. Con­grat­u­la­tions. Must be

[00:01:48] Tony: I did, I did think about, I scoped out air­fares to jump on a plane for Sat­ur­day to fly to Ade­laide and fly back that night. And I ummed In the end, I did­n’t. Um, I did­n’t want to jinx her, that’s how that worked, but um, yeah, hope­ful­ly I’ll see her in

[00:02:03] Tony: Bris­bane.

[00:02:05] Cameron: Hmm. Oh, good. It’d be nice to have you up here.

[00:02:07] Tony: Yeah,

[00:02:08] Cameron: Well, Berk­shire Annu­al Meet­ing this week, Tony, how much of the 7 and a half hours did you get through?

[00:02:16] Tony: well I’ve only got through about the first hour so far, but uh, love it, just so good. I actu­al­ly found a pod­cast, I’m lis­ten­ing to the pod­cast and it’s, I think it’s made by some­one who smug­gles in a, Record­ing device, because I remem­ber when I went there, they, they, they, lots of signs up say­ing no record­ing, no videos, et cetera, et cetera, because they, um, they always show a film at the start and it’s usu­al­ly Hol­ly­wood stars and sport­ing stars and busi­ness stars have giv­en their time for free and it’s on the basis that it gets shown at the AGM, but not rebroad­cast.

[00:02:50] Tony: So, but this pod­cast actu­al­ly, some­one must’ve smug­gled in a, an iPhone or some­thing because you hear the, you know, you obvi­ous­ly can’t see it on the pod­cast, but you can hear the, the, um, uh, the trib­ute they put togeth­er for Char­lie. So it’s prob­a­bly 10 min­utes of his sto­ry, famous say­ings, great quotable quotes.

[00:03:09] Tony: And that, that so far has been the high­light of what I’ve heard and what I’ve read from the AGM. Some of his quotes are amaz­ing.

[00:03:17] Cameron: Yeah,

[00:03:18] Tony: Yeah, I mean, I mean, so Buf­fett, it’s a pas­tiche of the last, what­ev­er it is, 55 years or some­thing of, 57 years of AGMs, but there’s some great quotes. Buf­fett, Buf­fett talks about how, um, When he was first start­ing out back in about 1957, he was talk­ing to a doc­tor and his wife, who were neigh­bors of his par­ents in Oma­ha.

[00:03:41] Tony: And he said he was most­ly speak­ing to the wife about invest­ing in his part­ner­ship. And the doc­tor was sit­ting in the back­ground, not say­ing much. And after about 20 min­utes, the doc­tor goes, hon­ey, give him a hun­dred grand. And that was a big deal back to Buf­fett. Back in the days when Buf­fett was start­ing out with his part­ner­ship, it was like 20 per­cent of the mon­ey he had, uh, invest­ed.

[00:04:04] Tony: And, um, after they talk a bit fur­ther, Buf­fett asks the doc­tor, You’ve been sit­ting in the back­ground not say­ing much, why? You know, what did I say that made you want to invest 100, 000 in my fund? And the doc­tor said, You sound like Char­lie Munger.

[00:04:22] Tony: And Buf­fett said,

[00:04:23] Cameron: that’s

[00:04:25] Tony: And Buf­fett said, wow, I’d like to meet this guy. So that was back in 1957.

[00:04:30] Cameron: I think he quotes that sto­ry in, um, the Wit­ten Wis­dom, Char­lie’s Almanac, it’s in there, I think, and one of the things that he wrote, yeah.

[00:04:37] Tony: Yeah. Oh, these are all,

[00:04:38] Cameron: heard about Char­lie.

[00:04:40] Tony: Yeah. these are all,

[00:04:40] Cameron: oh, yeah, right.

[00:04:43] Tony: yeah, And then, uh, like he goes on from there talk­ing about how, when Char­lie and he final­ly caught up and, uh, Char­lie’s wife asked Char­lie after a while, how come you’re spend­ing so much time with this War­ren guy? He spends his whole day laugh­ing all day and he nev­er eats any veg­eta­bles. And War­ren says they went away on a hol­i­day once and their wives asked him to wear name tags so they could tell them apart.

[00:05:07] Tony: But some of,

[00:05:07] Cameron: AGM, oh,

[00:05:09] Tony: ahead.

[00:05:11] Cameron: in the AGM he said that Char­lie was peak­ing at the age of 99. The world was beat­ing down a door. To spend time with him, he nev­er delib­er­ate­ly did a day of exer­cise in his entire life and ate what­ev­er the hell he want­ed. And at 99 he was peak­ing, peo­ple, you know, he’s like, just a long list to be, he said Elon Musk went and caught up with him before he died, every­one want­ed to spend time with Char­lie, at 99, so, that’s a, that’s an incred­i­ble life, isn’t it?

[00:05:39] Tony: It is, yeah, and there was lots of trib­utes. I mean, they played this, um, pas­tiche of Char­lie’s quotes and sto­ries and, and then Buf­fett made a quite a mov­ing speech about how when they first met, the dif­fer­ence between Char­lie and War­ren was that, uh, War­ren want­ed, want­ed to know the results and Char­lie want­ed to know how.

[00:05:57] Tony: The results hap­pened and how, you know, Buf­fett uses the exam­ple that Buf­fett would turn a light bulb on and see the results that the room got bright, but Char­lie would want to know the dif­fer­ence between AC and DC elec­tri­cal cur­rents. And Buf­fett took a, Buf­fett would, you know, Buf­fett want­ed to buy a house, but Char­lie was inter­est­ed in the archi­tec­ture.

[00:06:17] Tony: And he, Buf­fett then goes on to say, and that came through in their rela­tion­ship because it was real­ly Char­lie who was the archi­tect of Berk­shire

[00:06:24] Tony: Hath­away.

[00:06:27] Cameron: And, in um, In his com­ments at the begin­ning of the annu­al meet­ing, War­ren said that the most, actu­al­ly, no, I think it might have been dur­ing the Q& A. There was a kid, looked like he was about 13, who got up and asked a ques­tion. He said, if you had one more day with Char­lie, what would you do? How would you spend it?

[00:06:48] Cameron: And War­ren said, prob­a­bly doing the same thing that we always did. But he said that the most fun that they ever had togeth­er was when some­thing they did failed. Because then they had to work hard to get them­selves out of it. He said, when you do, when some­thing works, you know, it’s just, oh yeah, it works.

[00:07:08] Cameron: It’s not that excit­ing. It was when some­thing went wrong that they actu­al­ly need­ed to step up and fig­ure it out. And he said, that was when they had a lot of fun. He just said that, yeah, same thing though, that they just laughed all the time. They just laughed. And, uh, whether it was play­ing golf or play­ing ten­nis or talk­ing about busi­ness and invest­ing, it was just, they just had a good time.

[00:07:30] Cameron: Always.

[00:07:31] Tony: That’s incred­i­ble, isn’t it? Some of the oth­er, oth­er quotes that came out of this video, um, you may have heard these before. And look, I should, I should say If any­one wants to read a good read, just type in Google Char­lie Munger quotes and there’s hun­dreds of them list­ed on var­i­ous web­sites that are great to read.

[00:07:51] Tony: Some of the ones

[00:07:51] Cameron: real.

[00:07:52] Tony: yes, some of the ones I like, back from the dot com days, Char­lie’s talk­ing about good inter­net com­pa­nies and bad inter­net com­pa­nies and he says if you mix raisins and turds, they’re still turds. Uh, he said, he said, uh, I’d rather throw a viper down my shirt than hire a com­pen­sa­tion con­sul­tant.

[00:08:13] Cameron: Okay.

[00:08:13] Tony: there it, he was, no, this was at the time when, um, uh, CEO pay was a thing. That’s the con­text of it, and Char­lie blamed the com­pen­sa­tion con­sul­tants who get hired by boards of direc­tors to basi­cal­ly say you’ve got to pay this guy a lit­tle bit more than what the oth­er guy’s get­ting paid, oth­er­wise you’ll lose him to that com­pa­ny or what­ev­er, so yeah.

[00:08:33] Tony: He was­n’t a fan of com­pen­sa­tion con­sul­tants. Uh, and the last one I thought was fun­ny. He said, To say account­ing for deriv­a­tives in Amer­i­ca is a sew­er is a dis­ser­vice to sew­ers.

[00:08:48] Cameron: Uh, well, it was, there was some sort of sweet, uh, and, and, uh, poignant moments, I guess, in what I’ve seen of it. There was one moment where, War­ren answers a long ques­tion about some­thing, I can’t remem­ber what, and then he, by reflex, he goes, Char­lie? And then he goes, Oh, uh, yeah,

[00:09:10] Tony: Yeah,

[00:09:10] Cameron: said, Oh, sor­ry. He said, I, I, I promised myself I was­n’t going to do that today, but old habits die hard or some­thing like that.

[00:09:18] Cameron: Yeah. And he got Greg to answer it. Yeah.

[00:09:20] Tony: yeah, And he got a got a round of applause for that. Got a, got a, got a, an ova­tion after the video trib­ute for Char­lie and then Huf­fett comes on and goes, um, you know, don’t waste all those claps, we’re still

[00:09:32] Tony: here for lat­er.

[00:09:33] Cameron: Yeah. Don’t waste them all on Char­lie. Yeah. Like I, I thought he’d be a lot more, um. I don’t know, uh, sad, uh, than he was. He seemed to be, you know, his nor­mal self and upbeat and chirpy, I guess, you know, he’s had some time to process it, what­ev­er, but it was, I mean, I felt, I felt it was a big moment, like see­ing War­ren up there by him­self was

[00:09:57] Tony: Mm.

[00:09:59] Cameron: I felt sad, you know.

[00:10:01] Tony: It was like in COVID when he was there by him­self with Greg, cause I could­n’t, uh, actu­al­ly have peo­ple present.

[00:10:08] Cameron: um, just felt like, I don’t know, Alex Van Halen when Eddie Van Halen died or some­thing like that. Mem­ber, the mem­ber, key mem­ber of the band is gone, you know. Um,

[00:10:18] Tony: and look, War­ren isn’t get­ting any younger too, he did say at some stage his eyes and his hear­ing was going, so, and you could tell he was an old man speak­ing. For the first time in a long time I’ve sort of real­ly noticed that lis­ten­ing to

[00:10:29] Tony: the audio.

[00:10:32] Cameron: voice is very soft and croaky. Mind you, Greg’s isn’t that much bet­ter.

[00:10:36] Tony: Yeah.

[00:10:38] Cameron: Greg

[00:10:39] Cameron: sounds just like War­ren, actu­al­ly. A cou­ple of oth­er Things that I not­ed down here, um, some­body asked him about AI. He said, I don’t know any­thing about AI, but he did say the genie is halfway out of the bot­tle. He was com­par­ing it to the devel­op­ment of nuclear weapons and, you know, we don’t know real­ly what the result is going to be, but it seems to be hap­pen­ing any­way.

[00:11:02] Cameron: So we’ll just have to wait and see. He did say that some­body showed him just recent­ly, a fake video of him­self cre­at­ed by AI say­ing things. And he said it. looked and sound­ed just like him. He knows that he’d ever said those things, but he said, even his fam­i­ly would­n’t be able to tell the dif­fer­ence. Um, and he said, I would, I would prac­ti­cal­ly send mon­ey to myself if I saw that video ask­ing for mon­ey.

[00:11:30] Cameron: Um,

[00:11:30] Tony: Yeah.

[00:11:31] Cameron: and the only oth­er note I’ve got, he was, some­body asked him about. If self dri­ving cars actu­al­ly become the stan­dard, as Elon and oth­er peo­ple claim they will, Elon appar­ent­ly has quot­ed inter­nal Tes­la sta­tis­tics say­ing that acci­dent rates from self dri­ving cars are 50 per­cent low­er than acci­dent rates when humans are dri­ving them.

[00:11:56] Cameron: What the impact of that will be on Geico’s insur­ance rev­enues and

[00:12:01] Tony: Mmm.

[00:12:03] Cameron: And War­ren said some­thing to the effect that low­er car acci­dents would be good for soci­ety and good for soci­ety is what we’re look­ing for. Ralph Nad­er has done more for the Amer­i­can con­sumer than almost any­one. I thought that’s, that’s War­ren, right?

[00:12:19] Cameron: It’s, it’s not about rev­enues and prof­its at the end of the day. It’s about what’s good for soci­ety. He’s a, he’s the real deal. Good

[00:12:27] Tony: yeah. I agree. And I mean, I agree Ralph Nad­er. I mean, I grew up a lit­tle bit after Ralph Nad­er when he became a thing, but it was, he was, I mean, he was run­ning for pres­i­dent, I think, when I first became aware of him. But peo­ple should go back and watch that lit­tle clip on Unsafe At Any Speed. That was just an amaz­ing rev­e­la­tion.

[00:12:46] Tony: That doc­u­men­tary about, uh, How one of the big auto com­pa­nies in Amer­i­ca worked out it was cheap­er to, uh, pay com­pen­sa­tion to the vic­tims of the cars that failed because of an error in the man­u­fac­ture than it was to get back and retro­fit the cars and fix it. Yeah, a kind of high­light or low­light of cap­i­tal­ism,

[00:13:08] Tony: real­ly.

[00:13:09] Cameron: I know Chris­sy vot­ed for him and I think it was the, one of the pres­i­den­tial elect, I think it was the one when Bush Jr. was run­ning against Al Gore and peo­ple like her that vot­ed for Nad­er got crit­i­cized after­wards because they split the Demo­c­rat vote and allowed Bush to win, etc, etc. I’ve always called bull­shit on that.

[00:13:34] Cameron: I mean, I think democ­ra­cy means that you should vote for the per­son that you think is best for the job. And if you’re split­ting the vote, so be it. If the

[00:13:42] Tony: Well, and it’s a demo­c­ra­t­ic coun­try.

[00:13:45] Cameron: not the right per­son,

[00:13:46] Tony: Cor­rect. If they can’t attract some­one who likes Ralph Nad­er, then they’ve got a lot of prob­lems, haven’t they? They’re in the camp of the auto indus­try, who would rather pay com­pen­sa­tion than for recalls. So, yeah. But I mean, that slo­gan has just stuck with me in invest­ing terms as well, to turn it back into QAV par­lance.

[00:14:05] Tony: But, you know, um, From mem­o­ry, the title of that doc­u­men­tary comes from the fact that, uh, the auto­mo­bile man­u­fac­tur­er worked out that the car would be safe up to a cer­tain speed. And, you know, part of their mit­i­ga­tion is they put stick­ers in the car say­ing, you know, don’t dri­ve this above what­ev­er it was, 60 miles an hour or what­ev­er the num­ber was.

[00:14:27] Tony: And that’s, and that’s why Nad­er chose to call his doc­u­men­tary unsafe at any speed. Um, because the car would get speed wob­bles and then flip. And, um, for a long time, and prob­a­bly still even now, I still see arti­cles that talk about the risk reward trade off and how, you know, if, if you, if some­thing does­n’t pay you much, um, It might still be good for you because it’s a low risk invest­ment or, or, or that there’s a kind of slid­ing scale where if you’re more aggres­sive, you can go after some­thing which has a high­er chance of not turn­ing out for you, but it pays a bet­ter reward.

[00:15:04] Tony: Often­times these assess­ments are made on volatil­i­ty, which is not a good way of mea­sur­ing risk, I don’t think. But any­body who tells you to, So, you know, take a punt. This is going to rec­om­pense you for the risk of invest­ing your hard earned in a par­tic­u­lar­ly shaky invest­ment. It should just be ignored.

[00:15:21] Tony: There’s, you know, that volatil­i­ty or the chance of los­ing your mon­ey is unsafe at any speed, right? It’s if it’s a bad invest­ment, it’s a bad invest­ment. It does­n’t mat­ter if it’s bad or good. Propos­ing to return you 10, 20, 30, 40, 50% per annum in cagr. If it’s a, it’s a fun­da­men­tal­ly flawed invest­ment. It’s unsafe at any speed.

[00:15:42] Tony: Um, and for a long time there was a sort of, you know, qua­si the­o­ry in invest­ment cir­cles that you could put a bit of your port­fo­lio into spec­u­la­tive invest­ments because you know, the, if, if they, if they go under you don’t lose much. But if they win you, they’ll shoot the lights out for you. And that’s just rub­bish.

[00:15:58] Tony: It’s like, why would you put a scent into some­thing that could. Wipe out cap­i­tal com­plete­ly.

[00:16:04] Cameron: You know, I have to remind myself that though, every time I look at the Bit­coin price, you know, it’s very, um, uh, what’s the word, um, what’s the word when some­thing’s, entic­ing, I guess, it’s very entic­ing, allur­ing, yeah, you see the amount of growth that it’s had in the last six months,

[00:16:27] Tony: Mm hmm.

[00:16:27] Cameron: you think, oh, could have been part of that, and I have to remind myself, it’s, well, it’s just like, okay, you’re either going to be a gam­bler, Or you’re not.

[00:16:37] Cameron: And that’s a line that you either cross or you don’t cross. And, you know, I, I don’t want to cross it because I think once it’s slip­pery slope, I say this a bit, you know, we do at my Kung Fu school, we have these two fit­ness class­es. Wednes­day nights and Sat­ur­day morn­ings that are just bru­tal. High intense, high inten­si­ty fit­ness class­es that just kill me.

[00:17:00] Cameron: And I nev­er want to go because I’m going to be sore for days after­wards like I am today. But I know if I don’t go to one, if I skip one because I’m like, ah, you know, it’s too hard. That’s it. I know myself well enough that if I make an excuse to opt out one time, it’s like an alco­holic hav­ing the first drink, right?

[00:17:22] Cameron: If I make an excuse one time, I’ll make an excuse a sec­ond time, and then I’ll make an excuse a third time, and I just can’t. I mean, I just, I can’t allow myself to step over that line because it’s a slip­pery slope.

[00:17:36] Tony: Yeah.

[00:17:37] Cameron: speak­ing of slip­pery slopes, Rat­Poi­son­Squared,

[00:17:40] Tony: Bit­coin, it’s, it was­n’t long, it was­n’t very long ago that, um, turds and raisins quote was made, but I think that was made about dot com stocks, but I think it equal­ly applies to Bit­coin too.

[00:17:54] Cameron: he called Bit­coin, I think, did­n’t he?

[00:17:55] Tony: Yeah,

[00:17:57] Cameron: Um. I want to talk about Michael Pas­coe and Chi­na, but I know you’ve got a Chi­na sto­ry com­ing up, so we can save it for that. Um, just a cou­ple of oth­er quick news items though. Um, we did a poll a cou­ple of days ago, or last week, about a US show. You know, we’ve been talk­ing for years about one day doing a U.

[00:18:18] Cameron: S. show, um, uh, focus­ing on U. S. stocks. We’ve got a few lis­ten­ers in the U. S. and in North Amer­i­ca that have been ask­ing us to do that. I start­ed the Stock­o­pe­dia U. S. port­fo­lio six or sev­en months ago with a view of dip­ping a toe in the water with the U. S. mar­ket and see­ing how the check­list per­formed. It seems to have been doing okay.

[00:18:41] Cameron: So we Did a poll last week to say, hey, what if we did a US show once a month? So one out of every four shows that we do, week­ly shows, we focus on the US mar­ket. The over­whelm­ing response so far to the poll has been pos­i­tive, about 90 per­cent of the peo­ple that have respond­ed to it. Said yes, they would like that.

[00:19:03] Cameron: So, uh, we’ll prob­a­bly do that. Uh, we’ll see how it goes. Uh, I, you know, I think for us, it’s just test­ing the waters and get­ting a feel for the U. S. mar­ket and see­ing what we can make of their, um, struc­ture, their, their, their mar­ket, how the, how QAV works over there, look­ing at things like div­i­dends and tax­es and report­ing peri­ods and Some things that are going to be new for us, but I just want­ed to flag that for peo­ple

[00:19:33] Tony: yeah,

[00:19:34] Cameron: the poll.

[00:19:35] Tony: yeah, good. That’ll be inter­est­ing. I mean, I have no expe­ri­ence in doing it, so, and no track record, but I think it’s worth­while hav­ing a go, see­ing, uh, see­ing what we

[00:19:46] Tony: can dis­cov­er. Mm hmm.

[00:19:48] Cameron: I did a new poll for this week’s newslet­ter, by the way, for the club newslet­ter that went out today. What kind of rule one rule are you fol­low­ing? 10%, 20 per­cent or not fol­low­ing it at all? I’m inter­est­ed to see what peo­ple come back with. So far, there’s only been a few peo­ple that have respond­ed to it this morn­ing.

[00:20:06] Cameron: Most peo­ple have said that they’re doing 10 per­cent still, but I’m inter­est­ed to see.

[00:20:15] Cameron: SXE, I want­ed to men­tion. SXE, South­ern Cross Elec­tri­cal, uh, one of the stocks in our port­fo­lio, one of our port­fo­lios. announced yes­ter­day that they want a new con­tract and it’s not real­ly going to deliv­er any­thing this year in terms of prof­its but they put out a prof­it guid­ance update which as far as I can tell basi­cal­ly said yeah it’s still what we said it was going to be last time but the share price went up 21 per­cent any­way.

[00:20:45] Cameron: Yes­ter­day. So, uh, that helped things a lit­tle bit. Um, cause we had the Atlas Pearls ker­fuf­fle, uh, not that long ago, a week or so ago. But it was, it’s nice when one of the stocks does that. I haven’t checked to see what it’s doing today. Let me have a quick look, see if that held. Um, no, it did­n’t. Okay. Well, bug­ger you.

[00:21:09] Cameron: Oh, no, it’s still pret­ty good. It’s, it’s come back a cou­ple of cents or some­thing, but it’s still up. So there you go. Jump from 1. 22. To a dol­lar 50 yes­ter­day, cur­rent­ly trad­ing at about a dol­lar 47. So, but real­ly again, when I read the prof­it guid­ance, it said, look, we just got this new con­tract. It’s not real­ly gonna cha have an impact on our, uh, prof­it this year, but it’s good for next year.

[00:21:34] Cameron: But, uh, and you know, we’re near­ly the end of the finan­cial year, I guess, but, um, yeah, it’s good.

[00:21:40] Tony: it’s good. Well, I’ve got a cou­ple of news sto­ries, too, I can go through. Um, I do have some more, And notes from the Berk­shire AGM, but I can leave those until lat­er, uh, because we’ve cov­ered a few of them. Um, so, stocks in the news, and some of this is a bit apro­pos of noth­ing, but, um, I just thought I’d lead off with, uh, your old friend Apol­lo Tourism and Leisure.

[00:22:05] Cameron: Uh,

[00:22:05] Tony: now called THL. And it was in today’s paper. So I did­n’t send you through an arti­cle before we jumped on the, on the pod­cast, but, um, head­line is THL in 200 mil­lion wipe­out as sales slump. So the curse of Apol­lo is alive and well. Um, the mar­ket cap­i­tal­iza­tion of THL has been. It has fall­en by more than a third, or 200 mil­lion, after the camper van and car­a­vans group told investors it would miss its prof­it fore­cast.

[00:22:34] Tony: THL, which has a fleet of 7, 200 rental camper vans under brands includ­ing Brits, Maui and Apol­lo, and also a sub­stan­tial busi­ness sell­ing the vehi­cles, warned the prof­it for the year would be up to 31 per­cent low­er than the fore­cast issued in Feb­ru­ary. So um, the curse con­tin­ues

[00:22:53] Tony: with this busi­ness.

[00:22:55] Cameron: I’m

[00:22:55] Tony: Has­n’t been on the buy list for a long time.

[00:22:57] Tony: Check it his­to­ry. It was

[00:22:58] Cameron: what I was going to ask. the

[00:22:59] Tony: the more recent lis­ten­ers. Apol­lo was one of the first stocks we put into the dum­my port­fo­lio five years ago. The first,

[00:23:07] Cameron: Yes.

[00:23:08] Tony: what hap­pened to it? I think it

[00:23:09] Cameron: We had to sell it.

[00:23:11] Cameron: And then we had to buy it back again, and then we sold it again, and I said nev­er again, and then we did buy it again, and we sold it again at some point, but,

[00:23:20] Tony: And along the way, it’s had a, it’s had a, an audit red flag for us. Um, went through a big upturn when it, because it had a stake in a com­pa­ny called Cam­pli­fy, which is, um, some kind of camper van shar­ing app. like Airbnb and then dur­ing COVID it hit the skids because of no one being able to trav­el and then it’s merged with a New Zealand com­pa­ny to form THL and now that they’re blam­ing the cost of liv­ing increas­es and infla­tion for not being able to sell as many vans that they nor­mal­ly would dur­ing this time of the year and that’s impact­ed their fore­cast for

[00:23:58] Tony: prof­itabil­i­ty.

[00:24:00] Cameron: uh, well I can’t, I can’t see THL on our buy list at all, look­ing at the buy list his­to­ry. Right, well that’s a good thing. I have to set a lit­tle alert for that to make sure I nev­er buy it by mis­take if it comes on. THL,

[00:24:16] Tony: yeah, but also too a good thing we got out of it when­ev­er we did in our dum­my port­fo­lio a long time ago.

[00:24:22] Cameron: hmm.

[00:24:23] Tony: Curse of the Pulled Pork. I’m heavy on curs­es this week. Apol­lo and now the Curse of the Pulled Pork. So a com­pa­ny called Karoon Ener­gy, which I did the Pulled Pork on a month or so ago, has been, I guess, attacked.

[00:24:39] Tony: Or ques­tioned by a com­pa­ny called Sand Cap­i­tal and anoth­er com­pa­ny called Samuel Ter­ry Asset Man­age­ment. Um, there’s been a cou­ple of arti­cles in the last week about these, uh, two activist invest investors. Um, I, I kind of call­ing this one out because, um, if any­one did buy Karun, it was­n’t the buy list for a while, it’s now a sell.

[00:25:01] Tony: And that some­times hap­pens when these activists investors take stakes in a com­pa­ny and then have a high price. high vis­i­bil­i­ty cam­paign attack­ing the com­pa­ny, guess what hap­pens, the share price drops. Peo­ple just don’t know what to believe, um, or assume the worst case that the activist investor is right.

[00:25:21] Tony: Um, whether they are or not, I guess I’ll leave it up to, to, um, lis­ten­ers to do their own due dili­gence, but they should have sold out by now cause it’s, it’s gone through a 3PTL sell line. Um, what they’re, what they’re say­ing in a nut­shell is that, uh, these two activist firms want the board to return cap­i­tal to share­hold­ers via div­i­dends or buy­backs, um, and they’re ral­ly­ing against recent acqui­si­tions such as Hou­dat.

[00:25:45] Tony: and the cap­i­tal rais­es to fund them. So they’re also tak­ing aim at, uh, at the, uh, way man­age­ment is incen­tivized. They claim that Karoon is pay­ing man­age­ment to, uh, acquire new assets. And that involves, um, rais­ing of funds, which they seem to be against. But I, I haven’t dug deeply into this, but I seem to recall the rea­son why Hou­dat was bought was to diver­si­fy away from Bua­na, which was the Brazil­ian oil field that Karoon owned.

[00:26:17] Tony: And, um, I think both from a sort of geog­ra­phy sort of risk and, but also I think Berwana did­n’t have the sort of, uh, a life of asset that they were after, so they had to buy some­thing else. So I’m not sure that they’ve done the wrong thing with pur­chas­ing this oil field, um, but some­one thinks they has. they

[00:26:37] Tony: have.

[00:26:39] Cameron: What do you think the chances are that these activists are also short­ing the stock or, you know, using options to buy in when it comes down or what­ev­er?

[00:26:51] Tony: yeah, that’s, that’s the old play­book, isn’t it? So I’d say it’s rea­son­ably high.

[00:26:55] Tony: I’m just going to

[00:26:56] Cameron: there,

[00:26:56] Cameron: there’s

[00:26:56] Tony: the,

[00:26:56] Tony: I

[00:26:58] Cameron: wrong with that, like, legal­ly, right? To, you know, crit­i­cize a com­pa­ny and dri­ve down its share price when you’ve got options to buy it at a low­er price?

[00:27:09] Tony: don’t think so. I mean, there prob­a­bly are some rules around it, but none spring to mind. Just look­ing at in Stock Doc­tor, the per­cent­age short­age on Karoons has gone down gen­er­al­ly over the last year or so, but has ticked up a lit­tle bit in the last cou­ple of months. So the last two months, but not by much.

[00:27:29] Tony: So yeah, they could be short­ing it. Um, but you know, Karoon have been fair­ly silent. on, um, on their response. So that’s always the best offen­sive. They dis­agree with what, you know, what San­don is say­ing. They should come out and say why.

[00:27:45] Cameron: Yeah, well, there you go. We did sell it. I had to rule 1 it about a month ago, 11th of April. Um, and I think it was at 2. 05. It’s now below two bucks. So, glad I rule 1’d it when I did.

[00:28:03] Tony: Yeah, good. Uh, and then, um, one more, two more, some good news this time, or poten­tial­ly good news. Talk­ing about aus­tel. They’ve been in the news again this week. The ship builder from Perth Head­line used in the A FR was no con­cerns with South Kore­an takeover. Bid for Aus­tel says Miles. The defense min­is­ter, um, Kore­an defense giant is grow­ing more con­fi­dent.

[00:28:30] Tony: The FIRB will back its quest for Perth Ship­builder Aus­tel as defense min­is­ter Richard Miles said the Albanese gov­ern­ment had no con­cerns with the bid. So the. The bid was lobbed at 282. 50, the shares for Austell have nev­er trad­ed at that price. Large­ly because peo­ple did­n’t think the bid would go ahead.

[00:28:52] Tony: Large­ly because they need both Aus­tralian gov­ern­ment and US gov­ern­ment approval to change from an Aus­tralian owned com­pa­ny to a Kore­an owned com­pa­ny. How­ev­er, that’s look­ing, you know, a lit­tle bit more like­ly because Aus­trali­a’s kind of wav­ing it through and say­ing that, um, they have no prob­lems. Um, but a fol­low up arti­cle a lit­tle bit after that, Aus­tralia, Austal back­ers won Han­wha Group in the race, so at the moment the board of Austal have not allowed Han­wha to do any sort of due dili­gence on the com­pa­ny, so Han­wha are bas­ing them.

[00:29:28] Tony: Thank you. Their offers so far on what they can see in the pub­lic domain, but if they do get due dili­gence, Han­wha have said that they will increase their bid, pro­vid­ing due dili­gence works out for them. Seoul head­quar­tered Han­wha is pres­sur­ing the Austal board to allow it to car­ry out due dili­gence and is will­ing to mount a revised offer of about 1.

[00:29:49] Tony: 5 bil­lion dol­lars. So that’s pret­ty much it. 50 per­cent high­er than the bil­lion dol­lar offer they’ve made so far at 2. 825. So, um, there’s poten­tial­ly some upside here. One of the ana­lysts fol­low­ing this, uh, uh, the com­pa­ny is called Chester, and the per­son is called Antho­ny Kavanagh. He says it was clear that Clear mul­ti­ple par­ties were stalk­ing Austell.

[00:30:13] Tony: The mar­ket is act­ing like there is noth­ing to see here. My gen­uine belief is the offer goes up to 3. 00 to 4. 00, 3. 50 to 4. 00. So a fair bit of, um, a bit of upside in, uh, poten­tial­ly in this takeover bat­tle. Still a few hur­dles to get, to over­come. One is the, um, the, uh, U. S. gov­ern­ment approval, but also too the founder of Austell still has about 9 per­cent and Twig­gy For­rest has, uh, in his.

[00:30:40] Tony: One of these com­pa­nies called Tatarang has a fair, a fair slice of the com­pa­ny too. Um, but you know, if it gets up, if it kind of dou­bles from where the share price is now, that might be become more attrac­tive to them

[00:30:51] Tony: to, uh, con­sid­er sell­ing.

[00:30:54] Cameron: So the share price is cur­rent­ly 2. 44, Tony, and you’re say­ing that the offer that was reject­ed was 2. 82 or 2. 85 or

[00:31:05] Tony: 2. 82.

[00:31:06] Tony: and a half.

[00:31:07] Cameron: 2. 82

[00:31:08] Cameron: Right. And they’re increas­ing their offer from there, so why aren’t the shares trad­ing up at, you know, a lit­tle bit less than that,

[00:31:16] Tony: Well, they haven’t increased, they haven’t increased their offer yet. They’re say­ing, if you give us due dili­gence, we’ll increase our offer. And they’re indi­cat­ing it could go up by 50 per­cent depend­ing on due dili­gence as a way of try­ing to get

[00:31:28] Tony: the com­pa­ny to engage with them.

[00:31:30] Cameron: But why aren’t the shares trad­ing clos­er to 2. 82 if that’s already the offer?

[00:31:34] Tony: Well, that’s what I’m say­ing. So the mar­ket is say­ing, well, you’ve got to get Cater­ing to vote, to, to, to, to, to be tak­en over or to accept the offer. You’ve got to get the founder to accept the offer and you’ve still got to get U. S. reg­u­la­to­ry approval as a defense con­trac­tor to accept the offer. The first domi­no I guess has fall­en though because the Aus­tralian gov­ern­ment says we have no prob­lems with Han­wha own­ing this com­pa­ny and it real­ly is an impor­tant deal for Aus­tralia.

[00:31:59] Tony: ASB would be prob­a­bly the biggest defense con­trac­tor that’s local­ly owned I would think. Big ship builder. So yeah, so, uh, I think you’re right. I think this ana­lyst, uh, Kavanagh, is say­ing that, um, peo­ple are under­valu­ing the poten­tial for this, and, uh, I guess

[00:32:18] Tony: we watch the space.

[00:32:21] Cameron: Well, I’m glad because after I added it to my super port­fo­lio last week, Ed Nixon, one of our mem­bers, emailed me and said, what are you buy­ing that for? Like it’s under an acqui­si­tion offer. And I said, well, two very good rea­sons. Num­ber one, um, I for­got it was under an acqui­si­tion offer and two,

[00:32:43] Cameron: two, It has­n’t set­tled yet, so who knows what could hap­pen, you know, the price could go up, and it has gone up, so suck it, Ed, it’s gone up 5 per­cent already since I bought it.

[00:32:54] Tony: Ed may,

[00:32:55] Cameron: But if it goes,

[00:32:55] Tony: now. Ha ha ha ha Ha

[00:32:59] Cameron: well, if it goes up to 3. 50 or 4. 00, as Mr. Kavanagh is say­ing, then it’ll be hap­py days. But, um, I was won­der­ing, after Ed remind­ed me that you just, you know, Talked about it and that it was under an offer. I was like, well, I should have , I should go back and lis­ten to the pod­cast again. Uh, ’cause as soon as,

[00:33:16] Tony: you were

[00:33:17] Cameron: I edit the pod

[00:33:18] Tony: Ha ha ha ha ha

[00:33:19] Cameron: as soon as I edit the pod­cast, I, you know, it’s gone.

[00:33:23] Cameron: It’s gone from my ram. As soon as I edit it, it’s com­plete­ly gone.

[00:33:27] Tony: Well, we’ll get a RAM upgrade. Ha ha ha

[00:33:30] Cameron: I don’t, trust me. I wish I could. Um, but, uh,

[00:33:36] Tony: to go back and lis­ten to the inter­view I did with Phil Mus­catel­lo on Shares for Begin­ners, because, um, again, this is just a rule of thumb, it’s a heuris­tic, but I, I do sell out rea­son­ably ear­ly in takeover bat­tles, but not until the board makes a rec­om­men­da­tion to accept. Until the board actu­al­ly capit­u­lates, it’s, it’s

[00:33:57] Tony: fair game.

[00:33:59] Cameron: well,

[00:34:00] Tony: also, there’s also the risk that Han­wha goes away because the board just won’t engage.

[00:34:04] Tony: So. You can go either way.

[00:34:07] Cameron: yeah. And I, I mean, the, the, so the, when I went back and looked at it, num­ber one, I was like, well, why isn’t it clos­er to the 2. 80 price? Cause you’d think that any­thing slight­ly less than that is a good price to buy in at if it’s gonna close at 2. 82, if you know, 5 per­cent less than that, you can still get your 5 per­cent CZ mon­ey.

[00:34:26] Cameron: But my con­cern with it is that, uh, Um, the advi­so­ry firm work­ing for Han­wha is Christo­pher Pyne, uh, Pyne and Part­ners, the uh, the some­thing poo­dle. What was his, what did they call him? The,

[00:34:37] Tony: Yeah.

[00:34:38] Cameron: was it Keat­ing who called

[00:34:39] Cameron: him a

[00:34:39] Tony: no, it was Gillard.

[00:34:41] Cameron: Or was it Gillard?

[00:34:42] Tony: Yeah. Some kind of poo­dle.

[00:34:45] Cameron: nev­er been a big admir­er of Christo­pher Pyne, so I was like, uh, he’s advis­ing,

[00:34:50] Tony: he’s, worked his mag­ic because these, the, Richard Miles has rolled over and said he’s hap­py to approve a change of own­er­ship in this com­pa­ny, so. He, he did fix it.

[00:35:02] Cameron: Yeah, okay. We’ll see. It’s not done yet. We’ll see.

[00:35:05] Tony: No,

[00:35:07] Cameron: All right. What else you got?

[00:35:08] Tony: I got, I got some oth­er bad news, uh, on Grain­Corp came out today with a, um, a cut to their guid­ance and the share price dropped three or four per­cent.

[00:35:17] Tony: Um, I own it, so it’s a bit of a bum­mer for me, but I just make peo­ple aware of that. It’s not quite a, a rule one or a 3PTL, but, um, if it keeps trend­ing down, it will be. So Grain­Corp faces ques­tions over its abil­i­ty to live up to its earn­ings tar­get after slash­ing guid­ance for the finan­cial year. 2024 as grain han­dling mar­gins tum­ble and West­ern Aus­tralia suf­fered dri­er con­di­tions.

[00:35:42] Tony: So Grain­Corp is the grain han­dling busi­ness, um, been around for­ev­er in Aus­tralia. Um, but yeah, it, it, uh, I think, I won’t, I won’t read out the rest of the arti­cle on today’s Fin Review, but, um, Grain­Corp paints the pic­ture of the, yes, it’s a sea­son­al com­mod­i­ty han­dler, But they use a term called look through earn­ings, so they try and use aver­age earn­ings to, um, to talk about how well the busi­ness is going.

[00:36:09] Tony: Um, ana­lysts are now say­ing with this down­grade, the, it’s going to fall below the look through earn­ings on aver­age, and it’s going to be a prob­lem. The prob­lem is also com­pli­cat­ed a bit because they have a, Some kind of deal with, um, with, uh, an insur­er, Aon, um, and they have a crop insur­ance pol­i­cy, which is designed to even out its finan­cial per­for­mance, but the way the insur­ance pol­i­cy works, um, is that they give mon­ey to the insur­er, um, if they I’m try­ing to work out the deal here.

[00:36:42] Tony: I’ll read the quote. Gov­ern­ment fore­cast­er ABARES esti­mates farm­ers in Queens­land, NSW and Vic­to­ria pro­duced a 2023 24 crop of 23. 1 mil­lion tonnes, above the 10 year aver­age of 21. 6 mil­lion tonnes. Based on the ABARES num­bers, Grain­Corp faces a fourth con­sec­u­tive pay­out to its insur­er AON under a crop insur­ance pol­i­cy designed to even out its finan­cial per­for­mance.

[00:37:08] Tony: So this is one of those crazy times when it’s, um, it’s had a down­grade, but it’s still doing bet­ter than it, um, it fore­casts in this insur­ance pol­i­cy. So even though it’s not the best of times for it, it’s going to have to pay AI insur­ance, some kind of, uh, pay­ment, uh, which it takes out as insur­ance, um, against hav­ing a real­ly bad year. And I think I’ve talked about this in the past, and I don’t know Grancourt well enough to know whether it’s a good deal that they’ve got, but the same sort of deal gets, um, you Looked at by min­ers. So, um, they can con­trol, you know, a floor, for exam­ple, on what they get as the price of gold or iron ore or what­ev­er, because they know that below that cost, I’ll start to lose mon­ey.

[00:37:52] Tony: Um, and, you know, it’s, they some­times work, they some­times don’t. It’s a, it’s a tricky sit­u­a­tion because the insur­er is try­ing to make mon­ey and the min­er’s try­ing to make mon­ey. So, um, some­one has to lose out in that tus­sle. Um, and, uh, uh, You know, I’ve seen some spec­tac­u­lar fail­ures over the years on those kinds of insur­ance deals.

[00:38:11] Tony: And a lot of, a lot of min­ers now don’t enter into them, they just, um, take an unhedged posi­tion and take it on the chin when, uh, when the com­mod­i­ty price falls too low for

[00:38:21] Tony: them.

[00:38:22] Cameron: Looks like Grain­Cor­p’s tak­en a real beat­ing over the last week or so. Dropped from 8. 60 on the 30th of April down to 7. 88 today. Yikes. That’s

[00:38:35] Cameron: hor­ri­ble.

[00:38:37] Tony: Yeah.

[00:38:38] Cameron: well, Speak­ing, speak­ing of bad num­bers, I just want­ed to flag, uh, for club mem­bers run­ning their own check­list. I already men­tioned this in the newslet­ter and Face­book, et cetera.

[00:38:48] Cameron: But just in case any­one missed that, um, Stock Doc­tor still hav­ing some issues with some data integri­ty. Uh, when we did the buy list yes­ter­day, I not­ed that ACR and RMD. Num­bers looked wonky. ACR was at the top of our buy list, but when I, and I’d nev­er heard of it before. And it’s fun­ny now, it’s a sure sign that

[00:39:12] Tony: Ha ha. Yeah.

[00:39:13] Cameron: prob­a­bly dodgy when

[00:39:15] Cameron: they’re flagged as it’s their first time on the buy list.

[00:39:18] Cameron: And I’m like, Hmm. So yes, uh, the shares out­stand­ing num­bers for ACR and RMD look wonky on Stock Doc­tor. They fixed up some of the ones that we. Alert­ed them about last week, but, um, sort of a bit of a cat and mouse game. I don’t know why they’re not going through and check­ing all of them. Um, they’re just let­ting me do their due dili­gence for them, appar­ent­ly.

[00:39:37] Cameron: So I should ask for a salary from Stock Doc­tor on that. So be care­ful. Um, before we do anoth­er news sto­ry, Tony, I want­ed to ask you about regres­sion test­ing. I, um, after the show last week, we did talk about regres­sion test­ing. Price less than con­sen­sus, which I ran dur­ing the show, for­got to update you before the end of the show, but did send you a text after­wards.

[00:39:59] Cameron: The result of price less than con­sen­sus as an iso­lat­ed met­ric was 14. 1%, which brings it into the top 10 of the iso­lat­ed, well, all of the regres­sion test­ings that I’ve run. Um, but, uh, not at the top, but still a Pret­ty good score. 14. 1. Um, have you had a chance, I sent you the code, did you have a chance to do any­thing this week?

[00:40:24] Tony: No, I haven’t. I’m still play­ing with it, hav­ing a look at it. Um, just back on that price to con­sen­sus, I, I, the thought crossed my mind after I got your text is that the major­i­ty of the stocks on the buy list, they’re less than their con­sen­sus. And so maybe we’re get­ting close to a sort of aver­age QAV response by fil­ter­ing on that met­ric.

[00:40:44] Cameron: The major­i­ty, well, first of all, I don’t think the major­i­ty have a con­sen­sus, because they’re too small to have ana­lysts look­ing at them. So they prob­a­bly don’t have a con­sen­sus.

[00:40:55] Tony: No, no,

[00:40:55] Tony: I

[00:40:55] Cameron: used to be the Stock Doc­tor con­sen­sus. You think most of them have a con­sen­sus?

[00:41:00] Tony: I would think so. Let me just call up my spread­sheet and have a look. Yeah,

[00:41:03] Cameron: we can do that, can’t we?

[00:41:05] Tony: yeah. Cer­tain­ly the small ones don’t. I actu­al­ly think there’s more ben­e­fit in look­ing at ones that don’t have a con­sen­sus because I think that’s where you have a bit of an edge because we’re find­ing those com­pa­nies before the ana­lysts are. And that’s, I want to run some work

[00:41:17] Tony: on that once I get this up and run­ning.

[00:41:20] Cameron: They’re also prob­a­bly gonna have a low A DT though, right?

[00:41:23] Tony: Yeah, that’s right. That’s going to be the issue. For sure. Um, but still, I mean, that’s, if that’s some­thing worth explor­ing, a port­fo­lio of out­per­form­ing low ADT stocks might still be worth look­ing at. Um, okay. 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14. Yeah, I think the major­i­ty of stocks, I’d say just a rough quick cal­cu­la­tion, 60 to 70 per­cent of stocks have a con­sen­sus fore­cast and the major­i­ty, maybe 80 or 90 per­cent of those are below the con­sen­sus fore­cast.

[00:41:58] Cameron: Oh,

[00:41:58] Tony: Just look­ing at it quick­ly.

[00:42:01] Cameron: Yeah.

[00:42:02] Tony: Yeah, so that was my first thought, but here I need to do some fur­ther analy­sis on that.

[00:42:07] Cameron: Right.

[00:42:08] Tony: did, I did have a ques­tion dur­ing the week about what the regres­sion test was, so I guess we’ve been throw­ing that term around. A lot, but maybe we should just explain our­selves here. Um, when we talk about regres­sion test­ing, we’re talk­ing about going back in time, in this case to 2016, and start­ing to then use data from then to run QAV for­ward and see how a port­fo­lio would have per­formed fol­low­ing the rules or as many of the rules as we can apply, giv­en lim­i­ta­tions on data.

[00:42:38] Cameron: Mm

[00:42:38] Tony: So that’s what we meant. Some­one, some­one had it in mind that regres­sion meant like you regress back to child­hood or you regress to old age or you get poor­er in per­for­mance and they won­dered if we were doing work on stocks that did­n’t meet the QAV num­bers. But yeah, any­way, just to clar­i­fy we are using QAV on his­tor­i­cal data and see­ing if we can tweak the check­list to get bet­ter per­for­mance.

[00:43:06] Cameron: I’m actu­al­ly, uh, going to ther­a­py and going back to my child, you know, under hyp­no­sis and going back to my child­hood state and look­ing at the stocks I would’ve invest­ed in if I was a child. Um, and see­ing how that plays out if I’m any rich­er, uh, today than I actu­al­ly am.

[00:43:25] Tony: What would those stocks be? Mat­tel?

[00:43:27] Tony: Um, haha, Lego. Haha,

[00:43:31] Tony: yeah.

[00:43:32] Cameron: Accord­ing to Chat­G­PT, regres­sion test­ing is a soft­ware test­ing prac­tice aimed at ver­i­fy­ing that pre­vi­ous­ly devel­oped and test­ed soft­ware still works after a change. Okay, well that’s not very help­ful. What about regard­ing invest­ments?

[00:43:50] Tony: Well that’s, yeah, that’s pret­ty close to what we were doing. So I know what that, that’s refer­ring to just debug­ging code. Right, you’ve made a change to the code and you’re test­ing it um, on pri­or data to make sure the bug, or the change to the code has­n’t intro­duced a bug. So it’s a sim­i­lar sort of

[00:44:04] Tony: con­cept.

[00:44:05] Cameron: Invest­ment ana­lysts may run regres­sion analy­ses on his­tor­i­cal mar­ket data to iden­ti­fy trends and cor­re­la­tions between dif­fer­ent eco­nom­ic indi­ca­tors and asset prices. Pre­dic­tive mod­els. By under­stand­ing the rela­tion­ship between vari­ables, ana­lysts build pre­dic­tive mod­els to fore­cast future price move­ments.

[00:44:24] Cameron: All returns based on changes in relat­ed fac­tors like inter­est rates, GDP growth, or infla­tion. Port­fo­lio test­ing. Investors might use regres­sion analy­sis to sim­u­late how a par­tic­u­lar change, such as an inter­est rate increase, would affect a port­fo­lio. This allows them to test their port­fo­lio against hypo­thet­i­cal future mar­ket con­di­tions and refine their invest­ment strate­gies.

[00:44:47] Cameron: So, we’ll sort of round about what we’re doing.

[00:44:50] Tony: Yeah, yeah, test­ing it, that’s, back­test­ing it, yeah.

[00:44:56] Cameron: Yeah. back­test­ing

[00:44:57] Cameron: What do we, what do you, what do you want to do? Blah, blah, blah, blah. Uh, do you want to talk about your Chi­na sto­ry?

[00:45:04] Tony: Yeah, I just came across a sto­ry, um, in the AFR last week, I found it quite chill­ing. And it, first of all, like, it grabbed my atten­tion. Um, it, the head­line is, Chi­na’s Gold Buy­ing Spree Rais­es Fears It Is Prepar­ing For Tai­wan War. So, um, it goes on. Uh, Chi­na has built up a 170 bil­lion stock­pile of gold, that’s US dol­lars, after a record buy­ing spree in a move that has raised fears Bei­jing is prepar­ing its econ­o­my for a pos­si­ble con­flict over Tai­wan.

[00:45:35] Tony: The Peo­ple’s Bank of Chi­na bought 27 tons of gold in the first three months of the year, tak­ing its reserves to a record of 2, 262 tons. Chi­na has been buy­ing gold steadi­ly since Octo­ber 2022, mak­ing its longest build up of the pre­cious met­al since at least 2000. Experts, I love this, experts, like unsourced experts, said Chi­na’s stock­pil­ing was like­ly to be an effort to guard its econ­o­my against West­ern sanc­tions in the event of a con­flict over Tai­wan.

[00:46:09] Tony: They do have an expert here. Jonathan Eel, Asso­ciate Pro­fes­sor at the Roy­al Unit­ed Ser­vices Insti­tute.

[00:46:16] Cameron: Asso­ciate

[00:46:16] Tony: Don’t know if, yeah, don’t know, I’ve nev­er heard of the RUSI, but any­way, he says the relent­less pur­chas­es and the sheer quan­ti­ty are clear signs that this is a polit­i­cal project which is pri­ori­tised by the lead­er­ship in Bei­jing because of what they see as a loom­ing con­fronta­tion with the Unit­ed States.

[00:46:35] Tony: Sir Ian Dun­can Smith, co UK’s Inter Par­lia­men­tary Alliance on Chi­na, says Set of the gold stock­pil­ing. If they get much clos­er to bul­ly­ing Tai­wan and coun­tries start to move their invest­ments out of Chi­na, it will give them a bit of padding to be able to ride through some of the dif­fi­cul­ties. Chi­na’s cen­tral bank began buy­ing short­ly after West­ern nations froze Rus­sian’s cur­ren­cy.

[00:46:57] Tony: So the impli­ca­tion is that Chi­na has learnt from watch­ing Rus­sia invade Ukraine. that they’ll need to pro­tect their cur­ren­cy by buy­ing gold in the case of poten­tial sanc­tions or the shut off of trade with Chi­na. So I thought about that for a while, like that is a plau­si­ble expla­na­tion for why Chi­na is buy­ing gold.

[00:47:19] Tony: But I also thought that there is a, you know, long stand­ing pol­i­cy or I guess a strat­e­gy of decou­pling. in the world and that, um, a lot of the trade is done in U. S. dol­lars and that by buy­ing gold, um, as a reserve, Chi­na’s kind of shoring up that the U. S. dol­lar might drop and that they might trade more off their own books in their own cur­ren­cy.

[00:47:42] Tony: Um, but the third, third thing I thought of after read­ing this arti­cle was we did see some ruc­tions in the share mar­ket after Rus­sia invad­ed Ukraine. If Chi­na does try and take back Tai­wan, if there’ll be a sim­i­lar sort of play out in the mar­ket. But gen­er­al­ly, if the share mar­ket sees some­thing hap­pen again, they’re not as scared of it as if, as when it hap­pens the first time.

[00:48:07] Tony: And we’ve seen that with the Mid­dle East, you know, the war in Gaza and Israel, that the share mar­ket has cer­tain­ly been affect­ed by it. The oil price went up and the gold price went up, but it has­n’t been sort of an end of worlds cat­a­stro­phe that some. Peo­ple fore­cast when con­flicts hap­pen. So I thought it was quite chill­ing.

[00:48:26] Tony: It’s the first time I’d seen that argu­ment that the buy­ing of gold by Chi­na could be in prepa­ra­tion for a take back of Tai­wan. But then I kind of set­tled down and thought, well, if it is, we don’t know how it’s going to play out and we’ll just keep doing what we do with our QAV

[00:48:41] Tony: check­list. Do you have any thoughts,

[00:48:44] Cameron: there’s, oh, well, I have the New York Times thoughts and the South Chi­na Morn­ing Post’s thoughts.

[00:48:50] Tony: They’re, reput­ed com­men­ta­tors on Chi­na.

[00:48:55] Cameron: well, no, and

[00:48:56] Tony: Experts, as the big review

[00:48:58] Tony: calls them.

[00:49:01] Cameron: Times, I expect­ed them to reflect the same sort of analy­sis as the one you just read out, but they did­n’t. Um, New York Times says, Chi­na is buy­ing gold like there’s no tomor­row. The glob­al price of gold has reached its high­est lev­els as Chi­nese investors and con­sumers, wary of real estate and stocks, buy the met­al at a record pace.

[00:49:26] Cameron: So basi­cal­ly the analy­sis in the New York Times is that, uh, con­sumers in Chi­na are putting their mon­ey in gold because they’re not con­fi­dent about, you know, real estate as an invest­ment, real estate and stocks. Um, but then it also says that the cen­tral banks, uh, buy­ing gold, again, basi­cal­ly what you said, because of their diver­si­fy­ing away from U.

[00:49:55] Cameron: S. trea­sury bonds, uh, part­ly because of the ten­sions between them and the U. S. and trade wars and all the oth­er ten­sions that are going on, uh, part­ly, I assume, to put some pres­sure on on the US econ­o­my. If Chi­na’s not buy­ing their trea­sury bonds, it could send a sig­nal to the mar­ket. Says here, Bei­jing is buy­ing up gold to diver­si­fy its reserve funds and reduce its depen­dence on the US dol­lar, long con­sid­ered the most impor­tant cur­ren­cy to hold in reserve.

[00:50:26] Cameron: Chi­na has been reduc­ing its US trea­sury hold­ings for more than a decade. As of March, Chi­na had about 775 bil­lion worth of US debt, down from about 1. 1 tril­lion in 2021. When Chi­na increased its gold hold­ings in the past, it bought domes­ti­cal­ly using Ren­min­bi, said Guan Tao, Glob­al Chief Econ­o­mist at BOC Inter­na­tion­al in Bei­jing.

[00:50:51] Cameron: But this time, he said the bank is using for­eign cur­ren­cies to buy gold, effec­tive­ly reduc­ing its expo­sure to the US dol­lar. and oth­er cur­ren­cies. Many cen­tral banks, includ­ing Chi­na, start­ed acquir­ing gold after the U. S. Trea­sury Depart­ment took the rare step of freez­ing Rus­si­a’s dol­lar hold­ings under sanc­tions imposed on Moscow.

[00:51:09] Cameron: Oth­er Amer­i­can allies imposed sim­i­lar restric­tions for their cur­ren­cies. Mr. Guan said the sanc­tions had shak­en the foun­da­tion of trust for the cur­rent inter­na­tion­al mon­e­tary sys­tem and forced cen­tral banks to pro­tect their reserves with more diverse hold­ings. So basi­cal­ly they’re say­ing we can’t trust the U.

[00:51:27] Cameron: S., not, uh Freeze our, uh, assets for just what­ev­er rea­son they want. And, uh, we need to, you know, diver­si­fy where we’re stor­ing our funds. And I sus­pect there, you know, there is some play here in terms of. Um, you know, I’ve, I’ve read a lot of sto­ries recent­ly about BRICS and how BRICS are try­ing to move away, uh, from the U.

[00:51:57] Cameron: S. dol­lar as the glob­al reserve cur­ren­cy. and it’s a del­i­cate bal­ance, but they’re try­ing to, you know, um, rely less on U. S. trea­suries and U. S. dol­lar as the reserve, and that could have a big impact. I’ve been re read­ing Michael Hud­son’s Super­impe­ri­al­ism book, um, in the last cou­ple of weeks. And, you know, I don’t know if we’ve talked about that before, I know I’ve talked about it on one of my shows, but, you know, he wrote that, he was a U.

[00:52:28] Cameron: S. econ­o­mist who, I think the first edi­tion came out in 72, and he’s revised it sev­er­al times since then. He now works in Chi­na, um, but his basic the­o­ry back then was that the U. S. was using the U. S. dol­lar as a reserve cur­ren­cy to finance their wars for free. Um, they were get­ting a huge ben­e­fit out of the fact that every, every for­eign coun­try basi­cal­ly had no option but to take all of the U.

[00:52:58] Cameron: S. dol­lars that they had and use them to buy U. S. trea­suries. And then the U. S. gov­ern­ment would just take that mon­ey and use it to build up their mil­i­tary. And then they would issue more trea­suries, which those coun­tries would have to buy. And it just kept re, you know, he calls it petrodol­lar recy­cling, right?

[00:53:15] Cameron: They would just, Keep recy­cling those funds back into, uh, U. S. mil­i­tary hege­mo­ny, 800 mil­i­tary bases around the world and using their influ­ence over the World Bank and the IMF to threat­en coun­tries with dif­fer­ent lev­els of sanc­tions if they did­n’t, uh, you know, run their econ­o­my the way the U. S. saw fit.

[00:53:37] Cameron: So any­way, that was inter­est­ing. I also South Chi­na Morn­ing Post has a slant on this talk­ing about gold rep­re­sents the only safe asset for Chi­nese con­sumers to pro­tect their wealth against infla­tion, asset price declines and geopo­lit­i­cal risks. But again, that’s con­sumers buy­ing the gold, not nec­es­sar­i­ly cen­tral banks buy­ing the gold.

[00:54:00] Cameron: Um, but it has a, um, Sim­i­lar take from the New York Times. Chi­na’s cen­tral bank bought 160, 000 ounces of gold bul­lion in March as it aims to diver­si­fy hold­ings away from US bonds amid strained bilat­er­al rela­tions. So, none of that’s a, you know, none of these sources are talk­ing about, you know, Uh, Poten­tial Inva­sion of Tai­wan, and by the way, Boosie, you men­tioned before, where Jonathan Eyal is from, I am aware of the Roy­al Unit­ed Ser­vices Insti­tute, it’s been around 193 years,

[00:54:35] Tony: Yep.

[00:54:36] Cameron: and it’s a defense and secu­ri­ty think tank head­quar­tered in Lon­don, found­ed in 1831 by my old friend, the Duke of Welling­ton, Arthur Welles­ley, the, uh, Napoleon’s arch­en­e­my,

[00:54:49] Tony: yeah.

[00:54:50] Cameron: who, If you believe Rid­ley Scot­t’s film, they had a love­ly break­fast togeth­er after Napoleon had sur­ren­dered to the British.

[00:55:01] Cameron: Uh, which nev­er hap­pened, nev­er hap­pened,

[00:55:04] Tony: I still haven’t seen that movie. I just can’t bring myself to watch it after lis­ten­ing to your reviews.

[00:55:10] Cameron: yeah. Yeah. Don’t it’s, it was, I’m

[00:55:12] Tony: Yeah, but get­ting back to this Chi­na sto­ry, I mean, I thought that was a real­ly inter­est­ing take on the pur­chase of gold by cen­tral banks. Could be right, may not be right. I remem­ber 10 years ago when Chi­na start­ed buy­ing lots of US trea­suries, there were sim­i­lar sorts of arti­cles out there say­ing, Oh, Chi­na’s doing this as a form of eco­nom­ic war­fare against the US.

[00:55:34] Tony: They’re going to buy all these trea­sury bonds and then try and triple, triple the US by sell­ing them all quick­ly or doing var­i­ous machi­na­tions with them. And At the same time, I thought, well, Chi­na’s a big trad­ing part­ner of the US, why would they do that? So, um, yeah, I have, I have a sim­i­lar sort of skep­ti­cism about this.

[00:55:53] Tony: Not that they may well take back Tai­wan, um, and may do it next year, which is what this arti­cle was sug­gest­ing, um, but again, from an invest­ment point of view, is it going to make a dif­fer­ence to us?

[00:56:05] Cameron: yeah, well, you know, maybe it will, maybe it won’t, we

[00:56:10] Tony: Yeah. It’s noise, isn’t

[00:56:11] Tony: it.

[00:56:12] Tony: Mm

[00:56:13] Cameron: With the Tai­wan thing, you know, I’ve been read­ing this biog­ra­phy on Deng Xiaop­ing and there was this inter­est­ing line I read last week, uh, it’s, it’s talk­ing about 1979, where Deng was going through the process of nor­mal­iz­ing rela­tions with, uh, The U.

[00:56:29] Cameron: S. and he flew to Wash­ing­ton and met with Jim­my Carter and met with Nixon, um, even though he’s out of pow­er, but it says in the book, uh, that in late 1979, the U. S. ambas­sador to Chi­na, a guy called Wood­cock says he was in con­ver­sa­tions about Tai­wan. with Dong. Because part of the deal was, uh, one of the chal­lenges that Dong had at the time was, the US was sell­ing weapons to Tai­wan, and, you know, Chi­na did­n’t like that, and this is around about the peri­od where, you know, Chi­na’s, um, try­ing to nor­mal­ize its rela­tion­ship with the US for eco­nom­ic rea­sons, and they’re also try­ing to ally with them against the Sovi­ets, and they’re tak­ing Tai­wan’s place in the Unit­ed Nations, and all this kind of stuff.

[00:57:14] Cameron: But they con­vinced Dong that he should just Turn a blind eye to the fact that they’re sell­ing weapons to Tai­wan and it says in the book Wood­cock respond­ed that he thought that after nor­mal­iza­tion with the pas­sage of time the Amer­i­can peo­ple would accept that Tai­wan was part of Chi­na and they would sup­port uni­fi­ca­tion which at the time many Amer­i­can offi­cials as well as Chi­nese offi­cials expect­ed would occur with­in sev­er­al years. So it’s like, just like, let’s just do the nor­mal­iza­tion. Peo­ple will get used to the idea. And in a cou­ple of years, you’ll be able to uni­fy with Tai­wan. Here we are, what­ev­er, 40 odd years lat­er, and it’s still this major flash­point red line. And of course, you know, with, with what’s hap­pen­ing with, um, Semi­con­duc­tors,

[00:58:05] Tony: Mm hmm. Mm

[00:58:06] Cameron: NVIDIA, near­ly all of NVIDI­A’s chips, near­ly all of AI on the, uh, you know, cer­tain­ly in the West­ern world today is run­ning on NVIDI­A’s chips, uh, NVIDI­A’s chips are near­ly all built by TMSC in Tai­wan, uh, TMSC builds the vast major­i­ty of the world’s advanced semi­con­duc­tors, the US are increas­ing­ly try­ing to stop Chi­na from being able to buy NVIDI­A’s Tai­wanese semi­con­duc­tors.

[00:58:32] Cameron: So, uh, you know, it is becom­ing, um, you know, a pret­ty crit­i­cal issue if Chi­na can’t buy semi­con­duc­tors out of Tai­wan at

[00:58:40] Tony: Yeah, that’s, I agree, that’s an eco­nom­ic dimen­sion that most peo­ple aren’t aware of. But yeah, you’re right, at some point it becomes attrac­tive for Chi­na just to take it over and get their hand on the

[00:58:51] Tony: semi­con­duc­tors.

[00:58:54] Cameron: So I saw this arti­cle by Michael Pas­coe. It was on, uh, Pearls and Irri­ta­tions, uh, John Mene­du’s, uh, web­site. And I thought this was inter­est­ing com­ing from Michael Pas­coe, who we’re nor­mal­ly used to talk­ing about eco­nom­ics and finance.

[00:59:10] Tony: Yep.

[00:59:11] Cameron: It’s called, uh, Our Biggest Chi­na Lie. Three things. Chi­na is win­ning from Gaza.

[00:59:16] Cameron: Chi­na grow­ing at 5 per­cent now is bet­ter than Chi­na grow­ing at 7 per­cent a decade ago. And Aus­trali­a’s biggest Chi­na lie is that we’re spend­ing half a tril­lion dol­lars on boats to pro­tect our sea lanes. Um, and, you know, the Gaza stuff I’ll skip over, but I like his analy­sis, and I think you’ve said sim­i­lar things in the past, but he talks about the fact that As he says in the intro, I guess, 5 per­cent at a cer­tain lev­el is bet­ter than 10 per­cent at a low­er lev­el.

[00:59:50] Cameron: He says, I’ve been watch­ing Chi­na for long enough to remem­ber when the coun­try’s GDP growth falling below 10 per­cent was called a dis­as­ter, when of course growth had to slow as the econ­o­my grew big­ger. In very sim­plis­tic terms, 7% of 200 is 40% big­ger than 10% of 100. It’s hap­pen­ing again now with Chi­na’s GDP growth of about 5% down from 7% a decade ago.

[01:00:13] Cameron: In 2013, the record­ed GDP growth of 7.7% for a US $9.57 tril­lion econ­o­my meant an extra US $737 bil­lion. In 2023, 5. 2 per­cent growth for a U. S. 17. 52 tril­lion econ­o­my means an extra U. S. 911 bil­lion, 1. 4 tril­lion in our mon­ey. Yes, Chi­na’s sta­tis­tics have a rub­bery qual­i­ty and GDP does­n’t tell you every­thing, but that sort of growth is still enough to under­write much of Aus­trali­a’s econ­o­my.

[01:00:48] Cameron: By way of com­par­i­son, U. S. Real GDP grew by a strong 2. 5 per­cent last year, deliv­er­ing cur­rent dol­lar growth of U. S. 1. 61 tril­lion. About a tril­lion U. S. dol­lars less than the rise in Amer­i­can gov­ern­ment debt to U. S. 34 tril­lion. Chi­na isn’t the only coun­try with chal­lenges. So any­way, I thought that was, uh, a good analy­sis.

[01:01:12] Cameron: By the way, this is repub­lished from the New Dai­ly, it says, which I used to read, but I don’t any­more, but there you go. It’s part of Michael Pas­coe’s analy­sis, which I thought was good, good read­ing.

[01:01:24] Tony: Yeah, I think, I think any West­ern coun­try would, um, would give a lot to be able to grow by 5 per­cent in a mature, mature econ­o­my. It’s, uh, it’s huge growth.

[01:01:32] Tony: Yeah.

[01:01:35] Cameron: Yeah. But what we get in our media usu­al­ly here is Chi­na’s head­ing for a dis­as­ter and they’re going to invade Tai­wan,

[01:01:43] Tony: We get sto­ries of apart­ment, like whole rows of apart­ment build­ings that have been built that no one’s in, free­ways to nowhere, Chi­na’s going to invade Tai­wan, which it may do. Um,

[01:01:52] Cameron: which it may do,

[01:01:53] Tony: yeah.

[01:01:54] Cameron: who knows.

[01:01:55] Tony: yeah.

[01:01:56] Cameron: Ques­tions. We have two, Tony. Did you get my late one?

[01:02:00] Tony: I did. It was a good one,

[01:02:02] Cameron: First one’s from, yeah, first one’s from Matt. Ques­tion, uh, is how Morn­ingstar and oth­ers like them deter­mine their rat­ings? I bought FND from the buy list in Jan­u­ary and it’s done very well and I noticed that Morn­ingstar I noticed that Morn­ingstar repeat­ed­ly upped its val­u­a­tion as the stock rose, seem­ing­ly for no rea­son oth­er than the price was high­er.

[01:02:22] Cameron: They seem to always say it’s under­val­ued. In my day job, I also had a meet­ing recent­ly with a guy who does stock rec­om­men­da­tions for an invest­ment bank, and off­hand he com­ment­ed that the con­sen­sus esti­mate for any stock tends to be under­val­ued as, quote, con­sen­sus wants peo­ple to buy, end quote. We would be inter­est­ed in hear­ing Tony’s thoughts.

[01:02:43] Tony: Yeah, well, a cou­ple of things. Um, I’m not an expert on Morn­ingstar’s val­u­a­tion. Um, I used to sub­scribe to their user about 20 years ago. Uh, or even longer. It used to be called Your Mon­ey Week­ly. A guy called Ian Hunt­ley used to put it out week­ly on a pod­cast. Print­ed sheet before pre inter­net, um, and then it was bought out by Morn­ingstar and changed a bit and I sort of see sub­scrib­ing at that stage.

[01:03:06] Tony: But, you know, back in, back then when I was look­ing at it, they basi­cal­ly used a form of dis­count­ed cash­flow. They were mak­ing pro­jec­tions of how much cash the com­pa­ny was going to throw off in the future. And then they would do an analy­sis about how depend­able they thought that fore­cast was. If they had a high degree of.

[01:03:25] Tony: If they had a high degree of cer­tain­ty, they could fore­cast the cash flows, then, um, they would give that an extra sort of tweak in their rat­ings. And they call that a high moat stock. They also, they use that the term, the moat rat­ing after Buf­fett. Um, the com­pa­ny, com­pa­nies with good moats tend to be, um, bet­ter and can, um, uh, sur­vive longer in down­turns with­out hav­ing to low­er their prices.

[01:03:51] Tony: Uh, so yeah, so they had a dis­count­ed cash flow and a moat rat­ing. The moat rat­ing was all about how con­fi­dent they were in their future pro­jec­tions of cash flows. Um, and they came up with a score based on that. So, it’s not a bad exer­cise. Um, again, it’s for­ward look­ing and you’re try­ing to project what cash flows are into the future, which is always bet­ter.

[01:04:10] Tony: Dif­fi­cult to do. Um, but, but yeah, that’s how they do it. Um, sec­ond part of the ques­tion was, uh, Con­sen­sus fore­casts, and, and I think what, um, the per­son that Matt was speak­ing to, the invest­ment banker, was say­ing is that, um, most stocks, uh, trade below their con­sen­sus val­u­a­tion, which is what we talked about before, uh, large­ly because the con­sen­sus val­u­a­tion is put togeth­er by stock bro­kers or invest­ment bankers who are hop­ing to, if they don’t already have, busi­ness from the stocks that they’re So, you know, it’s pret­ty hard to go and pitch for some M& A work or a cap­i­tal rais­ing with a stock that, um, the oth­er part of your busi­ness has just down­grad­ed to a sell.

[01:04:57] Tony: Um, so, you know, stock­bro­kers, um, RF Noth­ing, self inter­est­ed, so they gen­er­al­ly will make sure that their ana­lysts are rat­ing most stocks as a buy or at least a hold or below their con­sen­sus val­u­a­tion. So they stay in the good books of the boards that they’re pitch­ing the

[01:05:18] Tony: oth­er busi­ness to.

[01:05:19] Cameron: Well, con­grat­u­la­tions to Matt. Depend­ing on where he got in at Jan­u­ary, he prob­a­bly got in around about a buck and it’s trad­ing at three bucks an

[01:05:26] Tony: Yeah.

[01:05:27] Cameron: it’s pret­ty good. Been on an absolute tear. I don’t own it in any of my port­fo­lio, sad­ly. I wish I did.

[01:05:33] Tony: Well, done, Matt.

[01:05:35] Cameron: yeah, well done. Uh, only oth­er ques­tion we’ve got this week is from Phil. What does TK think about sev­er­al banks now doing large buy­backs? How does he account for this in the score­card?

[01:05:48] Tony: Uh, well, I don’t. I don’t account for buy­backs. I think it might actu­al­ly become a thing at some stage, but, um, we don’t have that at the moment. I think what’s going on with, um, with banks at the moment is inter­est­ing, but in gen­er­al terms, I take the view that high­er inter­est rate envi­ron­ments are good for banks.

[01:06:07] Tony: Um, you know, if you have a high­er mar­gin, you’re mak­ing more mon­ey. And that can hide, that can hide a whole heap of ills. Um, I did pick up an arti­cle today in, in, um, today’s AFR about West­pac, who are, uh, giv­ing, um, 1. 5 bil­lion dol­lars back to share­hold­ers via div­i­dends. Um, sur­prise as this arti­cle talks about and the super­sized buy­back.

[01:06:38] Tony: Um, so, uh, West­pac are going to give back $500 mil­lion as a spe­cial div­i­dend and pop pup­pets share buy­back scheme by a bil­lion dol­lars. And the shares are up today based on that. Um. What’s, what’s hap­pen­ing, I think is, uh, is good for the banks, um, a cou­ple of things. I like to focus on their bad and doubt­ful debt pro­vi­sions, and even though West­pac did­n’t increase their bad and doubt­ful debt pro­vi­sions a lit­tle bit in this lat­est result, and the result was a decrease in prof­it com­pared to last year, um, it’s gen­er­al­ly being seen as a bit of a good thing because, uh, Um, the pro­vi­sion­ing was­n’t increas­ing at what the ana­lysts thought it might need to increase.

[01:07:21] Tony: So, if that makes sense. So, bad and doubt­ful debts are what the banks hold on their bal­ance sheets for a rainy day because they think that the num­ber of cus­tomers who can’t repay their mort­gages and default or go into arrears will, um, will affect them. And then they can write back to you. from that pro­vi­sion to, to account for that in their prof­its.

[01:07:43] Tony: Um, which means that if you increase the bad and doubt­ful debt pro­vi­sion because of dou­ble entry book­keep­ing, your prof­its are less than the year you increase the pro­vi­sion. And if you write it back, so if you say we don’t need that pro­vi­sion, you can write it back to prof­it. It’s a boost to prof­it. So the fact that West­pac have said, even though inter­est rates are high, we had to take, we did increase our Bad and doubt­ful debt pro­vi­sion, but not as much as ana­lysts are think­ing, that’s seen as a good thing because it’s less of a hid­den prof­it.

[01:08:10] Tony: Um, the oth­er thing that’s hap­pen­ing is, uh, that banks are real­ly well cap­i­tal­ized these days because of gov­ern­ment reg­u­la­tion. Um, sort of the too big to fail, um, reg­u­la­tion, which is called, um, hold­ing pro­vi­sions to be unques­tion­ably strong. So banks have had, have a lot of, um, extra cap­i­tal and, and there’s, with­out going into that in too much detail, they hold, um, what’s called tier one cap­i­tal, which gives cash or cash equiv­a­lents, um, to a high degree than they have in the past.

[01:08:42] Tony: Um, and. that’s giv­ing them, um, two things. In the case of West­pac, they were hold­ing even more cap­i­tal than they were required to under the unques­tion­ably strong pro­vi­sions, and so they’re giv­ing back some of that cap­i­tal by spe­cial div­i­dend now, which is, um, nice, but also, too, I picked up in this arti­cle that, uh, Because of West­pac’s prob­lems in the past with, uh, the a PR, um, uh, and their mon­ey laun­der­ing, mon­ey laun­der­ing prob­lem that they had a few years ago, which cost the CEO and the chair their jobs because of, um, the fact that they, uh, peo­ple could mon­ey laun­der through their ATM machines by mak­ing cash deposits, which weren’t picked up prop­er­ly.

[01:09:28] Tony: Um, APRA have asked them to hold. Um, an extra amount of cap­i­tal until they got their sys­tems in place, and it now looks like that they’ve picked the box on fix­ing up their sys­tems. The AFR report says West­pac reached a mile­stone in repair­ing its risk man­age­ment, announc­ing the com­ple­tion of its Cus­tomer Out­comes and Risk Excel­lence pro­gram, the core pro­gram.

[01:09:52] Tony: It released a report yes­ter­day by a con­sul­tan­t’s promon­to­ry on the res­o­lu­tion of the work. This raised the prospect of the Aus­tralian Pru­den­tial Reg­u­la­tion Author­i­ty remov­ing a 1 bil­lion cap­i­tal over­lay that fol­lowed its mon­ey laun­der­ing scan­dal and would pro­vide a fur­ther tail­wind to reg­u­la­to­ry cap­i­tal lev­els.

[01:10:10] Tony: APRA removed a sim­i­lar 500 mil­lion penal­ty on NAB in March. And so West­pac are talk­ing about hav­ing a con­ver­sa­tion with APRA to have that 1 bil­lion in cash or cash equiv­a­lents freed up as well. So, you know, basi­cal­ly. West­pac did bad things in the past. It’s in the cleanup phase of that. They were required to hold more cap­i­tal because of that, and they’re hop­ing to write that back.

[01:10:36] Tony: So the banks are, even though they’re heav­i­ly reg­u­lat­ed, they’ve got plen­ty of cash, and it may be time that they start giv­ing some of that back to share­hold­ers. So I think that’s what’s going on in the bank­ing mar­ket at

[01:10:48] Tony: the moment.

[01:10:49] Cameron: So, we don’t account for that, but gen­er­al­ly buy­backs are seen as a good thing by Buf­fett, right?

[01:10:57] Tony: Oh yeah, I mean we’ve had this dis­cus­sion before. Gen­er­al­ly it is because it increas­es the earn­ings per share, um, to the remain­der of the share­hold­ers that did­n’t sell into the buy­back. So it’s kind of a free kick for get­ting more of the, your share of the prof­its, which is a good thing. Um, but there is also the counter argu­ment which says that man­age­ment only Buy back shares when it can’t find much else to do with the cap­i­tal, so

[01:11:23] Cameron: to do.

[01:11:24] Tony: yeah, so it gen­er­al­ly is a sign that there’s not much growth, um, in the indus­try, and they can’t find some­thing else to spend the mon­ey on, but I sub­scribe to Buf­fett, so buy back is a good thing, um, yeah, and I’d like to do some analy­sis on that, haven’t got around to doing it, but, um, Um, I will try and sep­a­rate, now we have the regres­sion tester, com­pa­nies which are buy­ing back shares from, from the rest and see how they per­form.

[01:11:49] Cameron: Good ques­tion, Phil, and thanks for that, Tony. And that is the ques­tion, uh, part of the show for this week. Uh, after hours, Tony?

[01:11:59] Tony: Oh, hang on, you’re, you’re jump, you’re jump­ing the gun here. I’ve still got some more

[01:12:03] Tony: to talk about the Berk­shire AGM,

[01:12:06] Cameron: Oh, well, that’s after

[01:12:07] Tony: got a pulled pork to do.

[01:12:09] Cameron: Oh, pulled pork. Right. You did­n’t have that in your notes. You did­n’t say you pulled pork in your notes.

[01:12:15] Tony: Did­n’t know, I’m sor­ry.

[01:12:16] Cameron: No, no. Who, what pulled pork are you doing?

[01:12:19] Tony: I’m hold­ing one over from last week to do this week, because we talked a lot about regres­sion test­ing last week, but I’m doing one on Eme­co hold­ings. Their code is EHL. And fun­ni­ly enough, the share price has­n’t changed from last week, so I can actu­al­ly just regur­gi­tate the notes I pre­pared last week, which is easy on the work­load today as

[01:12:41] Tony: I was prepar­ing for the show.

[01:12:43] Cameron: Well, hold on. I own EHL, so I’m just going to go sell that while you do your pulled pork. So off you go.

[01:12:50] Tony: all right, so EHL stands for Eme­co. It’s a min­ing equip­ment rental busi­ness based in WA. They are Aus­trali­a’s largest min­ing equip­ment renter, and they oper­ate nation­al­ly. They have over 860 trucks and graders and the like out on lease. Um, they ser­vice both open cut and under­ground mine in Aus­tralia.

[01:13:14] Tony: Um, they also oper­ate a series of nine work­shops where they do lots of main­te­nance on graders and trucks and, and refix on, uh, on those, uh, they rebuild min­ing equip­ment under a com­pa­ny brand called the Force Brand. It’s a com­pa­ny they acquired, but um, they oper­ate the work­shops. Um, for Eme­co, or as part of Eme­co, uh, they also oper­ate a labour hire divi­sion and per­form in field equip­ment ser­vic­ing.

[01:13:41] Tony: Com­pa­ny goes back to 1972 and began life as the Earth Mov­ing Equip­ment Com­pa­ny in WA, which is where you get Eme­co from. They expand­ed across Aus­tralia over the next 20 years and was even­tu­al­ly acquired by a com­pa­ny called DARR Equip­ment Com­pa­ny, D A R R, in 1997. DAR expand­ed the brand over­seas to the US and the Nether­lands, but in 2005, Eme­co was bought back by man­age­ment in the buy­out.

[01:14:10] Tony: in, uh, in cahoots with Pacif­ic Equi­ty Part­ners and Archer Cap­i­tal. EHL was then relist­ed in 2006 on the ASX and con­tin­ued expand­ing, acquir­ing oth­er equip­ment rental com­pa­nies in Aus­tralia and over­seas. And in 2017, they acquired the Force Main­te­nance Busi­ness. And in 2020, acquired a com­pa­ny called Pit and Por­tal, which is a min­ing con­trac­tor com­pa­ny.

[01:14:38] Tony: In 2021, they also acquired anoth­er. Borex, a line bor­ing com­pa­ny, but over the last 4 or 5 years their share price has been steadi­ly declin­ing. Until recent­ly, when they announced the sale of the Pit and Por­tal busi­ness to anoth­er friend of ours from the buy list, McMa­hon. Click to learn more in the next episode.

[01:14:59] Tony: McMa­hon Hold­ings, MAH. EHL said, um, when they decid­ed to, uh, to sell Pitt Por­tal, that they were pleased to announce that they have entered into bind­ing agree­ments with McMa­hon Hold­ings, under which it will exit under­ground con­tract min­ing, which and enter a five year agree­ment under which Eme­co will become McMa­hon’s pre­ferred equip­ment rental provider for both sur­face and under­ground.

[01:15:24] Tony: So that was an inter­est­ing deal, I thought. They’re get­ting out of, um, the con­tract min­ing work, um, sell­ing it to McMa­hon, who is a provider of con­tracts, min­ing ser­vices, um, but also hav­ing a nice, uh, sweet­en­er in the tail there that Eme­co gets a five year deal with McMa­hon to pro­vide, uh, them with equip­ment rentals.

[01:15:42] Tony: So kind of a win win there. And since then Um, Eme­co share price has turned up and it’s uh, it’s a buy in the uh, Bredala­tor, but also McMa­hon has been doing strong­ly, that’s also a buy, that both com­pa­nies are now doing well in terms of their share price. Um, so, you know, looks like they’re turn­ing around the decline in their share price, they’ve divest­ed this part of the busi­ness.

[01:16:05] Tony: Which, um, the mar­kets received well. In terms of the num­bers, um, the share price, uh, I’m doing my analy­sis at is 72. 5 cents. The com­pa­ny has an ADT of 223, 000, so it’s not, um, not too bad. Uh, for, for peo­ple, um, to include in their port­fo­lios. Um, not over­ly large, but, um, not, not a, uh, a micro cap. Uh, 72. 5 cents is below con­sen­sus tar­get.

[01:16:33] Tony: It’s just above IV1 at 70 cents, but below IV2 at 1. 24. Um, it’s net equi­ty per share is 1. 16, so this com­pa­ny is trad­ing at below it’s book val­ue, and there­fore below it’s book val­ue plus 30%, which is 1. 51, so it scores for those two things. It did cross my mind that if they have sold part of the busi­ness, that will affect NetE­quity, but um, until, until I can see some num­bers which will get report­ed I guess in six months time I can’t do that cal­cu­la­tion eas­i­ly.

[01:17:05] Tony: Stock Doc­tor finan­cial health is both strong and steady so we score it for that. Yield is 1. 72 per­cent so it is, Pay­ing a div­i­dend but not high enough, uh, for it to score on our check­list. One thing we do score it down for is earn­ings per share fore­cast is minus 7%. Um, I’m not sure what is dri­ving that, but poten­tial­ly when they’ve offloaded this busi­ness, uh, they, they have less of, uh, less, uh, earn­ings per share com­ing through.

[01:17:33] Tony: Um, But we do score it down for that. Uh, Prop­Caf on this busi­ness is only one and a half times. So it’s, you know, a real­ly good buy from the oper­at­ing cash­flow point of view. Uh, PE is 5. 29, which is its low­est in the last three years. So that also scores well for us. Um, we don’t have an own­er founder, and I guess that makes sense giv­en that the com­pa­ny has been bought and sold a cou­ple of times.

[01:17:58] Tony: Bought by an over­seas com­pa­ny, bought back by man­age­ment and pri­vate equi­ty, and then re list­ed, so the own­er founder has­n’t stuck around. It’s a new 3 point trend­line uptrend since the announce­ment of the Pit and Por­tal sale, so we give it an extra boost for that on our check­list. Uh, it almost has Six halves of con­sis­tent­ly increas­ing equi­ty, but just missed out in one of those.

[01:18:25] Tony: So it’s close, but we can’t score it for that. So all in all, the qual­i­ty on this com­pa­ny is 12 out of 17 or 71%. And it has a good QAV score of 0. 47, so quite high up on our, on our buy list. Um, pros and cons for this one, um, it’s a min­ing sec­tor com­pa­ny, so they can be volatile, but at the moment, the tail­winds are in the min­ing sec­tor.

[01:18:48] Tony: So for now, that’s a pro, um, That will face prob­lems if the min­ing sec­tor turns down in the future, of course, some­thing to watch if peo­ple are inter­est­ed in doing some analy­sis on this com­pa­ny is their uti­liza­tion rates. So because they’re an equip­ment rental com­pa­ny, they don’t want assets sit­ting around.

[01:19:07] Tony: Uti­liza­tion rate is cur­rent­ly 92 per­cent which is quite good, um, that, that is some­thing to watch going for­ward. Uh, it does, and the oth­er pro I could list is that it does seem to be received well, that they’re exit­ing out of their con­tract min­ing busi­ness called Pit and Por­tal, um, and there’s the deal to sup­ply MAH with five years worth of equip­ment rentals is also sup­port­ing their busi­ness, so that’s a good thing too.

[01:19:30] Tony: So, Eme­co Hold­ings, um, turn­ing around and does­n’t look too bad on our buy

[01:19:36] Tony: list.

[01:19:37] Cameron: Thank you, Tony. Uh, we do hold them, as I said before, in one of our port­fo­lios, and they’ve been doing okay. So, uh, let’s hope the pulled pork curse does­n’t, uh, hit them, like a brick, TRS. Uh, I had to sell TRS today at my old friend’s, the reject shop.

[01:19:58] Tony: I haven’t done a pull pork on those in years though. How long does the curse last?

[01:20:03] Cameron: Ha ha ha! I don’t know, but I’ve held them in the dum­my port­fo­lio and one of the light port­fo­lios since the 11th of July 2022, but sad­ly they’ve now crossed their three point sell line.

[01:20:20] Cameron: Still, we made 11 per­cent on them over near­ly two years, so not spec­tac­u­lar, not knock­ing the lights out there, but, um, I remem­ber they did very well for us dur­ing COVID

[01:20:32] Cameron: TRS.

[01:20:33] Tony: yeah, as you’d expect if the peo­ple were pre­dict­ing a decline in the econ­o­my until there was a cash flash and there­fore com­pa­nies like TRS gen­er­al­ly do well because peo­ple shop less in Coles and Wool­worths and

[01:20:48] Tony: more in the reject shop.

[01:20:51] Cameron: made all their mon­ey out of sell­ing toi­let paper dur­ing those first few weeks of COVID when peo­ple went nuts. Speak­ing of peo­ple going nuts, I saw an arti­cle, uh, ear­li­er. Appar­ent­ly a bunch of anti vaxxers set up some sort of clean farm­ing invest­ment group, um, over the last cou­ple of years where they were buy­ing up farm­land in North­ern New South Wales and Queens­land and put togeth­er some sort of an invest­ment trust or an invest­ment fund to spend a hun­dred mil­lion dol­lars buy­ing farm­land for clean farm­ing and food secu­ri­ty and it’s just gone bust.

[01:21:35] Tony: Yeah, there is a rea­son why farm­ers spray chem­i­cals on crops, not just to pol­lute the grain,

[01:21:41] Tony: they need to for eco­nom­ic rea­sons.

[01:21:43] Cameron: I don’t think it was that. I think there was just like 150 peo­ple that end­ed up own­ing these farms and none of them could agree on how it was being run and what they should do. And there were no real pro­fes­sion­al farm­ers involved in the whole deal. And they had one ini­tial­ly who quit, I think. And so, yeah, every­one’s now try­ing to get out of this fund and sell their shares and the share prices are plum­met­ing and

[01:22:06] Tony: was it, was it Easy Rid­er, the movie, when they have that scene where they start off with the hip­pies throw­ing seeds on the ground, they’ve, they’ve decid­ed to get out­ta the city and become farm­ers and they’ve got no idea how to hoe the, to, to, um, fur­row the ground to put the seeds in. And they do a drum cir­cle to chant for the seeds to grow

[01:22:28] Tony: I think that’s how

[01:22:29] Tony: Easy Rid­er starts. I think so. I could have my movies con­fused, but I think that’s when Peter Fon­da goes and buys some drugs off them and then

[01:22:35] Tony: sets off across the USA with The with

[01:22:38] Cameron: The only thing I real­ly remem­ber about that is just

[01:22:41] Cameron: Jack Nichol­son’s per­for­mance in it, which was just

[01:22:44] Tony: Break­out. Yeah.

[01:22:45] Cameron: yeah, yeah, yeah. I watched it quite a few years ago,

[01:22:49] Cameron: um, but, uh, yeah, I just remem­ber see­ing Jack and going, yeah, just, like, super­star, writ­ten all over him in that film, right? And it was­n’t one of his first films, he’d been around for a long time, I think, at that point, but he just real­ly leapt off the screen.

[01:23:08] Tony: had to drink on the back of the motor­cy­cle. Yeah. Yeah. That, that and, uh, five easy pieces. That was the oth­er break­out for Jack. Yeah, play­ing the piano on the back of the lor­ry as they were dri­ving along. Had this kind of crazy per­son­al­i­ty and, and, um, it just slipped off the screen.

[01:23:30] Cameron: mmm, mmm­mm!

[01:23:33] Tony: Yeah. So, uh, what else do I have to talk

[01:23:36] Tony: about? Uh, just, there was, I had more notes on Berk­shire. Um, I don’t know if it’s worth going through there. They were report­ed pret­ty wide­ly, but peo­ple can have a look. Um, but there’s one quote I want­ed to end on, which I think is maybe the one that. War­ren end­ed on, um, he says, uh, I not only hope you come next year, I hope I come next year.

[01:24:01] Tony: Uh, his, his wit is so

[01:24:03] Tony: good.

[01:24:04] Cameron: Yeah, you got­ta love it. I won­der who writes his mate­r­i­al.

[01:24:08] Tony: Yeah. I think he does.

[01:24:09] Tony: But who knows?

[01:24:12] Cameron: I’m sure he does. He’s always, he’s always Been like this, right? You go

[01:24:16] Cameron: back and

[01:24:17] Tony: Oh, yeah.

[01:24:17] Cameron: read his, his let­ters

[01:24:19] Cameron: from 40, 50 years ago. It’s, he’s always had that dry wit in there.

[01:24:25] Tony: All right. Oh, one last thing. No, one last thing. RBA. So I just looked them up on the It’s Tues­day after­noon, first Tues­day in May, so the RBA has met on inter­est rates. ABC News reports, live updates, RBA keeps inter­est rates on the hold at 4. 35%, but warns progress against infla­tion is slow­ing, ASX push­es high­er.

[01:24:49] Tony: So thank you to Michelle Bul­lock

[01:24:50] Tony: for the pay rise.

[01:24:53] Cameron: I thought you said they were meet­ing last Tues­day.

[01:24:56] Tony: No, no, this Tues­day. Did I?

[01:24:59] Tony: Okay, well, it’s this Tues­day, def­i­nite­ly this Tues­day. Just

[01:25:01] Cameron: When I edit­ed, when I edit­ed last week’s show, I picked up that you said they were meet­ing and then I, I real­ized that we had­n’t checked to see what they’d said by the end of the show. But, uh, maybe you said they were meet­ing this week

[01:25:14] Tony: this week, yeah, per­haps, yeah.

[01:25:16] Cameron: Okay.

[01:25:17] Tony: So rates are on hold, which is good. Um, yeah. Oh, and it’s the start of the month, so peo­ple should update their alerts too, for, like I do in Stock Doc­tor. Um, the three point trend line sells. Which I reg­is­ter in Stock Doc­tor as alerts, will change from month to month as we get extra points on our

[01:25:37] Tony: graph.

[01:25:38] Cameron: Mm hmm. Which is why TRS has crossed its three point trend line.

[01:25:43] Tony: Yeah, okay.

[01:25:45] Cameron: Alright, Tony. Is that it? Are we into After Hours now?

[01:25:49] Tony: Yeah, I can talk for anoth­er hour on Berk­shire Hath­away if you like, but no, we’ll go on. Peo­ple can do their own Googling it’s well worth

[01:25:56] Tony: it. Yep, after hours.

[01:25:59] Cameron: Well, I got

[01:25:59] Cameron: noth­ing for after

[01:26:00] Cameron: Hours. I haven’t watched any­thing. Yeah, not real­ly. But what about you?

[01:26:04] Tony: um, yeah, well, Poi­fect did real­ly well, um, we spoke about that before. The only oth­er thing I’d men­tion is, um, I’ve been lis­ten­ing to a lot of

[01:26:11] Tony: Nick Drake. Have you come across Nick Drake before?

[01:26:14] Cameron: Oh yeah, love Nick

[01:26:15] Tony: Ah, good, okay. I only, I only came across him a cou­ple of weeks ago, and just, um, love the album Peak Moon, been lis­ten­ing to that end­less­ly. Yeah,

[01:26:24] Cameron: that’s his clas­sic, I think. Pink, uh, Pink Moon.

[01:26:28] Tony: Yeah,

[01:26:28] Cameron: Yeah, died very young, trag­i­cal­ly.

[01:26:31] Tony: Yeah, which is maybe why I haven’t heard of him before, but he’s a very sort of gen­tle acoustic

[01:26:36] Tony: play­er, but real­ly enjoy­ing it.

[01:26:39] Cameron: Yeah, love­ly song­writer, had a real­ly sort of sweet, love­ly,

[01:26:43] Cameron: uh, feel about him. And, uh, yeah, I think he took his own life, I think, um, an over­dose. Yeah, he over­dosed.

[01:26:56] Tony: Reminds me a bit of Jeff Buck­ley, who also died trag­i­cal­ly young. That’s the same sort of style of musi­cian­ship.

[01:27:04] Cameron: from drown­ing though, not from mak­ing his own life. Yeah. I think he was on a tour bus, right? They were tour­ing and he, um, went for a swim, late night swim or some­thing and did­n’t sur­face.

[01:27:17] Tony: And did­n’t Jeff Buck­ley’s father also drown as well?

[01:27:20] Tony: There’s some kind of

[01:27:22] Cameron: Yeah, I think you might be right. Some­thing about, you know,

[01:27:25] Tony: tragedy in that sto­ry. Yeah. Mmm.

[01:27:27] Cameron: Bruce Lee and Jason Lee, his son, dying young. Dying at the same age, I think.

[01:27:35] Tony: Yeah, right.

[01:27:36] Cameron: Um, well, apart from the Dong Xiao Ping book, I’ve I’ve been read­ing a book, there’s this guy, there was this guy called FitzRoy McLean who crops up from time to time in our Cold War shows. He was a Scot­tish, um, well, sol­dier slash spy slash politi­cian diplo­mat sort of thing that was appar­ent­ly one of the guys that Ian Flem­ing based James Bond on.

[01:28:04] Cameron: They knew each oth­er, you know, dur­ing World War II. And, um, we, we talked about him back in our Tito shows when we were doing Yugoslavia and, uh, Par­ti­sans, et cetera, because he was sent by Churchill to go and befriend Tito and the Par­ti­sans dur­ing World War II and help them fight the Nazis. And he end­ed up becom­ing real­ly good friends with Tito.

[01:28:29] Cameron: Um, and I think lat­er in life, McLean, He want­ed to buy a vil­la and retire to Yugoslavia, but they had a law against for­eign­ers being able to buy prop­er­ty at this junc­ture. But this par­tic­u­lar town that he want­ed to, it was like a coastal vil­lage y kind of thing, he want­ed to buy a vil­la in that. Tito changed the laws for this town for one day and made it a free town where any­one could buy real estate for one day, and then Fitzroy McLean bought his vil­la, then they changed the laws back again.

[01:29:00] Cameron: That’s how good a friend of Tito’s he was, but we were talk­ing about him recent­ly on the, on our Cold War show because before that, the year before that in 1942, he was, he was sent to Iran to, uh, basi­cal­ly arrest the top gen­er­al in Iran, who the British had heard was, uh, doing a deal with the Nazis. And, uh, they’d already, uh, got rid of the Shah, replaced him with his son, and this guy, Gen­er­al Zahe­di, who end­ed up ten years lat­er being part of the CIA’s coup against Mossadegh.

[01:29:42] Cameron: But they, so they sent Fitzroy McLean in, basi­cal­ly said, You know, do take him alive, but you know, basi­cal­ly you can do what­ev­er you want to arrest this guy. And he came up with this plot of, uh, of how to arrest the Top gen­er­al in Iran. And it was, it was like this amaz­ing sto­ry where he, he just basi­cal­ly, uh, sends a mes­sage to him that one of the top brigadier British brigadier, who was based in Bagh­dad, want­ed to have a qui­et word with him.

[01:30:11] Cameron: So they rock up. And Fitzroy McLean is with an actu­al brigadier. They, the British would­n’t let him, uh, imper­son­ate a brigadier. He was only a cap­tain at the time. So they rock up for this meet­ing with the gen­er­al and the gen­er­al walks into the room and Fitzroy McLean’s just hold­ing a gun on him and says, um, Sur­ren­der now, old chap, do us all a favor, and then march him out to a truck and they.

[01:30:35] Cameron: Keep him in an intern­ment camp for the rest of the war. Just, you know, walk out with a gun behind his back. Past all of his troops. He’s, they’re salut­ing. He’s salut­ing. He’s lit­er­al­ly, you know, they’re march­ing him, frog march­ing him out with a gun behind his back. Any­way, this guy wrote a cou­ple of great books.

[01:30:49] Cameron: One’s called East­ern Approach­es, which I’ve been read­ing. Basi­cal­ly, his sto­ries of all of this peri­od. World War II. And he’s basi­cal­ly this Scot­tish lad who just want­ed adven­ture. So he just signed up and he would go to the most remote places, like he spent the late 30s in Rus­sia, just because he thought it sound­ed, um, exot­ic.

[01:31:15] Cameron: He was there when Stal­in was purg­ing all of the gen­er­als, he had some sort of diplo­mat­ic career. He said that it was easy to get an assign­ment there because he was the first per­son in the his­to­ry of the British diplo­mat­ic ser­vice who was actu­al­ly vol­un­teer­ing to go to Rus­sia. No. But yeah, it’s just read­ing his mem­oirs is like read­ing James Bond’s mem­oirs, like he just had this insane sort of life,

[01:31:41] Cameron: uh, pulling off all of these stunts, etc.

[01:31:44] Cameron: So, any­way, I’ve been read­ing a bit of that, which has been

[01:31:45] Cameron: fun. East­ern Approach­es, just, it’s just like clas­sic, so what, British, well, Scot­tish in this case, but, Just, uh, traips­ing around the world, hav­ing adven­tures, you know, get­ting into scrapes, you know, pulling off assas­si­na­tions and arrests and befriend­ing rebel lead­ers and, you know, yeah, et cetera, et

[01:32:12] Tony: Wow.

[01:32:13] Tony: It’s a very Errol Fly­nn

[01:32:14] Tony: type sto­ry.

[01:32:16] Cameron: Mmm. If Errol Fly­nn was not just an actor.

[01:32:20] Tony: Yeah.

[01:32:20] Cameron: Any­who.

[01:32:21] Tony: We watched the movie last night called Page 8. Have you ever seen that?

[01:32:25] Cameron: No. Mmm.

[01:32:27] Tony: It’s, um, it’s quite old. It’s quite old. Back 2011, I think. Um, I had­n’t come across it before, but it just popped up in my Net­flix, Net­flix feed and quite liked it. Um, British sort of qui­et movie, Bil­ly Nye, Michael Gam­bon, uh, Judy Davis about, you know, the intrigue at the top of the British, um, secret ser­vice.

[01:32:49] Tony: It

[01:32:49] Tony: was quite good. I thought.

[01:32:52] Cameron: I like Bill Nye.

[01:32:53] Tony: not action packed, but yeah. Inter­est­ing. Um, and we fin­ished Fall­out, which I real­ly enjoyed.

[01:32:59] Tony: The Fall­out

[01:33:00] Cameron: Mmm.

[01:33:01] Tony: Yeah, it’s worth

[01:33:01] Cameron: I’ve been mean­ing to start that.

[01:33:03] Tony: Pret­ty grue­some,

[01:33:04] Cameron: have watched. Mmm. Oh yeah, we watched a cou­ple of episodes of, um, this doc­u­men­tary, uh, Sons of Our, Sins of Our Moth­er.

[01:33:16] Tony: Hmm. Okay.

[01:33:17] Cameron: It’s a con­tem­po­rary, cur­rent­ly run­ning case in Ida­ho about a cou­ple of Mor­mons who killed their spouse. Their spous­es are then hooked up and then killed her kids, two of her kids, because they believe they were pos­sessed by demons and all sorts of wack­adoo­dle shit.

[01:33:38] Cameron: Chris­sy’s been obsessed with this case, one of these true crime things that’s, she gets, she’s been real­ly deeply obsessed with, you know, Mor­mon true crime sto­ries for the last cou­ple of years, because there’s been a few of them that have been big head­lines over there. Um, Turns out that, uh, if you run a cult where peo­ple are told to believe crazy things, they believe crazy things and then do crazy shit as a result of that,

[01:34:06] Tony: Yeah.

[01:34:06] Cameron: uh, to their chil­dren some­times, as well as their spous­es.

[01:34:10] Cameron: Any­way, so we watched a cou­ple of episodes of that. Yeah, it’s real­ly bonkers crazy. But, uh, yeah, Chris, that’s, that’s been our tele­vi­sion watch­ing for the last week is true crime doc­u­men­taries, which I’m not into at all. At all. Could

[01:34:25] Cameron: not,

[01:34:26] Tony: Yeah.

[01:34:27] Cameron: could not care less. Like his­to­ry, I can’t even watch his­to­ry stuff real­ly, but I read it.

[01:34:33] Cameron: But, um, yeah, the whole true crime thing, um, uh, it’s

[01:34:39] Tony: No, it’s kind of a chick thing too. I think from what I can tell from the stats, you see that appar­ent­ly women are right into

[01:34:47] Tony: it for some rea­son.

[01:34:48] Cameron: yeah. I, I’ve asked Chris­sy about that, tried to fig­ure it out and she’s like, well, it’s because it teach­es us what to watch out for with men and

[01:34:58] Tony: Yeah. That’s what I thought. Yeah. Yeah. We don’t have the same sort of. I guess sens­es or sen­si­tiv­i­ty towards what could hurt us because we’re on the aggres­sive side nor­mal­ly in these domes­tic sit­u­a­tions, domes­tic vio­lence sit­u­a­tions. But women, dif­fer­ent. Yeah, Jen­ny, Jen­ny isn’t a fan. Well, I don’t think Jen­ny’s a fan of true crime, but she just reads end­less crime thrillers all the time.

[01:35:24] Tony: Yeah.

[01:35:25] Tony: So,

[01:35:25] Cameron: Hmm. Okay.

[01:35:26] Tony: inter­est­ing, isn’t it? It’s a female thing.

[01:35:29] Cameron: Yeah. It’s a chick thing. That’s not, I think there’s a lot of men that are big fans of true crime, uh, stuff to, you know,

[01:35:39] Tony: Maybe they’re tak­ing notes. Yeah,

[01:35:47] Tony: I just don’t, I don’t, I mean, I, you know, I, I get the attrac­tion, but I just don’t need to see the, the worst side of human­i­ty,

[01:35:55] Tony: you know, as enter­tain­ment.

[01:35:58] Cameron: Well, that’s, that’s how I feel about it. I just, I just feel icky about the whole thing. Like, oh, it’s just sad. And like, these are bro­ken peo­ple doing hor­ri­ble things to their loved ones. It’s just, it’s just trag­ic and sad stuff. I, but you know, a lot of, I know a lot of peo­ple, like my kids, Hunter and Tay­lor feel the same about my inter­est in his­to­ry.

[01:36:18] Cameron: Like, why do you care? Who cares what hap­pened 2, 000 years ago? Who cares what hap­pened 100 years ago? What, how, what rel­e­vance does that have to your abil­i­ty to make mon­ey and run a busi­ness today if you’re wast­ing your time? Think­ing, well, I find it inter­est­ing.

[01:36:34] Tony: Well, not just that, you, you’ve learned things. You don’t want to make the same mis­takes. You can take short­cuts because some­one’s already done it. You can work out what to do. You don’t have to, like his­to­ry did­n’t start yes­ter­day and you don’t have to invent the wheel again. You

[01:36:47] Tony: get, you get the ben­e­fits of know­ing his­to­ry.

[01:36:50] Cameron: when I final­ly become the dic­ta­tor, I will make sure I don’t make the same mis­takes that Cae­sar and Alexan­der Napoleon did.

[01:36:59] Tony: Well, when you’re a dic­ta­tor, I’m going to run the trea­sury.

[01:37:04] Cameron: Yeah, absolute­ly. Yeah. Yeah. Emp­ty the trea­sury. That’s what

[01:37:07] Tony: Emp­ty the trea­sury.

[01:37:08] Cameron: they don’t run the trea­sury. They emp­ty the

[01:37:10] Tony: good point, yeah.

[01:37:12] Cameron: TK. Well, that’s it. I

[01:37:17] Tony: Alright,

[01:37:18] Cameron: should prob­a­bly get a move on. Thank you for chat­ting. Good fun as always.

[01:37:23] Tony: a plea­sure, yeah.

[01:37:24] Cameron: Which one of you, I can’t, are you Buf­fett or Munger in our rela­tion­ship?

[01:37:28] Cameron: I’m nev­er quite sure.

[01:37:30] Tony: Nei­ther am I. I think you’re more Char­lie. I’m more, um, no, I think I’m more Char­lie. You’re more War­ren.

[01:37:35] Tony: You’re the show­man. You’re the sales­man.

[01:37:37] Cameron: which one of them was the poor

[01:37:38] Cameron: one?

[01:37:39] Tony: the poor one, Char­lie ha ha. ha

[01:37:42] Cameron: Oh,

[01:37:42] Cameron: okay.

[01:37:42] Tony: poor­er. Nei­ther were poor, but, but War­ren was worth a lot more because he kept all these Berk­shire Hath­away shares. Char­lie would sell them.

[01:37:50] Cameron: Right. All right. Thank you,

[01:37:53] Tony: All right. Have a good week. Oh, before I go, don’t for­get peo­ple, if you’re in Bris­bane, Alex is up there. My Alex is up there.

[01:38:00] Cameron: mm.

[01:38:00] Tony: Sell­ing her art­work in the Afford­able Art Fair at the exhi­bi­tion ground.

[01:38:04] Tony: So, if you get a chance, go and have a look.

[01:38:07] Cameron: We will be there on Sun­day

[01:38:11] Tony: Nice.

[01:38:11] Cameron: with her and Sean on Sat­ur­day, but then we’re gonna go on Sun­day and check out hers and all the oth­er painters. Look­ing for­ward to it. She’ll be great.

[01:38:18] Tony: Yeah, good. So that’s, that’s

[01:38:20] Tony: Sun­day week, isn’t it? I think

[01:38:23] Cameron: No, this Sun­day?

[01:38:24] Tony: this, Oh, that’s right. She’s fly­ing up this week. Sor­ry. So that’s

[01:38:27] Cameron: Yeah,

[01:38:27] Tony: 12th, 12th of May.

[01:38:29] Cameron: I think it’s run­ning Thurs­day through Sun­day this week.

[01:38:33] Tony: Yeah. Okay.

[01:38:34] Tony: Good. I’ll get along

[01:38:37] Cameron: All right.

[01:38:38] Tony: All right.

[01:38:39] Tony: Have a good week.

[01:38:40] Cameron: Have a good week.

[01:38:41] Tony: Bye.