In this episode, Tony provides insights into recent retail sales figures, the market’s reaction, and the concept of ‘confession season’ in the corporate world. Then he conducts a detailed ‘Pulled Pork’ segment on Stealth Group (SGI), a tool retailer, evaluating its financial health, market performance, and prospects.

00:00 Introduction and Greetings
02:41 The Market Drops due to Retail Sales Analysis
06:11 Confession Season Explained
15:10 Pulled Pork: Stealth Group (SGI)


QAV 722 Club

[00:00:00] Cameron: Welcome to QAV.

[00:00:12] Cameron: It is, uh, episode 22 7 22

[00:00:16] Cameron: Uh, recording this on the 28th of May, 2024. Tony Kynaston, where are you today, Tony? No longer in Brisbane.

[00:00:26] Tony: No, fabulous Sapphire

[00:00:27] Tony: Beach in Coffs Harbour.

[00:00:30] Cameron: Love

[00:00:30] Cameron: Sapphire Beach. Fox had his first surfing lesson at Sapphire Beach a couple of years

[00:00:36] Cameron: ago.

[00:00:36] Tony: Wow.

[00:00:38] Cameron: it was great.

[00:00:39] Tony: Okay. Well, the flags aren’t up at the moment, so I was at

[00:00:41] Tony: during summer.

[00:00:43] Cameron: Uh, no, it was about this time of year, I think. We, we were on our way down to visit you, for some reason, and, um, it was actually mid COVID, I think. Anyway, so it was probably four, four years ago. Oh my God, has it been four years since COVID? Wow, isn’t that crazy? Wow, four years. Anyway, lovely part of the world, Coffs Harbour.

[00:01:05] Tony: It is. Yeah, I’m enjoying it.

[00:01:08] Cameron: How did POIFECT go on the weekend, Tony?

[00:01:11] Tony: Not, not quite perfect.

[00:01:13] Cameron: Less than POIFECT.

[00:01:14] Tony: Less than perfect. Yeah, she ran 10th. Uh, in the words of the trainer, we threw a lot at her. She flew up from Melbourne, um, horses run a different way in Brisbane. It’s like changing from being left handed to right handed. And she went out in distance to 2, 000 metres. So, it was a lot of effort on her part.

[00:01:38] Tony: So, um, she’ll be rested now. She’ll probably come to the end of the line this time and come back in the spring.

[00:01:47] Cameron: Right.

[00:01:48] Tony: Yeah, but for a young three year old, it wasn’t too bad. It wasn’t, it wasn’t too bad. We went out there. It was a great day. We had a beautiful lunch out there in the, one of the, uh, banquet rooms

[00:01:57] Tony: and had a buffet and yeah, it was good.

[00:02:02] Tony: Good day.

[00:02:03] Cameron: Nice. Hopefully the food was better than the Norman

[00:02:05] Cameron: Hotel where we went on

[00:02:07] Tony: Oh, you didn’t like it either. My steak was awful.

[00:02:10] Cameron: Yeah, the boys and I all on the way home were

[00:02:12] Cameron: like that food was really average.

[00:02:16] Cameron: I haven’t been to the Norman in, in years. Uh, you know, it’s got a reputation as being the go one of the go to steak restaurants in Brisbane and it was, yeah, very average.

[00:02:28] Tony: I thought so too.

[00:02:30] Cameron: Expensive and average food. So

[00:02:33] Tony: No, the

[00:02:33] Cameron: down to the Norman Hotel in Woolloongabba.

[00:02:36] Tony: at, uh, food at, was really good.

[00:02:39] Tony: Food. Yep. Good day. Yeah.

[00:02:41] Cameron: Well, let’s move on to investing, Tony. We don’t have a lot to talk about today. It’s going to be a short show, which is

[00:02:47] Cameron: good because you’re in transit anyway. No questions from the members today, but I’m looking at the market. You know, it’s funny. I got up and I looked at the Fin this morning, as I always do.

[00:02:59] Cameron: And the Fin said. ASX to edge higher, April Retail Sales Awaited, and then I got back from Kung Fu, uh, half an hour ago, and I looked at it and it says ASX Falls, Retail Sales Missed Forecasts, Gold Lifts, uh, so apparently, Market was not happy with the retail sales number, and as far as I can tell, it says that, uh, I don’t know, it was too, too good?

[00:03:29] Cameron: Not good enough? I’m not quite sure. Retail trade rises 0. 1 percent in April. Missing forecasts.

[00:03:36] Tony: haven’t seen the article. I

[00:03:37] Tony: imagine the forecast was for a higher number.

[00:03:41] Cameron: Says Rise 1.1% in April, rebounding

[00:03:44] Cameron: from a 0.4% fall. The previous month, market’s consensus was for a 0.2% rise, year on year retail trade. Retail trade was up 1.3%. Why it matters. The Central Bank is looking for evidence of a slow down in the economy to help bring inflation back to target. It has kept the cash rate on hold at 4.35% since November.

[00:04:09] Cameron: So. If they were expecting a 0. 2 percent rise, but 0. 1 percent rise, then that does seem to be a slowing down, which

[00:04:23] Tony: should have gone up.

[00:04:27] Cameron: that’s why I was confused. Like, wait, hold on. Isn’t that exactly what you wanted? But, uh,

[00:04:32] Tony: strange. Good news is bad news and bad news is good news. Well, we’re in the moment,

[00:04:35] Tony: isn’t it?

[00:04:36] Tony: We’ll

[00:04:37] Cameron: but like the frustrating thing, I mean, okay, maybe I’m just dumb, which would explain everything, but, The Fin seems to say that we’re looking for evidence of a slowdown and yet it didn’t sort of explain why that evidence of a slowdown First of all it said the market was going to wedge higher, then it doesn’t, and instead they don’t really explain why.

[00:05:02] Cameron: Um, so I don’t know, that’s shitty journalism from the Financial Review, I thought.

[00:05:08] Tony: it tomorrow. Yeah.

[00:05:12] Cameron: Okay.

[00:05:14] Tony: Yeah, look, um, it’s retail is looking pretty anemic, which I guess is why there are some retail stocks on the buy list at the moment.

[00:05:22] Tony: Which is usually a good time to buy them because it’s not going to stay anemic forever.

[00:05:27] Cameron: Yeah,

[00:05:28] Cameron: right.

[00:05:28] Tony: but companies, like I own Super Cheap Auto in my portfolio and it’s come back a lot.

[00:05:32] Tony: Um, largely because it’s been, um, I’ll argue the fact that it’s struggling to increase sales when interest rates are up. Um, I think, I forget now the number that they, they said that they were down something like 1 percent year on year. Um, I’m not sure if that’s with new store openings included or not, whether it’s like for like or whether it’s, um, total sales.

[00:05:55] Tony: So yeah, so interest rates abiding, which is what the RBA wants, so I would have thought if retail sales weren’t meeting targets, the RBA has less reason to raise interest rates, and the

[00:06:05] Tony: share market might like that, but, um, who knows.

[00:06:09] Cameron: Who knows? Oh, what about confession season, Tony? I think we, we’re I’ve been in confession season now for

[00:06:16] Cameron: sort of a good couple of weeks, um,

[00:06:19] Tony: relatively quiet this

[00:06:20] Tony: year.

[00:06:21] Cameron: it is relatively quiet. Yeah. I mean, any, any theories

[00:06:25] Cameron: on why and what’s happening in corporate

[00:06:28] Cameron: Australia?

[00:06:29] Tony: no, I mean, I think, I think companies like Supercheap came out with a sales forecast decline. So that hit the stock. Um, there were some other retailers, I think from memory, JB Hi Fi also said something similar. Um, Telstra has been the big one, I guess, but we don’t usually see Telstra on our buy list.

[00:06:50] Tony: They’re cutting staff and Well, you know, forecasting numbers less than, reducing the forecast, um, from what the analysts thought. But otherwise it’s been reasonably quiet. Um, and I haven’t noticed any big upticks, like no one’s come out and said we’re going to beat forecasts by a lot.

[00:07:09] Tony: So the economy is quite subdued.

[00:07:11] Cameron: So for new members, new listeners, we should explain what confession season is, um, something to do with a good Catholic upbringing.

[00:07:23] Tony: Yeah. Yeah. Take your rosary beads.

[00:07:28] Cameron: Say 24 Hail

[00:07:31] Tony: You go, go in and say, um, the priest asked you if you’d sinned that week and you try and make up something innocuous like, yeah, I’d raise my voice to my mother or something like that. Except to slap on the wrist and off you go back out to the playground, pick up the footy and keep going.

[00:07:46] Tony: Yeah. Um, Confession Season, so in what’s it, five weeks time, the companies are going to rule the line on their books at the end of June, as they do every half, or most companies do, some do it on a March deadline, but most companies do it in Australia on an end of June basis. So they’ll be putting their numbers together now, they’ll have a pretty good idea of what What the end of year is going to look like for their companies, at least 11 months in.

[00:08:20] Tony: If something dramatic happens in June, I’ve got a fair idea of how they’re going to finish. Um, the ASX listing rules say if the, if the, the, if, you know, you have information which you think will change the share price, you’ve got to announce it. So if, um, if the company chair person knows that, uh, most analysts or consensus forecast is to, 10 percent and it’s starting to change.

[00:08:45] Tony: to look like they’re going to grow by five, then they need to come out and say that, um, because you don’t want the market trading on misinformation. And the reverse happens too. If it looks like being a great year, they’re going to boost sales by 20%. They have to come out and announce that too.

[00:09:00] Tony: Um, so it’s called Confession Season.

[00:09:01] Tony: It’s, there’s no hard and fast date to it, but it generally occurs about, um, in about the last month of the, um, of the financial half. As, as companies become aware of how they’re going to

[00:09:14] Tony: finish up the year or the half compared to what the analysts think.

[00:09:18] Cameron: I saw an article in the Fin, Chanticleer.

[00:09:22] Cameron: I think.

[00:09:22] Cameron: this was yesterday. Says, there is a fragility about this bull market that is worth watching heading into the end of the financial year. While fund managers love cheering the market higher and will take Monday’s 0. 8 percent gain ahead of the June 30 performance tests, they are scanning the horizon for the top of the market.

[00:09:43] Cameron: When will the good times end? We’ve heard all sorts of things. The next interest rate increase, when the tech slash AI dream turns into reality, when tensions flare in Taiwan, Upcoming reporting season. Every hard headed investor has his or her favorite leading indicator. Regal Partners Chief Investment Officer Phil King swears by the US 10 year bond rate, currently 4.

[00:10:05] Cameron: 46%. For example, others watch the VIX, 11. 9 points, a 35 year low for their smoke signals. At the stock level, it’s all about earnings. Macquarie’s equity strategist put an interesting leading indicator out there on Monday, warning it had been triggered. And could crimp company profits, activating the risk of a near term downgrade cluster?

[00:10:27] Cameron: Macquarie’s indicator is Australian businesses forward purchasing orders, which is a proxy for forward sales and economic activity. Worryingly, forward orders fell off a cliff last month to multi year lows. We say worryingly because the last time there was such a fall was 12 months ago. And it triggered a wave of earnings downgrades for the following month.

[00:10:49] Cameron: That wave hasn’t come yet, but the data suggests we should watch out for it next month as management teams and boards look at their forward orders and think about what it means for forecasts this year and next. And it goes on and on and on. But, um, Yeah, you would think that if, uh, people know that they’re not getting as many forward orders, they must know that their results aren’t going to be as good as they forecast, and they should be confessing stuff.

[00:11:17] Cameron: Like we, I seem to recall that six months ago, we got hit with a lot of surprise. Well, not six months, but when the last financial results, I remember we were getting hit with a lot of downgraded things and going, hold on, where was the warning? Where, why didn’t this come out during confession season? And I don’t remember there ever being any sort of, uh, ASIC swinging the bat at people for not, uh,

[00:11:40] Tony: Mm.

[00:11:40] Cameron: confessing. Do you, did you see anything?

[00:11:43] Tony: Well, the A SX, um, is the regulator in this case, and, uh, no, they’re, they’re, they’re a bit of a paper tiger. Um, when it comes to this, I, I can’t think of anybody in a very long time that’s been, um, pulled up for not disclosing, uh, something that they should have disclosed where they, where they do run a bigger risk is, is the class action lawyers getting involved.

[00:12:07] Tony: So. There’s been a couple of cases, um, Sims, Sims Metal Management comes to mind, or Sims, Sims Metals comes to mind. A couple of years ago, they, um, they came out with a downgrade, but it wasn’t signaled properly. They knew about it beforehand. And, and so the class action lawyers, um, went to work and contacted all the shareholders and said, you know, if you bought shares, buy Between this time when, which is basically allegedly when Sims knew about the downturn in their business to when they told people publicly, um, then you were trading with misinformation and, and, uh, I think that got to a settlement.

[00:12:44] Tony: I don’t know if it ever got to court, but it got to a settlement and some, and the shareholders were paid out something by Sims, probably by their, their, um, insurers. But, uh, but yeah, that’s, that’s where the companies do get fearful. So, um, it, it can be an issue for the smaller ones if they’re not. Like a big company like ComBank or Telstra, they’ve got, you know, a whole floor of lawyers.

[00:13:07] Tony: Watching this for this kind of market disclosure infringements and making sure it doesn’t happen, but, um, if it’s a small company, which I know some of our listeners have in their portfolios that, um, they can, uh, sell close to the winning when it comes to all the finer points of, um, of the ASX announcements.

[00:13:27] Tony: I mean, there was a, I’m doing a pull talk later on on one small company and they will issue what’s called a speeding ticket. So the ASX said, well, your share price has gone up. Do you know why? Um, then they came back and said, um, oh, we see you made this presentation at a conference or to a website or to an audience.

[00:13:47] Tony: And it looks like it had market sensitive stuff he didn’t declare. And then they got a fairly legalistic response from the company’s lawyers saying no, he didn’t. So as far as I know, that’s as far as it went. But yeah, that’s, that’s the kind of thing that the ASX is meant to be regulating. But it generally just, it’s almost like I’m going to remind you of your obligations rather than I’m going to fine you

[00:14:12] Tony: for breaking your obligations is the approach.

[00:14:16] Cameron: Hmm. Yeah. I just looked up the Sims one. It was settled for 29. 5 million, but, um, it looks like it, uh, took quite a few years

[00:14:29] Tony: yeah. Class. Class Settlements do, for sure, or Class Actions do,

[00:14:34] Tony: yeah.

[00:14:35] Cameron: Right. Uh, all right. Well, nothing for confession season then.

[00:14:43] Tony: No, I mean, the only ones I’ve been aware of are a couple of the retailers who came out, um, with downgrades, and then companies like Telstra, but I can’t recall any, um, terrific upgrades, uh, and I can’t recall much happening yet, so far this confession season. There’s still a month to run, though, so we might get some late

[00:15:02] Tony: action leading into the financial year end.

[00:15:07] Cameron: Well, the only other thing I wanted to talk about, Tony, is to pick your brain on, I’ve had two emails in particular in the last week from QAV club members. And

[00:15:18] Tony: Mm

[00:15:19] Cameron: um, wanting to thank us because he said he’s looking at a great return for this financial year. So around 20%. The other saying that, uh, he’s hasn’t got a great return and both, both members have been around about the same amount of time.

[00:15:36] Cameron: Both started early. 2022, um, which we know is, is, you know, when the Ukraine invasion happened and interest rates, interest rates started going up and all of that kind of stuff really rocked the markets, uh, for a long time. Um, but you know, it’s just this situation where we have, One member that’s getting great results, one member that’s not getting great results, and assuming that they’re both following the rules.

[00:16:05] Cameron: Um, I know that my super performance over the last couple of years hasn’t been great. I know that the dummy portfolio’s not had a bad year. I mean, it’s up about 10%, I think, this financial year, but it’s underperforming the STW. I know the light portfolios have been struggling in the last couple of years to match the STW.

[00:16:28] Cameron: They’re underperforming. But, you know, we’re all following the same rules. And why some, one person’s portfolio would be doing great, another wouldn’t, um, I have my theories on why that is, but, um, I wanted to throw it to you and see what your back of the envelope analysis would be, why

[00:16:49] Tony: Yeah, well,

[00:16:50] Cameron: the same rules are getting different year on year performances.

[00:16:54] Tony: um, yeah, so I looked at the two year performance in the dummy portfolio, I think it’s actually been negative. If you take a calendar performance, maybe you’ll look that up for me, thanks, um, and the market’s been slightly positive, uh, but it’s a bit, it’s a bit like chaos theory. It’s, um, initial states matter, so if you’ve got two people, if they started investing on the same day, um, if they bought the same, the Number of stocks in their portfolio at the same time.

[00:17:20] Tony: If they, um, had the same sort of ADT limits, then yeah, they should apply the same rules and get the same results. But it doesn’t take much for that path to diverge if, for example, they started Even a few days later than each other or one started with a smaller portfolio and one started with a larger portfolio or someone took a couple of days to realize it was a sell before they sold.

[00:17:46] Tony: Um, someone did a download during the week and found there was something else to buy on top of the buy list compared to the weekly one we put out. There’s all sorts of reasons which

[00:17:55] Tony: can diverge the performance of those, of those two portfolios for sure.

[00:18:00] Cameron: Um, you said Dummy Portfolio over the last two years.

[00:18:03] Tony: Yeah,

[00:18:06] Cameron: Uh, I’m looking at it now. It says, uh, our two year CAGA performance is 6. 77 percent per annum. Um, the STWs is 9. 1 percent CAGA per annum, but our capital, our capital gain is actually down over that period. It’s income, income return is what’s saving it.

[00:18:27] Cameron: Capital gain is down 3%. Income return is up 9. 8%.

[00:18:32] Tony: yep, okay,

[00:18:34] Cameron: But I’d be happy with my super portfolio if it was running at

[00:18:38] Tony: yeah,

[00:18:38] Cameron: percent

[00:18:39] Tony: and I’m the same over the last couple of years as well. It hasn’t been a good time to be, uh, invested,

[00:18:45] Tony: um,

[00:18:46] Cameron: I think ADT, um, seems to have a lot to do with it, I think. Like the, the member who said that he’s looking at a 20 percent return, I think he said his ADT is about 150, 000. Um, I know my super is definitely high, but then again, the, the light and the WPortfolio Restrictions. They’re all, you know, 15, 000 and up and the light portfolios.

[00:19:13] Tony: yeah, but they do have more small stocks in my portfolio, for example.

[00:19:19] Cameron: Well, that’s what I’m saying. So,

[00:19:20] Cameron: um, but their, their performance hasn’t been particularly strong either. Like not 20%, like that member, the one member is getting 20%. Like if I look this financial year for the dummy portfolio, it’s looking at the moment, it’s about 10%. Versus the SDW about 13. Um, and if I just start looking at the light portfolios, like the 221 light portfolio, this financial year is up, uh, it’s up about 13, which is about the same as the index.

[00:19:52] Cameron: Um, so that’s, uh, not too bad. Uh, let’s say 222 is up 5 percent versus 13. 223 is up 10 percent versus 13. 231 is down 1 percent versus 13. I think it was sitting on a lot of cash, uh, for a long period of the beginning of this financial year when I couldn’t find anything to buy. Um, so, uh, you know,

[00:20:26] Tony: It’s a spread.

[00:20:27] Cameron: okay.

[00:20:27] Cameron: They’re not doing 20 though, right?

[00:20:29] Tony: No, it’s a spread, but, but also too, you’re looking at a short term performance. If you’re thinking you’re going to find 20 percent across the board on all of those, that’s not going to happen.

[00:20:39] Cameron: Yeah,

[00:20:39] Cameron: right.

[00:20:39] Tony: they’ve got to get established and,

[00:20:41] Tony: you know, wait a fair bit of time before they’re averaging 20%.

[00:20:44] Tony: Mm

[00:20:46] Cameron: Yeah. So if I look at the dummy, you

[00:20:49] Cameron: know, the dummy has been running since, um, 2019, late 2019, I think September was when we invested the final bit of our capital and it’s doing 15 percent CAGR per annum versus the STW about nine. Um, and as you know, anyone knows if they’ve been following us for a while or looked at their chart, you know, we had massive overperformance Our performance from sort of, uh, September, 2020 through to, um, May, 2022, April, May, 2022, when our stocks started to sink relative to the SDW.

[00:21:33] Cameron: But there was one period there, like in July, 2021, we were doing, we were up, we were up 45% versus the STW up 12%,

[00:21:43] Tony: Yeah, and that’s, we need a few of those in the other portfolios, so

[00:21:47] Tony: you can start to outperform consistently over the longer term. And that’ll happen with

[00:21:51] Tony: time. Yeah, I

[00:21:55] Cameron: It’s just, if, if you started, uh, April, early 2022, when the market was crashing, it’s just bad, bad timing. That’s all you just gotta, you just gotta be, be consistent, be persistent and wait for those good years. You get one, one and a half good years. What every. What do you think? Decade? Or is it less than that?

[00:22:22] Cameron: Six or seven years?

[00:22:23] Tony: have said one

[00:22:23] Tony: cycle, yeah, six or seven years, um,

[00:22:27] Tony: tends to be a sort

[00:22:27] Cameron: So you get, you get a 12 to 24 month period where you massively

[00:22:32] Cameron: outperform, and then the rest of the time you’re coasting, underperforming, maybe in a couple of years, moderately outperforming in a couple of years, and then just holding on for that cyclical period. You

[00:22:46] Tony: the human psychology of that and why it’s so hard for investors to do that because, um, what’s that, but let’s say it’s seven years, it’s, it’s six out of seven years. You’re looking like the worst investor in the world. So, you know, maybe for two or three of those seven years, you’re underperforming the index even on a 12 month basis.

[00:23:06] Tony: Um, and so the psychology is normally, Oh, this is no good. I’ve got to get out of here. I’ve got to put my money somewhere safe. Um, this is not working. And that’s called capitulation. And so, that’s, I mean, there, there are people who think there’s some science around that, and there probably is. Um, one guy was Coppock who said that, you know, that the market goes through the stages of grief, like a person does after a close relative dies.

[00:23:33] Tony: And it takes about 18 months before the market gets back up on its feet after a big fall. Um, The point I’m trying to make is that it’s, I don’t know which of the seven years is going to be the massive outperformer. Um, so you’ve got to stay in for all seven years. And then after a period of time, like seven to 10 years, you’ll be doing much better than the market.

[00:23:56] Tony: Um, if you take a shorter timeframe than that and you haven’t had that, that, you know, once in a cycle, really good result, you, it’s going to look reasonably average and you may want to quit and that’s the worst thing to do.

[00:24:09] Tony: Because you’ll never get the ones, you know, the one unit outperforms if you do

[00:24:12] Tony: that.

[00:24:15] Cameron: know, in my head, if I ever start to feel, um, depressed about performance for my super or I get, you know, start to question it, the process that I go through is I return to fundamentals. I think, okay, what are we doing here? We’re trying to find companies that are performing well, that are undervalued. We’re buying shares in those companies under the assumption that.

[00:24:42] Cameron: Over time, the market will recognize that they’re performing well and they’ll regress to the mean. We’re not going to get it right all of the time. We’re just trying to get it right 6 out of 10 bets. Things are going to go the other way. Uh, and even that 6 out of 10 is like an average over a long period of time.

[00:24:59] Cameron: You’re going to have periods where you get them, we get 8 out of 10 wrong. You know, you’re trying to get on average 6 right over a period of time. And then, of course, while you’re doing all of that, there’s the froth and bubble in the marketplace of, as we talked about last week, loss making, high growth stocks that the market’s obsessed with for whatever reasons, a lot of froth and bubble that will be driving up different trends.

[00:25:23] Cameron: Stocks and the STW and all that kind of stuff in many cases, and you just got to ignore the froth and bubble and just stick to the fundamental theory. I guess that’s what it comes down to in my head is, look, is there anything wrong with the fundamental theory? Find good performing companies when you can get them at a discount, buy them and hold them until they You know, you ha you, you’re forced to sell ’em because they break one of the rules and you know, you doing an insurance call on them, basically.

[00:25:52] Cameron: Um, and I, if, if I can’t find anything faulty with the theory and I don’t have a better theory, ,

[00:26:00] Tony: Yeah, that’s the thing. We can always improve the theory, but, um, until we do, we’ve got to, you know, we’ve got to prove it. But, um, until we do, we’ve got to stick with it, right? Because you, you, you’re right. I mean, it’s a bit like life, isn’t it? So your next door

[00:26:12] Tony: neighbors upgraded their car, you know, well, what are they doing?

[00:26:15] Tony: Do I should be? No, I’m not. What am I doing wrong?

[00:26:18] Cameron: they’re not a podcaster. That’s basically what it comes down to. And in every case, everyone I know is doing better than me and I’m going, well that’s, that’s ’cause they’re not a podcaster, you know? No. But yeah, no.

[00:26:29] Tony: so it doesn’t mean you go and quit your job and apply for the same job they are, but they

[00:26:33] Tony: have. You stick with it, unless you think that your job isn’t going to pay off in the

[00:26:37] Tony: end.

[00:26:39] Cameron: There was this great, um, quote I saw recently. I’m gonna see if, um, I can find it in my list of quotes. Um,

[00:26:54] Tony: Patience is so important in Life Cam, it’s not, you know, in investing it’s important, in business it’s important, in almost everything it’s important, but people are always pressured into making quick decisions and that’s not how you should operate.

[00:27:08] Cameron: yeah. I’m trying to remember this quote and where I got it from.

[00:27:14] Cameron: Yes. So it was Geoffrey Hinton. Um, do you know who Geoffrey Hinton is? Geoff Hinton?

[00:27:21] Tony: I do not,

[00:27:22] Cameron: you’ve probably seen him in the media. Okay. So Geoffrey Hinton is, they call him the godfather of AI in mainstream media.

[00:27:30] Cameron: He was the. Professor of Ilya Sutskever, who was the chief technology officer at OpenAI until he got pushed out a couple of weeks ago. Um, uh, and, and Hinton was then ended up at Google. He was like, he and his team of researchers ended up at Google’s AI thing where they built basically, uh, The model that is used now for language large models largely came out of Geoff Hinton and his, and his students.

[00:27:57] Cameron: They built this thing. So I was watching a really good interview with him recently and he was talking about, um, hiring smart people or bringing smart people into his team. And he was talking about Ilya as, you know, the first time he met Ilya, he obviously was very, very bright. And he said something like this, in his experience, really smart people have a model for how the world works in their head. And if somebody presents them with data that doesn’t match their model, they are suspicious of the data, first of

[00:28:37] Cameron: all. And then, but then they will interrogate their model for weaknesses to see if the new data can improve their model. Or it just doesn’t fit with their model. Uh, you know, their model stands up.

[00:28:51] Cameron: It’s, it has a robustness to their model. And then they reject the data as being faulty or problematic, right?

[00:29:00] Tony: hmm.

[00:29:01] Cameron: There’s this idea about you and I, and, and, and I thought, well, that. I mean, that’s kind of how I work with geopolitics, right? When I do the bullshit filter and, you know, when I’m doing my history shows, I have a model that’s been established over 30 years of reading history and politics and philosophy and that kind of stuff, a model for how Countries work, politics works, geopolitical affairs work, why wars happen, how governments operate, right?

[00:29:30] Cameron: So I have this model in my head and I don’t, I don’t think it’s a perfect model and I don’t think I’m always right, but I have a model. And I’m pretty confident that that model explains the vast majority of stuff that I’ve read about history and geopolitical conflicts. And if somebody presents me with a version of events that doesn’t map to my model, I’m going to go, hmm.

[00:29:56] Cameron: Yeah, I’m not sure about that. And, you know, then I can interrogate my model and see if my model could be improved by integrating their version. But you have to have a model that you, you know, WELTANSCHAUUNG, that you see the world through, right? And I guess that’s what I’ve been learning from you over the last five years with investing is I have a model, which is.

[00:30:18] Cameron: Been proven not just by you over 30 years, but by Buffett and Munger and, you know, all these guys came before them. And it seems to make sense. It’s, it’s, it’s coherent. It’s logical. It’s rational. I can’t find any weaknesses in the model. So unless I have a better model, for investing that’s more coherent, more rational, more logical.

[00:30:43] Cameron: I have to stick with this model. And if the model doesn’t seem to be working in the short term, it gets back to who is that guy

[00:30:51] Tony: Well, just let me pull you up there too. The

[00:30:52] Tony: model is working in the short term, but dummy portfolio proves it’s working in the short term.

[00:30:57] Cameron: Yes, exactly. Yeah, yeah, yeah, yeah, yeah. Well, I mean, on short term, like one year though, you know?

[00:31:04] Tony: But, but I’ll, I’ll just want to pull you up there. You’re saying it’s not working because perhaps it’s underperformed the market in a one year time frame.

[00:31:13] Tony: But the model is still working. It accounts for the fact that some years you’re going to underperform.

[00:31:18] Cameron: Oh yeah, right. Okay.

[00:31:19] Cameron: Yeah. Yeah.

[00:31:20] Tony: I

[00:31:21] Cameron: And you’ve always said

[00:31:21] Tony: January the 1st, I can’t predict that this year is going to be

[00:31:24] Tony: an underperform year or an outperform year. So I’ve got to stay in it. That’s the

[00:31:27] Tony: model.

[00:31:29] Cameron: Yeah. And you’ve always, like, I remember in the early days when we were talking about this, you was, you would say. You know, in some, some years we will underperform and I used to go, yeah, I didn’t, I didn’t really believe you at the time. He’s just being humble. He’s just being modest. But, uh, apparently it’s, we do underperform sometimes.

[00:31:47] Cameron: Yeah. I’m trying to remember the name of that book I was reading, um, What Works on Wall Street. Um, couple of years ago,

[00:31:55] Tony: McGinnis, isn’t it? Oh, it was O’Shaughnessy.

[00:31:57] Tony: Yeah. It’s an Irish name. McGinnis or O’Shaughnessy? Could be O’Shaughnessy. Uh

[00:32:03] Cameron: but I clearly remember in his book, he was saying that based on his experience, that’s exactly what people do, they pick a model, They run that model for a year or two until it doesn’t work for a year. And then they go, Oh shit. And they jump off of that model and they go, they go find another model, uh, that works for a year or two.

[00:32:28] Cameron: And then it stops working and they go, Oh shit. And then they jump off of that and they go find another model. And it’s like long term that never works. Cause you know, the, you’re not consistent with your model. I don’t know why I

[00:32:41] Tony: Well, it’s, well, you’re always jumping off the model at the wrong time. You’re jumping off the model and it’s down year. And so that’s just classic buying high and selling low.

[00:32:52] Tony: You’ve seen something, you’ve seen something increase in date or some model outperform. It’s like fund managers, right? You never, you never buy the, buy, you never put your money into the fund of the highest performing manager from last year.

[00:33:04] Tony: Because they’re going to regress to the mean. If you keep doing that, you’re just going to keep losing money. It’s the same with, with investment style. You don’t just keep jumping around because you’re, you’re following one that’s worked and this year it’s not working. So you’re going to jump out and find something else.

[00:33:17] Tony: That’s just, that’s just consistently

[00:33:19] Tony: taking a loss.

[00:33:22] Cameron: I just found a couple of quotes from his book that I’d made a note of. Finding ex It is, James O’Shaughnessy, What Works on Wall Street. Finding exploitable investment opportunities does not mean it’s easy to make money, however. To do so requires an ability to consistently, patiently, and slavishly stick with a strategy, even when it’s performing poorly relative to other methods.

[00:33:44] Cameron: Few are capable of such action. Structured investing is a hybrid of active and passive management that automates buy and sell decisions. If a stock meets the criteria, it’s bought. If not, not. No personal emotional judgments enter the process. Disciplined implementation of active strategies is the key to performance.

[00:34:04] Cameron: Traditional managers usually follow a hit and miss approach to investing. Their lack of discipline accounts for their inability to beat simple approaches that never vary from their methods. Don’t second guess. Don’t change your mind. Don’t reject an individual stock if it meets the criteria of your strategy, because you think it will do poorly.

[00:34:24] Cameron: Don’t try to outsmart.

[00:34:26] Tony: Ooh,

[00:34:28] Tony: good

[00:34:28] Cameron: Right? How good is that? Yeah. I remember reading that and going, okay, well, I wasn’t going to do it because Tony told me, but if this guy tells me, I’m gonna No, but it’s

[00:34:41] Cameron: like

[00:34:41] Tony: exactly right though, isn’t

[00:34:43] Tony: it?

[00:34:43] Cameron: Yeah, right? It’s like, brilliant. It’s just,

[00:34:47] Cameron: don’t, you know, try, unless you are smarter than the strategy, then come up with a smarter strategy and

[00:34:54] Tony: Yeah, honestly, every strategy should evolve over time as long as it’s done scientifically. You can’t just sort of think, oh, that didn’t work this week. I’m going to change it. It needs to be tested properly. Yeah. But yeah, I mean, otherwise,

[00:35:07] Tony: otherwise it’s the casino that Buffett talks about. I mean, he’s had plenty of years where he’s underperformed. Um, he, you know, he says something humble at the AGM and moves on and keeps investing. And in fact, when he first set up his partnership, when it was the Buffett Partnership back in the 50s, um, he made people sign a contract saying that they were going to keep their money with him, I think it was for 10 years at least.

[00:35:29] Tony: Like, they weren’t going to, they weren’t going to be able to pull it out. Um, because, uh, you know, he had a bad year and he underperformed. It was invested for the longer period and he would get outsized returns. And that was really smart of him to do that because he knew that if some of his investors would lose faith along the way and try and pull their money out and try and sell it or redeem at the wrong time when the market was down or when he was

[00:35:49] Tony: down compared to the

[00:35:50] Cameron: Yeah. Yeah. You just gotta stick with it. Be disciplined. Slavishly stick to it, as O’Shaughnessy says.

[00:35:59] Tony: correct.

[00:36:01] Tony: Be Doctor No.

[00:36:01] Tony: Ha ha ha.

[00:36:05] Cameron: Yeah. What have you got for us on a pulled pork front this week, Dr. No?

[00:36:11] Tony: I’ve just got one more thing to talk about before we get there. So we talked about confession season, but it’s also CGT, uh, selling season too, just to make people aware of that. Um, by that I mean, it’s, yeah, so it’s coming up to the end of the financial year. Um, and this is not financial advice or tax advice, and people should talk to their accountants about it.

[00:36:34] Tony: But, um, it seems to me, uh, if you have, A portfolio, uh, which is sold stocks during the year and they have a capital gain and you have a stock in your portfolio which you’re holding on to, which is at a loss, then you might want to think about selling that stock and offsetting the capital loss or realize that capital loss this month.

[00:36:56] Tony: Um, against the capital gains to reduce how much capital gains tax you pay. Um, so just, just be aware of where you are sitting with capital gains tax before the end of the financial year. And if you need to try and minimize that, then, um, look at selling something which is at a loss. Um, and there are rules around that, which your accountant can help you with.

[00:37:13] Tony: The, the wash rule is the most important. So, if you do sell something, um, to offset the capital gain, don’t buy it back again on July 1. Because the tax office will say, oh, you’ve just done that to, to try and reduce your tax.

[00:37:27] Cameron: Right.

[00:37:27] Tony: Yeah, so you sell it and you buy something else. Replace it with, um, you know, don’t re buy it after a period.

[00:37:35] Tony: Um, so yeah, so yeah, talk to your accountants, but just be aware that the clock’s ticking before June 30. If you do have some good capital gains, um, you might want to, and you do have a loss in your portfolio and you’re

[00:37:46] Tony: holding onto it, you might want to think about offsetting one against the other.

[00:37:50] Cameron: Very good.

[00:37:51] Cameron: Hmm.

[00:37:53] Tony: my pulled pork today is on a company called Stealth Group. Great name, Stealth Group, SGI. I thought it was going to be some kind of secret, secret squirrel cyber security

[00:38:06] Tony: company, but it’s not. It’s a tool company. It’s a tool retailer.

[00:38:11] Cameron: Stealthy tools,

[00:38:12] Tony: Stealthy tools, yes. SGI, small company. ADT is only 35, 000. Be aware of that. It’s a WA based company and they have a network of, I guess, now five businesses that retail automotive and industrial parts, tools, construction tools, safety equipment, workwear, hardware, construction materials, truck and trailer parts, automotive parts, electrical parts, Cleaning, uh, supplies, and any other sort of workplace consumable.

[00:38:51] Tony: Um, so they operate five businesses. One is called Heatley Safety and Industrial. Another one’s called C& L Tool Centre, Skipper Transport Parts. Industrial Supply Group and United Tools, uh, brings up the rear, great name, United Tools, uh, they have 65 locations around Australia, and they’ve had a good year, so, the market’s been kind to them, and their share price is up, um, this is the company I was talking about before that, uh, Went into a presentation saying that their financial year 24 pre audit numbers showed that profit, net profit was up 49 percent and operating cash flow was up 65%.

[00:39:37] Cameron: Wow.

[00:39:38] Tony: And yeah, so they’re good. The ASX came out and said, hang on, you haven’t announced those to the general market. And their lawyers came back with some double Dutch reason why there was pre audit numbers and you couldn’t rely on them, etc, etc. But anyway. Um, but if they, if those numbers do flow into the, uh, end of financial year numbers, then their QAV score will probably get even better, um, because, uh, they’re, they’re impressive.

[00:40:07] Tony: Um, the buy list is still using numbers, though, from 31st of December, 2023. So, that’s another thing, I guess, to bear in mind now is that, um, we always have this debate. In the last month of the year, do you wait until new numbers come out, or do you rely on the old ones? And my answer is always to rely on the old ones, so I’ve got some numbers to work with.

[00:40:27] Tony: Uh, that’s the case with this analysis, but just bear in mind that the company is already highlighting that the numbers will get better. Uh, company was, has a, an owner founder, which we score well, uh, for, so a chap by the name of Mike Arnold set the company up in 2014, and it’s been growing since then.

[00:40:47] Tony: He’s still the CEO today and he still holds 11 percent of the company, so that’s pretty good. So it’s, it’s, my sort of, um, Take away from reading about this company is it’s like a mini Bunnings sort of store. Um, or maybe if you combine Bunnings and super cheap order into a, into one business, um, they’re, they’re growing, uh, both organically, uh, but also by acquisition.

[00:41:12] Tony: So I think there is space in the market for a niche player who is. Um, we’ll eventually acquire lots of the, the, you know, single store outlets that still service their markets, particularly in rural areas. So, um, I don’t see any reason why they can’t grow, even though they’ve got a couple of big competitors on their doorsteps.

[00:41:34] Tony: Um, it’s often the case in retail that, uh, the niche player and the big player. Do well, um, and that’s the one in the middle that gets squeezed from the top and the bottom. Uh, but eventually, I mean, you know, if this company gets really large, then it’s either going to be picked off by one of the big players or, or face some stiff competition from them.

[00:41:56] Tony: But anyway, numbers at this stage are pretty good. Um, it’s just, as I said, a small company, we don’t have a consensus forecast for it, which is something I like usually. Uh, but it means we, we don’t know what, um, what we think the, the company will do next year. Notwithstanding the fact that they’ve called out that this year is very good, and that next year, um, will be better. Uh, we have, no, the company isn’t paying a dividend, and they do see themselves as a growth company, so we’re not getting, we can’t score them for yield. Stock Doctor financial health and trend is satisfactory and recovering, so I like the recovering side of things of that, and we score it well for that.

[00:42:34] Tony: PEs, you know, about market average, it’s 18. 4, maybe a little bit, um, below that, but, uh, 18. 4 is not the highest or the lowest over the last three years for this company, so I’m going to kind of score it for that. PropCaf is only 2. 78 times, which is very good, so. This company is throwing off a lot of cash and that’s obviously going to fund their growth as they go look to acquire more businesses or to expand.

[00:43:00] Tony: I know they’ve done a fair bit of work expanding into an online channel. So, um, but, but whatever they do, I, I, you know, from my sort of cursory look at them, I don’t see them, um, necessarily putting their hands out for, you know, Capital raisings or taking on lots of debt when they’ve got such strong cashflow.

[00:43:19] Tony: Uh, IV one for this company is only 6 cents, so it’s trading. Um, uh, well above that I, the number, I use the share price of 21 cents, I think for this analysis. Yeah, 21 cents. Um, I think it’s a bit higher than that today. Um, 21 cents is way above the IV one score. We don’t have an IV two score because we don’t have, uh.

[00:43:46] Tony: Uh, consensus forecast about future EPS. On the net equity side, uh, Neps for this company is 16 cents per share, and the book plus 30 is 21 cents, so you can buy this company that’s throwing off a lot of operating cash flow basically at its book plus 30 percent, um, on a down day perhaps it’s going to trade around that number, uh, but you know, that, that to me is good buying.

[00:44:11] Tony: Um, from a value side of things anyway, and, uh, as I run through the scores, it’s, it’s also scoring well on the quality side, the quality score side of things too, so it’s, um, it’s right in that nice sweet spot for, for people if they want to have a look. Um, can’t score it for growth because we don’t have analyst forecasts.

[00:44:29] Tony: Um, we do score it for having an owner founder, so Mike, Mike Arnold, as I said, has 11 percent still. Uh, the company has consistently increased equity over the last three years, so that’s. You know, that’s, that’s a good thing. Well managed company. Uh, overall, out of all those things, the, the company Stealth Group has a quality score of 10 out of 11 items.

[00:44:52] Tony: We can score at 4 or 91 percent and a QAV score of 0. 33. So it’s quite high up on our buy list. Um,

[00:45:01] Cameron: Hmm.

[00:45:02] Tony: as I said, pros and cons are going to come, um, I think entirely around the fact the pros will be because they’re a niche player and they’re going to have better customer relationships. with their local communities and some of the big chains are going to be more nimble.

[00:45:16] Tony: And I think, you know, potentially have more growth opportunities because they’re more likely to grow by buying one or two businesses with a small number of outlets per year. But, you know, Bunnings will need to buy a whole chain of Uh, of a company like this, it may well come up on the, the acquisition horizon for Bunnings at some stage.

[00:45:37] Tony: Um, and then the, the cons for this, this is that they do have a big competitor in the market like Bunnings or SuperCheapOrdo, uh, keeping prices, um, as low as possible so that, that will always, um, put headroom on what they’re able to charge. Uh, and, um, you know, if they grow, reasonably large and they don’t get acquired and they will start, um, you know, finding it hard to find niche markets that aren’t in the catchment areas for a big, a big store, which will, um, which will affect their growth

[00:46:05] Tony: opportunities. But overall, this company scores really well and it’s worth having a look at.

[00:46:11] Cameron: I’m just looking at our historical buy list. it’s

[00:46:13] Cameron: been on and off our buy list going back like 2021, I think, and it was trading at around, I don’t know, 10 cents back then. It’s now trading at, uh, 23 cents, 23 and a half cents. So anyone

[00:46:31] Cameron: who,

[00:46:31] Tony: That’s good. Yeah.

[00:46:32] Tony: Yeah,

[00:46:33] Cameron: it, Back then when it was first on our buy lists and has held it, I mean, it’s had a couple of declines.

[00:46:38] Cameron: So you might’ve had a three point trend line at some point, but, uh, I don’t hold it in any of our portfolios. I’ve never really looked at it before. SGI for me means Silicon Graphics. Do you remember Silicon Graphics?

[00:46:56] Tony: do. Yes.

[00:46:59] Cameron: Wow, they are like Silicon Graphics

[00:47:02] Cameron: back in the day, man. They were the original SGI. I was just, um, I looked up whatever happened to Silicon Graphics.

[00:47:12] Cameron: I vaguely remember, but, uh, yeah. From 1984 to 1997, their revenue went from 5. 4 million, 1984 to 3. 7 billion. In 1997, 3D graphics, and then a few years later they filed Chapter 11.

[00:47:32] Tony: Ah! Yeah, right.

[00:47:37] Cameron: When Macs and PCs could do 3D graphics as well,

[00:47:41] Cameron: no one was paying hundreds of thousands of dollars for an SGI, uh, computer. But, um, you know, the guy who, uh, founded it was Jim Clark, who then founded Netscape.

[00:47:57] Tony: Okay.

[00:47:58] Cameron: so, you know, I’m pretty sure he did okay. I’m not too worried about, uh, Jim Clark. He’s still around 80 years old.

[00:48:06] Cameron: So yeah, I think, I don’t know what, I think Netscape ended up getting bought by Oracle, but anyway, I’m, I’m ranting now, but yeah, SGI takes me back to the, the nineties, nineties IT industry when SGI was sort of like a beast of a machine that

[00:48:23] Tony: It was, wasn’t it?

[00:48:24] Cameron: Ooh.

[00:48:25] Tony: Ah,

[00:48:28] Cameron: 3D graphics, which is how, I mean, NVIDIA, I mean, this is completely off the NVIDIA then sort of did the 3D graphics thing and, uh, look at what’s, look at where they’ve gone.

[00:48:41] Tony: That’s why it’s always hard to find the next big thing, isn’t it?

[00:48:45] Cameron: Yeah. You know, you, you look at SGI late nineties, you would have thought

[00:48:49] Cameron: this company is going to dominate forever. And within 10 years, I think they’d gone bankrupt.

[00:48:56] Tony: Yeah, and I read an article, I think it was in last week’s Fin, about Duncan Miller selling out of Nvidia. He got in early.

[00:49:03] Cameron: Who?

[00:49:05] Tony: Uh, Druckenmiller, he’s a famous investor, used to work for George Soros,

[00:49:10] Tony: um, I think it’s Stanley Druckenmiller, if I remember, Drucken, Druckenmiller, get that name right. Worked for Soros, went off on his own, has had great returns for a long time, um, he’s often, you know, mentioned in the Buffett, um, League, uh, or people like Soros, and, uh, uh, but anyway, it’s, it’s that time in the US when they’re all announcing their quarterly movements and their investments.

[00:49:36] Tony: Buffett did a couple of weeks ago as well. And, uh, he came out and sold out of NVIDIA. So, uh, he, I think he said he made eight times his money and it was time to get out. I don’t think he had a clear reason for doing it or he’s not required to give a clear reason for doing it. It was just following a report on what he traded, but, um, he’s out.

[00:49:55] Cameron: Right. Taking his profits out.

[00:49:57] Tony: Yeah.

[00:50:01] Cameron: Yeah, well, they’ve had a year.

[00:50:04] Tony: Oh Yeah.

[00:50:06] Cameron: Crazy. What’s going on with that? Well, thank you for SGI, Tony. That’s a good one to keep an eye on. As I said, I wish I’d, wish I had it in my portfolio over the last couple of years. It’s had a great run.

[00:50:17] Tony: Well, I’m, I’m guessing if it’s ADTs, what’d I say it was, it’s about 27, 000. So it’s probably only gotten up to the stage where you can put it in your portfolio in the last year. At 10 cents the ADT was

[00:50:29] Tony: probably below 15, 000. I’m guessing.

[00:50:32] Cameron: Yeah.

[00:50:33] Cameron: probably. Well, that is everything for today, apart from a little bit of after hours. I finished watching Dream Scenario last night, the Nicolas Cage film.

[00:50:45] Tony: Ah, I’ve got halfway through it and haven’t gotten back to it.

[00:50:52] Cameron: I took sort of a week to watch it while Chrissy was away, a bit here and a bit there. But I really enjoyed it. Um,

[00:50:58] Tony: good.

[00:50:59] Tony: I’ll get back to it then. It was, it was flagging for me. As much as I liked it, it

[00:51:02] Tony: was

[00:51:03] Cameron: oh really? Yeah.

[00:51:05] Cameron: I mean, you know, and it has a, it has a twist that I didn’t see coming, um, but you know, I’m world’s number one Nicolas Cage fan, so I’m gonna love everything he does, but he’s had a good run lately, like he’s doing really interesting films that are showing a range.

[00:51:22] Cameron: Did you see Pig? We talked about Pig?

[00:51:25] Tony: No, I haven’t seen it.

[00:51:27] Cameron: Oh, you gotta see Pig, man. Pig was great. They steal his pig.

[00:51:31] Cameron: Um, yeah. You

[00:51:35] Tony: of thing?

[00:51:37] Cameron: would think, but no,

[00:51:39] Cameron: no, not really. That’s the direction you expect it to go in, but it really doesn’t. He’s, um, yeah, it’s a really quiet role, he barely speaks in it. And this one, he’s obviously playing this schlubby, middle aged, balding professor, and he’s playing against type, not doing

[00:51:59] Cameron: the crazy Nicolas Cage kind of persona.

[00:52:03] Tony: Yeah.

[00:52:04] Cameron: Yes! Yeah, that one!

[00:52:08] Tony: Yeah.

[00:52:09] Cameron: Renfield, um, yeah.

[00:52:13] Cameron: Anyway, uh, I enjoyed that. Haven’t watched anything else really. What about you? Seen anything good on your travels? Hmm.

[00:52:21] Cameron: Hmm.

[00:52:22] Tony: or films or anything for the last two weeks. That dream scenario reminded me a bit of the, like, if you like movies like Eternal Sunshine of the Spotless Mind, those kind of,

[00:52:33] Tony: you know, really good ones from the

[00:52:36] Tony: 90s. That kind of mo Yeah. I’ll get, I’ll get back to it. I just didn’t have time to watch it,

[00:52:41] Cameron: The guy who wrote and directed this I’d never heard of before. I think he’s from

[00:52:45] Cameron: Norway or something like that. He’s done a couple of films, a bit of a writer, director, auteur. Um, obviously had a good enough resume to, although I don’t think it’s very hard to get Nicolas Cage to make anything if you’ve got to give him a pay packet.

[00:53:00] Cameron: Um, But this was good. It made me want, it makes me want to watch this guy’s earlier films because I

[00:53:06] Tony: Oh, right,

[00:53:06] Cameron: really, really, really, impressed with this.

[00:53:09] Tony: Yeah.

[00:53:10] Cameron: I just watched a YouTube, uh, today or last night, last couple of days of, uh, the Curb Your Enthusiasm cast at some, you know, I don’t know, industry thing where they were being interviewed for an hour by Judd Apatow talking about Curb Your Enthusiasm and the history of making it, which was fun.

[00:53:31] Tony: Yep. Well, that’s good. No, well, we’ve, we’ve been, um, absorbed by golf and horse racing for

[00:53:39] Tony: the last, uh, week or so and catching up with friends and family too, which has been nice. Yeah,

[00:53:45] Tony: um,

[00:53:45] Cameron: body going with the golf? So you, uh. Over your injuries.

[00:53:50] Tony: Yeah, no, back’s hot. I’ve, um, been a little cropped though lately. I had to get some antibiotics after I saw you in Brisbane, not because of you, but, I think I probably from scarring when I was down there in lots of crowds,

[00:54:03] Cameron: That’s so good.

[00:54:04] Tony: no, I picked up some kind of sinus infections.

[00:54:07] Tony: I’ve just been battling that for a while, but that’s coming good, which is good. Otherwise all good. We played a great game yesterday. Went to Bonneville, which is a golf course in Coffs Harbour. Very, very nice. Um, had a great round there with Ruddy yesterday. A lot of fun. Had the course to ourselves pretty much.

[00:54:26] Tony: Really recommend doing Bonneville to anyone. Um, and then we’re heading down to one called Foster Tunkari tomorrow, meeting up with a friend down there. So we’re getting up early and checking out and getting on the road quickly tomorrow.

[00:54:41] Cameron: Nice.

[00:54:41] Tony: Yeah. and

[00:54:42] Tony: then back in Sydney.

[00:54:44] Cameron: I was at a golf course on the weekend with Fox and one of his friends

[00:54:47] Cameron: who, one of their favorite things to do is go around golf courses and pick up golf balls from

[00:54:53] Tony: Oh, nice.

[00:54:54] Cameron: You know, whatever.

[00:54:56] Tony: Well, I should have bought some off him when he was up there then.

[00:54:58] Cameron: Well, that’s his, I keep saying to him, he does this like every now

[00:55:02] Cameron: and again, they go, can you take us to a golf course? And then they’ll pick up a hundred balls. And I’m like, and then they’ll just sit in the garage. And I’m like, what, why are we doing, why are we doing this? He goes, I’m going to sell them.

[00:55:14] Cameron: I’m going to sell them on eBay. I go,

[00:55:16] Tony: Yeah, that’s a good idea. That’s a great idea. Well, people do it,

[00:55:20] Cameron: I’m going to sell them to Tony.

[00:55:21] Tony: me. All right. Well, I’ll buy some.

[00:55:25] Cameron: I said, do you know how much,

[00:55:27] Cameron: what it’s going to cost to

[00:55:28] Cameron: ship a hundred golf balls by mail to someone? It’s going to be like 50 bucks in postage, man.

[00:55:35] Cameron: Anyway.

[00:55:36] Tony: That’s great. That’s great. That’s how Buffett started getting golf balls on golf courses.

[00:55:41] Cameron: Really?

[00:55:42] Tony: Yeah. It’s one of his jobs as a kid or one of his, um, his, uh, entrepreneurial Exploit? I’m just watching the um, Magic Millions in the background. Our horse is

[00:55:55] Tony: felling at the moment.

[00:55:57] Tony: Negronis, the one that Steve Mabb’s in with me.

[00:55:59] Tony: Yeah,

[00:56:00] Cameron: Oh Yeah, What’s the price at? How’s it going?

[00:56:04] Tony: It’s going up, it’s currently 40,

[00:56:07] Tony: 000, but hoping for a lot more, 50, 000.

[00:56:10] Cameron: Do you want me to

[00:56:11] Cameron: dial in and put in a fake bet for you and push the price up?

[00:56:15] Tony: as long as you don’t get caught with it.

[00:56:18] Cameron: Yeah, I get caught. You give me the money and you know,

[00:56:20] Tony: Oh, right.

[00:56:21] Cameron: you still

[00:56:22] Tony: Yeah, I’ll pay you on golf balls.

[00:56:27] Tony: Yeah, sixty thousand. Come on, need more than that. Sixty five. We’re always going to five, so that’s not good.

[00:56:35] Cameron: Oh,

[00:56:36] Tony: 80. Oh, it’s jumped to 80, that’s

[00:56:37] Cameron: whoa. Look at that.

[00:56:39] Tony: Yeah. Come on.

[00:56:40] Cameron: That was Steven Mabb.

[00:56:42] Tony: Ah, ha, ha, ha, ha, ha, ha,

[00:56:44] Cameron: on the phone pushing it

[00:56:45] Tony: ha, ha, ha, ha, ha, Ah. It’s gone like this. It’s stalling again. 85. Come on, we need more than that. 90. Oh, this is the one. It’s the half sister to the blue diamond winner this year, which is why we decided to, um, put it through the ring, because it’s worth more as a

[00:57:03] Tony: Broodmare than the racehorse. Oh, it’s sold for 90, 000. OK. Bye.

[00:57:07] Cameron: How does that match your expectations?

[00:57:10] Tony: It’s lower than my expectations. I was, I was hoping for

[00:57:14] Tony: like, I thought we’d probably get something like 140

[00:57:18] Tony: or 150.

[00:57:22] Cameron: You didn’t have your real estate agent selling this, did you?

[00:57:30] Tony: No, don’t mention the war. All

[00:57:35] Cameron: All right, TK. Well, that’s it. I got to go put a loaf of bread in the oven. Um, and that’s not a euphemism. I wish it was, but my wife’s still overseas. Um, you have a good week.

[00:57:47] Tony: All right.

[00:57:49] Cameron: I’ll talk to you next week. Cheers,

[00:57:50] Tony: Thanks. Bye.

[00:57:52] Cameron: Bye.


QAV 725 – Mr Lazy & Mr Dumb

In this episode of QAV, Cameron and Tony dive into recent market activities, the RBA’s decisions, the Lindy Effect, substantial shareholder announcements, and GrainCorp’s prospects, along with a detailed analysis of Embark Early Education (EVO). Member questions about living off a share portfolio during down years and the differences between value and quality investing are addressed. Additionally, Tony clarifies the calculation of shares on issue for Rio Tinto, emphasizing global figures for earnings per share. In after hours, the duo also covers Mario Puzo’s ‘The Godfather’, Alphonse Mucha, and the Archibald Prize, and discuss the potential and risks of AI, drawing references from science fiction. They wrap up with thoughts on films and books, including ‘Klara and the Sun’.

QAV 724 – Our First U.S. Episode

In this episode of QAV, Cam and Tony explore the U.S. market for the first time, with a brief introduction of Tony and his QAV system of value investing, a discussion of value v growth investing, a discussion of the performance of our U.S. dummy portfolio, a deep dive or ‘Pulled Pork’ segment on Reinsurance Group of America (RGA), and a review of the FY survey results we’ve received so far from club members.


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