In this free episode of QAV, Tony Kynaston and Cameron Reilly discuss the performance of their US portfolio, highlighting challenges with their current buy list and the need for qualitative adjustments. The discussion includes the introduction of metrics like the Z and F scores from Stockopedia to improve financial health assessments. The ‘pulled pork’ segment features Willis Lease Finance Corporation (WLFC), a unique US company leasing aircraft engines. They also touch upon survey results from Australian QAV club members, showcase portfolio experiments based on the AFR Rich List, and debate the viability of Fortescue Metals Group in light of commodity pricing concerns.

00:00 Introduction and Greetings
00:16 Horse Racing Updates
01:47 U.S. Portfolio Performance
02:28 Revising the Buy List
10:42 Stock Analysis: Willis Lease Finance Corporation
20:50 Listener Survey Results
23:35 Rich List Portfolio Experiment
27:36 Conclusion and Sign-Off


QAV 728 Club

[00:00:00] Cameron: Welcome back to QAV. This is episode 7 28. Uh, we’re recording on the 9th of July, 2024. How are you, tk? Very well, thank you. Very good. Good. Um, uh, congratulations on your horses, uh, or horse. I think you had a, he had a win. I saw.

[00:00:23] Tony: Yeah, Indubitably. Won in Beaudesert of all places. But it was actually well placed, because uh, it picked up a couple of bonuses because it was a Queensland horse.

[00:00:34] Tony: Queensland sold horse. I think maybe Queensland bred as well. Um, yeah, so, like, there was a, there was uh, more prize money involved than what had appeared in the race book. So it was good.

[00:00:45] Cameron: Where did the Indubitably name come from? It’s a bit of a mouthful.

[00:00:49] Tony: It is. Yeah. Uh, one of our mates, that’s the way he speaks and he came up with it.

[00:00:56] Tony: So, and we kind of laughed at it cause we, anytime you want to, I like names that trip up the race callers just to stick it to them a little bit. Right. Indubitably on the blablabla.

[00:01:06] Cameron: Yeah, exactly. Indubitably on the

[00:01:09] Tony: blablabla. Yeah, so that was a bit of fun.

[00:01:13] Cameron: Oh, congratulations. Always good to hear that. Any

[00:01:15] Tony: other horse, um, cha cha changes, uh, actually bled after the race, so that’s why it didn’t perform well.

[00:01:23] Tony: Bled from both nostrils, which means it has to have a mandatory three month rest.

[00:01:28] Cameron: Didn’t it just have a win recently or a good run? Ran

[00:01:30] Tony: second, yeah, it just missed out on winning in its last start, so it started like a 1. 45 favourite, so everyone thought it was going to win this one, but unfortunately it bled.

[00:01:39] Tony: So, um, it gets the rest.

[00:01:42] Cameron: That’s no good. Oh, ch ch ch changes. Well, this is going to be our second U. S. show. We did the first one about a month ago, and we’re going to try and do one on a regular basis. Um, the, uh, performance of the U. S. portfolio hasn’t been as good over the last month. It’s now running a little bit behind the benchmark since inception.

[00:02:07] Cameron: I think it was up about 1 percent over the last month versus the benchmark, which was up about 4%. But, I had to sell a stock yesterday. I had to, uh, I think 3PTL one of the stocks. And then I had to, of course, do a new buy list. Hadn’t done one for a few weeks. And there were a couple of stocks at the top of the list that I was looking at and I was like, yeah, I don’t think these stocks should be in the buy list.

[00:02:37] Cameron: I don’t think the buy list is working, is it? Sure. There are a couple of tech stocks, uh, in particular that I looked at that weren’t making any profits, um, might’ve been value traps. And, um, uh, it just made me think, yeah, I need Tony to look over this in more detail. And we need to, we did talk about this last time that we needed to re jig maybe some of the, the numbers, particularly the ones that are kind of trying to replace the Stock Doctor, um, Star Stocks and those sorts of things that look at the financial health.

[00:03:14] Cameron: of a company we need to play around with. Stockopedia have their own variations of that, but the scoring is different. It’s not as clear cut. Um, and we need to maybe adjust some of the numbers and look at some other things. So, um, I then decided on a stock yesterday to add to the portfolio, which was GTN.

[00:03:35] Cameron: Gray Television. Uh, and then you pointed out to me in an email this morning that I completely missed the fact that they were flagging that as a bankruptcy risk. So, obviously a lot more work needs to be done on how we, uh, engineer the U. S. portfolio. And I’ve also got some stocks in the U. S. that are in the news, uh, some of the portfolio stocks that we have.

[00:03:59] Cameron: Holder in the news, which I thought it’d be interesting to talk about as well. And if we have time, we can talk about some Australian stuff as well. I’ve got some survey results in from some members, um, got some news out of the Australian market, but anyway. So you had a look at my US checklist over the last 24 hours, and you’ve highlighted some concerns, some issues.

[00:04:20] Cameron: And I said, let’s do it on air, man. Let’s, let’s be transparent about it because you know, these are good things for. I think our members to be thinking about, understanding, not only if they’re looking at building their own US checklist, but just generally speaking, you know, as we’re trying to identify good companies and getting out of the safety zone of Stock Doctor, you know, we’ve got that checklist, you’ve been refining it for decades, it runs well, we’re comfortable, there’s always room for improvement, but we’re comfortable that it’s doing a good job of Highlighting the sorts of companies that we want to invest in, and more importantly, eliminating the sorts of companies we don’t want to invest in.

[00:05:01] Cameron: But, um, you know, this one still needs some refining.

[00:05:07] Tony: Yeah, well, uh, I think, I think you’re right. I think from my looking at the, the buy list you sent through to me today to have a look at, I think we need to tighten up the quality side of things. So the dummy portfolio, I went through those stocks as well, and a lot of those have the same risk profile as Grey TV, um, in terms of their financial health.

[00:05:30] Tony: So I think the dummy portfolio for the US stocks at the moment is better. More of a value portfolio without the quality overlay that we’re used to, but it shouldn’t be too hard to improve that. So, there’s a couple of things in Stockopedia, which I had a look at. One is called the Z score. And this is not Stockopedia’s IP, it’s Z Score’s that talked about, generally in finance, it’s a way of trying to work out the financial health or risk of a company.

[00:05:58] Tony: Another one called the F Score, which I guess is probably the most analogous to the Stock Doctor financial health trend, so it’s looking at the trend over time. Um, so they’re two metrics that I think can replace, um, With Stockopedia data, what we usually use in our own checklist was Stock Doctor’s data.

[00:06:17] Tony: Um, in terms of what the cutoff scores have to be, I, you know, I don’t know those two scoring systems well enough to guess an answer. So what I’m going to suggest is next time you do a download, just to stack rank them based on those two metrics, and then we can cut it off at maybe a hundred stocks, which is, you know, Really the limit of what we want in a buy list, I think, anything more than 100 becomes unwieldy, but 100 gives us enough to work with, so we can find stocks that meet our other criteria from that universe.

[00:06:46] Tony: And then we can work out what the code into the checklist is, you know, if a 100 stock has a QF score of 5 out of 10, or 7 out of 10, or 10, then we can put that in as our hard code. mandate for our checklist. Uh, and likewise too, uh, Stockopedia has a quality ranking. So they stack rank stocks based on these kinds of criteria.

[00:07:07] Tony: So that’s the other option is that we work out the top hundred stocks and put a, um, a hard code, a quality at that score in our checklist. So we’re not dropping too far down the quality, um, layers. Cause I think that’s, what’s missing from the portfolio at the moment. Um, a lot of the stocks, uh, showing poor financial health that are in the dummy portfolio at the moment.

[00:07:31] Cameron: So they do have this thing, as you mentioned, the quality rank. And that was, it is one of the things that I use in the scoring component of it. So, uh, their explanation on their website of the quality rank. says that they look at, um, our approach to calculating the quality rank mirrors that taking for the value rank, momentum rank, and growth rank scores.

[00:08:00] Cameron: Our quality rank is based on a composite of carefully selected company factors based on the latest academic research into understanding quality. The factors used are inspired by the writings of Warren Buffett, Joseph Piotrowski, Edward Altman, and Mesod Beneish, as well as recent papers from Robert Novy Marx.

[00:08:20] Cameron: of the Marx Brothers, no, of the University of Chicago, and National, he was the fourth brother, there was Groucho, uh, Chico, um, Harpo, Zippo, that was the other one, the good looking one, Zippo, and then Robert, yeah, he was the quiet one. Each company in the market is, I’m joking, joking, each company in the market is going from 1 to 100, oh, there’s another one, seriously?

[00:08:47] Cameron: I think

[00:08:47] Tony: it was Gummer, yeah, could be wrong, definitely Zippo. I’m a huge Marx Brothers fan.

[00:08:53] Cameron: Apparently. Uh, it’s ranked from 1 to 100 for each of these quality factors, and a composite score is calculated as a weighted average of all these values. The quality rank is then calculated between 0 and 100 for this composite score, where 100 is best and 0 is worst.

[00:09:11] Cameron: And so it says they’re looking at things like long term average return on capital employed, Long Term Gross Profits to Assets, Long Term Average Free Cash Flow to Assets Ratio, Long Term Operating Margin Stability, Long Term Sales Growth Consistency. Then the F Score is looking at whether or not it is an improving company.

[00:09:32] Cameron: Piotrowski F Score. We weight, we heavily weight the F Score given its effectiveness, especially among small caps. And then, is it a safe company? Bankruptcy and earnings risk. Number one, the Altman Z score, a bankruptcy meter. Number two, the Beneish M score, an earning manipulation flag. And number three, the Current Leverage Net Debt to Assets.

[00:09:57] Cameron: So, um, as I said, I’m pretty sure I have this, um, in my scoring metrics. I’m just trying to find Okay. Yeah, so under, when I’m doing the health rating, in the Stockopedia version of this, I have a scoring for quality rank and the way that I set it up, and honestly, when I did this, you know, six months ago, I was just licking my finger and holding it up in the air and taking, you know, figuring out a starting point.

[00:10:37] Cameron: I’ve got equal to or greater than 51, giving it a one score and below that, giving it a zero. So I think, as a starting point, I need to increase the cutoff for the quality score, quality rank.

[00:10:57] Tony: Yeah, well if you can do a download and see What the score is for the hundredth stock, if you stack rank from the highest quality down.

[00:11:06] Tony: That’s probably a good starting point to up your score for that checklist item. Right,

[00:11:13] Cameron: so Do a download of What Though, like Uh, all of the stocks that I’m currently doing and then stack rank them just based on the quality score, quality rank. Is that what you’re saying?

[00:11:31] Tony: Yeah, good question. I, um, I was thinking do a download of the top hundred quality stocks in Stockopedia.

[00:11:42] Tony: And get that score. Um, that may make the buy list too small though, if you’re filtering for a lot of other things, but I’d, I’d start, yeah, yeah. So I’d start, I’d start maybe there and then, uh, and then see what you get the, when you do a normal download with that score in there and then maybe try and get to 50 to a hundred stocks.

[00:12:08] Tony: that meet all the criteria, but using the top quality scores.

[00:12:13] Cameron: Right. I’m wondering if I look at my most recent download.

[00:12:19] Tony: Yeah, is it there already? Or does Stockopedia have the ability to be able to go and query it now online, and we can see what the 100th quality stock is?

[00:12:29] Cameron: Uh, yeah. Yes, baby. Yeah, it’s a bit hard to set up.

[00:12:37] Cameron: You’d have to create basically their equivalent of filters and all of that kind of stuff, which is a bit of dicking around. But, okay, so the, like the download that I did on Monday, yesterday, um, I think has three and a half.

[00:12:53] Tony: Hang on, sorry. Hang on. It’s on their front page. I’ve got, I’ve got a download now for U.

[00:12:59] Tony: S. stocks. They’re, they’re using a QV, which I guess is quality. Is it? What’s QV? Oh, that’s quality and value.

[00:13:07] Cameron: Yeah, I

[00:13:08] Tony: don’t know if I can just get quality.

[00:13:11] Cameron: So I downloaded three and a half thousand stocks on Monday, and I have quality rank as the second to last thing that I’m looking at. So if I do them in descending order Mm hmm.

[00:13:27] Cameron: Oh, here we go.

[00:13:27] Tony: Quality rank. Sorry.

[00:13:30] Cameron: Quality rank a hundred going down.

[00:13:33] Tony: Mm hmm,

[00:13:34] Cameron: right? You’re not gonna, you’re not gonna believe who’s the number one Stock.

[00:13:43] Tony: Is it Microsoft?

[00:13:44] Cameron: Fortescue.

[00:13:46] Tony: Are you talking about Australians or US, Australian stocks, eh?

[00:13:49] Cameron: No, this is US stock. I’m just looking to see if it’s the same Fortescue.

[00:13:53] Cameron: FSUGY. Fortescue Limited, formerly Fortescue Metals Group Limited, is an Australia based integrated green technology energy and metals company. So, um, yeah. This is listed on the New York Stock Exchange and it has a quality score of 100.

[00:14:16] Cameron: Now, well that’s, that’s not the ones you

[00:14:20] Tony: downloaded because I’ve just gone to their front page. I can do a quality rank, um, download and the hun, the only item with 100 is BMI, Badger Meter, whoever they are.

[00:14:33] Cameron: Well, they are the other stock that I’ve got in my download with a 100, but it’s also got Fortescue.

[00:14:41] Cameron: And then it goes down to Google with a 99 quality score. Meta, NVO, Novo nor disk, uh, 10 cent holdings 99. And so anyway, yeah, there’s a bunch with 90 nines. Lot of, oh my god, a lot of 90 nines.

[00:14:57] Tony: Yeah. ’cause it looks like the hundred stock on stock, EDIA is ranking is gonna be 95. It has a score of 95. So that’s on, maybe 94.

[00:15:10] Tony: I’m just sort of arbitrarily picking the middle here.

[00:15:13] Cameron: Well, in my download, if I go down 100, uh, it’s, they’re still in the 98s.

[00:15:24] Tony: Okay. Well, I’m just using the top quality rank button in Stockopedia for US stocks.

[00:15:33] Cameron: Right. And I’ve got,

[00:15:35] Tony: it’s on the front page.

[00:15:37] Cameron: We’re on the front page.

[00:15:39] Tony: Okay. Let me, I’m just trying to get back to it. Hang on. Popular Screens, so it’s in Browse, and then the first tab is called Popular Screens, and if you go to the right, Top Quality Rank, and that gives you 200 stocks.

[00:15:54] Tony: So I’m thinking we want, for good quality companies, we want probably a score of 90 or better, is my guess.

[00:16:00] Cameron: Right.

[00:16:01] Tony: So I code that into the checklist. The next time you do a download, see if that doesn’t filter out too many stocks, if you still have sort of 50 to a hundred to play with.

[00:16:10] Cameron: Okay. 90 or better?

[00:16:13] Tony: Yeah. That’s based on the fact that it looks like just from this quick look at the Stockopedia ranking, the sort of hundred stock is gonna be around, uh, 96.

[00:16:26] Tony: Not all of those a hundred stocks are gonna be value stocks, so we’ll probably just lower the ranking a little bit to try and get a list.

[00:16:31] Cameron: Um, well, I’ll tell you what I’ll do right now, live on air, is I’m going to make a copy of the buy list that I did on Monday. I’m going to, I’m going to go into the, uh, scoring for this, uh, piece of information, quality rank, health, uh, financial health. Yes. Um, Hold on, no, not that, the scoring, uh, health rating, here we go, and I’m going to change it to equal to or better than 90,

[00:17:06] Cameron: um, okay, so that has left me with, rVYL and BOXL are still in here, Tony.

[00:17:22] Cameron: That can’t be right.

[00:17:23] Tony: What were those companies, sorry? RV, RVYL.

[00:17:28] Cameron: RVYL and BOXL and GTNA. So, okay, yeah, well, they, they’re getting a zero. So I haven’t filtered them out because of that. They’re getting a zero for financial health. But their scores, their QAV scores are still high, right? I’m not eliminating them, I’m just not scoring them, they’re not getting a score for financial health.

[00:17:51] Cameron: But the rest of their scoring is still strong enough that they’re coming up at the top of the buy list.

[00:17:56] Tony: Yeah, right. How did we get around that

[00:17:59] Cameron: with the stock? Well, they weren’t getting a health score before anyway, because their scores were below 51. So they already weren’t getting a 1 for financial health, but still coming up at the top of the list.

[00:18:10] Cameron: Because their, you know, their price to operating cash flow is crazy low, like 0. 35, 0. 54. By the way, there’s another one above them, QRTEA, Curate Retail, which I looked at too. That’s the company that owns QVR. But, um, they are about to be delisted, I noticed, because their share price is less than a dollar.

[00:18:37] Cameron: And apparently, if your share price is less than a dollar for a certain period of time, uh, you get delisted from the NASDAQ.

[00:18:44] Tony: Oh, wow. Okay.

[00:18:46] Tony: with our normal checklist though, we’ve got a number of financial health Metrics, don’t we? We have, is it a star stock? Is it, what’s the stock doctor financial health? What’s the stock doctor financial trend? Do we have anything else? I’m just trying to think how we knock out poor quality stocks in the current checklist.

[00:19:08] Tony: Because if we only have one thing, I can see what’s happening in this, in the stock opportunity checklist. It’s not filtering out poor quality companies.

[00:19:18] Cameron: Unless we make it a negative.

[00:19:20] Tony: Yeah, unless we make it a hard score, like a hard cut off, because I’m looking at Stockopedia rank RYVL as a 38 on quality, 6 on momentum, but 90 on value, and then the combined score is 38, so they’re obviously weighting their scores as well.

[00:19:40] Tony: There’s a window washer appearing at my window, you might hear him, sorry.

[00:19:45] Cameron: Ask him what he thinks.

[00:19:47] Tony: I think he’s from, he’s probably from Morgan Stanley, we’re just trying to steal our IP.

[00:19:51] Cameron: Yeah, yeah, probably. Um, yeah, so, uh, you know, there’s this other thing that they’ve got, the, you know, the Z2 score, the bankruptcy risk.

[00:20:02] Cameron: The Z2 You know, I could, I mean, I think any company that’s a bankruptcy risk is an automatic no for us. I think so too. That’s one of the, that’s one of the reasons we look at qualified audits is any company that’s could not be able to meet its obligations. We just immediately, uh, take off the table. I could add another metric in here that looks at the, uh, bankruptcy risk score and if it’s you know within the realms of distress um make that a hard go no go too.

[00:20:40] Tony: Yeah I think that’s probably the way to do it Cam because looking at this particular company it’s got a bankruptcy risk score of distress which is the lowest and it’s a score 6 so I’m guessing anything with a positive score is going to be safe and anything with a negative score is going to be something we want to probably avoid.

[00:21:01] Cameron: Yeah right.

[00:21:02] Tony: Yeah,

[00:21:03] Cameron: and make it a hard,

[00:21:06] Tony: yeah,

[00:21:06] Cameron: hard stop,

[00:21:08] Tony: yeah,

[00:21:10] Cameron: that’ll

[00:21:10] Tony: take out all the stocks in the current dummy portfolio by the way,

[00:21:14] Cameron: right,

[00:21:15] Tony: yeah, I had a look at that today, which is okay because the portfolio is a deep value portfolio and it’s been performing but it just doesn’t have the quality overlaid or the like.

[00:21:26] Cameron: Yeah.

[00:21:27] Tony: You don’t want to wake up tomorrow and find out this company that you’ve owned has gone bankrupt.

[00:21:31] Cameron: No, that’s never fun. So, uh, what should, what should I do with the existing stocks? Like, just use the normal rules, uh, or ditch them and replace them?

[00:21:44] Tony: My gut says to use the normal rules and as you need to replace one, do a new buy list and then go with that.

[00:21:51] Cameron: Yeah. Okay. Just track their three point trend line and their real ones and all those sorts of things. Okay.

[00:22:00] Tony: Yeah. How many stocks are in the DP for the U. S. portfolio now?

[00:22:04] Cameron: Thirteen, I believe. Okay.

[00:22:07] Tony: So it’ll take a while to turn that over.

[00:22:12] Cameron: Some of them are doing great.

[00:22:14] Tony: Yeah. But like, you know, I had a look at Land’s End today, which I think is being One of the better performers.

[00:22:20] Tony: Cause you sent me a link saying it’s just really some, uh, bad results. And I look at its bankruptcy score and it’s, it’s the lowest it can be. So it’s not surprising.

[00:22:33] Cameron: Oh, wow. It’s pretty bad. Yeah. It’s not as bad. It’s not as bad as RVYL, but it’s still pretty bad.

[00:22:40] Tony: Yeah. So why don’t we do this? Are you able to set up a second US dummy portfolio with a new buy list? Um, call it a trial portfolio, I guess, because, you know, we don’t know yet whether we’re going to make a lot more changes to it.

[00:22:55] Tony: I think we probably will. So it’s no point hard coding something, setting up a new portfolio at this stage. But it might be worthwhile just setting up a trial one that we can play around with and tinker until we get it right.

[00:23:07] Cameron: Yeah. Okay. Good idea. Let me just, uh, make a note of that.

[00:23:13] Cameron: I mean, we can even just collapse this one. I mean,

[00:23:16] Tony: yeah, we probably can actually. You’re right. It’s, it’s really a trial portfolio too, isn’t it?

[00:23:20] Cameron: Yeah. I mean, it was designed. specifically for this purpose to start to work out what the scoring should be, you know, what it should look like, what works, what doesn’t work in the US market.

[00:23:33] Cameron: Um, okay, what other, uh, things should I look at? Tony, have you discovered any other major flaws?

[00:23:42] Tony: Um, I don’t know if they’re laws in the stockopedia data or, or it’s. Not being picked up in the buy list, but I couldn’t see, so I did a pulled call from a company called, um, Willis Lease Finance, so if you have a look at that one, it doesn’t have an IV,

[00:24:02] Cameron: hi folks came in the editing booth here. So the next 10 or 15 minutes was Tony and I going through. Some other data points that he thinks I need to rejig to get the buy list working properly. Uh, we need to look at how we’re scoring things. Like IV1, price less than book, price less than yield. Um, we talked about how we can go about adding the PE history and

[00:24:31] Cameron: Whether or not it has a new three point upturn. And a bunch of coding projects for me, basically. I decided to edit all of that out because I think it would bore you to tears. Basically the bottom line is. All right, so that’s given me a lot to work on.

[00:24:49] Tony: Yeah.

[00:24:51] Cameron: So what I’ll do is I’ll, I’ll rejig the checklist with all of that, run a new buy list, create a new portfolio based on that, and then run that past you and see what you think.

[00:25:03] Tony: Yeah. Well, and, um, I guess you’ll see it when the checklist comes down. Does it have enough stocks or not that we can make it work?

[00:25:12] Tony: Yeah. Yeah.

[00:25:13] Cameron: Yeah.

[00:25:14] Tony: You might have to play around with the financial cutoff before you, um, get a usable number.

[00:25:20] Cameron: Yeah. Okay, but the key thing is going to be using that Z2 score to take out anything that’s a bank license risk. Yeah, I think so. Just rely on the scoring.

[00:25:30] Tony: Yep.

[00:25:31] Cameron: Alright, thank you for that. Um, I had some news that just, apart from the QVR parent company that was going to get delisted, which I thought was interesting, just some of the other interesting things, uh, you know, with a different market and different, you know, kinds of news that I’m used to seeing.

[00:25:50] Cameron: Grindrod, which is one of the companies that we hold in this portfolio that we’re about to collapse. Um, but they’ve done well for us. They’re up 52 percent Grindrod shipping, but they also have a very low Z2 score. They’re in distress and their share price has turned around. Uh, but, um, I saw on the news for them, it says that they’re expected to show a fall in quarterly revenue when it reports their results on Friday.

[00:26:21] Cameron: Um, well, June 28th. So I guess that’s been in gone. The Singapore based company is expected to report a 50. 5 percent decrease in revenue. To 38 million from 76. 79 million a year ago, according to the estimate from one analyst. Don’t know what they actually reported when it came out, but, uh, imagine if we saw that in Australia, a 50 percent decrease in revenue year to year, uh, how would you react to that?

[00:26:53] Tony: Oh, look, it may be a red flag, but, um, it didn’t hurt the share price, which I found interesting, but I think that’s good. Can that be because of what you talk about next, which is the fact that they look like they’re buying back lots of shares. So that might be it. Yeah, well, the next story was that they had

[00:27:11] Cameron: an extraordinary general meeting on the 20th of June, um, just before their results were due to come out.

[00:27:17] Cameron: Approval of the proposed selective capital reduction of the company. So that’s, uh, propping up the share price, do you think?

[00:27:26] Tony: I think so, yeah. It was an interesting, uh, link you sent me. It looks like. This company is listed in a number of different jurisdictions and they have to satisfy requirements in each of them, like Singapore and the UK and the US.

[00:27:37] Tony: And, uh, look, the link you sent me said they were cancelling their shares and they were seeking Singapore approval to do that, and then they were cancelling shares but returning the value of the shares back to the the shareholders. So that to me sounds like a compulsory buyback. of some kind and therefore and they have to be valued on by the shareholders which makes sense if they’re having their shares acquired uh yeah so it looks like they’ve undertaken a massive buyback Maybe that’s what’s propping up the share price.

[00:28:10] Tony: Hey, I’m looking at them in Stockopedia. This is a GRIN, Grind Rod, Grind Rod, Shipping Holdings. Their bankruptcy risk score is cautious or just under cautious, but the score is Numerically 1. 14, so I said before we might have to look for positive companies, uh, positive scores for companies as our cutoff, but it might have to be higher than that.

[00:28:35] Cameron: Yeah, I, um, I’ve made a note to have a look at the Altman Z score and see how they score it, but according to their, um, little website, Explanation on it. They say a Z score above 2. 99 are safe zones. The company is considered safe based on the financial figures only. Below that down to 1. 8, there is a good chance of the company going bankrupt within the next two years of operations.

[00:29:05] Cameron: And then below 1. 8 is distress zones. So we want a score above 2. 99. 2. 99?

[00:29:12] Tony: Yeah, I think so. So it’s safe. That sounds, sounds, um, good. I know when we first started talking about US stocks, I, Pulled together Z scores and compared it to Stock Doctor’s financial health and they didn’t line up, so even though I don’t doubt Z score’s a good bankruptcy avoider score, it doesn’t, it’s not the same as the Stock Doctor financial health, but it’s what we have available, so I think we have to use it.

[00:29:38] Cameron: Well, you know, their quality rank has all those other financial measures factored into it too.

[00:29:45] Tony: Yeah, okay.

[00:29:46] Cameron: Maybe I can take something like Fortescue or BHP and compare the Stock Doctor health score and the Quality Rank score and try and line them up.

[00:29:57] Tony: Yeah, don’t do that.

[00:29:58] Cameron: It’s going to be hard to tell.

[00:30:00] Tony: Yeah, that’s what I did as an exercise last year when I was trying to do all this from hand by hand and they didn’t line up.

[00:30:06] Cameron: Oh, right. Even with the Quality Rank score?

[00:30:10] Tony: I don’t know if I used Quality Rank. I think I was using Zed score for memory.

[00:30:14] Cameron: Right. Yeah.

[00:30:16] Tony: Anyway,

[00:30:16] Cameron: well, another stock in the news, as you mentioned, is Land’s End, uh, which is up about 90 odd percent since I added it to the US portfolio. So I’ll be sad to have to let that one go, but they, they got a news announcement that came out that said.

[00:30:33] Cameron: Um, shares were down after quarterly report shows revenue decline and widening, widening loss. Land’s end shares last traded at 12. 83 after hitting a low of 11. 78, its lowest level since April 10 and was on track for its fourth straight day of declines after its report. Um, again, something like this, like a bad, we, you know, we talk about confession season in the US.

[00:30:59] Cameron: Sorry, in Australia. And I’m not sure what the equivalent is in the U. S. market if they have something equivalent to a confession season where companies are expected to give investors warning that they’re not going to meet expectations. Are you aware of anything?

[00:31:17] Tony: I’m not, no, but I do know the difference between the U.

[00:31:21] Tony: S. and the Australian market is they do quarterly earnings reports, so they may not have to come out and do full disclosure like they have to legally in Australia, but certainly reporting every quarter would mean they’re pretty much doing that anyway, I think. It’d be, I think it’d be difficult to form an opinion that you’re not going to meet market consensus in anything under a quarter.

[00:31:45] Tony: I mean, confession season in Australia is usually on a six month basis. And, you know, in the month five, people are coming out and saying, Hey, we are, or we aren’t going to make target. We’re going to exceed it or we’re not. But if you’re doing quarterly earnings, I think you pretty much are coming out straight away with a, um, an item that needs disclosing as quick as you can.

[00:32:07] Tony: But no, I’m not, I don’t know what the legal obligations are in the US. Good question.

[00:32:12] Cameron: Something to look into. What are the legal obligations? Hello, let me ask my, uh, co host.

[00:32:20] Cameron: Hey, ChatGPT, states for giving advance notice to the market if they’re not going to hit their, uh, financial targets that they’d previously publicly expressed.

[00:32:36] ChatGPT: In the United States, publicly traded companies have a legal obligation to disclose material information that may affect investors decisions. This includes the obligation to give advance notice if they are not going to hit their previously publicly expressed financial targets.

[00:32:52] ChatGPT: The key regulations and principles governing these obligations include 1. Securities Exchange Act of 1934. Rule 10b 5. This rule prohibits any act or omission resulting in fraud or deceit in connection with the purchase or sale of any security. Companies must disclose material information to ensure that all investors have equal access to significant information that might influence their investment decisions.

[00:33:19] ChatGPT: 2. Regulation Fair Disclosure. Reg FD. This regulation requires that all material non public information be disclosed to all investors at the same time. If a company discloses such information to certain individuals or entities, it must also make the information public. This prevents selective disclosure and ensures that all investors have equal access to important financial information.

[00:33:44] ChatGPT: 3. Materiality. Information is considered material if there is a substantial likelihood that a reasonable investor would consider it important in making an investment decision. Missing financial targets that were previously publicly expressed is typically considered material information. 4. Timing of disclosure.

[00:34:07] ChatGPT: Companies must disclose material information in a timely manner. There is no specific time frame mandated by law, but the disclosure should be made promptly upon the company becoming aware that it will not meet its financial targets. 5. Earnings Guidance and Pre Announcements Many companies provide earnings guidance to investors and analysts.

[00:34:27] ChatGPT: If it becomes apparent that actual results will differ significantly from the guidance, companies often issue a pre announcement to manage investor expectations and avoid misleading the market.

[00:34:40] Cameron: All right, so, yeah, it sounds like that. Fairly similar. Something similar, yeah.

[00:34:44] Tony: And like, I guess that’s within the framework, too, of class actions.

[00:34:48] Tony: I mean, the U. S. is even more litigious than Australia. And there’s been plenty of class actions in Australia where a company has You know, being deemed to have misled the market and therefore shareholders get some recompense from them. So the same thing would happen in the US. So that’s it. That’s probably, it may even be a bigger stick than the regulations in the US.

[00:35:09] Cameron: Yeah. Okay. Good to know. All right. Well, uh, that’s the U. S. component of the show, I think, unless you wanted, you’re going to still want to do a pull pork?

[00:35:23] Tony: Yeah, I’ve really enjoyed looking at this company. I’m not sure it’s going to be on your new, your new portfolio though. Yeah. But I will, I will. I’ll go through it.

[00:35:33] Tony: Um,

[00:35:34] Cameron: sure.

[00:35:34] Tony: The company’s called Willis Lease Finance Corporation. This is my pulled pork today. It’s a U. S. stock listed on the Nasdaq. Um, it’s interesting. I, I mean, the Nasdaq I think is just a competitor of the stock market to the New York Stock Exchange. But, um, I know that kind of, I think of it as being the tech index or the tech, um, listing place.

[00:35:56] Tony: And it probably is, but this company isn’t the tech stock, but it’s on the NASDAQ anyway. Uh, share price is up strongly recently, um, but there’s currently a Josephine, which means that, uh, its current price is just below the last month closing. Um, it makes it a hold in, in our terms, um, but it’s a weight to buy.

[00:36:17] Tony: I think it’s. Pretty close, at least on the momentum basis. The thing which struck me about Willis was the business model, which is unique and innovative, and which is why I chose to talk about it. WLFC is the code, and they lease aircraft engines to people. Jet engines to airlines and then provide ancillary services as well.

[00:36:40] Tony: So, um, yeah, leasing jet engines, um, interesting kind of business model. We don’t see that in Australia, at least on the ASX. There might be companies doing it privately, but, uh, um, interesting one. And their pitch to, uh, carriers is that, uh, if you lease your jet engines, it keeps the planes out of the shop and in the air more.

[00:37:00] Tony: Basically, much like leasing a car, um, jet engines need more care and maintenance as they get older, as they age, and leasing engines, uh, decreases maintenance costs and allows upgrades to newer, more efficient engines, uh, models on a regular basis. So, um, very interesting, uh, business. They’ve been, they claim they’ve been going for, uh, More than 45 years and they claim to be the first company to lease jet engines to commercial operators.

[00:37:30] Tony: They have built up a business around this and they offer a couple of other services such as one they call Constant Access, which allows customers access to jet engines when they need them on demand on a worldwide basis. basis without, um, without any weight. So, uh, you know, I guess if something breaks down and you’re overseas, like you’re a FedEx or something, um, you have access to their stockpile of jet engines to quickly replace it and then worry about fixing it later.

[00:38:00] Tony: And I have another product called, you’ll like this Cam, Constant Thrust. Where, uh, Willis covers the cost and risk of jet engine maintenance, um, by swapping out the engines. So, if something has a problem, it just gets swapped out and replaced quickly. Planes back up in the air, um, and then Willis worries about refurbishing the engine and putting it back into the stock pipe.

[00:38:21] Cameron: I need to find out who came up with that name for that product because that is seriously genius. Like there’s 50 boring ways you could have gone with naming that service. Yeah. Constant thrust. That’s fantastic. They should have, whoever came up with that should have won some sort of industry award for marketing.

[00:38:40] Cameron: That’s fantastic.

[00:38:42] Tony: Yeah. And so, you know, products like this, uh, help carriers and we’re not just talking about Carriers of passengers here, but freight carriers who, you know, it’s, it’s very important for them to keep the planes in the air as long as possible, not having to worry about grounding them to maintain them or replace problem engines.

[00:39:01] Tony: And that’s called, uh, AOG, Aircraft on Ground Time for Operators, and they’re always trying to decrease it, and this company helps them. Uh, to do that. So by the numbers, um, share price 67. 82 when you did the buy list. Uh, ADT is 876, 000. I guess one question I had for you is what the units for ADT are in the download you gave me.

[00:39:25] Tony: I think it’s just Just dollars. Just dollars, yeah. So 867, 000. 876, 000, sorry, is the AET for the stock. So not super huge, but big enough for most personal investors. PropCaf is very low on this, 1. 85 times, so that’s where it scores well for us. Uh, The book value in 60, so this company trades below book value, and of course, book value plus 30.

[00:39:53] Tony: Uh, but it looks like it drops on the financial health score. Um, and this might be something we need to finesse and our models can, because Stock appeared to give it a financial ranking of 65. However, they can’t score it on the Zed score, so we don’t know what its bankrupt risky risk is. And I know this was a thing in Stock Doctor for a long time.

[00:40:15] Tony: They didn’t, they weren’t able to provide a financial health score for finance companies, banks, and mortgage providers, and leasing companies, because they just have different business models to the typical industrial or, you know, business models. you know, other type company like that. So, um, Stockopedia don’t have a Z score for this company, which I think is probably causing it to be lower down in the quality rankings than it would otherwise be.

[00:40:40] Tony: But on the financial health trend, it scores 8 and just from my looking at the company, it seems to be in, you know, pretty good financial health, so that might be something we have to look at. The coding might have to be if it doesn’t have a Z score, we lower the health ranking. Cut off forward in Stockopedia, maybe.

[00:40:59] Tony: Uh, or, or if it’s a leasing company, we, we give it a pass on the Zed score. Uh, I had a look at this manually. This is the lowest PE in three years. So we can score it for that. The PE is only 7. 3 times. I wasn’t seeing a forecast earnings per share for this. And when I sort of delved into Stockopedia, I saw something interesting.

[00:41:22] Tony: So they have a, Um, a low broker coverage, uh, filter, and, um, if something has low broker coverage they give it, they look for, uh, for, uh, coverage, um, of less than two brokers and they give it a score for that, so that’s something worth looking at for us, but, um, they have a number of, uh, uh, like screens that they call it, which is I guess, um, prebuilt filters for stockopedia data.

[00:41:51] Tony: One of which is called Neglected Firms Screen. So I was sort of scrolling through all the different screens that they have built in. And this was from a book called Quantitative Engineering, Quantitative Equity Portfolio Management by two people called Ludwig Cincorini and Daewon Kim. And I ordered the book to have a look at it, but it looks like They go into this area that I’ve been sort of thinking about in our own checklist, which is, you know, what kind of advantage do we have in buying a company that we like, but hasn’t been covered by the, the brokerage community yet.

[00:42:29] Tony: And these two gentlemen who wrote the book seem to think that there is a big, um, benefit. So I’m going to await their book and have a look at it. Um, but that might be something we can, uh, sort of formula, formula, formularize and put into our checklist as well. Stockopedia have it as a filter.

[00:42:46] Cameron: So you’re suggesting that could be like an extra point that a company gets if it doesn’t have brokerage coverage But we’ve discovered that there’s some underlying value.

[00:42:55] Cameron: Hmm. Hey, that’s interesting.

[00:42:57] Tony: Yeah, so I had done some research on our checklist, uh, where we don’t have an earnings per share forecast, which is basically a, um, a marker that there’s not enough. I think Stock Doctor need three brokers before they put an earnings per share forecast in their downloads from memory.

[00:43:15] Tony: Um, and that’s, I did do some research on that. Wasn’t looking like it made a big difference to performance, but, um, I want to read this book that these guys, um, have. Published around neglected companies and just see what they say about it. That might be something worth putting into our checklist. Anyway, that was an interesting aside.

[00:43:36] Tony: Um, getting back to the checklist, uh, couldn’t give it a growth over PE score because we don’t have an earnings per share forecast. Um, it’s, uh, it’s had a great, uh, run up in, um, the bread later. Uh, but it wasn’t a recent buy, crossed its buy line quite a while ago. So I couldn’t score it for that. Uh. All in all, I kind of did this manually, I got 8 for quality score, and the QAV score, I used yours at 0.

[00:44:03] Tony: 41, which makes it pretty high up, but I think, you know, that PropCaf, that score will probably change as we play around with the download and the checklist. going forward. Yeah, but interesting one. I really liked it. It’s one of the reasons why I think people might want to have a look at some U. S. stocks when they can get into companies like this that are unique and innovative that we just don’t see in Australia on the ASX.

[00:44:29] Cameron: But even though this one doesn’t have a Z score, it’s got a quality score of 65. So, um, you know, we’re not filtering those out at this stage, right? We’re just going to give it a zero for financial health rating. Yeah, I

[00:44:44] Tony: think so. Yeah. Yeah, we’ll have to, we’ll have to trial that. Yeah, exactly. We’ll have to work out what to do.

[00:44:51] Cameron: Hmm, there you go. Interesting. I don’t know how you, like, how do you hot swap a jet engine? Yeah,

[00:45:00] Tony: it would, wouldn’t it?

[00:45:02] Cameron: I imagine it’s like an F1 thing where like, you pull your jet up and 20 guys come out and they’re like, engine comes out, engine goes in, boom, it’s off.

[00:45:13] Tony: And if it works that quickly, I’d have, I’d hate to be a passenger, like sitting there looking at the guys, right, we’re free to take off,

[00:45:23] Cameron: no, no thanks.

[00:45:25] Cameron: Yeah. Terrifying.

[00:45:27] Tony: Yeah.

[00:45:29] Cameron: Well, thanks for that, Tony. Um, I got a couple of, um, uh, survey results in from our Australian QAV club members, uh, in the last week. Uh, one from Tom. Hey, he puts a bit of a caveat on it. He says, uh, I use a number of different entry methods aside from QAV. Not exactly sure what that means.

[00:45:53] Cameron: And secondly, my use of the 3PTL, which is awesome, is inconsistent. As it’s used alongside the Stock Doctor 30 TSR. Ah, right. Yep. Charting 30. And he says, uh, despite all of those caveats, his returns on ShareSite for the financial year were, um, in his SMSF, 17. 07%. With dividends 3. 86, I’m not sure if that’s on top of the 17 or including in the 17.

[00:46:23] Cameron: I’m going to suggest it’s included in the 17. Trust 19. 79 percent with divs 4. 37. He says, I’m looking to adopt more QAV recommendations on the buy list and would be happy to contribute to a WhatsApp group. Or email you when I buy, as discussed on this week’s episode. Um, recently I bought PRN from the buy list and sold IGL after it breached the 3 point trend line.

[00:46:47] Cameron: The bastard of a stock has gone up almost 10 percent after I sold it. Yeah, you never check, Tom. Never. Never, never, never go back. Don’t go on to Facebook and

[00:46:58] Tony: see what your ex girlfriend’s up to. Just don’t look back. That’s right. Yeah. Yeah. Don’t

[00:47:01] Cameron: look back. Uh, but thank you for sharing that. Uh, Mark said, I’ve started to experiment with my portfolio and pivoting towards resource slash energy stocks.

[00:47:14] Cameron: Um, and looking to NAMM slash Stockopedia for more breadth in resource slash energy companies, NAM.

[00:47:21] Tony: North America.

[00:47:23] Cameron: Oh, yeah, right, okay. I suspect a full resource stock portfolio will be volatile, prone to periods of no trades, Josephine slash sell, and likely to need two year, Monthly 3PTL to be effective, I’ll see.

[00:47:38] Cameron: Uh, Mark is, uh, a geologist, I think, from memory. So he’s deep in the whole resource industry. So probably knows a lot about resources market that us average punters don’t know. He said he got about a 4 percent return for the financial year. So sort of down at our levels, not up with Tom’s levels, but, uh, congratulations to everybody for staying in the game.

[00:48:04] Cameron: Cause that’s what it is. Got to be in it to win it, good years, bad years, good times, bad times, something, something, something.

[00:48:14] Tony: Well, speaking of performance and cutting off your singing, I have from time to time talked about my musings on the show, and one of them I’ve been working with is, I think I talked about it once before, it was, it was building a portfolio based on the, the Used to be called the BRW Rich List, I think it’s now the AFR Rich List.

[00:48:37] Tony: Um, and I was kind of went back and had a look at it at the end of financial year and I had set one up. So basically I went through the Rich List, which came out about 12 months ago. And then they just updated it recently in the last month or so. And pulled together all the stocks that were listed on the ASX that RichListers had a holding in.

[00:48:58] Tony: There’s about, I think there’s definitely 200 people on the RichList, but of course, a lot of it’s private wealth and a lot of it’s like property developers and farmers. And so you don’t get, um, you don’t get a, uh, a complete one to one, uh, comparison. And then I, I stack ranked the list of ASX stocks by their ADT.

[00:49:17] Tony: So stocks like Fortescue, Meadows Group. Close to the top. Um, and then I put together a portfolio. Originally, I put it together based on the top stocks by ADT, which were, uh, if I get the number now, say top 10 stocks were 75 percent of the Um, ADT value of the list anyway. Uh, and I just left it there and that, that kind of outperformed the market by one or 2 percent since I put that together, which was back in the start of October, but then I started playing around with it and, uh, pulled together a list using our normal buy and sell criteria.

[00:49:55] Tony: So, um, this was a regression test. It wasn’t done, um, going forward. It was done going back and reviewing. Uh, but anyway. You know, so I didn’t put a stock into the portfolio until it, um, wasn’t a commodity sale, and it wasn’t a Josephine, but it was a buy on the Breda later. Uh, and there’s only a couple of stocks which had commodities anyway.

[00:50:17] Tony: Fortescue Metals Group was one, obviously. Mineral Resources was another one. Uh, you know, because Gina Reinhart’s, uh, Company isn’t listed. It’s, it’s held privately. So we can’t buy into that. Um, but the rest of them weren’t, weren’t commodity stocks. So I could look at their Brevilleatus, um, scores and score them.

[00:50:36] Tony: Anyway, in doing that, and I, I kept, um, I did an even 15 stock portfolio, um, based on what I had to spend. And, uh, that did really well. It was like a 17%. performance since October, which was not quite double market, but close to it. So I’m going to just fiddle around with that going forward and seeing if that can lead somewhere.

[00:50:59] Tony: I’ll kind of do it more live than what I did just then and see if that has some legs, but I thought that was interesting. So it’s basically, I guess, riffing on the idea of the owner founder. Because these, most of these companies have an owner founder in them. Some of them are just passive investments. Um, they tend to be on the smallest side of the ADT list.

[00:51:19] Tony: But, um, you know, your Fortescue Metals still have owner founders and then the Mineral Resources still have owner founders. Washington, Sol Pats is up there, it still has an owner founder as a, as a chair. So, yeah, they, it, um, they seem to be doing well. If you, if you adopt the normal QAV buys and sells for it.

[00:51:41] Cameron: And you would be discounting our standing concerns about Fortescue to add them to the list?

[00:51:50] Tony: Well, I added them to the, I did, but, um, they were out of the portfolio, I think in January because the iron ore price was a commodity sell. Right. And I think it’s been there for the rest of the year, so it didn’t make much difference.

[00:52:03] Tony: Yeah.

[00:52:03] Cameron: Right. Hmm. Interesting.

[00:52:07] Tony: Hmm. Anyway, something I played around with. Well, I might mention it.

[00:52:13] Cameron: Keep us in the loop on that. Well, speaking of Australian news, a couple of articles I saw I wanted to touch on. Why coal stocks are seeing an epic rally. According to the Financial Review, Whitehaven Coal and Yank Coal surged 17.

[00:52:31] Cameron: 3 percent and 10. 7 percent respectively this week, with both stocks hitting fresh 52 week highs on Friday. Meanwhile, Coronado Global Resources jumped 13. 5 percent and Stanmore Resources climbed 12. 2%. This is Alex Gluyas in the Financial Review and he was saying that, um, there were disruptions at two major coal operations over the past week which have heightened concerns about insufficient supply at a time for growing demand for the commodity, sparking a rally in ASX listed mining stocks.

[00:53:05] Cameron: Underground fires at Anglo American’s Grosvenor mine in Queensland and Allegheny Metallurgical’s Longview mine in West Virginia. have interrupted production at both mines, which together account for about two and a half percent of the hard coking coal export market. Um, I don’t know if you have any comments on that, but, uh, you know, coal stocks have been pretty popular on our buy list.

[00:53:32] Tony: They’re a classic contrarian buy, aren’t they? They’re throwing off lots of cash and, um, companies, uh, that, uh, trying to, uh, do the right thing by ESG concerns haven’t been buying it. So it’s, um, It’s been a happy hunting ground for us if you ignore the ESG concerns.

[00:53:50] Cameron: Well, according to Glenmore’s portfolio manager, Robert Gregory, he says coal stocks have been overlooked by investors due to the dazzling performance of technology companies.

[00:54:00] Tony: I doubt it. I don’t think they’re doing either or.

[00:54:04] Cameron: Right, yeah, yeah, yeah.

[00:54:06] Tony: Yeah, I think it’s more that, um, You know, people, a lot of fund managers don’t want to or can’t buy them under their mandates for ESG concerns. Which means the share price is always reasonably valued because you don’t have a whole heap of people competing to buy.

[00:54:21] Cameron: And,

[00:54:22] Tony: and no, we’ve talked about this a lot, um, You know, I think coal’s going to be around for a lot longer than people think because, uh, it’s baseload power, which is important, um, and we haven’t got that sorted out yet, even though battery technology is improving, it still, you know, hasn’t been deployed at levels required to, to phase out coal power, at least in Australia, and I suspect it’s the same around the world.

[00:54:48] Tony: And even if Australia adopts nuclear power, they were talking about it taking 10 or 15 years to build the first one, so, I don’t know. The coal plants are probably going to keep going for a lot longer than people think.

[00:54:59] Cameron: Speaking of which, have you heard about, um, the Natrium, uh, plant that’s getting built in Wyoming?

[00:55:08] Tony: Is that Bill Gates one?

[00:55:09] Cameron: Mmm.

[00:55:10] Tony: Yeah. I don’t know much about it, but I have heard of it. Looks interesting.

[00:55:17] Cameron: Yeah, this is where they’re taking, you know, it’s the thing he’s been working on for, gee, 25 years, I think I’ve been following this, where they’re taking sort of, waste products from nuclear plants, depleted uranium, and, uh, extracting the residual energy out of it, I think, with this new technology for different kinds of, um, sodium.

[00:55:41] Cameron: Natrium is apparently what sodium is called in Germany. And, um, it’s, yeah, sodium. Makes sense, NA. Yeah, NA, exactly. And they, uh, melt the sodium apparently. Um, the sodium, some sort of sodium water, but also they melt sodium and it has something to do with the heat dispersion process. Anyway, yeah, that’s all I know about it.

[00:56:09] Cameron: I watched a bit of a video about it, but yeah, they’re building it now. It’s going to be ready by 2030. They think which will be interesting.

[00:56:18] Tony: Yeah, but I guess getting back to coal, even if it is ready by 2030, that’s one trial reactor.

[00:56:24] Cameron: Yeah.

[00:56:25] Tony: You’re still going to have to have baseline power provided by coal for a lot longer than people think is my opinion.

[00:56:30] Cameron: Yeah. Interestingly, um, I just had a look at my, uh, portfolio. Tracker. I’ve only, I’m only holding one coal stock in one portfolio. That’s the light possible portfolio, which isn’t really part of our technical holdings. It’s Yang Coal. Had it since the 31st of May and it’s up 15%, but, um, obviously had to dump all of our coal stocks at some point due to a commodity sell, I’m guessing, and have them brought back in.

[00:57:03] Tony: Yeah, right. Um, and that’s the other thing too, is that the commodity price for coal, even though it’s going up. A little bit recently may not still, I don’t know what, we’re at six at the moment, may not be a bar. In terms of a five year monthly graph?

[00:57:18] Cameron: Um, well, uh, it just became a buy. Coal Thermal just became a buy for us this week actually.

[00:57:26] Cameron: Right. Metallurgical has been a sell or a Josephine going back to February. And, uh, Thermal’s been up and down, but yeah, up until recently it was a Josephine, was a buy briefly a week here, a couple of weeks in April and early May. But yeah, it’s, uh, and it was, you know, going back to being a sell January. So it’s been up and down a little bit more volatile than Metallurgical, but Neither of them have been buys for long enough to actually make it into our portfolios, well, my portfolios anyway, I don’t know about yours.

[00:58:03] Tony: Yeah, so, I mean, that’s, I haven’t had a cold stock for a while, I did have them a year or two ago. Um, but yeah, I think that’s been the issue for us is that, uh, even though you get articles like this saying the cold stock, cold prices spiked, it’s not, um, it’s not becoming a buy on our portfolios. Yeah,

[00:58:24] Cameron: it’s not a buy long enough.

[00:58:26] Cameron: The spike’s not long enough for it to actually become a buy for us.

[00:58:29] Tony: Yeah.

[00:58:31] Cameron: There was another interesting article by Joshua Peach in the Financial Review. The next global investing megatrend, war stocks. Which I read and I thought was interesting, but um, particularly this bit, they’re talking about the stubborn stubbornly, high iron ore price supporting the valuations of BHP and Fortescue, and saying it may be connected to military spending across Asia.

[00:58:56] Cameron: It’s hard to reconcile while the price remains, why the price remains high, and why China is stockpiling it. There is a theory that a lot of it is going into defence spending. Australia’s largest export has defied analysts predictions in the last 18 months, pushing as high as 140 US per tonne earlier this year, despite many forecasting China’s ailing property sector to trigger a bear market in the steel making commodity.

[00:59:21] Cameron: Last traded at US$ 113. 95 a tonne. Of course, In another AFR article on the same day, it says ASX to sit out global rally amid iron ore woes. A slump in iron ore prices is set to drag the Australian share market further behind its global peers. Um, but I thought that was interesting, just the analysis about it maybe being some sort of war stockpiling.

[00:59:49] Cameron: Uh, well, maybe. Not much.

[00:59:52] Tony: It just sounds like noise Again, if you look at the five year graph, I think iron ore isn’t a Buy for us, it’s been a sell, it’s been dropping. Um, I think it’s like, even this article says it’s high was 140 and now it’s about 113 a ton. So, um, it’s not necessarily a buy for us. So, whether, you know, if there wasn’t military stockpiling going on, it should be 80 a ton.

[01:00:17] Tony: I’m not sure, but it’s not a buy. I don’t focus on it.

[01:00:22] Cameron: Hasn’t been a buy for us since the middle of January. So most of this year, we have not been able to buy iron ore stocks. Not that we would have bought FMG anyway, because, uh, I don’t think there’s anyone left. It’s like last person that FMG turned out the lights kind of situation, at least in the senior management, right?

[01:00:42] Tony: I noticed when I was going through the BA, uh, not the BAW, the AFR rich list, Quiggy’s wife, who he’s now divorced from, actually owns more stock in FMG than he does. So, uh, it must be an interesting conversation when the AGM rolls around.

[01:01:00] Cameron: Yeah. Awkward. All right. Well, that’s all I’ve got for today. Tony, how about you?

[01:01:07] Tony: Yeah, that’s, that’s all I had. Uh, I’m sorry. I did park a comment I wanted to make when I talked about the billionaire’s portfolio. One of the reasons for raising it or the Rich List portfolio, one of the reasons for raising it during our US show was because if anyone’s interested in the US, they of course have the Forbes 400 list.

[01:01:25] Tony: They could. Do the similar sort of, um, trial or analysis as I’ve been doing, um, which might be interesting for them. But that was all. Yeah. And I just had, um, after hours after that.

[01:01:39] Cameron: After hours, where we talk about stuff that isn’t investing related for new listeners. We’ve talked about your horses. What else have you got?

[01:01:48] Tony: I came across it and I’m still reading the, the, uh, Peter Biskin book on the golden use of TV, which is brilliant. Interesting, and I’d recommend it. Um, but I came across an article in the Fin Review on the weekend. And, uh, they have a column called The Buzz, which is about shows, films, books, and things. Not necessarily, um, about investing as well.

[01:02:10] Tony: I just, we’ll read out, um, a little bit of it quickly. So this is about, uh, the Museum of Old and New Art, MONA, in Tasmania. And, uh, interestingly enough, they’ve moved part of their collection, including several Picassos, into the woman’s toilets, after a court ruled that displaying them in its female only ladies lounge was discriminatory to men.

[01:02:35] Tony: The U. S. artist behind the lounge, I’m going to struggle to pronounce her name, Keisha, Kichele, um, and I feel, I feel your, uh, pain there, Kiesha, if I’ve mispronounced it, because I have a mispronounceable surname beginning with K as well, so, um, yeah, sympathies there. Anyway, Kiesha Kichele is appealing a court decision handed down in April after a man complained about being refused entry to the Mona exhibit because of his gender.

[01:03:03] Tony: In the meantime, Mrs. Kicelli, who was married to the museum’s owner, David Walsh, says she did a little redecorating. I thought of a few, I thought a few of the bathrooms in the museum could do with an update. Some cubism in the cubicles, so I’ve relocated the Picassos, she said in an email to the AFR. The lounge was a conceptual artwork that allowed only one man inside, the butler, who served women fancy high teas.

[01:03:29] Tony: It has been closed since the state of Tasmania’s civil and administrative tribunal gave the museum 28 days to stop refusing entry based on gender. Uh, Mr. Cicelli is considering other possible workarounds to the court ruling. The law states that there are certain grounds for denying access based on gender, such as in a religious institution where religious doctrines were brought.

[01:03:52] Tony: So the, Brigham Tribunal in Tasmania lets made up religious doctrines allow sexism, but not an art gallery. Anyway, in the case of single gender schools and in the same types of shared accommodation, and some types of shared accommodation, Ms. Caccelli says we’ll get the lounge open again as a church slash school slash boutique glamping accommodation.

[01:04:18] Tony: She said in a social media post, she has also proposed opening to men on Sundays for the quote, personal enrichment meditation in the form of ironing and folding laundry. That really tickled my fancy. I love it when, uh, someone is, is much smarter than the administrator of the Tribunal of Tasmania and came out voxing.

[01:04:41] Tony: Great. Well done. Props to them.

[01:04:44] Cameron: I read that article, uh, when it came out a week or two ago and I was reading it out to Chrissy cause I knew she’d enjoy it. And, um, I liked the fact that during the tribunal hearing, there was a bunch of women who turned up to the tribunal with the, Co-owner of the gallery dressed all the same and all reading, uh, a book.

[01:05:05] Cameron: Um, during it, they turned it into like a, an, uh, a, a performance theater piece. Um, the whole thing. They just turned the whole thing into a, a bit of a show and, yeah.

[01:05:18] Tony: Fantastic. That’s great.

[01:05:19] Cameron: The, uh, the guy here in the tribunal, I don’t think he’s a judge or whatever you call somebody who, um, administrates a tribunal, was not impr he didn’t see it, but, uh, he wasn’t impressed when he heard about it later, said they were making a mockery of the whole thing, and I think that was Oh, and he’s not?

[01:05:37] Cameron: Really? I think that I think that was I think that was their complete intention was to make a

[01:05:43] Tony: copy of it. I hope the guy who took them to the tribunal has been banned for life. It’s just, oh dear.

[01:05:51] Cameron: That would probably be another discrimination case.

[01:05:55] Tony: And they can go along with Bristol the same and read from the same book again.

[01:05:59] Cameron: Yeah.

[01:06:00] Tony: Yeah.

[01:06:01] Cameron: Um, I really want to get down to Mona, still haven’t been

[01:06:04] Tony: there.

[01:06:05] Cameron: I’ll be down there playing golf

[01:06:07] Tony: in January and I’m thinking about tacking on Mona at the end of that.

[01:06:11] Cameron: That’d be fantastic. Uh, we watched the Gene Wilder documentary this week on Netflix. What did you think?

[01:06:19] Tony: Good. Yeah, I was always been a fan of Wilder.

[01:06:22] Tony: Yeah,

[01:06:23] Cameron: me too. It was sad, like, uh, both losing Gilda Radner and then he found happiness and then his Alzheimer’s. But I thought it, it was a really terrific, it was great to see Mel Brooks, uh, telling stories. I mean, Mel’s gotta be, what is he, a hundred Mel? Yeah.

[01:06:38] Tony: two, 2000 year old man or whatever it was. Yeah.

[01:06:42] Tony: He really is, isn’t he now? Yeah. Yeah.

[01:06:44] Cameron: Um. And still, you know, articulate and funny and all of those sorts of things. Let’s see. How old is he? Born in 1926. So June 28th. So just turned 98. Wow. Yeah, still going strong. Good for him. He

[01:07:04] Tony: could give Joe Biden some lessons.

[01:07:09] Cameron: Oh, let’s not get sucked into that rabbit hole. Um, what else? Uh, Watched, um, a couple of good interviews getting back to our futuristic stuff, um, I sent you, I think, the link to the Bill Gates one. Don’t know if you had a chance to look at that, but I found that really interesting.

[01:07:30] Tony: Oh, I didn’t.

[01:07:32] Cameron: No? Well, I got

[01:07:34] Tony: nothing new out of it.

[01:07:35] Tony: Um, I mean, Bill thinks AI will drive productivity, which makes all the sense. That’s about it. That’s what I took out of it anyway.

[01:07:43] Cameron: Right. Uh, yeah, well, he’s very bullish about where AI is going. going in the next few years too. He’s another guy who really thinks it’s going to have a huge explosion. And then I’m nearly finished watching a recent interview that Elon did at the Khan Lions, um, uh, event.

[01:08:02] Cameron: The like advertising industry. Advertising. Yeah. Yeah. Yeah. They had him along and the guy is the CEO. Mark Reed is the CEO of WPP, uh, did the interview. And his first question was about six months ago, you told us we could all go fuck ourselves. So, uh, what was that all about? How’s that going? Yeah. Yeah, what did you mean by that?

[01:08:22] Cameron: Which I thought was a good way to open the interview. Um, yeah, but also just Elon talking about his forecast for AI. Um, Mark Reid said, we’ve got a whole theatre here full of people that are in the creative industries and is AI ever going to be, you know, genuinely creative? And Elon’s like, yeah. And he goes, are we going to, are we going to look at writing and painting and video that AI does that’s original and say, this is really amazing?

[01:08:50] Cameron: He goes, yeah. He goes, so what you’re basically telling us is we’re all going to be out of work. And he’s like,

[01:08:55] Tony: yeah,

[01:08:56] Cameron: yeah. I mean, but he’s forecast, he says there’s a 10, 10, 20 percent chance that everything’s going to be a disaster. But he said, but that’s 80 percent cup full. So, Kapaful, he said, you know, he thinks it’s going to be a world of abundance.

[01:09:14] Cameron: He said it’s not going to be a universal basic income. It’s going to be a universal high income. Every, he said, it’s going to be a, um, a big crisis of meaning. Everyone’s going to have to figure out how they get meaning from life when they don’t have Well, he said when an AI

[01:09:31] Tony: Why do people want meaning?

[01:09:32] Tony: Like, does a grasshopper have meaning, but it’s got life? Does a cow have meaning? Does a blade of grass have meaning? They don’t. Why

[01:09:40] Cameron: do

[01:09:40] Tony: we keep trying to put meaning on life? It has no meaning.

[01:09:45] Cameron: Well, you have to have a reasoning.

[01:09:46] Tony: We exploded from a big bang and everything’s been preordained since then. If you look for meaning, I mean, my take on on the meaning of life is we’re just part of a message system, right?

[01:09:57] Tony: Someone, someone much far advanced than us said I have to send a message to somebody else in a different space time, so I start a Big Bang, I encode it in the DNA, it all plays out according to how I programmed it. And at the end of the universe, the other person gets the message. But because everything happens at the same time, it’s instantaneous communications.

[01:10:17] Tony: This is what we experience at taking a long time. Somewhere in our DNA is a message saying, Do you want to go out for beer on Friday night at nine o’clock? That’s the meaning of life. There’s no meaning.

[01:10:30] Cameron: I’m not sure it’s in the DNA, I think it’s in the underlying, uh, code of the universe, the laws of physics, you know.

[01:10:38] Cameron: My old mate Dennis Bastas, who’s now one of Australia’s billionaires, uh, he and I used to talk about this during long boozy lunches, uh, 25 years ago. We, we, we were, we used to say, when we finally decode the underlying algorithm, the unified field theory of the universe, it’ll be a message saying, Welcome.

[01:10:59] Cameron: Welcome haha bb. Yeah, welcome. You know, you’ve now joined the club of advanced intelligences, uh, go to these Spacetime coordinates in a different universe and Oh, maybe. I think it’s going to be much more trivial than that. Maybe it’s your badge.

[01:11:17] Tony: You’re being human centric. It’s like, no one’s going to welcome us.

[01:11:22] Tony: We’re just serving, we’re serving some far greater intelligence who wants to send a message across spacetime.

[01:11:28] Cameron: Well, I think what he means by meaning is just a reason to get up in the morning and what you’re going to do with your life, day to day. Grasshoppers and cows just exist to pass on their genome.

[01:11:38] Cameron: That’s all they think about is eat, bang. Well, yes. I mean, for me, that’s definitely true, but that’s, I don’t know about many other people. Anyway, good, good, interesting chat from, Elon, like, it’s the thing with Elon, like, he has these two different personalities, he has his boisterous shit stirrer marketing personality, but when you get him and he’s being serious, like he was at this thing, thoughtful, serious, taking his time, thinking about his answers, trying to do a good job, uh, he’s very intelligent, very insightful, and I find him, you know, very different to his, sort of, Sort of autistic, dickish, uh, tech pro personality, you know?

[01:12:23] Cameron: Yeah.

[01:12:23] Tony: So if he, if he thinks that PDoom’s less than, would you say 20%? 10 to 20%, which he said is

[01:12:29] Cameron: Geoffrey Hinton’s numbers too. Okay.

[01:12:32] Tony: Okay. So has he changed his view about having to have Mars as a backup to, you know, Earth?

[01:12:38] Cameron: No, no, they asked him about, you know, his, why he’s doing SpaceX and he said it’s so humans become a multi planetary species and as quickly as possible so we remove the, you know, what he calls the, um, uh, okay, mental blank, um, who was the physicist in the forties who, um, said if aliens exist why aren’t they here?

[01:13:08] Cameron: Where are they? Oh, that

[01:13:09] Tony: was, that’s um, Cigarne isn’t it? No, uh, Fermi. Fermi Parallax.

[01:13:12] Cameron: Fermi. Yeah. Thanks. He called it the, the Fermi problem. You know, the answer to the Fermi problem is you don’t have a single point of failure, right? So you have to get intelligence. He doesn’t talk about as humans necessarily, he talks about as intelligence.

[01:13:27] Cameron: To spread intelligent consciousness to other planetary systems so we don’t have a single point of failure. That’s his, that’s his overriding sort of vision for SpaceX.

[01:13:42] Tony: Well, I think the aliens are already here, you know that, don’t you?

[01:13:45] Cameron: You call it the AI, the aliens.

[01:13:48] Tony: No, well, any alien, I think any, any alien that’s advanced enough to travel interstellar distances has to do it as a, as a being projected at the speed of light, which they can then, you know, be injected into matter here, my, my desk, my keyboard, um, and then, you know, live out their uploaded life using the, using the quantum computers that they’ve, you know, formed stored as part of the matter.

[01:14:17] Tony: in space. I mean, that’s, to me, that’s the solution. That’s the only solution. Because like we have this 1950s view of space travel, right? That someone’s going to crack the speed of light travel and we’re going to be frozen for a million years while we find another planet. Don’t need to do that. Once we’re uploaded, you can just send out beams in a 360 degree rotation everywhere until it strikes matter and have some code in that, which just injects you into the asteroid or the earth or whatever, um, and you live your life as a, in a quantum computer, which is generated in that matter.

[01:14:54] Cameron: What would be the point? If you live, just living in a virtual environment in your desk, what’s the point of traveling? Oh, okay. So

[01:15:02] Tony: one of Kurzweil’s books, he said that there was, spookily enough, there wasn’t, there’s enough matter in the universe to upload everyone’s brain into a quantum computer using that matter as the storage.

[01:15:15] Tony: Right, because the brain is so big and

[01:15:19] Cameron: Right, so you have to reach out into the universe to find matter to turn into compu tronium.

[01:15:26] Tony: Yeah, so I’m guessing someone else has already done that, given that there’s trillions and trillions and trillions and trillions of planets out there, um, and it solves the Fermi Paradox as well.

[01:15:36] Tony: So what happens when

[01:15:37] Cameron: we’re mining the earth, we’re digging up their compu tronium, we’re digging up their Yeah. Yeah. When BHP has a mine that dig in, they’re digging aliens out of the ground and disrupting their quantum computers. If you knock

[01:15:51] Tony: over your chair or you throw your chair on the fire. Yeah, definitely.

[01:15:56] Tony: But there’s still plenty of other matter in the universe. I’m sure they’re, I’m sure they’re diversified, to use a financial term.

[01:16:04] Cameron: They have redundancy backups. Yeah. Yeah. Yeah. Uh, I’ve been, I’ve, I’ve been watching a lot of Bonsai YouTubes too, getting into Bonsai thing. I’ve been wanting to do my whole life, so I’ve got some focus.

[01:16:19] Tony: You mean bonsai, not little plants, trimming little plants, not, not as in Kamikaze’s yelling

[01:16:26] Cameron: bonsai. Not bonsai, bonsai, not bonsai, yes, yes, tiny plants in a pot.

[01:16:35] Tony: Okay. I love how you bring meaning to your life in lots of different ways. Bonsai, baking bread, roasting beans. Yeah, it’s great. No, it’s really good.

[01:16:49] Cameron: All right. Well, if you’re going to laugh at all my hobbies.

[01:16:52] Tony: I’m not. I love it. It’s so interesting.

[01:16:55] Cameron: See,

[01:16:57] Tony: this is what happens when you don’t follow sport.

[01:17:02] Cameron: Ah, yeah. How’s your golf game going?

[01:17:07] Tony: Ah, okay, it’s been very wet here, so last week we went into an indoor simulator to play, rather than go out into the course, we couldn’t go out into the course, too wet.

[01:17:17] Cameron: So you just hit a ball at a screen, that kind of thing?

[01:17:19] Tony: Yeah, and then the AI tells us how good we are. Yeah? No, indoor simulators, no, they measure the spin on the ball, you can hit it into a screen. So we played the old course at St Andrews, which I played in real life and now played on the simulator as well.

[01:17:35] Tony: Which is better? In real life, for sure, because the simulator technology just isn’t quite there yet. So if you’re going to, you know, the gorse bush on the simulator, no penalty. You’re going to place the old course at St Andrews and go into plenty of gorse bushes, you’re stuffed, you have to reload.

[01:17:56] Cameron: I’ve got an appointment at the Apple Store at Chermside on Saturday afternoon to test the Apple Vision Pro, which arrive in Australia this week, finally.

[01:18:08] Tony: They

[01:18:10] Cameron: arrive on Friday, so Taylor and Hunter and I have got a booked, Taylor’s already played with one in LA last year, but Hunter and I have booked it. Booked a demo, or Taylor and Hunter and I have booked a demo when I go to pick up my laptop, which is getting fixed. Um, yeah, so that’ll be fun. So maybe a few years from now, you’ll be able to wear an Apple Vision Pro in your living room and play San Andrews and Yeah, not for sure.

[01:18:35] Tony: Absolutely. Still won’t be quite the same as going out there in the wind and the rain and the Scottish air and having a beer afterwards.

[01:18:45] Cameron: Just have a fan and a mister going in your, uh, in your sports room.

[01:18:51] Tony: I could do it that way. Yeah, it’s gonna be a long time, I think, before you replace the real thing.

[01:18:55] Tony: That’s my humble opinion. Yes.

[01:18:57] Cameron: Yeah, I think so too. Alright, thank you tk. Thanks everybody. Have a good week.

[01:19:03] Tony: Yeah. Happy ASX and happy NYSE and happy Nasdaq now with the listeners.

[01:19:08] Cameron: Yeah, all of those. Yeah.


QAV 729 – The Trump Bump

In this episode of the QAV podcast, hosts Tony Kynaston and Cameron Reilly are discussing a record-high in the All Ordinaries index spurred by the ‘Trump bump’, Aussie Broadband’s sudden dive (ABB), portfolio results, more FY survey results, MLX‘s bump, the Shipping Crisis, thoughts about integrating “Buyback Yield” into the checklist, and Tony breaks down the history and market stance of Elders Limited (ELD) in a detailed ‘pulled pork’ segment. They also explore the Apple Vision Pro’s new features and its future alongside immersive tech like Oculus Rift, then shift to the political scene with discussions on Trump’s influence on global conflicts. The conversations touch on AI, Elon Musk’s ventures like Neuralink and SpaceX, horse racing updates, book recommendations, and reviews of ‘Better Call Saul’ and Tom Cruise films.

QAV 727 – Great FY Results

In this episode of the QAV podcast, hosts Tony Kynaston and Cameron Reilly cover a range of topics at the start of the new financial year. They begin the resilience in financial and property markets amid global interest rate hikes, and how the gig economy affects unemployment rates. They also touch on the history and impact of quantitative easing, review their own and member financial year results, and analyze market news related to companies like Myer and Fortescue Metals Group. Tony provides an in-depth look at Auric Mining Ltd (AWJ) in his ‘pulled pork’ segment. Tony answers questions about tax rates and performance-based share issuance, then in After Hours they get into movie reviews of ‘Furiosa’ and ‘Marie Antoinette.’ They also explore AI’s potential future impacts on job markets and technological advancements, referencing Ray Kurzweil’s predictions.


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