QAV 802 — SWEET FA

QAV 802 Club

 Wel­come back to QAV, TK. This is episode 802. We’re record­ing this on Tues­day, the 14th of Jan­u­ary, 2025. How are things at capes shake?

[00:00:23] Tony: Good, busy, because you can see in the back­ground there’s still plen­ty of unbox­ing to do.

[00:00:29] Cameron: Mm. And not the fun unbox­ing, which is No.

[00:00:32] Cameron: No, cor­rect. Noth­ing did­n’t all arrive from Ama­zon. It’s, uh, it’s the bor­ing unbox­ing. Oh, yeah, all that stuff.

[00:00:40] Tony: And it’s like we’re at the stage now where it’s, we’re hav­ing to buy more stuff, stor­age stuff to put it in. Ha ha. Just leave it in the box­es. Yeah. Well, you could­n’t get into the bed­rooms if you did that.

[00:00:53] Tony: So the, uh, we bought some more wardrobes and, and draw­ers, which has helped, but I’ve got to get some, uh, office stuff. Stor­age, you know, fil­ing cab­i­nets and things like that and some more wine fridges and what­not. So yeah, and get them deliv­ered to Cape Shake. Yeah, which is, which is okay. We can do it. Oh yeah?

[00:01:14] Tony: Oh yeah. It’s

[00:01:15] Cameron: get­ting bet­ter. It’s not as far away as it used to be. Frankston? You can get stuff from Frankston or some­thing now? Yeah, Morn­ing­ton, Frankston, what­ev­er. Well, uh, let’s get on to invest­ing, Tony. What’s tak­en your atten­tion from an invest­ing per­spec­tive this week?

[00:01:32] Tony: I noticed, uh, when I got the data from Alex that, uh, there’s a lot of com­modi­ties which have become, uh, Buys again this week.

[00:01:40] Tony: Hmm. A lot of things have turned

[00:01:42] Cameron: around for some rea­son. You got any, um, the­o­ries as to why all of those have become buys all of a sud­den?

[00:01:48] Tony: I have not. Sur­pris­ing. Um, just to run through them. Crude oil, cop­per, alu­mini­um, LNG, and lithi­um, our old friend lithi­um, are all back as com­mod­i­ty buys. I sus­pect lithi­um is bombed out.

[00:02:03] Tony: So it had to turn around at some stage. And you could prob­a­bly say that about a lot of those. Crude oils. Down to, oh, last time I looked at was 74 a bar­rel. So that’s pret­ty low. Um, and it’s turned up. So yeah, I don’t know. I mean, there’s a lot of tur­moil in the mar­kets as traders posi­tioned for Trump tak­ing office for poten­tial inter­est rate cuts or delays to inter­est rates for all the geopo­lit­i­cal stuff that’s going on in the world and what might hap­pen between now Biden can fix things or if he can’t, what Trump will do.

[00:02:37] Tony: So a lot of move­ment in mar­kets.

[00:02:40] Cameron: Yeah, I mean, the crude oil one I find inter­est­ing, cause, I mean, and the LNG, because I’m assum­ing that Trump will get in, force Zelen­sky to do a deal with Putin, and then prob­a­bly do some­thing about the sanc­tions against Rus­sia, which you think would mean all of that Russ­ian Oil and LNG will be back on the mar­ket and you know, they’ll, I don’t know, get the Nord Stream rebuilt or some­thing, it’ll flow back into the mar­ket, it might take a while.

[00:03:14] Cameron: And that would mean there’s more sup­ply in the mar­ket, not less sup­ply, and the prices should go down, not go up, but what the hell do I know?

[00:03:20] Tony: No, look, frankly, I agree with you. Not so much for that, because I think peo­ple have been buy­ing Russ­ian oil covert­ly any­way. There’s all sorts of sto­ries about that.

[00:03:29] Tony: Tankers rebadg­ing them­selves in the mid­dle of the Atlantic from Rus­sia to wher­ev­er else and then sell­ing it. Maybe not in the US, but, um, you know, a lot of the emerg­ing economies.

[00:03:39] Cameron: It’s like, it’s like in movies where they steal a car and just put a mag­net, mag­net­ic plate over the back. They’re just like slap­ping a mag­net on the side and peo­ple are going, yeah, yeah, what­ev­er, no wor­ries.

[00:03:49] Cameron: Yes.

[00:03:49] Tony: Yeah, exact­ly. You’ve got cheap oil, sure. Sure. So I think, I’m not sure about Rus­sia com­ing into the mar­ket, but it might have an effect. What I’m think­ing of is if, um, is when Trump deliv­ers on Drill Baby Drill, there’s going to be a lot more shale oil drilled in the U. S. And by U. S. com­pa­nies, which would flood the mar­ket.

[00:04:09] Tony: So I think you’re poten­tial­ly right. This might be a short lived upturn for those com­modi­ties, but at the moment it’s an upturn. And we, we play by the data, not by the crys­tal ball. So, um, we’ll see. There’s, and, uh, I’ll do a bit lat­er, I’ll do a pulled pork on Hori­zon Oil, which is very lever­aged to the oil mar­ket.

[00:04:28] Tony: So, uh, there’s, there’s been a few oil com­pa­nies and gas com­pa­nies on our buy list for a while now. So it’s time to have a look at them. Now the oil price has turned up a lit­tle bit.

[00:04:38] Cameron: Um, what else have you got on your talk­ing points for this morn­ing? After­noon?

[00:04:42] Tony: After­noon. Uh, I came across an inter­est­ing arti­cle on the week­end, uh, which is head­lined Don’t Lis­ten to Wall Street Experts, Syd­ney Ana­lyst says.

[00:04:54] Tony: I’ll just read from it. Um, came out of the AFR. Anoth­er year, anoth­er set of Wall Street pre­dic­tions about how the S& P 500 will per­form over the com­ing year. The fore­casts come from top tier firms like Mor­gan Stan­ley and Gold­man Sachs and skilled and ana­lysts, but are they worth the paper they’re writ­ten on?

[00:05:12] Tony: David Allen. Not the come­di­an, the ana­lyst. Head of Long Short Strate­gies at Syd­ney Hedge Fund, Pla­to Invest­ment Man­age­ment, says not only should these prog­nos­ti­ca­tions be ignored, traders should do the polar oppo­site. Com­par­ing annu­al strate­gic return, strate­gist return fore­casts With the actu­al mar­ket return since 2000, Alan found that strate­gies have an atro­cious track record on the extreme end of the spec­trum.

[00:05:39] Tony: Dur­ing the bear mar­ket of 2000 to 2002, strate­gists pre­dict­ed a cumu­la­tive return of 42%. The actu­al return was neg­a­tive 40%. In fact, the eter­nal opti­mists on Wall Street have nev­er pre­dict­ed an annu­al share mar­ket decline for the past 25 years. Where­as six have been record­ed. Recent per­for­mance isn’t bet­ter either.

[00:06:00] Tony: Strate­gist pre­dict­ed a slen­der 2 per­cent return for the past two years. The index returned 46%. But Allen says the fore­casts weren’t just inac­cu­rate. They’re com­plete­ly off the rails. Analysing the rela­tion­ship between strate­gist’s pre­dic­tive returns and the actu­al returns, he found a neg­a­tive cor­re­la­tion.

[00:06:18] Tony: This means for every per­cent­age point increase in pre­dic­tive returns, the actu­al returns were a per­cent­age point low­er. Not only would you have been bet­ter off had you ignored Wall Street’s best and bright­est, you would have fared even bet­ter by doing the oppo­site of what they sug­gest­ed. He said in a note to his clients.

[00:06:37] Tony: Ana­lysts pre­dict the gains every year between 2024 and 2024 between 1 per­cent and 22%. But we know there were sev­er­al peri­ods of major loss­es, dip­ping to neg­a­tive 38 per­cent in 2008, against a fore­cast of 12. 5 per­cent increase and gains as high as 23%. And the last quote I’ll say is, in 2025. Don’t waste time try­ing to divine the mar­ket’s next move, he said, instead con­cen­trate on what you can con­trol.

[00:07:09] Tony: Iden­ti­fy­ing qual­i­ty invest­ments and man­ag­ing risk, let Wall Street keep its crys­tal balls. So I thought that was good analy­sis and cer­tain­ly bears out what I’ve noticed in the mar­kets in the past.

[00:07:24] Cameron: Yeah. Noth­ing new for us, but, um, it’s, it’s, uh, you know, or Peter Lynch, you know, basi­cal­ly that’s what he was say­ing in that video from 1994 that I played last week and yet the vast major­i­ty of what you see com­ing out of, uh, the, the invest­ment media and invest­ment ana­lysts is all pre­dic­tions and bas­ing strate­gies around pre­dic­tions, right?

[00:07:47] Tony: Yeah. And this is the time of year when they, Give all their pre­dic­tions or they’re asked to give pre­dic­tions. Some peo­ple give them reluc­tant­ly. And look, uh, it does­n’t mean much, does­n’t mean any­thing to me, but where I found it plays out poor­ly is when peo­ple lis­ten to a finan­cial advi­sor and a finan­cial advi­sor pays these banks to give them fore­casts about where they should be.

[00:08:13] Tony: Rebal­anc­ing their clients port­fo­lios into, and I think it’s the dumb­est game I’ve ever seen where a finan­cial advi­sor will tell you, Oh, get out of Aus­tralian equi­ties, get into the US equi­ties or get out of, equi­ties and get into bonds or get out of bonds and get into gold or that. I just find that whole game inher­ent­ly a casi­no because, um, no one can pre­dict the future.

[00:08:42] Tony: And then hav­ing to rely on what’s, which is often­times 10 or 12 pre­dic­tions about what each sec­tor is going to do is just illog­i­cal in the extreme, I think. So just be care­ful if peo­ple are rely­ing on that kind of

[00:08:55] Cameron: But peo­ple, you know, your aver­age punter thinks that, you know, well I’m pay­ing this per­son, they’re a pro­fes­sion­al, they know what they’re doing, and they’re pay­ing oth­er pro­fes­sion­als who know what they’re doing, is this assump­tion that these pro­fes­sion­als know what they’re doing?

[00:09:09] Tony: Yeah, but that’s just fees on fees as we know, um, and uh, often times what it leads to in a kind of obtuse and arcane ways that leads to you buy­ing the mar­ket. So you may as well just go out and get a low index ETF, uh, because, you know, if they’re telling you to move mon­ey into gold or prop­er­ty or shares or US shares or what­ev­er, go and buy an ETF, which has a, it’s, you know, the world index of all those dif­fer­ent things.

[00:09:38] Tony: Made up into it. And if, if one goes down and anoth­er sec­tor goes up, you hold the index. So, um, you know, it’s like hold­ing a bal­anced port­fo­lio, but with­out the pre­dic­tion of, um, pro­fes­sion­als.

[00:09:50] Cameron: Yeah, but before we start­ed doing this show and you and I start­ed talk­ing about this stuff, I don’t think I’d ever heard that as com­mon wis­dom.

[00:10:00] Cameron (2): Yeah.

[00:10:01] Cameron: Indus­try pro­fes­sion­als don’t have a good track record and you’re bet­ter off just buy­ing the index. Um, I mean, Sam­marti­no had taught me his Sam­marti­no method, which was buy­ing the index. But, and he said, you know, no one can beat the index, which I now know is not true. But gen­er­al­ly speak­ing, most peo­ple.

[00:10:21] Cameron: Pro­fes­sion­als don’t beat the index. So large­ly cor­rect. Um, but you know, he was the only per­son I’d ever heard say that. Not that I was pay­ing that much atten­tion, but before you, no one else had just said, yeah, you’re bet­ter off just buy­ing the index. It’s not like it’s. Com­mon wis­dom, I think, out there that every­body knows, because from the moment you become an adult, or even before then, every­one’s always say­ing most pro­fes­sion­al, most invest­ing, uh, ana­lysts, or finan­cial plan­ners, or advi­sors, or what­ev­er, don’t know what they’re doing, so, you know, don’t, uh, don’t, when it comes to invest­ing advice, don’t lis­ten to any of them, they’re all sharks and scam­mers, well, most of them are sharks and scam­mers,

[00:11:04] Tony: I don’t think they are.

[00:11:05] Tony: I think there are finan­cial advi­sors out there who hon­est­ly believe that they’re doing the right thing, and to a cer­tain extent they are. But unless the finan­cial advi­sor you’re tak­ing advice from is obvi­ous­ly bet­ter off than you are, why would you lis­ten to them?

[00:11:20] Cameron: Because they’re pro­fes­sion­als, you know, I go to a doc­tor, you just, we just assume that peo­ple with a cer­tifi­cate on a wall know more than we do, and there­fore we should lis­ten to them, I think.

[00:11:32] Tony: Yeah, I think that’s the case with doc­tors, I’ve got very lit­tle skep­ti­cism about doc­tors, I think there are con­flicts in that indus­try, but any­way. But yeah, I mean, it’s a dif­fer­ent sort of, uh, train­ing that a finan­cial ana­lyst has, and

[00:11:47] Cameron (2): it’ll

[00:11:47] Tony: take them a life­time before they can work out whether what they’re advis­ing bears fruit or not.

[00:11:52] Tony: It takes you a life­time to work it out too.

[00:11:54] Cameron (2): So,

[00:11:55] Tony: unless you’re tak­ing advice from some­one who’s And I know there are finan­cial ana­lysts out there who’ve got grey hair and they’re prob­a­bly the best ones to go to. And the ones who charge you a fee for ser­vice rather than a com­mis­sion on the port­fo­lio, they’re the ones to go to.

[00:12:13] Tony: Yeah, but they’re in the minor­i­ty, unfor­tu­nate­ly.

[00:12:18] Cameron: Well, speak­ing of num­bers and analy­sis, after our show last week, I did some fur­ther analy­sis on some of my port­fo­lios and, um, I looked at the two, two, one, the light two, two, one, uh, trades for, cal­en­dar year 24 and had a look at why the cells were the cells and most of it was rule one and most of them were I think with­in sort of the rule one mar­gin of uh, error by the time some­thing becomes a 10%.

[00:12:56] Cameron: There was one ING that col­lapsed 20 per­cent in an hour. So it had, it, we took a big hit on that. But, um, I did some analy­sis then look­ing at the cur­rent prices of, The ones that we Rule 1’d to see if they’d gone up or down since we sold them. Cou­ple of them, SGI and GTN, had done very well since I Rule 1’d them.

[00:13:22] Cameron: And would have made a dif­fer­ence to the end of year results if I’d held onto them, but they were the only ones that real­ly had turned around since we Rule 1’d them and did par­tic­u­lar­ly well. I also did a Rule 1 analy­sis on the dum­my port­fo­lio. And, uh, looked at Rule 1 sells over the last two years, and then looked at where the share prices of those stocks are today, despite my ex girl­friend rule, and, uh, it was exact­ly 50 50.

[00:13:56] Cameron: For how many went up ver­sus how many went down since we Rule 1’d them, and VUK, which had been delist­ed. Uh, now the, that does­n’t account for div­i­dends that we would have accrued if we’d held on to the ones that have, well, well to all of them, I guess. Even the ones that went down, if we’d held on to them, we would have, you know, Got div­i­dends from some of them.

[00:14:18] Cameron: But, uh, inter­est­ing­ly, I was think­ing about it in terms of if the Rule 1 cut­off had been increased from 10 per­cent to 20%, 60 per­cent of the ones that are Rule 1 to 10 per­cent would have also bro­ken through the 20 per­cent mark, would have had to sell them any­way. So, um, I don’t know. That’s my, that’s where I got to.

[00:14:44] Cameron: Do you have any analy­sis or thoughts on any of that?

[00:14:48] Tony: I do. And it’s, it’s a bit of, um, it reminds me of the work that, uh, the ana­lyst did for us, Ryan did for me, um, with a much big­ger data set. And, um, he got, we got to the same con­clu­sion that Rule 1 of 10 per­cent and Rule 1 of 20 per­cent were about the same.

[00:15:07] Tony: Um, in terms of their results, how­ev­er, Rule 1 of 20 per­cent meant less trad­ing. So, I think, I think that prob­a­bly suits me at least bet­ter. Um, but what we did­n’t do is to see what would hap­pen if we elim­i­nat­ed Rule 1 com­plete­ly. We nev­er got around to doing that bit of work. So, that’s worth look­ing at, I think, for fur­ther analy­sis.

[00:15:31] Tony: Um, Because it looked like from the fig­ures you shared with me, which I think was the 221 port­fo­lio for QAV Lite, going through all of the, I think you sent me all of the sales, and if I look at them line by line, it looks like the 3PTL, Sales worked in terms of the shares are still less than what they were when they were sold.

[00:15:59] Tony: Where­as it’s a mixed bag for Rule 1. So the oth­er ques­tion I’ve got is if we take out Rule 1 and just use 3PTL, how does the per­for­mance go? And I haven’t done the analy­sis on that.

[00:16:10] Cameron (2): Hmm.

[00:16:11] Cameron: So if I go back and look at it and I just assume that we did­n’t use rule 1 cells, I’d have to do some regres­sion test­ing on 3PTL and com­modi­ties then, you know.

[00:16:26] Cameron: Yeah, it’s

[00:16:26] Tony: a dif­fi­cult piece of work which is why we did­n’t get around to doing it.

[00:16:29] Cameron: Yeah.

[00:16:32] Tony: Yeah. So Ryan put togeth­er that, we’ve got the buy list data­bas­es now, so each week you put it into a big­ger spread­sheet, so you can work through it rea­son­ably eas­i­ly. But it’s still very man­u­al to check for com­modi­ties and check for 3PTL sales.

[00:16:51] Cameron: Yeah, well, AI will give us some more tools to do that prob­a­bly in the next year. But, um, right now, um, out of that analy­sis, I don’t know what to take out of it. Like, as you say, and I have imple­ment­ed now a 20 per­cent rule one on half of my port­fo­lios. Yep. Um, just to see. What hap­pens, but based on this, I think it’ll just mean less trad­ing, maybe some more div­i­dends.

[00:17:21] Cameron: Um, but the flip side is, uh, the ones that go down to 20 per­cent are going to go down

[00:17:28] Tony: more. So you said 60%. became rule one at 20%. So they’re kind of los­ing. You’re keep­ing half and los­ing half rough­ly, but they’re 10 per­cent worse off. So again, it’s like a zero sum game real­ly as to whether you use 10 per­cent or less.

[00:17:44] Tony: Depend­ing on,

[00:17:45] Cameron: depend­ing on how much the div­i­dends end up being worth. But, uh, yeah, but if you, if you

[00:17:50] Tony: sell some­thing and buy some­thing, you still get div­i­dends from a new pur­chase. So I’m not sure if you’re going to pay a big part in

[00:17:57] Cameron: the

[00:17:57] Cameron (3): analy­sis. Yeah, you’re right. Yeah. All right.

[00:18:01] Tony: Yeah, so that’s where I’ve got­ten to. So I’m using 20 per­cent and it’s work­ing fine for me. Right. I went through a cou­ple of weeks ago with you, I’ve only trad­ed once or twice dur­ing the year. Yeah. Which is good.

[00:18:16] Cameron: Well, some of the news items I’ve got, um

[00:18:20] Tony: Sor­ry, before we leave that, we, you also had a ques­tion on why the dif­fer­ent light port­fo­lios per­formed dif­fer­ent­ly last year.

[00:18:28] Tony: So, did you, I had, don’t think you sent those through to me, but if you want to at some stage I’ll try and weed through that and see if I can find a rea­son.

[00:18:39] Cameron: Oh, right. Yeah, I haven’t, um, done all of the analy­sis on all of the port­fo­lios, uh, yet, but I can send you through the, the trans­ac­tion lists and we can have a look through.

[00:18:50] Cameron (2): Yeah, okay.

[00:18:51] Cameron: Uh, what should I be look­ing for, like, in my analy­sis on those? Is there some­thing in par­tic­u­lar? I,

[00:18:58] Tony: I don’t know. I’m inter­est­ed in what the start­ing port­fo­lios hold and why they’re, why they’re dif­fer­ent, why some under­per­formed and some did­n’t. Um, num­ber of stocks. What they’ve done the year before, per­haps even two.

[00:19:13] Tony: Yeah, I don’t know. It’s got to be in the start­ing port­fo­lio. My think­ing is that if a port­fo­lio had a good year the year before, it’s going to have a bad year or poten­tial­ly have a bad year the fol­low­ing year. But the sys­tem should still even that out. So I’m real­ly not sure.

[00:19:31] Cameron: Okay. Well, I’ll send that through and you can have a look when you get a chance.

[00:19:37] Cameron: Got your box­es sort­ed out.

[00:19:39] Tony: And I’ll just say, you know, I’ll be away next week as well. So I can’t record. I’ll be in Chas­ing.

[00:19:45] Cameron: I do know that I’m going to put out the Mus­catel­lo chat. Okay.

[00:19:49] Tony: Thanks. So what­ev­er you, um, send through, I won’t be able to get to next week any­way. Sure. Yep.

[00:19:55] Cameron: Well, uh, some­body point­ed out on our Face­book group yes­ter­day that the chief finan­cial offi­cer for.

[00:20:04] Cameron: NRW Hold­ings, or NWH is their code, had sud­den­ly resigned Mr. Richard Simons. He had ten­dered his res­ig­na­tion from the com­pa­ny NRW1 to take a search process for a new CFO and pro­vide an update on the recruit­ment process in due course. I took that as a red flag and, um, Dumped the stock. It was already down 10%.

[00:20:29] Cameron: Um, when I got the news, I haven’t looked to see what hap­pened today. I exit­ed, it was in one of the live port­fo­lios, exit­ed it. Well, I think it was still 28 per­cent up. So it did okay for us, but, um, that did sound like a sud­den res­ig­na­tion. And, um, for what­ev­er rea­son, the mar­ket did­n’t like it, unless they were all just QAV mem­bers who said, Oh, red flag, we’ve got to sell.

[00:20:54] Cameron: Um, Did you, uh, did you take away any­thing con­trary from that news?

[00:21:01] Tony: No, it was a hard one for me because I, um, I did­n’t hear about it until you told me this morn­ing and I went research­ing it. And cer­tain­ly the num­bers they’ve pro­duced in their lat­est results look good. Um, it’s been on the buy list for a long time.

[00:21:15] Tony: But yeah, it was sold off by 10 per­cent when the mar­ket got a hold of that announce­ment. So I think you’ve done the right thing. There was a 50 50 for me, because like I said, the num­bers are good. Com­pa­ny’s doing well, but the CFO resigned. So it’s, in the absence of fur­ther infor­ma­tion, it’s hard to know, but the mar­ket sort of made its mind up.

[00:21:34] Tony: The oth­er inter­est­ing point was, it’s a long way above its sell price. So if you wait­ed for three PTL sell lines, which is the oth­er trig­ger, um, you might’ve giv­en back that 28 per­cent that the port­fo­lio had made. So I think you’ve done the right thing. I think on the bal­ance of the risks involved, look at, might rebound, but.

[00:21:53] Tony: Why stay in it if it keeps going down?

[00:21:55] Cameron: And the press release that the com­pa­ny came out with did­n’t say fam­i­ly rea­sons, health rea­sons, he’s tak­en anoth­er job. There was no jus­ti­fi­ca­tion for it, just, he’s out. Um, so it kind of, it did­n’t smell great, so.

[00:22:12] Tony: Yeah, look, it could be innocu­ous. My first thought was he’d been poached.

[00:22:17] Tony: He was, I went back and looked at his bio. He was CFO at Clough, anoth­er engi­neer­ing ser­vices com­pa­ny for a long time. So he’s had a good track record. He was brought into. NWH, buy the retir­ing CFO, who he used to be his boss at Cloth, so he was a known com­mod­i­ty. So it’s entire­ly pos­si­ble that he’s been poached by some­one else.

[00:22:38] Tony: I could­n’t find out who, but yeah, um, a cou­ple of oth­er inter­est­ing side points. I don’t know if it’s impor­tant or not, but, uh, uh, that com­pa­ny has had, uh, Anoth­er REM strike, so more than 25 per­cent of the share­hold­ers vot­ed against the remu­ner­a­tion report, which has been to a spill on the board, but, um, this com­pa­ny actu­al­ly has had the longest streak of REM strikes of any oth­er ASX stock, it’s now into its 6th year of share­hold­ers vot­ing.

[00:23:08] Tony: vot­ing against the remu­ner­a­tion report. So I don’t think that’s trig­gered the CFO’s res­ig­na­tion because it was hap­pen­ing when he was hired two years ago. So, um, but yeah, clear­ly some por­tion of the share­hold­ers are unhap­py with every­thing. And one of the direc­tors, Fiona Mur­doch, also had a 25% protest vote against her, even though she was re-elect­ed.

[00:23:31] Tony: So not sure what’s going on. I don’t know the com­pa­ny that well, but, um, I think in the absence of infor­ma­tion of down­turn in the stock on the announce­ment, I think you’ve done the right thing.

[00:23:42] Cameron: I just looked, it has­n’t recov­ered today. So, uh, yeah, well, it has­n’t gone down fur­ther either, but it’s just sort of sta­bi­lized down.

[00:23:50] Tony: Yeah.

[00:23:51] Cameron: Well,

[00:23:53] Tony: yeah. We don’t need to take the risk and we can always buy back into it if it stays on the buy list and it’s cur­rent­ly a Josephine so you won’t touch it for a while but yeah, it could bounce back.

[00:24:03] Cameron: Well, speak­ing of dis­ap­point­ments

[00:24:07] Tony: Myer!

[00:24:09] Cameron: One of my old favourites, Myer. Always the same old sto­ry with Myer, it goes up and then it comes back down.

[00:24:20] Cameron: Dis­ap­point­ing trad­ing updates from Myer, saw it drop 22. 27 per­cent yes­ter­day, and then it’s dropped a lit­tle bit more today by the looks of it.

[00:24:31] Tony: Yep.

[00:24:32] Cameron: Uh Uh, Myer Hold­ings pro­vid­ed the group com­pa­ra­ble sales were in line with the PCP, pre­vi­ous cor­re­spond­ing peri­od, while total sales were down 0. 8 per­cent on PCP.

[00:24:49] Cameron: I don’t know what the dif­fer­ence between group com­pa­ra­ble sales and total sales. Uh, put your retail hat on there for me.

[00:24:56] Tony: All I can think of is I haven’t heard the term, I’m guess­ing it’s like for like, so it’s nor­mal­ly called like for like. So the stores that were open at the start of the peri­od get com­pared, not any new stores or clo­sures.

[00:25:10] Cameron: Total sales were affect­ed by the tem­po­rary clo­sure of the Wer­ribee store between the 14th of Feb­ru­ary 2024 and 29th of Novem­ber 2024. Group online sales were up 2. 8 per­cent on PCP and rep­re­sent­ed 22 per­cent of total sales in the peri­od. Oper­at­ing gross prof­it was 560 mil, rep­re­sent­ing a decrease of 15 mil on PCP, while EBIT On a pre a a SB 16 basis.

[00:25:38] Cameron: Well, I’m glad it’s a pre a, a SB 16 . I, I nev­er like it when they do a post AASB 16. Yeah. That always real­ly gets my nerves was 48 mil a decrease of 16 mil on PCP. Any­way, my col­lapsed. Um, you know, what are you gonna do? It’s, it, it did­n’t become a sell for us. Um, we’re still up on it, but it’s a long way down from where it was.

[00:26:02] Tony: Well, again, I tried to put my, I don’t know Myer, I tried to put myself in the shoes of some­one who would, and I think it’s prob­a­bly a sim­i­lar sort of thing. Why take the risk of it going down fur­ther? Um, I note it’s a week away from the share­hold­er vote to merge Myer with some of the pre­mier brands and, um, bring Solomon Lew onto the board, which I think is a pos­i­tive.

[00:26:25] Tony: Uh, the Sol­ly Lew on the board, I’m not sure if the merg­er with the brands is a, is being seen as a pos­i­tive by the mar­ket at the moment, because I think, um, I’m, I have, I tried to crunch the num­bers myself, did­n’t have enough time or, to be hon­est, inter­est, willpow­er to do it, but, um, The brands which are com­ing across from Pre­mier Invest­ments into Myer, so the merg­er going on that’s being vot­ed on soon, which are basi­cal­ly the Pre­mier Invest­ments store brands, so Just Jeans, Port­mans, etc.,

[00:26:56] Tony: or the ones which are involved in fash­ion, had, I think, a worse dete­ri­o­ra­tion. over the Christ­mas peri­od. I don’t have the num­bers in front of me but they were down a lot as well and in par­tic­u­lar their mar­gins decreased and I remem­ber read­ing an arti­cle when the merg­er was posi­tioned say­ing that it was a good deal.

[00:27:22] Tony: I think the inde­pen­dent Um, Inde­pen­dent Val­uer that was appoint­ed by the Myer board said it’s a good deal because the mar­gins at the pre­mier invest­ment brands like J, JJ’s and Just Jeans and Port­mans is high­er than the ones in Myer. So I’m sus­pect­ing that the mar­gin dete­ri­o­ra­tion at pre­mier invest­ments is soured that, that rea­son for merg­ing.

[00:27:45] Tony: Um, but I haven’t had a chance to go through and crunch the num­bers on, because it’s very con­vo­lut­ed on how many shares are being issued and at what price and what my share­hold­ers get out of all this. There’s lots of mov­ing parts, but I sus­pect Some of the big banks have and they’re say­ing it was a good deal before and may not be now so but you know I haven’t crunched the num­bers It’s look­ing like I mean the num­bers that were released by Myer aren’t They’re not great, but they’re not like, um, they’re not the kind of num­bers I would expect to see a 30 per­cent down­turn in the share price after.

[00:28:22] Tony: So, um, in sum­ma­ry, it looked like the sales were flat, um, year on year, okay, so no growth, so that might send some peo­ple to the sell but­ton. Uh, but, you know, Myer is a low growth busi­ness. I don’t know what they expect out of Myer, real­ly. Um, there’s the. Uh, Livia Wirth, the head of Myer, had some rea­sons for that, um, and why the prof­it was down at an EBIT lev­el.

[00:28:48] Tony: She talked about the clo­sure of a store. She talked about, um, com­mis­sion­ing a ware­house that was tak­ing longer and cost­ing more. So, I kind of under­stand why the EBIT num­bers missed. Um, again, I would­n’t expect either of those two things to to drop the share price some 30%. So I sus­pect peo­ple are get­ting cold feet with the merg­er with Pre­mier, which is also, which has prob­a­bly had a worse Christ­mas than mine did from my sort of casu­al read­ing of the num­bers.

[00:29:17] Cameron: So I hold it in two light port­fo­lios, bought both parcels in Jan­u­ary last year. They’re both up around 30%. Share price is cur­rent­ly 85 cents. The 3PTL is 54 cents. Um, so I’m up on it. I mean, you said before you think it’s, uh, like the NWH one, why risk it going fur­ther? Would you fudge a sell on some­thing like this if you held it?

[00:29:45] Tony: I’m prob­a­bly lean­ing towards it. It’s 50 50 for me, and that’s one thing you could do is sell half and keep half. Um, some­thing we haven’t done before, rec­om­mend­ed before, but when you don’t know, it’s an option. Uh, okay, let me go through the risks. The risks are that the shares keep drop­ping, and they, uh, go down to the three point sell line, which forces us to sell, and that’s a big loss.

[00:30:11] Tony: I sus­pect you might be rule one’d along the way, posi­tions you have in the light port­fo­lio, so But even so, it’s

[00:30:18] Cameron: 50, 59 cents, the 3PTL’s 54, so it’s not much dif­fer­ence, not much, no.

[00:30:24] Tony: But you’re giv­ing up a 28 per­cent gain, so the ques­tion is, um, what’s the upside from here? Myer’s not going to recov­er in a heart­beat.

[00:30:35] Tony: They’ve got a messy, they’ve got, not a messy merg­er, they’ve got a merg­er to get through. Uh, if the vote does­n’t go ahead next week, um, the share price will def­i­nite­ly crash because I think the growth in my stock price in the last sort of six months has been on the back of the announced merg­er. So yeah, I’m lean­ing towards a sell.

[00:30:54] Tony: There’s a red flag.

[00:30:59] Tony: Again, take a prof­it, bench it, if it comes back on the buy list, and it’s not a Josephine, you can always buy back in.

[00:31:07] Cameron: Take a prof­it? I don’t think I’ve ever heard those words come out of your mouth, TK.

[00:31:14] Tony: Haven’t you heard that say­ing? You nev­er go broke tak­ing a prof­it.

[00:31:17] Cameron: Not out of your mouth. Okay, I’ll make a note.

[00:31:25] Cameron: Um, On the pos­i­tive side, GNP, Genus Plus, which is a stock on our buy list, they had an announce­ment in the last day or so that they got a 270 mil­lion clean ener­gy project con­tract with West­ern Aus­tralia. Stock got a nice lit­tle bump, um, jumped

[00:31:50] Cameron: from around about 2. 50 up to 2. 66. It’s come back a lit­tle bit since then, but if any­one owns that, you might want to know. That’s been good for them. And I also noticed today that S, uh, sor­ry, FSF, which is a com­pa­ny that’s also on our buy list. Um, FSF man­age­ment com­pa­ny, uh, Fonter­ra Share­hold­ers Fund, uh, has sub­mit­ted a for­mal appli­ca­tion for removal from the ASX.

[00:32:22] Cameron (2): Hmm.

[00:32:23] Cameron: Pur­suant to ASX list­ing rule 17. 11. Don’t know what that is, but, Well, it’s like,

[00:32:31] Tony: it’s, it’s a delist­ing. So I sus­pect that’s a real­ly impor­tant piece of news for any­one hold­ing the shares. Right. On the ASX, because I, I would guess they’ll then be con­vert­ed to New Zealand shares because Ontario is the big milk pow­er in New Zealand, one of the biggest com­pa­nies.

[00:32:48] Cameron: Yeah, that was, uh, the rest of the announce­ment that they’re going to just be list­ed on the, uh, New Zealand Stock Exchange. Yeah, so it might

[00:32:58] Tony: not, you know, peo­ple might not want to do that, um, apart from the cur­ren­cy issues and the tax issues and there’ll be dif­fer­ent list­ing rules, etc. It may cost them a bit more to trans­act, so they might want to get out now before it delists.

[00:33:12] Cameron: Yeah. Don’t hold them in any of our port­fo­lios, but just an FYI for peo­ple who do.

[00:33:19] Tony: Good pick­up. Was that an AI pick­up? It was an

[00:33:22] Cameron: AI pick­up. Yeah. Yeah. Yeah. I’ve got some prob­lems with my AI news script that I’ve, I’ve sort of spent the last week doing. Kind of try­ing to fix up, um, and, uh, yeah, still got some, still got some issues, but, uh, pick that one up.

[00:33:40] Tony: Hey, just on that, um, are you able to amend your news alerts to pick up buy­backs or buy­back announce­ments at all?

[00:33:47] Cameron: Um, yeah, if they’re report­ed in the media,

[00:33:52] Tony: yeah. Oh, in the media, okay. They’re def­i­nite­ly report­ed as an ASX announce­ment. Um, yeah, and they’re often head­ed, you know, shares bought back today or what­ev­er, or dai­ly.

[00:34:04] Tony: Announce­ment of share buy­backs. And the only rea­son I’m say­ing it is that, uh, I’ve been look­ing at try­ing to find a source myself to auto­mate because, uh, it was one of the things of, one of the chap­ters in what works on Wall Street I’ve been try­ing to incor­po­rate into the buy list. Um, but I haven’t found an easy way to decide with­out man­u­al­ly check­ing the stock.

[00:34:25] Cameron: Yeah, I can, I can play around with that. See, the, the sys­tem that I’ve built is using Google News Alerts to file through. So if, if they’re get­ting picked up by Google News Alerts, for some rea­son, I can pick them up. Uh, I don’t know how I, whether or not the ASX announce­ments are get­ting picked up with that.

[00:34:46] Cameron: But, um, I sus­pect they’re not, but I’ll have a look. Yeah, thanks. The only oth­er thing I had talk­ing point was, Tony, is this um, arti­cle I saw this morn­ing in Macro Busi­ness. Aus­trali­a’s pri­vate sec­tor econ­o­my stuck in reces­sion. Fol­low­ing the Q3 Nation­al Accounts release last month, Pradeep Philip, head of Deloitte Access Eco­nom­ics, not­ed that the pri­vate sec­tor was being clob­bered and the econ­o­my was stuck in the mud and spin­ning its wheels.

[00:35:18] Cameron: Innes Will Ox, CEO of the Aus­tralian Indus­try Group, shared a sim­i­lar opin­ion, point­ing out that the pri­vate sec­tor is in reces­sion and los­ing jobs. The data shows much of the pri­vate sec­tor faces reces­sion like con­di­tions. It is only a flood of gov­ern­ment spend­ing in recent months that is mask­ing the true poten­tial.

[00:35:37] Cameron: Pic­ture in the broad­er econ­o­my, Willox said. It is clear the non gov­ern­ment sec­tor of the econ­o­my, the pri­vate sec­tor, is in con­trac­tion and you could then argue it is in reces­sion. There is a big trans­fer between the pri­vate sec­tor and the pub­lic sec­tor at the moment. The pri­vate sec­tor is shed­ding jobs to the pub­lic sec­tor.

[00:35:57] Cameron: Which is pick­ing up jobs, but are they the pro­duc­tive jobs we want? The real prob­lem we have here for the econ­o­my is that the pri­vate sec­tor, which is the engine room of the econ­o­my, is slow­ing quite dra­mat­i­cal­ly, he said. And, um, I saw anoth­er chart recent­ly, um, Red­dit, I think, just talk­ing about the num­ber of, um, insol­ven­cies.

[00:36:22] Cameron: in Aus­tralia that are going through the roof, uh, par­tic­u­lar­ly in the con­struc­tion indus­try, which we know has been com­ing some­time, but a lot of oth­er indus­tries as well. Insol­ven­cy rates are very, very high right now. What does that mean for our invest­ing strat­e­gy in the next year, Tony?

[00:36:41] Tony: Sweet FA. It’d be good if we had an insol­ven­cy com­pa­ny on the buy list.

[00:36:48] Tony: And there’s the title for this week’s episode, Sweet FA. I know one of my acquain­tances from one of the golf trips isn’t avail­able for a lunch, and he’s an insol­ven­cy part­ner. Right. And he told me when we were over­seas. play­ing golf that all of his mates were going out and buy­ing new Porsches. So, um, yeah, it’s not, it’s not new news that there are lots of insol­ven­cies.

[00:37:12] Tony: Um, and I’m mak­ing light of it, you know, obvi­ous­ly a ter­ri­ble time for busi­ness­es that are going into insol­ven­cy. Um, I read your arti­cle and I made a note and I just had one word pro­pa­gan­da. I’m not say­ing it’s, it’s incor­rect that the pri­vate sec­tor is doing it tougher than the pub­lic sec­tor. Um, But, it’s a very one sided arti­cle.

[00:37:36] Tony: I mean, Innes Willocks is paid to push the pro busi­ness side of lob­by­ing and my response to him would be to pull your fin­ger out and get your pro­duc­tiv­i­ty up and pay your work­ers more. And you might stop los­ing him to the pub­lic ser­vice. And you know, in some respects, it’s what. It’s the role of gov­ern­ment to some­times to fill the gap in the econ­o­my when we, you know, going into a down­turn or it’s going into a down­turn.

[00:38:06] Tony: But if you look at graphs of pro­duc­tiv­i­ty, the Aus­tralian pri­vate sec­tor has done sweet FA again for the last 10 years about improv­ing pro­duc­tiv­i­ty. And they’ll argue it’s because of gov­ern­ment red tape and. Blah de blah de blah. But, you know, we’ve been through a min­ing boom, our banks are boom­ing, um, plen­ty of stuff to invest in on the buy list.

[00:38:29] Tony: Uh, if, you know, it’s, it’s an old trick to point to. point to the gov­ern­ment side of things and say, you know, you’re just tak­ing work­ers away from us and not, we’re not pay­ing them enough, or, you know, he’ll be out there argu­ing that we should­n’t have any more immi­gra­tion. But, you know, that’s where the labour comes from some­times in the econ­o­my.

[00:38:50] Tony: So, yeah, I, um, I, noth­ing against Innes Willocks and noth­ing against the BCA, but I try and, you know, bal­ance what they’re say­ing against some­one from the oth­er side as well. Um, it’s, it’s, I think he’s prob­a­bly right that, um, you know. Pri­vate sec­tor’s doing it tough and the work­ers are going to the gov­ern­ment, but you know, that’s the prob­lem.

[00:39:13] Tony: How’s he going to fix it is my response to it.

[00:39:16] Cameron: Right. Okay. And from an invest­ing per­spec­tive, as always, does­n’t real­ly mat­ter what hap­pens in the econ­o­my. We just keep doing what we’re doing.

[00:39:26] Tony: Cor­rect. Look, I, you know, I’ve read, I’m read­ing more and more arti­cles than ever before about how over­val­ued the US share mar­ket is, about how over­val­ued the banks are in Aus­tralia, etc.,

[00:39:37] Tony: etc. So it would not sur­prise me if there’s a cor­rec­tion in share mar­kets, but we have rules to work through that. Would­n’t sur­prise me if Don­ald Truck­er, Elon, Don­ald Trump, Trump and Elon Musk, I’m get­ting their names con­fused. Don­ald Trusk. Trusk, yeah. Go on a tear and the share mar­ket loves it. So, who knows?

[00:39:58] Tony: Again, it’s pre­dic­tion.

[00:40:00] Cameron: All right. Well, that’s all I’ve got for news. Tony, do you want to get into your Hori­zon Oil talk?

[00:40:08] Tony: I do. Yeah, it was a real­ly inter­est­ing one. I, um, I decid­ed to do it today because it’s an oil com­pa­ny and the oil price has turned up, uh, and I’ve kind of, there’s a num­ber of shares on the buy list which have been there almost as long as we’ve been doing QAV, or if they haven’t been there the whole time, they’ve gone on and off the buy list a lot.

[00:40:30] Tony: Uh, and I know I did a pulled pork on Hori­zon. I could­n’t find out exact­ly when, but I sus­pect it was in the very ear­ly stages of QAV, so I’m hap­py to revis­it it now, and it was a very inter­est­ing one, it was a bit of an eye open­er for me, so I was glad I, uh, So, if any­one does­n’t know who Hori­zon Oil are, I’ll quote from their web­site, they’re obvi­ous­ly an oil com­pa­ny, they drill and explore and sell petro­le­um prod­ucts.

[00:41:00] Tony: To quote them, we have a low cost con­ven­tion­al oil pro­duc­tion from joint ven­ture inter­ests in, I’m going to go through their, how they name things, Block 22 12. which is in off­shore Chi­na, and Hori­zons Part­ners are CNOOC, C N O O C, Lim­it­ed, Fos­un Inter­na­tion­al Lim­it­ed, which is via Rock Oil, anoth­er Aus­tralian com­pa­ny, and Oil Aus­tralia Lim­it­ed, that’s one of their areas that they work in.

[00:41:30] Tony: So all these names relate to oil fields. So Block 2212 is off the coast of Chi­na. PNP 36180. which is also called the Mari Man­a­ia Fields, which are off­shore New Zealand. Now, uh, Hori­zon’s part­ners in that are OMV and Cue Ener­gy Resources, and both Rock­well and Cue Ener­gy will be famil­iar with investors there list­ed on the ASX.

[00:41:55] Tony: And the last one that Hori­zon’s, uh, all out is OL4 and OL5, oth­er­wise known as Mari­ni, in the North­ern Ter­ri­to­ry, Aus­tralia. And in that case, their part­ners are Ech­e­lon Mari­ni, Cen­tral Petro­le­um Mari­ni, and Q Ener­gy. In both of Hori­zon’s non oper­at­ed oil projects, Block 2212 and PNP36180, Hori­zon has been a long term part­ner over 20 years in Chi­na and 17 years in New Zealand and was a par­tic­i­pant pri­or to and through­out the project appraisal and devel­op­ment phas­es, includ­ing the 2022 Block 2212 128E devel­op­ment.

[00:42:34] Tony: So basi­cal­ly their exper­tise is in find­ing and Oil fields to pro­duc­tion. They, I would­n’t think they have the cap­i­tal to do it them­selves, so they part­ner with oth­er peo­ple and then some­times they step back and let oth­er peo­ple do the actu­al drilling for the oil and sell­ing for the oil and they keep a stake.

[00:42:55] Tony: Uh, so that’s what they do. 2024 results were down on Pri­or years, the rev­enue was 111 mil­lion U. S. ver­sus 152 mil­lion. Prof­it after tax was 26 U. S. mil­lion ver­sus 44 mil­lion in the pri­or year. How­ev­er, uh, FY23 appears to be an out­lier with much big­ger rev­enues than trend. And Man­age­ment called out that FY24 was 7 per­cent above the 5 year aver­age trend, and if you look at the graph, the pri­or year was quite good, but oth­er­wise they’ve been chug­ging along on an increas­ing trend, but not quite as good as FY23.

[00:43:35] Tony: One thing that has hap­pened between when I last looked at this com­pa­ny, I think, and now, is a scan­dal engulfed the com­pa­ny in 2020. And I’ll call it the PNG scan­dal and I’ll be cir­cum­spect about what I talk about because the par­ties in the mat­ter have been liti­gious and I think there may still be some actions going on so I’ll be care­ful.

[00:43:59] Tony: Any­one inter­est­ed in the details can go online and read arti­cles in the Fin Review and oth­er places and also the com­pa­ny’s respons­es to them. But using the own announce­ments, the time­line goes like this. On Feb­ru­ary the 10th, 2020, The AFR pub­lished an arti­cle sug­gest­ing that Hori­zon may have been involved in the bribery of a PNG ener­gy min­is­ter.

[00:44:23] Tony: The claim relates to the grant­i­ng of an explo­ration license back in 2009, and sub­se­quent com­pa­ny trans­ac­tions between the busi­ness grant­ed the explo­ration license. At the time, the Hori­zon board sus­pend­ed the then CEO and com­menced an inves­ti­ga­tion by exter­nal law firm, a firm, Her­bert, Her­bert Smith Free­hills, and account­ing firm Deloit­te’s.

[00:44:46] Tony: This was announced to the mar­ket on the 12th of Feb­ru­ary 2020, so two days after the Fin Review first broke the sto­ry. The Hori­zon CEO then resigned on the 28th of Feb­ru­ary, and they appoint­ed an inter­nal­ly sourced Act­ing CEO. On the 9th of June, 2020, the Hori­zon board announced the inde­pen­dent inves­ti­ga­tion con­clud­ed and found no breach of for­eign bribery law.

[00:45:10] Tony: On the 25th of June, the board announced the inter­im CEO would become the full time CEO. So, um, that’s a pricey of what’s hap­pened. Peo­ple can read about it online. I’m not going to talk about it. Pub­licly and just in case I say the wrong thing, I will say to my knowl­edge and research today, no charges were ever brought against the com­pa­ny over the mat­ter.

[00:45:32] Tony: So, if there was, well, the alle­ga­tions haven’t been proven in a court of law, I guess is where I’m com­ing from. The com­pa­ny share price closed at 0. 13 on the 31st of Jan­u­ary 2020. And then when the sto­ry broke, it dropped to 0. 08 dur­ing Feb­ru­ary. So, quite a drop, uh, but prov­ing a good time to buy, because it’s Since then, um, it’s rebound­ed and the price today is 19 and a half cents.

[00:46:03] Tony: It’s hard for me to know whether that was in response to the bribery alle­ga­tions arti­cle or COVID, because COVID was also occur­ring around then. And if peo­ple remem­ber, the oil price was smashed. It got down to about 45 bucks a bar­rel at the time, so I would have thought this was one of the com­pa­nies that was on life sup­port dur­ing that peri­od, so the share price may have been hit by COVID as well.

[00:46:26] Tony: The Hori­zon Board thought ATX was too cheap and began a buy­back of their shares. And that went through for 12 months, up until a fund called Samuel Ter­ry bought a 19. 9 per­cent stake in June 2021, when the price was still only 0. 09. On the same day, a com­pa­ny called Aus­tralA­sia Ener­gy sold down its stake from 30.

[00:46:50] Tony: 26 per­cent to 25. 34%. So a bit of cor­po­rate action going on when the price was still depressed. prob­a­bly com­ing out of COVID as well. Um, I went look­ing to see what Aus­trala­sia Ener­gy does and I could­n’t, I could­n’t find a web­site for them even though there’s, um, list­ings for a web­site for them that just goes through to a, um, a file not found error or a site not found error.

[00:47:17] Tony: The only infor­ma­tion I could find on them was from a site called Zoom Info, who I’ve nev­er used before, but they say Aus­trala­sia Ener­gy, uh, has more than 33 years of indus­try expe­ri­ence And has devel­oped close work­ing rela­tion­ships with major oil and gas pro­duc­ers, major ener­gy con­sumers, gov­ern­ment offi­cials and pol­i­cy mak­ers, etc, etc.

[00:47:38] Tony: They’ve worked with BHP and var­i­ous oth­er big com­pa­nies in the oil and gas sec­tor. Uh, how­ev­er, I also saw list­ed on Stock Doc­tor that, um, the Austal Ener­gy own­er­ship is the same as ones which Stock Doc­tor lists as US, uh, as owned by US funds IMC Invest­ments, and they own 24. 68%. So, I went to the annu­al report and it actu­al­ly says that these two are work­ing in as part­ners.

[00:48:15] Tony: So, I sus­pect that you can inter­change both of them. Um, I looked up who IMC Invest­ments are. They make the, uh, the boast that they are a glob­al trad­ing pow­ered by quant research and tech com­pa­ny from Ams­ter­dam to Chica­go, Syd­ney to Mum­bai. IMC is where the bright­est minds in quant, research, tech and trad­ing come togeth­er to solve our indus­try’s most chal­leng­ing prob­lems.

[00:48:39] Tony: We hire the most excep­tion­al peo­ple, then unleash their poten­tial by giv­ing them access to dis­rup­tive, cut­ting edge tech­nol­o­gy, includ­ing AI, machine learn­ing and large scale com­put­ing. Well, I could have just used QAV to go and see how good, uh, Hori­zon Ener­gy was at the time. So I think, uh, my read­ing of this is Aus­tral Ener­gy and IMC are inter­change­able as the fund.

[00:49:03] Tony: Either way, they own near­ly 25 per­cent of the com­pa­ny. And, um, Ter­ry Funds owns, uh, I think they’re now sit­ting on about 21%. So between them, they own almost half of the com­pa­ny. Um, in Novem­ber 2021 in the AGM address. The, uh, the act­ing CEO who has made the new, the full-time CEO kicked off his pre­sen­ta­tion with the very first slide, which says, our strat­e­gy is sim­ple.

[00:49:34] Tony: First­ly, we seek to max­i­mize free cash flow. Sec­ond­ly, we intend to make fur­ther dis­tri­b­u­tions to share­hold­ers when it is pru­dent to do so. And third­ly, we will con­sid­er to invest in new busi­ness if excep­tion­al. So I sus­pect there’s a bit of an influ­ence of the. The new fund man­agers who con­trol the com­pa­ny behind that strat­e­gy, it’s basi­cal­ly a max­i­miz­ing cash flow strat­e­gy.

[00:49:55] Tony: And it remind­ed me of, uh, of the com­pa­ny we spoke a cou­ple of weeks ago, the, um, Traf­fic News. Net­work com­pa­ny where a fund man­ag­er took over and said that he want­ed to make sure the com­pa­ny was aligned with share­hold­er inter­ests. Um, going on from that, uh, and I, and I liked it. You know, we’re, we’re inter­est­ed in cash­flow as an investor.

[00:50:15] Tony: I think it’s great. Um, in the first half 22 results, the focus on cash­flow was under­lined. Cash­flow from oper­at­ing activ­i­ties increased 150%, replen­ish­ing cash­flow fol­low­ing cap­i­tal returns. So, um, That was inter­est­ing. It made me think about why they had to replen­ish their Cash­flow, or the cash from cap­i­tal returns, and I looked at it and found out there was cap­i­tal returns made in June 2021 at the time that the, uh, the fund man­ag­er, Samuel Ter­ry, I think they were called, bought into the com­pa­ny, uh, and also in June 2022, and both of those returns totalled 3.

[00:50:56] Tony: 35 cents per share, and that was on top of div­i­dends of 1. 65 cents per share, so in the 12 months after this, uh, fund bought in, Um, they got 5 cents per share return to them, um, and they bought in between 8 and 9 cents, so that was, um, not a bad return for them, uh, kind of oper­at­ing, well, cash flow return of 1, or 2 maybe.

[00:51:20] Tony: Um, So by 2024, I worked out, April 2024, Samuel Thier­ry had repaid its ini­tial pur­chase price and dis­tri­b­u­tions from the com­pa­ny, at least on a pre tax basis. I know cap­i­tal returns are tax­able and div­i­dends are tax­able, etc. Um, but in the fol­low­ing share­hold­er pre­sen­ta­tions, max­i­miz­ing cash flow has always been list­ed as the top pri­or­i­ty.

[00:51:41] Tony: Uh, the com­pa­ny Has kind of shift­ed, not just to max­i­mize cash, but also they did­n’t, um, uh, under­take drilling pro­grams for a while. And the com­pa­ny has a long his­to­ry of drilling and find­ing, um, good, uh, areas to pro­duc­tion­ize and then part­ner­ing with peo­ple to bring those areas to, uh, to fruition. Um, but they did start drilling pro­grams from 2022.

[00:52:06] Tony: So they under­stand they need to keep their future reserves up, uh, cause they will run dry oth­er­wise, but, um, obvi­ous­ly. Doing that with­in a cash flow mind­set, I guess, has been good for them. Hori­zon replaced the CEO in 2022, and also a large part of the new man­age­ment team, and also last year refreshed the board.

[00:52:28] Tony: So the announce­ment, um, In 2024, was Hori­zon Chair­man to retire, Board to refresh. So, after almost six years as Hori­zon’s Chair­man, Mike Hard­ing has advised the Board of his inten­tion to retire at the con­clu­sion of the upcom­ing 2024 Hori­zon AGM, which was the last AGM. It is with mixed emo­tions that I announce my intend­ed retire­ment from the Hori­zon Board at the upcom­ing AGM.

[00:52:52] Tony: Ver­i­zon is a com­pa­ny I’ve grown very fond of, hav­ing tak­en on the role at a time when the com­pa­ny was deeply embed­ded and fac­ing severe strate­gic head­winds which had erod­ed share­hold­er val­ue. He goes on to talk about turn­ing the com­pa­ny around, which was fan­tas­tic. And, um, there was anoth­er com­ment which I want­ed to just high­light.

[00:53:11] Tony: I’ll just see if I can find the actu­al quote. Any­way, I can’t find

[00:53:22] Tony: it. They talk about the com­pa­ny becom­ing a, uh, um, can’t see it. They’re talk­ing about the com­pa­ny becom­ing a, um, like, like a cash gen­er­at­ing, uh, oil pro­duc­tion com­pa­ny, which is a bit of a dif­fer­ent sort of spin on their pri­or, uh, So, uh, you know, over the course of a cou­ple of years, they’ve cleaned up the bribery scan­dal, alleged bribery scan­dal.

[00:53:48] Tony: They’ve, um, become a, uh, cash­flow focused com­pa­ny with dis­ci­plined explo­ration. And, you know, it all, it all has the hall­marks of, um, of these two funds set­ting about to change the way the com­pa­ny oper­ates. And the share price has recov­ered from, uh, 0. 88 to 0. 20. So it’s worked well for them and it is work­ing well for them.

[00:54:11] Tony: Um, what else can I say? So that’s pret­ty much where they are. It does remind me of that Aus­tralian Traf­fic News Com­pa­ny we spoke about where a fund takes con­trol and then posi­tions the com­pa­ny for share­hold­ers rather than any­body else, oth­er stake­hold­ers like man­age­ment. QAV num­bers so put all that aside that’s, that’s back­ground.

[00:54:34] Tony: ADT is 178, 000. So it’s, it’s Not a large com­pa­ny, but it’s suit­able for peo­ple with a port­fo­lio of around say 500, 000 or less. The share price for analy­sis is 19. 5%, 19. 5, sor­ry, cents per share. There is no con­sen­sus tar­get for this stock, which is some­thing I like, and no fore­cast earn­ings per share, so I can’t do an IV2 cal­cu­la­tion for it.

[00:54:59] Tony: IV1, how­ev­er, is only 13 cents, which is below the share price, so we can’t score it for that. Cur­rent yield, I found inter­est­ing. This is, this com­pa­ny’s real­ly being milked for the, for the share­hold­ers. Cur­rent yield is 15. 38%, um, so that scores well for us, which is very strong, but the pay­out ratio is high, and Stock Doc­tor report a pay­out ratio of 116%, mean­ing that, uh, The div­i­dends are being paid out of cash reserves, not just, um, cur­rent prof­its.

[00:55:29] Tony: So, you know, my analy­sis of that is that if the future results are not mate­ri­al­ly bet­ter, the div­i­dend would need to be cut. So just be aware of that, um, if you, if you require that kind of lev­el of div­i­dend. This is one of those com­pa­nies which I like where the yield is greater than the PE ratio. That’s a strong val­ue sig­nal for me, and we score it addi­tion­al­ly for that.

[00:55:52] Tony: Stock Doc­tor finan­cial health is strong and the trend is steady. Stock­o­pe­dia qual­i­ty rank­ing is 80, which is not all that high. The F score is 4 out of 9, which again is just below par for that. And drilling down into the F score high­lights some of the risks men­tioned above. Prof­it this year is low­er than the pri­or year and there has been some increase in debt.

[00:56:17] Tony: Um, that did­n’t trou­ble me because the com­pa­ny’s got lots of cash to ser­vice debt, so I’m not too wor­ried about that, but it does low­er the F score. Stock­o­pe­dia qual­i­ty rank­ing is 80, but val­ue is 95 and over­all is 96, which is quite high, so I think Stock­o­pe­dia rank it. pret­ty well as well. We don’t score based on ROE, but it did strike me as quite high.

[00:56:39] Tony: ROE for this com­pa­ny is 31%. That’s the return on equi­ty. So that’s very good. PE ratio is 7. 6 times, which is low. It’s not the low­est though, or the high­est, but it’s the sec­ond high­est. And the high­est was three years ago. So unless the PE sort of sta­bi­lizes, next half, it may become the high­est. And it might be.

[00:57:00] Tony: Receive a score for it. Um, we’re not scor­ing it now, but, uh, it may get a neg­a­tive one in the future. What’s real­ly dri­ving, um, my lik­ing of this com­pa­ny is the prop cap, which is 3. 27 times, which is very low. So it is throw­ing off lots of cash. Um, it’s like. Bang like a drum, but it’s some­thing I like to see in com­pa­nies.

[00:57:21] Tony: Net equi­ty per share is 0. 08 per share. So it’s well below the share price. We can’t buy it on the basis of its assets. We’re buy­ing a cash pro­duc­ing machine instead.

[00:57:35] Tony: Inter­est­ing­ly enough, two funds hold the major­i­ty of, well near­ly the major­i­ty of stock between them in the sort of mid 40 per­cent­ages. But I can only see one with a direc­tor on the board um, who’s Uh, I imag­ine dri­ving this, this move towards, uh, uh, cash­flow. Um, so it was a tricky one to score as an own­er founder.

[00:57:54] Tony: Um, strict­ly speak­ing, it’s not. Um, how­ev­er, clear­ly the com­pa­ny is being run for the ben­e­fit of the share­hold­ers. So I’m going to leave it as, as scor­ing a, a one for own­er founder. Uh, it’s, it seems to be well stew­ard­ed by the share­hold­ers, by the, by the large funds involved. Um, but not an own­er founder. Uh, what else can I say about it?

[00:58:17] Tony: Com­pa­ny share price has been increas­ing kind of steadi­ly since 2020, so it does­n’t score as a recent three point trend line buy. It’s been a buy for a long time. It does­n’t have increas­ing equi­ty, so we can’t score it for that. But over­all, it’s a 12 for qual­i­ty, which is 83%, which is very good, and the QAV score of 0.

[00:58:38] Tony: 25, which sees it at the top of the buy list, so it scores well from our per­spec­tive. Now that oil is now a buy, it can be bought. Bought with some con­fi­dence any­way, or looked at, I’m not sug­gest­ing peo­ple run out and buy it, but have a look at it. Um, there are some risks of course, um, the high con­cen­tra­tion of own­er­ship in two funds, so far seems to be very good for the com­pa­ny, but I always won­der if push comes to shove.

[00:59:03] Tony: Um, the small investor’s inter­est may not be top of mind for.

[00:59:10] Tony: The oth­er risk is the high div­i­dend pay­out ratio. That’s going to have to resolve itself. It can’t go on for­ev­er, which is prob­a­bly going to mean a cut to the div­i­dend pay­out. Um, but, uh, it’s got to be care­ful of com­pa­nies like that. Um, the oth­er thing which I found inter­est­ing was that, uh, the com­pa­ny is only pro­duc­ing or its share of the pro­duc­tion is 111 mil­lion US dol­lars in rev­enue.

[00:59:36] Tony: So it’s a fair­ly small com­pa­ny, um, and it, it, We’ll have to fund large Capex at some stage, um, to keep explor­ing. Uh, they seem to have a dis­ci­plined method­ol­o­gy for that in explor­ing around their cur­rent ten­e­ments. So they’re try­ing to min­i­mize the cost of doing that. But $111 mil­lion of rev­enue is not a lot.

[00:59:55] Tony: Um, and I often, I’m often a lit­tle bit wary of small, uh, rev­enue com­pa­nies because in bad times there’s not much. Not much meat on the bone to, um, to have them reserved, but at the moment it’s doing well. The last risk is, of course, the oil price. Let’s move to a buy, and as we said before, there may be a glut com­ing up into the mar­ket if Ukraine gets sort­ed out, or if drill baby drill, um, hap­pens as expect­ed, or any num­ber of oth­er geopo­lit­i­cal events and risks.

[01:00:23] Tony: Um, occur in the next few years, uh, which will affect the oil price. And, and, you know, as we know from our expe­ri­ence, it hap­pens rea­son­ably, um, com­mon­ly, you know, sort of once or twice a year, per­haps. Uh, on the pos­i­tive side, this com­pa­ny, um, even though it only had 111 mil­lion in rev­enue, pro­duced 39 mil­lion in prof­it before tax.

[01:00:44] Tony: So it’s high­ly prof­itable. Um, so even though I said before, it does­n’t have many reserves, it’s got a big fat port­fo­lio. Prof­it mar­gin to play with if there’s a prob­lem. And that to me says it’s also lever­aged to the oil price. So it’s a bit like one of these gold, gold mines where the costs are fixed and when the gold price goes up, the mar­gin improves.

[01:01:03] Tony: I sus­pect that’s prob­a­bly the same with Hori­zon Oil. So yeah, colour­ful com­pa­ny, inter­est­ing sit­u­a­tion, being man­aged for cash­flow, which I like. So, um, yeah, have a look at it, peo­ple.

[01:01:15] Cameron: Thank you, Tony. And I added some to one of the live port­fo­lios yes­ter­day just for trans­paren­cy. Uh, alright. Oh, by the way, um, I checked my AI news script.

[01:01:31] Cameron: It is pick­ing up buy­backs already. Oh good. But it’s rat­ing them low­ly in terms of my pri­or­i­ti­za­tion of where to rank sto­ries, so I can increase that up if you want heads up on those. And it’s get­ting them from hot cop­per. ’cause hot cop­per. Hot cop­per runs the A SX uh, news alerts. Oh real­ly? Yeah, so it’s Wow.

[01:01:52] Cameron: Hot cop­per picks ’em up from the A SX I’m pick­ing ’em up from old Cop­per, so. Oh, okay.

[01:01:56] Tony: Yeah, look, it’d be, if you could stream it off for me and let’s have a look at the data it pro­duces. Um. I’m think­ing about putting it into a score on the buy list. So, uh, you know, because of the good work, the good, the good, uh, research that O’Shaugh­nessy did and what works on Wall Street.

[01:02:13] Tony: And I haven’t done the analy­sis yet, but it seems like com­pa­nies like Hori­zon Oil, Qan­tas comes to mind when they’re con­duct­ing buy­backs, they tend to go up. Fleet Part­ners was doing a buy­back and was going up. So I think there’s enough evi­dence to put it in the buy list and see, um, see what we can do.

[01:02:31] Cameron: So my only caveat on that is I’m only, I only have alerts set up for com­pa­nies that are, or have been on our buy list.

[01:02:41] Cameron: Right. Is that okay?

[01:02:43] Tony: I think we start with that.

[01:02:45] Cameron: Yeah. Okay.

[01:02:46] Tony: Yeah. My, my sense would be to, if you think about the fil­ter list, so the com­pa­nies that get down­loaded and then scored into the buy list, if we add anoth­er item to the buy list, it might fil­ter some of those com­pa­nies. into con­tention. Um, so, uh, it’d be great if we could widen it to that list, um, which is, you know, wider than the buy list.

[01:03:11] Tony: But if we start with the buy list and have a look, let’s see what we find.

[01:03:14] Cameron: Yeah, well I can do that. It just means I need to add a cou­ple of hun­dred more alerts, but you know, I’ve got that all cod­ed now, so that’s not real­ly a prob­lem.

[01:03:23] Tony: Okay,

[01:03:23] Cameron: thanks. Alright, well, I think that’s that. We’re into After Hours.

[01:03:30] Tony: Ooh.

[01:03:31] Cameron: Me first? A lot of you guys told me this week, yeah.

[01:03:35] Tony: Yeah, well, Civ­il War, um, was a movie Jen­ny and I watched. Not the Cap­tain

[01:03:41] Cameron: Amer­i­ca film?

[01:03:42] Tony: No. No, no Win­ter Sol­diers in this one. It was, uh, by Alex Gar­land, who, um, I had to look up because I recog­nised the name but for­got what he did. And he made a, a movie which I like called Deus Ex Machi­na.

[01:03:57] Tony: That was a great film. Real­ly good. Yeah. Yeah. Yeah. So he made this. It’s, um, how can I describe it? It’s, it’s almost like every oth­er sort of war film. You’ve, I’ve seen like, you know, Viet­nam War type movie, it’s about jour­nal­ists who are in a war sit­u­a­tion, so they face dan­ger and risk and liv­ing out of their car and they trav­el across Amer­i­ca.

[01:04:22] Tony: The premise of the sto­ry is, um, is told but not fleshed out. So, appar­ent­ly, it’s kind of like you come into the whole thing late, the war’s almost fin­ished, but, uh, The West­ern, West­ern forces, which is Cal­i­for­nia and Texas, have joined up to take on the rest of the U. S. Um, and there’s a, I don’t know if it’s meant to be Don­ald Trump, but there’s a pompous arse in the White House who keeps mak­ing broad­casts say­ing how won­der­ful the war’s going for them, and

[01:04:52] Cameron: Played by Nick Offer­man?

[01:04:54] Tony: Yeah, does­n’t end well for him. Um, spoil­er alert, you can see it com­ing the whole way. Uh, any­way, so, um, I real­ly enjoyed it. It’s, it’s a, it’s a kind of small­ish movie. Like there’s, there are some great spe­cial effects in it and great war scenes in it. But the, it’s like a, almost like a, it’s not like hand­held cam­era, but it’s almost like, um, you know, you’re fol­low­ing these four reporters as they, they have to, they start­ed in New York.

[01:05:20] Tony: Um, they have to go, they want­ed to go to the Wash­ing­ton DC to inter­view the pres­i­dent, which no one has done because the pres­i­den­t’s been exe­cut­ing jour­nal­ists, but they decid­ed it’s worth it. It’s worth the risk. But they can’t dri­ve straight from New York to Wash­ing­ton, they have to go the long way through Delaware, no Delaware, Vir­ginia, West Vir­ginia to get there.

[01:05:41] Tony: And you know, they encounter road­blocks and dan­ger­ous sit­u­a­tions and mass graves and dis­placed camps and all those kinds of things. So yeah, I found it com­pelling. It’s not a hap­py movie. Um, but yeah, very well made I thought.

[01:05:58] Cameron: But it does­n’t explore how the Civ­il War start­ed? It does­n’t,

[01:06:02] Tony: no. No, he just brought it in towards the end.

[01:06:05] Tony: Yeah,

[01:06:06] Cameron: that’s, like, I’ve been part of sev­er­al dis­cus­sions on Red­dit over the last few months about, um, how a Civ­il War in the US might play out. Play out and how these things get start­ed. And, um, you know, I just did a show with Ray last week, wrap­ping up the Syr­i­an civ­il war series that we start­ed the bull­shit fil­ter with sev­en or eight years ago, we did like 25.

[01:06:37] Cameron: episodes on the Syr­i­an civ­il war at the time. And we did one or two updates since then. And then we, I did a two hour show last week, just sort of recap­ping the his­to­ry of the Syr­i­an civ­il war up to where it is now with effec­tive­ly Al Qae­da run­ning the coun­try with the sup­port of the U S and Israel putting them into pow­er, but, um, civ­il wars, you know, there, there’s a fair­ly com­mon set of cir­cum­stances.

[01:07:09] Cameron: There’s only real­ly a small num­ber of vari­eties, I guess, of civ­il wars, and then you apply that to the con­di­tions in the U. S. today and say, okay, if, if any of these are like­ly, which one is most like­ly? So, yeah, any­way, we’ll see what hap­pens.

[01:07:30] Tony: Yeah, and the premise of Cal­i­for­nia join­ing up with Texas I found inter­est­ing too, because they’re kind of polar oppo­sites polit­i­cal­ly.

[01:07:36] Tony: Yeah. It’s nev­er explained. Yeah.

[01:07:38] Cameron: Well, except for Austin. Depends if it comes out of Austin, I could see it, but any­where else in Texas, maybe not.

[01:07:43] Tony: Uh, what else? Uh, we’ve been watch­ing Black Snow. Have you seen that on Stan?

[01:07:50] Cameron: I’ve seen it adver­tised, but, uh, don’t know any­thing about it. Is it an Aus­tralian thing?

[01:07:54] Tony: It is. It stars Travis Fim­mel. It’s an Aus­tralian thing. He was in Boys Fol­lows the Uni­verse and he was the dad. Yeah. Yeah, he’s good. Yeah, I’m enjoy­ing him, but he’s, um, I think he’s been to the Brad Pitt school of over emo­tion­al act­ing because it’s all about shak­ing your head and putting it back and shak­ing your hands and, you know, it’s all dra­mat­ic, um, over emot­ing, I think, but any­way, that’s him.

[01:08:21] Tony: And it’s part of the char­ac­ter, he’s, um, he plays a cold case cop who’s been sent to, in the first series to It’s nev­er men­tioned, but it’s Pros­er­pine. I know from liv­ing up in that area, that’s Air­lie Beach, Pros­er­pine, that kind of area. Uh, and then in the sec­ond series, which is still drop­ping, so we We’re eager­ly await­ing the next episode.

[01:08:41] Tony: He’s sent to the Glass House Moun­tains and that area to solve a cold case. Um, yeah, real­ly enjoy­ing it. It’s, um, police pro­ce­dur­al, but, uh, he, the premise is he comes from a bro­ken fam­i­ly and he’s kind of going into bro­ken fam­i­lies to try and solve these cold cas­es and help­ing them while, you know, hav­ing all the guilt of his own lost broth­er and vio­lent father and all that kind of stuff.

[01:09:06] Tony: So, um, but yeah, it’s great to see. Queens­land show­cased, um, as you were say­ing before, um, off air about, uh, watch­ing Amer­i­can movies, which are shot in Utah and meant to be in New York or what­ev­er. It’s the same with, with things like that. I think they delib­er­ate­ly don’t name the towns because it’s a mish­mash of cen­tral Queens­land, um, in all these, at least pick the best parts and put them into, into the scenes.

[01:09:32] Tony: But, you know, real­ly spec­tac­u­lar scenery, espe­cial­ly in the sec­ond series where they’ve got the, you know, Mount Beer­wah, Tibrog­a­r­gan in the back­drops, it’s, it’s beau­ti­ful pho­tog­ra­phy.

[01:09:42] Cameron: Tibro! Tibro!

[01:09:45] Tony: Which I climbed a cou­ple of times with my mate Des when I was younger.

[01:09:50] Cameron: Chris­sy and I have been up Tibro a cou­ple of times.

[01:09:53] Cameron: She, I, she sum­mit­ed it. I did­n’t get right to the very top, that last lit­tle scram­ble up the top there. I’m like, yeah, this is like 15 years ago. I’m like, yeah, I’m not doing that. And while she, when she was doing it, I just had this vision of her falling to her death and me hav­ing to explain to her fam­i­ly and, you know, Back in the U.

[01:10:13] Cameron: S. how she died falling off, but she’s, she’s good with the old. have visions of Dez

[01:10:18] Tony: falling on top of me and push­ing me down the back end of Tibro. Yeah, these

[01:10:21] Cameron (3): days you’d just push you, it would­n’t be falling on top of you, you’d just give you a shove.

[01:10:25] Tony: Oh, we had this, I remem­ber we had this day, so, um, I can’t remem­ber if we wagged Skit­tle, maybe in a hol­i­day, but we caught the train up.

[01:10:33] Tony: Bris­bane to Tibrog­a­r­gan, your school boys. And he had this ambi­tion to climb all three in one day. Cause there’s, um, Tibrog­a­r­gan, Crook­neck and Beer­wah. And we did it, but, um, he got blis­ters and I kind of had to sort of half car­ry him back to the train sta­tion and we missed the train. So I had to call my mom to come and get us.

[01:10:54] Tony: I got up about 6. 30 at night. She did­n’t mind, did­n’t say any­thing, but it was a bit of an effort of her com­ing up to the Glasshouse Moun­tains to pick us up. Des could­n’t walk.

[01:11:04] Cameron: That’s a great sto­ry. What kind of high school­ers have a goal of sum­mit­ing three moun­tains in a day? That’s kind of unusu­al now to just be like fin­ish a cou­ple of Minecraft maps or some­thing like

[01:11:17] Tony: that.

[01:11:19] Cameron: Kill the Ender Drag­on. Well, yeah, I was telling you off air, I, I watched the orig­i­nal, the first two Plan­et of the Apes films from 68 and 70, I think. And the first one real­ly loved it. Cin­e­matog­ra­phy is mag­nif­i­cent, even though you can tell at times that there’s a back­drop. Um, it’s still, it’s shot on like 70 mil.

[01:11:43] Cameron: It’s this beau­ti­ful ultra wide screen. Um, you know, obvi­ous­ly, uh, the, the, Begin­ning of the film, they’re walk­ing through the desert. So it’s very Lawrence of Ara­bia esque, those beau­ti­ful golds and yel­lows, and, you know, very bar­ren. Beau­ti­ful to see. Um, sto­ry, makes no sense. Like, like, for peo­ple that haven’t seen it, I haven’t seen a

[01:12:11] Cameron (3): lot.

[01:12:11] Cameron (3): Who. Oh, well,

[01:12:13] Cameron: yeah. Okay. But. Um, you know, they land on the, they’re, it’s, actu­al­ly I love this. The open­ing scene is, uh, the, the astro­nauts, uh, head­ing back to earth from some­where. They’re all in cryo except for Charl­ton Hes­ton, who’s dic­tat­ing his notes into his, like, cap­tain’s log while smok­ing a cig­ar. In a rock­et ship, which is quite a small rock­et ship.

[01:12:46] Cameron: Now, being a, uh, occa­sion­al cig­ar smok­er, I had one New Year’s Day with Chrissie’s, like the first one I’d had in maybe six months. I’ve got one left from our 2020. 2022 trip to the US that’s been sit­ting in the humi­dor ever since. But, you know, they give off a lot of smoke. I don’t know. What, maybe they’ve got

[01:13:07] Tony: oxy­gen rich envi­ron­ment too, prob­a­bly.

[01:13:10] Cameron: Maybe they had real­ly good vent­ing envi­ron­ments, a real­ly good vent and the thing, but any­way, he goes where we’ve been away, you know, if the sci­en­tists are cor­rect, 700 years will have passed. Then they wake up out of, Cryo. Some­thing’s gone hor­ri­bly wrong. They’ve crashed. They’re sink­ing in a lake. They have to get out.

[01:13:29] Cameron: He takes a quick look at the clock and it’s, uh, you know, the time, um, time meter, and it says it’s the year 3, 900 or some­thing. And he assumes that they’ve gone off course and they’ve crashed near Beetle­juice or some­where like that. Not Michael Keaton’s Beetle­juice, but anoth­er bit of the actu­al stuff.

[01:13:48] Tony: And it just hap­pens to have a lake.

[01:13:50] Cameron: Hap­pens to have a lake and it’s quite obvi­ous­ly Utah. I was like, well, why is he going, holy shit, we land­ed in Utah. This plan­et looks like Utah. Hey, Chris, he goes, well, back in then, back in the six­ties, peo­ple did­n’t get out and see as much. I go, yeah, but he’s seen a John Ford West­ern.

[01:14:08] Cameron: It’s all, they’ve all been shot in, you know, um, Mon­u­ment Val­ley and places like that. You go, Oh, this looks like a John Ford. Any­way. Um, Still does­n’t twig, then gets cap­tured by the apes, who all speak Eng­lish with an Amer­i­can accent, and when he writes in Eng­lish, because he’s dam­aged his throat, he gets shot in the throat, he can’t speak, they can under­stand his writ­ing.

[01:14:33] Cameron: Still does­n’t twig, that he’s on Earth. Like, like that nev­er sees humans. Does­n’t, does­n’t twig, that he’s on Earth. Not until he sees the Stat­ue of Lib­er­ty at the very end, that he goes, God damn you all. It was here all along. Like, come on, dude, for, for, for a bloody astro­naut, you’re a lit­tle bit slow on the uptake, but I like the fact like his, his per­for­mances over the top, but he’s very sort of mis­an­throp­ic.

[01:15:03] Cameron: Hates humans. That’s why he became an astro­naut because he hat­ed human­i­ty. Like, I don’t know about NASA’s cri­te­ri­on for being an astro­naut in the late six­ties, but pret­ty sure if you hate peo­ple, you don’t get through the selec­tion process to be trapped on a rock­et ship with peo­ple for sev­er­al years.

[01:15:21] Cameron: Any­who. He’s

[01:15:22] Tony: a team, not a team play­er. And I think he, from mem­o­ry, he’s. I think, but does­n’t one guy not make it out of the space­craft and gets ground and the like, and the oth­er guy gets cap­tured by the launch engine and gets

[01:15:33] Cameron: runned off? There’s three guys and a woman who they were going to all use to pro­cre­ate with, he tells some­body lat­er on, when they arrived at what­ev­er plan­et they were sup­posed to be arriv­ing to, but we don’t know why they did­n’t arrive because they were head­ing back to Earth or what­ev­er.

[01:15:50] Cameron: Or maybe they, yeah, what­ev­er. But they, um, uh, she

[01:15:55] Tony: Okay. I always thought They thought they’d land­ed on the plan­et they were head­ing to.

[01:16:00] Cameron: Well, it could be that. Yeah. Maybe he just said that 700 years had passed, but they weren’t return­ing back to Earth. Maybe I mis­un­der­stood that at the begin­ning, but her cry, when they, when they crashed, they check her cryo tube and she’s looks like she’s a mum­my.

[01:16:14] Cameron: So it had gone wrong. The three guys escape. And then one gets killed by the apes, one gets lobot­o­mized by the apes, and he’s the last one stand­ing. But then lat­er on he decides he’s going to be the pro­tec­tor of human­i­ty and he’s going to fight for the humans and, you know, some­thing, some­thing, some­thing, any­way.

[01:16:35] Tony: He hates apes. He hates apes worse than he hates human­i­ty.

[01:16:38] Cameron: Yeah, the Dirty Apes, yeah, yeah, yeah. Get your

[01:16:41] Tony: paws off me, you damn

[01:16:43] Cameron: Dirty Apes. But the sec­ond film, Beneath the Plan­et of the Apes, just, like, he’s a, he’s a small part of that one. It’s got anoth­er main char­ac­ter, it’s anoth­er human astro­naut who fol­lowed his tra­jec­to­ry, hap­pened to land almost exact­ly where he did in Utah, and then the, the mute human that Charl­ton Hes­ton had rides off into the sun­set with, Nova, had been sep­a­rat­ed from him and stum­bles across The new human, who looks a lot like a younger Charl­ton Hes­ton, and um, hap­pens to be wear­ing his dog tags, so the oth­er guy knows that she knows him any­way.

[01:17:19] Cameron: And then there’s all this psy­chic, spir­i­tu­al, meta­phys­i­cal stuff that gets, it’s all very, and they’re wor­ship­ping, there’s this under­ground human cult that wor­ship an atom bomb that has some­how sur­vived 2000 years, and they’re gonna det­o­nate it with crys­tals that they seem to have got from Christo­pher Reeve’s Fortress of Soli­tude.

[01:17:37] Cameron: Um, it’s all, yeah, very, very trip­py sort of a thing.

[01:17:43] Tony: I got­ta say, Charl­ton Hes­ton made some great sci fi movies back then. The Omega Man, was that one of

[01:17:49] Cameron: his?

[01:17:50] Tony: Yeah, it was­n’t, I think that’s the worst of the ones he made, but um, Soil and Green, that’s a crack­er of a movie.

[01:17:56] Cameron: Haven’t seen that since I was a kid.

[01:17:58] Cameron: Yeah, I remem­ber lik­ing it as a kid though.

[01:18:00] Tony: And then plain­tiff of the act was also great too, I thought.

[01:18:04] Cameron: Yeah. So it held up real­ly well. Yeah. Then he joined, um, yeah, the nra, the NSA, he went from NRA, well, he went, oh yeah, that’s right. Not as n , NRA from NASA to the NRA. Yeah. I’ve also been watch­ing, uh, the Goonies in space based on your rec­om­men­da­tion.

[01:18:21] Tony: Oh, have you?

[01:18:22] Cameron: Yeah, with

[01:18:23] Tony: Fox.

[01:18:25] Cameron: Oh yeah, that too, yeah. Uh, it’s good, yeah, real­ly. It’s fun. Yeah, yeah. Is Fox lik­ing

[01:18:32] Tony: it?

[01:18:32] Cameron: Lov­ing it, yeah. He said, I don’t know what’s going on. Yeah, me either. I have no idea what’s going on, man. But, uh, it’s fun, you know. I’m dig­ging it. But the big thing this week for me was watch­ing Jensen Huang’s keynote at CES.

[01:18:50] Cameron: Okay. The CEO of NVIDIA. Did you catch any of the NVIDIA CES news?

[01:18:55] Tony: No.

[01:18:56] Cameron: Oh my god, man. Like, you know, I’ve been read­ing Kurzweil for 30 years. Um, we are in the mid­dle of what Kurzweil’s been pre­dict­ing. So, one of the 10 things that he announced at CES was their new AI plat­form, the B200. The B200. Built on the Black­well GPUs.

[01:19:20] Cameron: So about a year ago, they announced the new GPUs, the Black­wells. This new plat­form has 8 NVIDIA Black­well GPUs, 1. 4 ter­abytes of GPU mem­o­ry space, 72 petaflops of train­ing per­for­mance, 144 petaflops of in game per­for­mance, Influ­ence per­for­mance. I ran the num­bers through GPT after­wards. So the cur­rent, all of the ai, um, imple­men­ta­tions out there, j you know, open AI and, and Google stuff.

[01:19:59] Cameron: And Entrop­ic and X AI are all built most­ly on the A one hun­dreds that came out, I think 2020 orig­i­nal­ly, 20 20, 20 22. In that peri­od they were pro­duc­ing them. Um, this B 200. It’s per­for­mance increase on the A100? is 67. 7 times. Now Moore’s law used to pre­dict a dou­bling every one to two years. This is near­ly a 70 times improve­ment in a few years.

[01:20:39] Cameron: Jensen said, we’re not, we’re not just rewrit­ing Moore’s Law. We’ve smashed it and we’re writ­ing some­thing new right now. They announced a 3, 000 PC that will be able to run an entire LLM. Some­thing that you would have had to spend, you know, 10 mil­lion on a cou­ple of years ago. They’re com­ing out with it in May, a 3, 000 PC.

[01:21:08] Cameron: You can train an LLM on it. They’re com­ing out with a 12, these are US dol­lars, 12. 99 lap­top that you can train an LLM on. They’re, they’ve come out, the new ver­sion of their in robot slash in car AI sys­tem, which can run an AI on it. They’re com­ing out. Um, they’re, he said they’re in full pro­duc­tion. Their cur­rent ver­sion is the stan­dard in most of your, um, autonomous vehi­cles.

[01:21:37] Cameron: This one is, I think he said, uh, 20 times as pow­er­ful. There’s the one that’s avail­able cur­rent­ly today and they’re already in pro­duc­tion. Um, it, they just blew, they just blown away all of the growth num­bers and this stuff. The tech, he said they got, you know, their AI. So they’re build­ing, they’ve got their, oh, and there’s the oth­er thing, they launched their soft­ware, it’s called World.

[01:22:05] Cameron: They’ve, it’s been trained on some­thing like 21 tril­lion hours of video. Um, it’s their basic AI train­ing plat­form that you can run on all of the stuff. They’re giv­ing it away for free on top of all of their hard­ware to train AIs on from robots through to, you know, every­thing. Their pack­age is just going to be avail­able for free.

[01:22:27] Cameron: Um, And they’re using their AI to, to design the next iter­a­tions of the plat­forms, the chipsets. So it’s just, you know, Kurzweil has always pre­dict­ed you get to that part of the expo­nen­tial curve and it just explodes. I was watch­ing, yeah, I was watch­ing this thing, like, quite lit­er­al­ly with my mouth agape.

[01:22:53] Cameron: Just shak­ing my head. Like, even though I’ve been read­ing this stuff for 30 years, to be liv­ing through it and watch­ing these announce­ments is mind bend­ing stuff. What we’re, what we’re actu­al­ly doing now, to see it come true in my life­time is mind bog­gling.

[01:23:14] Tony: So is NVIDIA pro­duc­ing lap­tops for its own hard­ware, or is it going to put its chips into Oth­er man­u­fac­tur­ers hard­ware?

[01:23:21] Cameron: Uh, they’re com­ing out with their own. I mean, I, I assume they’re not fab­bing the whole thing them­selves. I’m assum­ing they’re part­ner­ing with some­one. I did­n’t, I don’t think he men­tioned that. I did­n’t, uh, drill down into it. But who’s man­u­fac­tur­ing the stuff? Prob­a­bly get­ting it built out of. Chi­na, like every­body else, which, and they’re fight­ing, you know, Biden admin­is­tra­tion’s just come out with their new iter­a­tion of, you can’t sell the good shit to Chi­na law.

[01:23:47] Cameron: And NVIDIA put out a press release say­ing, this is bad. This is going to wreck Amer­i­can com­pet­i­tive­ness in the world. You can’t do this. Um, they’re one of many par­ties that are push­ing back on the Biden admin­is­tra­tion. So we’ll see what Trump does when he gets in. Because it’s a big chunk of the glob­al mar­ket that they’re not allowed to sell this stuff to now.

[01:24:08] Cameron: So it’s going to hit their rev­enues. But also they’re basi­cal­ly say­ing if Amer­i­can com­pa­nies aren’t pro­vid­ing the back­bone for all of this rev­o­lu­tion, then Chi­nese com­pa­nies will be, and it then becomes the stan­dard. And you know, Chi­na is doing fan­tas­tic. There’s a, Chi­na, Chi­nese AI called QUEN, Q U E N, that has just launched a thing today where you can pre train, no not pre train, you can train, post train your own AI, they’re say­ing for 500 bucks on, on their sys­tem, you can run it on for 500 bucks on some­thing.

[01:24:46] Cameron: Chi­na, Chi­na’s catch­ing up. Uh, very quick­ly, um, to the U. S. on a lot of this stuff, they’re going very, very hard. It would­n’t sur­prise me if they over­take the U. S. I mean, OpenAI’s got a bit of a lead and Chi­na can’t buy the NVIDIA stuff, so they’re hav­ing to get their own, their own stuff and they can’t get out of Tai­wan and all that kind of jazz, but any­way, it’s, um, it’s crazy time, man.

[01:25:17] Cameron: It’s crazy, crazy time.

[01:25:19] Tony: So I’ll show these buy NVIDIA and short lap­top pro­duc­ers. Microsoft and Apple.

[01:25:27] Cameron: Well, no, I don’t know that these, um, Nvidia lap­tops are going to be good for any­thing oth­er than run­ning an AI on, but, um, they’re not going to have oth­er, you’re not going to be able to run win­dows on it or an OS or Lin­ux nec­es­sar­i­ly to do any­thing else.

[01:25:44] Cameron: You’d just be able to, you’d prob­a­bly be able to run some ver­sion of Lin­ux in order to run the AI. Um, train­ing soft­ware on, I guess, but it’s, um, yeah, like every, um, hard­ware plat­form will have these sorts of chips run­ning in them in the next few years, you will have AI capa­ble Chips in every­thing, from your Room­ba through to every­thing else, that can ben­e­fit from an onboard local AI, not some­thing that needs to talk to an AI in the cloud, some­thing that does most of the infer­ence local­ly, and only needs to call out to the cloud in You Cer­tain sit­u­a­tions and cir­cum­stances, but, um, yeah.

[01:26:42] Cameron: So yeah. And there’s a thing, you know, the, the, one of the goals in AI has been what they call AGI, Arti­fi­cial Gen­er­al Intel­li­gence, which most peo­ple define as when the AI can do every­thing. As good as, if not bet­ter than any human in that domain. So bet­ter doc­tors than doc­tors, bet­ter math­e­mat­ics than math­e­mati­cians, bet­ter sci­ence than sci­en­tists.

[01:27:13] Cameron: And there’s been a change in just the last month in AI lead­er­ship cir­cles, peo­ple who are work­ing in open AI and Google and Anthrop­ic places like that, where they seem to be infer­ring that it’s done. Like, not that it’s built, but they now know how to build it, and they’re con­fi­dent that they’re going to blow through it.

[01:27:39] Cameron: Now they’re talk­ing about ASI, is what they’re focus­ing on now. AGI is basi­cal­ly done. It’s, they fig­ured it out, how to do it. It’s just, they’re prob­a­bly just wait­ing on com­pute capa­bil­i­ty, big­ger data cen­ters. Um, they’re now focus­ing on how to get to ASI, super intel­li­gence. But, uh, Yeah, it’s a weird time, man.

[01:28:02] Cameron: It’s a weird time.

[01:28:05] Tony: All that pow­er and I don’t need Elon and Don­ald to look after us. It’s gonna be strange.

[01:28:13] Cameron: You see that, uh, Ban­non has now made it his mis­sion to take down Elon?

[01:28:20] Tony: No, I thought he was get­ting behind Elon’s push to con­ser­va­tize the Euro­pean con­ti­nent.

[01:28:27] Cameron: No, Ban­non, who’s not part of the Trump team any­more but is sort of MAGA aligned, has come out in the last cou­ple of days and said Elon is fas­cist and evil and he’s made it his mis­sion to bring him down.

[01:28:41] Cameron: So MAG is con­tin­u­ing to tear itself apart. Um, how was, how was he going to bring Elon down? I don’t know, but when Steve Ban­non calls you evil, Yeah, it’s like, it’s like Hitler going, you know, that guy, that guy’s real­ly bad.

[01:29:00] Tony: Oh

[01:29:03] Cameron: God. Hitler would have

[01:29:05] Tony: called some­one evil for sure. Churchill, I guess, or Stal­in.

[01:29:08] Cameron: Jews, most­ly. Jews, yeah, the, the Jew­ish bank­ing car­tels. Um, yeah, I don’t know, man. It’s a fas­ci­nat­ing time to be alive.

[01:29:22] Tony: Yeah, I’m glad you’re keep­ing me updat­ed cause I don’t. I haven’t come across much of this stuff at all in my read­ing.

[01:29:29] Cameron (3): Yeah. Yeah.

[01:29:33] Tony: And I guess I’ll wake up one day and I’ll be a pet.

[01:29:39] Tony: A bug.

[01:29:40] Cameron: Yeah. Well, it could play out in a num­ber of dif­fer­ent ways. Yeah. We’ll see.

[01:29:47] Tony: Like I said, it’s lucky we’ve got Don­ald and Elon to help us all play out to our advan­tage.

[01:29:54] Cameron: Well, you know, I’ve come to the con­clu­sion that, and the oth­er thing, obvi­ous­ly, you see what’s hap­pen­ing over there is all of the tech lead­ers now are get­ting behind the Trump Musk thing, and Uh, I think they all have come to the con­clu­sion that this is it.

[01:30:16] Cameron: This is the end of times. This is the speed run to the fin­ish line. Oh yeah. I mean, if, if we’re look­ing at AGI in the next year or two, and ASI at some point close­ly on the heels of that, we’re enter­ing the world of, uh, You know, mas­sive­ly intel­li­gent machines and robots run­ning those things, that this is, this is it, like, this is the last five to ten years of life as we know it, and it’s, it’s a speed run to the end, no one knows what’s going to hap­pen, um, when we get there, but they want to be in a posi­tion to, you know, have a good, um, Decent chance of sur­viv­ing, play­ing some role, doing some­thing, being on the arc, yeah, yeah.

[01:31:07] Tony: Uh,

[01:31:09] Cameron: and, you’re prob­a­bly

[01:31:10] Tony: right, but I think from what I can see, peo­ple like uh, Meta, Zucker­berg, is just, they’re just using Trump as a way to reduce their costs.

[01:31:20] Cameron: Yeah, that’s, that’s a big part of it too. But, um, you, you add to that, the amount of mon­ey that they’re all sink­ing into this, yeah, like insane amounts of mon­ey.

[01:31:33] Cameron: They’re, they’re putting into all this sort of stuff now and it’s like bat­ten down the hatch­es, we’re going for it. And I think Elon, It’s hard to know how much of what he says to take at face val­ue, but I think he thinks this is the end run and he is going to do what­ev­er he has to do to be the guy who’s run­ning things in, dur­ing the end run, because he sees him­self as the tech­no mes­si­ah.

[01:32:01] Cameron: Uh, he’s. Tech­no Jesus, um, South African Jesus.

[01:32:07] Tony: I don’t know if it’s an Enron, but I think he’s always been that way. He’s just an oppor­tunist who’s see­ing a chance to get up anoth­er one up in, um, in the cor­po­rate world. He’s already the world’s rich­est man. He’s not going to give that up eas­i­ly. Yeah. Yeah. I guess you don’t get there by not engag­ing with politi­cians or con­trol­ling politi­cians.

[01:32:28] Cameron: Yeah. He’s remov­ing all of the obsta­cles right now. Yeah. Yeah, gov­ern­ments, you know, maybe his com­pe­ti­tion, we’ll see what hap­pens.

[01:32:39] Tony: Oh yeah, he’s in it for him­self, for sure.

[01:32:41] Cameron: Yeah. Whether or not he has a big vision for human­i­ty that he wants to shep­herd through or not remains to be seen.

[01:32:51] Tony: We’re going to be on the Tes­la pro­duc­tion line.

[01:32:53] Cameron: Robots will be far more cost effec­tive than humans. Robots will

[01:32:56] Tony: be lash­ing us.

[01:32:57] Cameron: Oh, right. Yeah.

[01:33:00] Cameron (3): Okay. Why,

[01:33:01] Tony: why pay 10, 000 for a robot when you can feed me six grains of rice a day and get me to build a Tes­la? Our over­lord. Our glo­ri­ous

[01:33:09] Cameron (3): over­lord. Well, we

[01:33:12] Cameron: have all this to look for­ward to.

[01:33:14] Tony: Yeah. It’s fun, isn’t it?

[01:33:15] Cameron: Yeah. Thanks TK. Have a good week. You too. Two weeks. Have a good two weeks. Yeah. Two weeks.

[01:33:21] Tony: Yep. Thank you.

[01:33:22] Cameron: Have a good two weeks.

[01:33:25] Tony: Thank you.