QAV 818 — Buffett’s Last Dance

QAV AU 817 CLUB

Cameron: [00:00:00] Wel­come to QAV Aus­tralia, 6th of May, 2025, 1 42 the pm tk Big elec­tion. What did you think of the elec­tion results? Hold on. No, before we get to that, I don’t, I, hold on. I’ve got a pre, pre sto­ry I’ve got­ta do. Before we do that, I near­ly for­got. Um, this is a, this is, um, trag­ic sto­ry actu­al­ly from QAV mem­ber Ben who reached out to me dur­ing the week I just want­ed to give Ben’s, um, sto­ry, a bit of a plug here.

He says, my nine month old son was diag­nosed with an extreme­ly rare genet­ic dis­or­der about five months ago. Unfor­tu­nate­ly, it is a real­ly hor­ri­ble dis­ease that’s pro­gres­sive with no cure and ulti­mate­ly will be fatal for him at a young age. I’ve put our web­site below if you’d like to read more about his con­di­tion.

So, um. had a bit the, the web­site is CURE as one [00:01:00] cureasone.org.nz. They’re try­ing to raise funds to look into research for this con­di­tion. It’s called the ECHS1 defi­cien­cy. It is a very rare dis­ease. Um, I think there’s about a hun­dred peo­ple a year that get diag­nosed with it, and 10 of those are in this one town in New Zealand where Ben and his fam­i­ly live.

So it’s, uh, real­ly trag­ic and bizarre. It says on the web­site, um, this con­di­tion is caused by muta­tions in the ECHS1gene, which leads to prob­lems in ener­gy pro­duc­tion with­in cells, in the mito­chon­dria. with ECHS1 defi­cien­cy often expe­ri­ence severe neu­ro­log­i­cal issues, devel­op­men­tal delays and mus­cle prob­lems when they are [00:02:00] babies.

That could be siege dys­to­nia, which are painful mus­cle con­trac­tions, severe devel­op­men­tal delay, hear­ing loss, dam­age to the optic nerve in the eyes, and fail­ure to thrive because their bod­ies starve them­selves. Ben did­n’t ask me to pro­mote it, he just asked me to pause his account while they go and deal with this, and I said, Hey, would you like me to give it a plug on the show?

He said, that’d be love­ly. So, um, you know, we’ve got a num­ber of well-heeled peo­ple who might like to con­tribute and help out, so I just sort, I’d throw that out there. It’s a, I mean, I, you hear sto­ries like this and always makes me dou­bly grate­ful that, uh, all of my chil­dren are healthy. Um, you know, okay, so they’re tik­toks, but, uh, out­side of that,

TK: Rel­a­tive­ly healthy, rel­a­tive­ly healthy.

Cameron: all seri­ous­ness, like it’s,

TK: Yeah,

Cameron: I mean, it’s, it’s gut­ting to hear these sto­ries

TK: is.

Cameron: with babies [00:03:00] with these sorts of things. So, um, if you can help out cure as one.org.nz,

TK: Yeah, thanks Ben. Thanks for shar­ing your sto­ry. Um, I, I echo Cam’s sen­ti­ments. I don’t know how many times gone to bed. Grate­ful for the fact that Alex is healthy. Even, you know, as a young adult you still, thoughts still go to what could hap­pen, um, which is nev­er pleas­ant. Um, so yeah, real­ly sor­ry to hear that Ben.

And all the best mate. Good luck.

Cameron: Well, some­body who, who does­n’t, isn’t gonna get a cure is Peter Dut­ton. Um, Peter Dut­ton is, uh, I don’t know, I haven’t seen him, haven’t seen him around. His bill­boards are still up all over my neigh­bor­hood, but, uh, I seen the last of him. So what did you think of the elec­tion result, Tony?

TK: Oh, I was hap­py to cash in on my bet can sev­en to one, that labor would form a major­i­ty gov­ern­ment. So, uh, no [00:04:00] indi­ca­tion of how I thought about the pol­i­cy, I just thought that the odds were wrong in that mar­ket. I think it’s, you know, it’s, I think Rod­dy said that best. He said it was heart­warm­ing. regard­less of who you sup­port in pol­i­tics, I, I, you know, the, the fact that Aus­tralians on Mass has reject­ed Sky News and the Mur­doch Press, Her­ald Sun, the Syd­ney Tele­graph, the Couri­er Mail, the Stoke Press and wa I think is heart­en­ing. a vic­to­ry for com­mon sense in my opin­ion. Um, and, uh, yeah, uh,

Cameron: me after the, the no vote, um, on the, the, the voice thing. And you know, we seem to be mov­ing fur­ther to the right and you know, I’ve been say­ing for, I. Decades. I don’t want us to end up like the Unit­ed States and

TK: Mm-hmm.

Cameron: that way. It was, uh, real­ly heart­en­ing to see Aus­tralians go, Hmm, maybe not.

TK: [00:05:00] Yeah, and

Cameron: that’s not where we wan­na be.

TK: Jen­ny and I went to an elec­tion din­ner on Wednes­day night as a guest of, um, Alex Hay, our stock­bro­ker. does it every fed­er­al elec­tion. And, um, it’s a great time to catch up with peo­ple in the, in the funds and man­age­ment indus­try in Mel­bourne. and Alex has some friends who are poll­sters and, uh, some­one who oper­ates a bet­ting agency.

He’s a CEO of a bet­ting agency. So they all get up and take you through the polls and what’s gonna hap­pen and their pre­dic­tions and, and all the rest. And it was real­ly clear from both, from sort of one par­tic­u­lar slide that stood out from the poll­sters that. When the, uh, when to the, the voice ref­er­en­dum, Peter Dut­ton had a, um, a lead over albanese after the voice ref­er­en­dum went down, that lead just split.

It was, it was great­ly exag­ger­at­ed in favor of Dut­ton. After the elec­tion of Trump, it start­ed to nar­row. After [00:06:00] lib­er­a­tion day it crossed, and with a week to go on the polls, it was going straight up one way and straight down the oth­er way. so it’s, you know, I think only, not only, you know, did those sort of three key things hap­pen dur­ing the elec­tion cam­paign, also I think it’s been my sort of per­cep­tion that Aus­tralians can sniff a trend. And in the last week of an elec­tion cam­paign, you were waver­ing on where to vote, you’re prob­a­bly gonna vote with the per­son you think will win just to be part of the. The I guess, or to be on the win­ning side or what­ev­er. I’m not sure what the psy­chol­o­gy is, but I’ve seen it hap­pen before, it real­ly hap­pened in a big way in this elec­tion. and, and to look at the bet­ting odds, they went to some­thing like the start of the cam­paign, um, labor form­ing minor­i­ty gov­ern­ment, uh, major­i­ty gov­ern­ment was, well, $7, to lib­er­als win­ning $9, um, as of last Wednes­day night at this elec­tion, [00:07:00] din­ner and labor win­ning like a dol­lar or some­thing.

So it was a real clear switch around after lib­er­a­tion day.

Cameron: Yeah, I read in the Fin just this morn­ing, the lib­er­als lost the female vote across all age groups in 20 22, 18 to 30 fours, 35 to 50 fours, and over 50 fives, includ­ing against female can­di­dates and well healed or elec­torates. They also lost peo­ple aged under 55 met­ro­pol­i­tan res­i­dents in the pro­fes­sion­al class.

And they were say­ing that it did­n’t improve this time. They did­n’t make any of, they had like a, a, um, what do you call it, a, a.

TK: Post­mortem.

Cameron: Post-mortem. Thank you. On last time they had a whole bunch of rec­om­men­da­tions of what they need­ed to do to fix it, accord­ing to this arti­cle in the Fin, all the strate­gists say­ing they did­n’t, they did­n’t do any of it,

TK: cor­rect.

Cameron: prob­a­bly, it’s prob­a­bly gonna look the same when the dust set­tles on.

This one says the par­ty sup­port­er [00:08:00] base is now dom­i­nat­ed by men aged over 55, and I don’t turn 55 until Octo­ber, I’ve got a few months left where I don’t have to vote lib­er­al. So I’m hap­py about that.

TK: Well, you might only have a few years left where you can vote lib­er­al. I mean, that’s the inter­est­ing thing. Uh, when does the, the strat­e­gy of going to the right and tar­get­ing, um, the edge of our cities and, and the sort of peo­ple who live there has only got a cer­tain shelf life before it bumps up against the Nation­al Par­ty who held all their seats in the rur­al areas.

So, you know, as part of the 2022 analy­sis and as part of this analy­sis, the answer’s got­ta be, I. Get more women in par­lia­ment, get more women stand­ing for Par­lia­ment and start to address issues like cli­mate change and, um, oth­er issues that, that female that are impor­tant to edu­cat­ed females and, and take on the teals. I know they’ll say they did that in a cou­ple of cas­es, [00:09:00] but you’ve got­ta have poli­cies to back that up. The whole flip on, you know, we’re gonna, we’re gonna force peo­ple back to work and then Oh no, we’re not. When we find out that women like it, um, just was a, was a bul­let in the foot. Um, and, and just showed what you were say­ing that the, the elec­tion strat­e­gy was, was real­ly the elec­tion strat­e­gy for did­n’t Dixon Red Large did­n’t work in Dixon. You know, Peter Dut­ton lost his seat. Um, and it did­n’t work for Aus­tralia.

Cameron: Okay.

TK: uh, it was a, it was actu­al­ly a real­ly, I thought, a real­ly gen­er­ous con­ces­sion speech by Peter Dut­ton. it was telling him that got up and said he, you know, he’s, he’s hon­ored to be par­ty leader, et cetera, and to run for Prime Min­is­ter, but the whole of his career was being a defense min­is­ter. I thought, yep, that’s exact­ly where your mind is at. It’s immi­gra­tion, it’s bor­ders, it’s polic­ing, they’re impor­tant issues. But the poll­ster’s said on Wednes­day night, the top five issues in this elec­tion were all cost of liv­ing, [00:10:00] rates, cost of ener­gy, cost of elec­tric­i­ty, et cetera, et cetera, fuel prices, what­ev­er. So, um, you know, to, to not have poli­cies to direct­ly address that and keep ham­mer­ing. It was a, a mis­step, a fatal mis­step.

Cameron: Yeah, the top pol­i­cy for me was what are we gonna do about AI in the next five to 10 years when it gob­bles every­thing up? no one was talk­ing about that. No one, not

TK: Well,

Cameron: not

TK: you, you talk enough about it.

Cameron: Maybe I should run.

TK: Yeah. Um, maybe you should, although you’re a 55-year-old white male, so I

Cameron: I’m

TK: have, you have to run for the lib­er­als. Yeah. You have to move out to the coun­try. but I, I, I don’t wan­na let the Labor par­ty off the hook here. Um, that they may have a major­i­ty in the Sen­ate. Um, they cer­tain­ly have an over­whelm­ing major­i­ty in Par­lia­ment, which prob­a­bly gives them two terms, not just one. Um, that remains to be seen. But I real­ly hope [00:11:00] this is secu­ri­ty in the elec­toral process for them to give them the spy­ing to be able to, uh, real­ly go after tax reform prop­er­ly and pro­duc­tiv­i­ty reform prop­er­ly. There are areas which are always gonna hurt. One con­stituen­cy in the elec­torate, but if you’ve got a fat mar­gin, this is the only time you can do it.

So I hope they tack­le those two issues. I also, you know, the, the one issue that’s on the books, which, um, I hope they change is to tax unre­al­ized gains in super­an­nu­a­tion funds. That’s a mis­take. Um, I’m hop­ing that they’ll go ahead with the extra tax on large super funds. I’m not, not hop­ing they do that. I, I hope they do that and that only, and that they drop the part which says that you have to pay tax on unre­al­ized gains because nowhere else, in the tax sys­tem, nowhere else in the world that, that I can think of does that. And it’s a mis­take. It’s a mis­take for some­one who has, illiq­uid assets in the super fund.

Like a, you know, they’ve grown a busi­ness, their own busi­ness in the fund [00:12:00] or their farm, or they put some, um, prop­er­ty in there hav­ing to. with a tax bill for and not have div­i­dends to pay for it or inter­est income to pay for it or any oth­er sort of income to pay for it is a mis­take. So hope­ful­ly they’ll see a sense on that one too.

Cameron: But they, but they need the rev­enue now, not when they sell the asset. Gov­ern­ment needs the rev­enue now. To pay for stuff.

TK: Yeah, but, but you only in like, well, we’ll talk shares in the share mar­ket, you only pay cap­i­tal gains tax when you sell the shares.

Cameron: Mm-hmm.

TK: that’s, that’s, that’s the same as it cur­rent­ly works in super­an­nu­a­tion. What, what, what the, what the a LP is pro­posed to do for super­an­nu­a­tions if you’re over a cer­tain bal­ance, and that’s, I think that may have moved a bit, it was 3 mil­lion.

Some peo­ple are talk­ing about 2 mil­lion. You have to pay extra tax. if, if, um, even if you hold shares and you haven’t trad­ed in 12 months, if those shares are now worth more this year than last year, taxed on the unre­al­ized gains. So you’ll have to sell[00:13:00]

Cameron: Hmm.

TK: to pay the tax. So it’s just, it’s not a work­able sce­nario.

It’ll just end up in, peo­ple own the tax office, large amounts of mon­ey, and if a tax office to go after them, it’ll bank­rupt peo­ple. They’ll have to sell some­thing they did­n’t wan­na sell, um, which could be a fire

Cameron: that’s, well, okay, but that’s not bank­rupt­ing peo­ple. You just sell the shares and pay the tax,

TK: No, it may not bank­rupt peo­ple, but some peo­ple it will, they may have to sell, it may have gone up this year, but it may still be a neg­a­tive, hold­ing for them. For exam­ple, you know, our shares can go back­wards water and in the last 12 months have turned up and, and be an unre­al­ized gain. Actu­al­ly, no, they can’t.

The cost base is no, they can’t be an unre­al­ized gain. Yeah, no, true.

Cameron: Look, I, I’m no expert on it. Um, I did know you were gonna talk about it though. I had in my notes I knew you were gonna arc up against about that ’cause you did last time. Um, [00:14:00] but, uh, any­way, I, the, you know, I, I remem­ber when I. Oba­ma won in the US and every­one was talk­ing about how the demo­graph­ics in the US had changed for­ev­er.

black and Lati­no vot­ers, young peo­ple, vot­ers, the the GOP was done for it was gonna have to com­plete­ly rein­vent itself, et cetera, et cetera. It was nev­er gonna win anoth­er elec­tion, and I guess it did rein­vent itself first through the Tea Par­ty fund­ed by the Koch broth­ers, which then merged into Trump’s MAGA move­ment.

So par­ties can come back from this kind of a

TK: Mm-hmm.

Cameron: all the analy­sis in the last cou­ple of days has been say­ing that I’ve seen, says all the demo­graph­ics have changed, lib­er­als are done, the coali­tion has done. Um, and I’m like, eh, we’ll see what hap­pens. And

TK: No, I

Cameron: just went fur­ther and to the crazy [00:15:00] right.

But some­how man­aged to build a broad enough church around the cra­zies that, uh, they, they dom­i­nat­ed. So we’ll see.

TK: And there’s cer­tain­ly peo­ple out there say­ing that was, that’s the solu­tion, is to go fur­ther to the right and, and take votes off one Nation and trum­pet of Patri­ots and all those kinds of peo­ple.

Cameron: Trum­pet of Patri­ots did­n’t get any votes, but yeah, like one

TK: Well, would they get 3%? One Nation got 11, I think so there’s 14%. Yeah. Which may be enough to get them back into a race again. So, um, I hope they don’t do that. Um, for the rea­sons that we’ve seen in the us I don’t think that’s the solu­tion. you know, Gina Rein­hardt was quot­ed in the paper today say­ing that, um, the rea­son why the lib­er­als lost is they did­n’t adopt Don­ald Trump’s poli­cies because they were scared of the left media.

Cameron: Yeah,

TK: That’s her point of view. And, you know, some of her points are quite valid about, um, gov­ern­ment, you know, [00:16:00] red tape and uh. Intru­sion and, and low pro­duc­tiv­i­ty. But I don’t think adopt­ing Trump’s poli­cies is a solu­tion to that. Again, there’s, you can, you can tack­le prob­lems while still hav­ing a lev­el head with­out turn­ing it into the cul­ture wars.

And I think what the Aus­tralians have said to gov­ern­ment, we don’t want cul­ture wars any­more. We want com­mon sense and we want lev­el­head­ed­ness, whichev­er side of pol­i­tics, you, you know, you’re, you’re in. And the oth­er thing that that too, um, I think hap­pened in this elec­tion was the, the lib­er­al lead­er­ship resorts back to past vic­to­ries as a roadmap. And, um, of course the, the big one was, um, John Howard, and I think he’s, he served more terms than, um, any­one since Men­zies, least on the lib­er­al side. And so they use that as a roadmap. And his roadmap was to go to the ex, go to the, um, out­er sub­urbs and to go after the bat­tle of vote. That’s, that’s all fine, but the fact is that. [00:17:00] Peo­ple like Alex who’ve now, you know, turned 26, your boys, don’t know who John Howard is. They weren’t here when John Howard was win­ning elec­tions. Um, so you’re gonna try and revamp an old elec­tion strat­e­gy, at least mod­ern­ize it for peo­ple who haven’t seen it before. it, um, yeah, it did­n’t work for them this time. They weren’t rel­e­vant to a whole new demo­graph­ic of young vot­ers com­ing in, um, who prob­a­bly a lot of them may have, I don’t, haven’t seen the break­downs. I guess a lot of them may have vot­ed inde­pen­dent or vot­ed eel or what­ev­er. ’cause the, the both par­ties had a slide in, in, um, pri­ma­ry votes, which is, it’s got­ta be an issue for the A LP, which they should be address­ing in their post­mortems as well.

Cameron: Mm. Well, noth­ing about that. The big, big, big news that you wan­na talk about. Don’t wor­ry about the Aus­tralian elec­tion. one thing, take it up your brain space. This week.[00:18:00]

TK: Uh, the horse, horse sales on Thurs­day night.

Cameron: Val­ue invest­ing. Jesus is, uh,

TK: The old white guy?

Cameron: War­ren Buf­fet

TK: Yes. Big news.

Cameron: Berk­shire the 60th. Annu­al meet­ing of Berk­shire Hath­away. He announced that he is retir­ing this year. Um, his 60th and final per­for­mance, and to be hon­est, I mean I watched most of his bit

TK: Oh,

Cameron: Char­lie. It’s not the Yeah, yeah. It’s

TK: Okay.

Cameron: Char­lie. Right. It’s just, uh, you know, I keep wait­ing for War­ren to do his bit and they go, what do you think Char­lie and Char­lie hav­ing some Bon Mo at the end of it.

Some punch­line.

TK: Yeah. Greg Abels. No. Char­lie, no.

Cameron: No. Is this the sec­ond year with­out Char­lie or the first, I think it’s the sec­ond right.

TK: It’s,

Cameron: annu­al

TK: sec­ond. Yeah, sec­ond.

Cameron: [00:19:00] Yeah.

TK: he was­n’t there dur­ing Covid ’cause he had, he had to lock down.

Cameron: That’s right.

TK: Yeah.

Cameron: Uh, so well look, it’s um, and War­ren’s sound­ing his age too at 94.

TK: yeah.

Cameron: pret­ty croaky.

He’s walk­ing with a cane, but I watched, I dun­no, maybe two hours of his thing. Like, still incred­i­bly enter­tain­ing, artic­u­late, just ter­rif­ic telling sto­ries about how a Berk­shire Hath­away lab invent­ed the rear vision mir­ror for a rac­ing car. Uh, they used to have a, they used to have two guys in a rac­ing car, one to look behind them, and their guy was sick and could­n’t make it, so they invent­ed the rear vision mir­rors.

It is like, so if you’re won­der­ing what Berk­shire Hath­away com­pa­nies are doing, just invent­ing things like rear vision mir­rors for cars and stuff like that. There’s some sub­sidiary of a sub­sidiary of a sub­sidiary that was involved in it. But yeah.

TK: My favorite anec­dote, I, I haven’t, I’ve only lis­tened for the first half of [00:20:00] it, and it’s avail­able on both pod­cast and YouTube if any­one wants to do your­self a favor and, and sit down to four and a half hours of it. But, um, my favorite anec­dote was, uh, when they were talk­ing about the cash pile that War­ren had built up and some­one asked him from the audi­ence, um, whether there weren’t enough, uh, fat pitch­es to swing at. And, uh, he said, well, yeah, it’s a bit like life. Um, uh, a a 10 year old’s gonna have a low­er chance of dying tomor­row than a 94-year-old. so you don’t always get the same odds every time, the mar­ket, wher­ev­er you are on the mar­ket cycle. and, and then he said, as to longevi­ty, it’s, I also point out that, that fe females live longer than males. I tried to con­vince Char­lie to have a sex change.

Cameron: It is a great line. It was a great line. Yeah.

TK: Uh.

Cameron: kid got up and asked him, said that he’d always advo­cat­ed, um, mov­ing slow­ly and were there [00:21:00] times when mov­ing quick­ly had ben­e­fit­ed them? Have you heard that one?

TK: Yeah, but go ahead. Tell her. It’s great.

Cameron: Well, no. He just says, you know, there are, there have been times when they moved quick­ly about one guy, I think it was the same guy that sold in the com­pa­ny. They end­ed up build­ing the rear vision mir­ror. But, he found a guy that his busi­ness part­ner had died and this guy did­n’t want to do busi­ness with the guy’s wid­ow.

So end­ed up call­ing War­ren and say­ing, Hey, you wan­na buy my com­pa­ny? And they moved quick­ly and did a deal, like in, you know, 10 min­utes with a hand­shake. he said, you know, ba basi­cal­ly they, they moved slow­ly. To build up the cash. So when they need to move quick­ly, they can. That’s basi­cal­ly, it’s not like you always move slow­ly, move slow­ly until you see the rea­son to move quick­ly and then you move quick­ly.

But, uh, it was a good, was like a 20 minute answer to the ques­tion, but it was, it was long mean­der­ing, anec­dote [00:22:00] filled answer. But it was great and I’m gonna

TK: Oh yeah.

Cameron: the end of an era for many rea­sons. But one of them is just that coun­try bump­kin down home soft, you know, just gen­tle, nice man of integri­ty, old school who does busi­ness with his head held high.

And, know, treats peo­ple with respect, uh, expects to be treat­ed with respect. He said some­thing about. You have to be will­ing to hang up with­in 10 sec­onds, but also like close a deal with­in 10 sec­onds as well. He was talk­ing about how Mo most of the peo­ple he just says no to very quick­ly.

TK: Yeah. Yeah, that, that, um, 30 minute

Cameron: quick­ly.

TK: he’s spo­ken about before where he had, says, I asked five ques­tions, and if they can answer those, it’s a deal. So, no one’s, no, he’s nev­er, he won’t divulge what the five ques­tions are. Peo­ple have tried to [00:23:00] work them out, uh, he has five, five ques­tions and, uh, which is amaz­ing.

And he act­ed very quick­ly dur­ing the GFC to, bail out some of the Amer­i­can banks and to be the lender of last resort and to do two very favor­able deals, deals for Berk­shire Hath­away to recap­i­tal­ize some of the banks at, at tremen­dous inter­est rates back to Berk­shire and con­vert­ible note deals. So, yep.

He’s, he’s

Cameron: I. And Greg had a good fol­low up to that too, where he said, you don’t under­es­ti­mate the amount of work that’s hap­pen­ing behind the scenes when we’re mov­ing slow­ly can move quick­ly when the right deal comes. They said there’s like, I can’t remem­ber the num­ber, but there’s like a hand­ful of busi­ness­es that they under­stand real­ly well, and they’re ready to move on

TK: Yeah.

Cameron: the right price, right oppor­tu­ni­ty comes across their table.

So their due dili­gence.

TK: yeah. Sounds like a buy list, does­n’t it?

Cameron: Yeah, they have a buy list. Yeah, exact­ly. They’re just wait­ing for the price to get be ready [00:24:00] and for times to be tough enough that peo­ple come to. But as always, peo­ple asked him about, um, well they asked about ai, uh, I think it was Aji. They asked about ai. War­ren said he would take one ADT over a hun­dred ais some­thing like

TK: For the next 10

Cameron: also said AI’s gonna have a huge impact on the Geico busi­ness, the insur­ance busi­ness. But they also talked about the u the prospects of the us A lot of doom and gloom, obvi­ous­ly about the US mar­kets and the future of the us. And War­ren, as always was very of, um. about the future of the us but then also

TK: Yep.

Cameron: that they’ve, they’ve bought a lot of for­eign cur­ren­cies, so I don’t think he’s as opti­mistic about the future of the US dol­lar, but, uh, yeah.

TK: Well, he, um, made a cou­ple of com­ments and he, he, [00:25:00] um, tries not to be too polit­i­cal, but you know, he, he, he said it does­n’t, it does­n’t, it does­n’t end well if one coun­try beats their chest and says, Hey, hey, look at us. We’re real­ly good. And, uh, the rest of you can, go away. said that, you know, world Trade helps all coun­tries, which I think is a, you know, is true. Uh. Some­one in writ­ing about, I think it was, it was War­ren. Um, but, uh, he, he does like to say nev­er bet against the us and he point­ed out at some stage that the, um, mar­ket in the US had risen from $66 to 11,497. This is a few years ago, I guess, despite two world wars of depres­sion and a dozen reces­sions or shocks and flu epi­demics.

So, know, he’s, always point­ed out the long-term game of, of back­ing the US and the fact that it’s gonna, yeah, prob­a­bly still gonna be around for a while. [00:26:00] I thought

Cameron: Yeah,

TK: though he is invest­ing heav­i­ly in Japan and over­seas, for

Cameron: Hmm. It’s cher­ry pick­ing the era though. I mean, he’s talk­ing about the suc­cess of the US dur­ing the cen­tu­ry when the US was basi­cal­ly the pow­er of the world. I mean, there was no oth­er. Um, com­pet­ing forces in that 100 year peri­od from World War I most­ly. After World War ii, the US did­n’t have any com­pe­ti­tion eco­nom­i­cal­ly or mil­i­tar­i­ly, real­ly.

It just, it had, uh, a, a very emp­ty run­way. And it’s not that ca it’s not the case any­more. It’s not gonna be the case for the rest of this cen­tu­ry.

TK: We’ll see, it’s, um, they’ve cer­tain­ly done well so far, the first 25 years of this cen­tu­ry, stock mar­ket’s up dra­mat­i­cal­ly and they’re fac­ing com­pe­ti­tion. But yeah. Um, maybe it’ll be tougher. I mean, I think they did face com­pe­ti­tion in the first bit of the US in the 20th cen­tu­ry, the end of the British Empire. Um, and, uh, [00:27:00] some parts of Europe any­way, so yeah, was, they had a lot of tail­winds for sure. All, all I’m doing is com­ment­ing on what Buf­fet’s say­ing. They may, they may have dif­fi­cul­ty going for­ward. Um, they may have had head­winds last cen­tu­ry. They still have head­winds. I think they’ll do. Okay.

Cameron: Well, we’ll see. Uh, let me move on and do you Moore? Do you have more

TK: I do, I’ve got some, I’ve got some quotes. Um, yeah, so, uh, let me just go, yeah, so just got, just on that, one of his quotes from the, the annu­al meet­ing was that, uh, he accepts that the Amer­i­can process has not always been pret­ty and is invest­ed with scan­dals and pro­mot­ers. Um, so I think that’s to your, you know, com­ments as well about us excep­tion­al­ism. but despite all that, he still says, don’t bet against Amer­i­ca. Uh, there’s the, there was a, um, a talk about the invest­ment with Apple and Bank of Amer­i­ca. So, [00:28:00] The, the quote is, um, Berk­shire has been sell­ing down its enor­mous stake in Apple and Bank of Amer­i­ca as the pro­ceeds have accu­mu­lat­ed into an enor­mous pile of cash, 536 bil­lion Aus­tralian dol­lars. The ini­tial invest­ment was one of the gravest trades of all time. As the firm, which has Berk­shire Hath­away accu­mu­lat­ed 900 mil­lion shares in the iPhone mak­er and Buf­fet equipped that Apple Chief exec­u­tive Tim Cook, made more mon­ey for Berk­shire Hath­away than he ever did. invest­ment grew from about 35 bil­lion to 173 bil­lion US in about six years. How­ev­er, uh, last year, Berk­shire began sell­ing and reduced its apple stake by two thirds. There was some spec­u­la­tion at the time that the sales were part of a suc­ces­sion plan. Giv­en that buf­fet’s 94 years old, buf­fet did con indeed con­firm that he was step­ping down, but he said he had no inten­tion of mak­ing able, who appar­ent­ly did­n’t know about the suc­ces­sion plan, pri­or to the announce­ment in advance looked good by hand­ing him a wa of [00:29:00] cash, the big liq­ui­da­tion of Apple stock proved jus­ti­fied as trade wars and sup­ply chain con­cerns have since sent the stock down as much as 20%. So I think he said some­thing like, when some­one asked him about the pile of cash, was it set up to make Greg look good? He said, no, I wan­na look good. Um, arti­cle today quot­ing some of the, um, Aus­tralian fund man­agers on, on, I. Buf­fett and I should say, uh, in a, you know, in addi­tion to the com­ments I’m about to read out, if you are lis­ten­ing to this and you haven’t read the col­lec­tive Share­hold let­ters, uh, of Berk­shire Hath­away and you haven’t read the Mak­ing of an Amer­i­can cap­i­tal­ist or the Snow­ball, just drop what you’re doing and go and buy both of those and read them because they are the best course you’ll do in invest­ing. Full stop.

Cameron: Yeah.

TK: Uh, so John Aber­nethy, which is, um, he’s the chair­man of Cli­mate Invest­ment Man­age­ment. [00:30:00] and I’ll declare, I’m a direc­tor of CIW now, um, and have been a, uh, a long time fan of John. Uh, but he said War­ren Buf­fett has an over­whelm­ing sup­ply of com­mon sense that gives him the capac­i­ty to invest both log­i­cal­ly and method and method­ol Of course, com­mon sense does not mean that he always gets, uh, things right, but it does allow him to make con­sis­tent­ly good deci­sions and to quick­ly iden­ti­fy and rec­ti­fy wrong ones. Both of these attrib­ut­es make him a great investor, and impor­tant­ly from a human per­spec­tive, a great men­tor to the invest­ment world through his pub­lished thoughts and let­ters. Um, Andrew Mitchell from Man­age­ment said one of my favorite war apho­risms is I don’t look to jump over sev­en foot bars. I look around for one foot bars that I can step over. When­ev­er a day like Lib­er­a­tion Date tar­iffs come along, I remind myself of Buf­fet’s nev­er waver­ing view of Amer­i­ca and cap­i­tal­ism, and the pos­i­tive [00:31:00] sum game that invest­ing is. That was a quote about, uh, the Dow going from 66 to 11,000. Uh, Chris Pro­ti of QVG cap­i­tal says I was 17 when I bought the War­ren Buf­fet way at Dem­mick and t on Can­ber­ra. I read it imme­di­ate­ly and thought, this is what I want to do. That was my first real intro­duc­tion to the world of stock pick­ing. What I’ve learned from him the most is ratio­nal­i­ty and dis­ci­pline, even when ques­tion­ing, even when answer­ing finan­cial ques­tions. He’s deeply ana­lyt­i­cal, always going back to the num­bers. It is incred­i­bly dif­fi­cult to main­tain out­sized returns when man­age man­ag­ing vast sums of mon­ey. Yet no one han­dles more that more than War­ren Buf­fet in terms of mon­ey, and still he’s con­tin­ued to gen­er­ate cred­i­ble, sus­tain­able returns. That com­bi­na­tion of scale and suc­cess is almost unmatched. Final­ly, his will­ing­ness to teach and share what he’s learned is anoth­er remark­able qual­i­ty. He’s been gen­er­ous with his insights, help­ing oth­ers under­stand the prin­ci­ples behind his [00:32:00] suc­cess. And last­ly, Jeff Wil­son from Wil­son Asset Man­age­ment. He says, uh, Char­lie and War­ren’s influ­ence was­n’t just about stock pick­ing, it was about instill­ing com­mon sense and sound prin­ci­ples for both invest­ing and life in gen­er­al. and Munger made com­plex finan­cial con­cepts acces­si­ble and prac­ti­cal teach­ing not only about invest­ing, but also about the skills and mind­sets need­ed for suc­cess. shared life lessons and tran­scend­ed the world of finance. Their abil­i­ty to com­mu­ni­cate the ben­e­fits of long-term invest­ing, dis­ci­pline, patience, and ratio­nal deci­sion mak­ing has left an indeli­ble mark for decades.

They showed us what it takes to suc­ceed in invest­ing, how to think inde­pen­dent­ly, and how to make deci­sions based on thought­ful analy­sis rather than emo­tion. So I echo all of those sen­ti­ments and if I ran the school sys­tem in Aus­tralia, I’d make, I. For and times of War­ren and Char­lie, of the cur­ricu­lum for all peo­ple going through grade [00:33:00] 12, before they enter the the work­force.

Cameron: Roger Lowen­stein, who wrote Buf­fet the Mak­ing of an Amer­i­can cap­i­tal­ist, uh, had wrote an arti­cle in the New York Times Today, the likes of War­ren Buf­fett, we will nev­er see again. And I just want­ed to read a cou­ple of para­graphs from that. He says, Berk­shire’s stock on that day in May that War­ren took over, the com­pa­ny CLO 1963, closed at $18 a share.

When he deliv­ered the news of his retire­ment, it was above $809,000, almost 45,000 times as high over the same span. The Dow Jones Indus­tri­al aver­age is up just under 45 times. How much did you sell your Berk­shire shares for

TK: No, don’t keep remind­ing me. That’s a lot less than what they are now. it was, I, I, going from mem­o­ry, it was in the three hun­dreds from mem­o­ry thou­sands.

Cameron: ah, ago. [00:34:00] So that’s

TK: It was,

Cameron: Yeah,

TK: I did it because I actu­al­ly was con­cerned what hap­pens to Berk­shire Hath­away when War­ren and Char­lie go, and it’ll be inter­est­ing

Cameron: price is down.

TK: Is it okay? I haven’t

Cameron: Yeah. Yeah. I heard it was down like 6% or some­thing after he deliv­ered the news. Lowen­stein goes on. Mr. Buf­fet has long stood out on Wall Street because he its fre­quent chi­canery self-deal­ing and greed, and the dou­ble talk that went with it. He revered the insti­tu­tions of cap­i­tal­ism.

Most espe­cial­ly, he treat­ed the exec­u­tive’s duty to share­hold­ers as a sacred trust, lest he be accused of vio­lat­ing that trust. He kept his annu­al salary at $100,000. He nev­er took a stock option. The unholy tool by which chief exec­u­tives expro­pri­ate a piece of the busi­ness from the share­hold­ers for whom they are fidu­cia­ries in cor­po­rate Amer­i­ca.

That made him all but unique.

TK: [00:35:00] Cor­rect. A hun­dred per­cent. And, um, large­ly did­n’t sell shares along the way. He’s been giv­ing him the char­i­ty as part of the, um, the wealth pack, the giv­ing back­pack, yeah.

Cameron: Yeah. And lived rel­a­tive­ly sim­ply,

TK: Mm-hmm.

Cameron: same car, more or less. Uh, you know, he said he had a few divorces along the way and

TK: We had

Cameron: but

TK: Yeah.

Cameron: Right.

TK: Um, and he, you know, I, he lived sim­ply, I think, I think that may have changed over the years. I think he, I think he was a good mar­keter when it came to that sto­ry. Um,

Cameron: right.

TK: I’ve cer­tain­ly, I’ve been to his house in Oma­ha. It’s cer­tain­ly, you know, a clas­sic mid­dle class sub­ur­ban house in Amer­i­ca. but I think he prob­a­bly has lived out of hotels for a long time. Um, and at at one stage he, you know, there was a cor­po­rate air­craft for Berk­shire Hath­away execs to fly around. And so yeah, he’s, he’s done Okay. On the lifestyle front. I’m not gonna, but I’m not gonna begrudge him that.

Cameron: but, he did­n’t live some sort of[00:36:00]

TK: No.

Cameron: Gordy sort of lifestyle. Like he kept it rel­a­tive­ly sim­ple.

TK: Cor­rect. And you know, I turned on the TV again this morn­ing and there was some clip for some dude from the us. You know, sit­ting in a Maserati or dri­ving a Fer­rari, singing any song and on a yacht and, you know, drink­ing cham­pagne. And I’m just think­ing that’s, yeah, that’s, that’s not a good image in my opin­ion. War­ren’s image is much bet­ter. I

Cameron: All right. Any­thing more you wan­na say about War­ren before we move

TK: no, just, and we’re kind of sound­ing like he’s passed on. He has­n’t, it’ll, he’s, he’s prob­a­bly still gonna exert an influ­ence on Berk­shire Hath­away. But yeah, next year, next year’s a GM will be inter­est­ing. Um, War­ren leaves, I think in Decem­ber, uh, so it’ll be six months under Greg and Aji and, and Todd and Ted and every­body else. I sus­pect, you know, War­ren’s thought long and hard about suc­ces­sion and how to struc­ture Berk­shire, so it’s hard to take over and break up and, and to give, [00:37:00] um, Greg the right kind of, uh, train­ing to trust agent and to trust the invest invest­ment team, et cetera. So, um, yeah, it’ll be inter­est­ing to see what hap­pens.

Cameron: Do you think 30,000 peo­ple will turn up to the annu­al meet­ing once War­ren’s not there?

TK: I have thought about this. It’s more than 30. The, the, when I was there, it’s like there’s a big, used one of the are­nas which holds 40, I think 40,000 peo­ple. But if you don’t camp, how at, at, you know, ear­ly in the ear­ly hours of the morn­ing, I think I got there about 4:00 AM You don’t get a seat, you’re forced across the road into one of the hotel ball­rooms to see it live on tv. So it’s more like prob­a­bly dou­ble that turn up to Oma­ha to, um, to go to the A GM. uh, I think if War­ren turns up as a share­hold­er, I think yes, I’d be sur­prised if I was Greg Abel, I’d be invit­ing him up on stage to take some ques­tions. I dun­no if War­ren will do that, but, um, if, if he, if the sort of peo­ple think he will, they’ll turn up. Um. [00:38:00] I think, uh, some peo­ple will turn up just to see what, uh, how Greg per­forms and what’s hap­pened with, um, Berk­shire Hath­away to get some kind of com­fort that there’s essen­tial­ly no change in the strat­e­gy. But you know, it’ll be inter­est­ing to see.

Cameron: All right, let’s move on. I’m gonna skip the OPEC sto­ry ’cause we don’t have time. Um, I’ll run through a cou­ple of these things quick­ly ’cause I do wan­na get your feed­back on this. N‑W-H-N-R‑W hold­ings I was, uh, look­ing at by, they’re on the buy list this week. I was look­ing at buy them for light port­fo­lio yes­ter­day and start­ed to try and fig­ure out whether or not they should be linked to some sort of under­ly­ing com­mod­i­ty.

for peo­ple who aren’t famil­iar or remem­ber, NWH. I will just read sort of the, um, basic busi­ness overview of them from Stock. Edia, [00:39:00] NRW Hold­ings Lim­it­ed is a provider of ser­vices to the resources and infra­struc­ture sec­tors in Aus­tralia with oper­a­tions in all Aus­tralian states except Tas­ma­nia and offices in Cana­da.

In the Unit­ed States, its geo­graph­i­cal diver­si­fi­ca­tion is com­pli­ment­ed by its abil­i­ty to deliv­er range of ser­vices. encom­pass civ­il con­struc­tion, includ­ing bulk, earth­works, road and rail con­struc­tion, and con­crete instal­la­tion, togeth­er with con­tract min­ing and drill and blast ser­vices. And they’re involved in civ­il engi­neer­ing, min­ing, min­er­als, ener­gy and tech­nolo­gies, et cetera, et cetera.

So going back to our con­ver­sa­tion last week around a biz alloy and the steel and that kin­da stuff, I’ve sort of been a lit­tle bit more cau­tious about tying these busi­ness­es to, to com­mod­i­ty cycles. But after talk­ing to Chat­G­PT and read­ing their, um, annu­al gen­er­al, the lat­est annu­al [00:40:00] report and try­ing to work it out, they seemed to be fair­ly diver­si­fied across dif­fer­ent min­ing sec­tors.

And uh, I decid­ed that they prob­a­bly did­n’t need to be tied to any par­tic­u­lar com­mod­i­ty, even though min­ing in gen­er­al is sort of down on our com­mod­i­ty charts. These guys seem to be able to move around a bit and, uh, keep the busi­ness hum­ming along. So have you looked at them much in the past? I know we’ve talked about them in the past.

I was­n’t sure how famil­iar you were though.

TK: Look, I’m not that famil­iar with them. I, I recall doing a pulled pork years ago on them. but from mem­o­ry they rec­og­nized the com­mod­i­ty prob­lem and they’ve diver­si­fied into the con­struc­tion sec­tor as well. So they do, um, civ­il engi­neer­ing, con­struc­tion work and, and main­te­nance work too, try­ing to get diver­si­fied away from the min­ing sec­tor. but to your point, I mean, my clas­sic test for whether they’re linked to one com­mod­i­ty cycle is to open up Stock Doc­tor and over­lay the com­mod­i­ty graph onto the, their share graph. [00:41:00] the only one I could see some kind of cor­re­la­tion, uh, for was iron or, um, so I’m not sure if they have a large iron ore. Seg­ment in their, in their busi­ness. Um, but that’s, I mean, that would be the only argu­ment I could see for link­ing them to a com­mod­i­ty is to, is to find their largest seg­ment and link it to that. like you, I think if it’s, if it’s diverse, if it’s across oth­er sec­tors out­side of the min­ing sec­tor, I dun­no if you can do a, a com­mod­i­ty chart for them. Um, and that’s, that’s okay. I mean, we’ve still got the three point trend line on the busi­ness itself to rely on. Um, we’re just not gonna get a heads up if the com­modi­ties cycle changes, um, that might, might not have flowed through to their, their share price. But we, you know, like any oth­er indus­tri­al share price, we still, we can still use the com­pa­ny’s three point trend line to, to give us buy and sell prices.

Cameron: Yeah. Well the oth­er one I want­ed to ask you about was QPM used to be [00:42:00] Queens­land some­thing min­er­als. Um, now it’s just QPM ener­gy. They’ve sort of piv­ot­ed recent­ly again, they’re on the buy list and I was look­ing at buy­ing them yes­ter­day. I think I did buy both of these. In the end. They’ve sort of piv­ot­ed.

They used to be, uh, pre­cious min­er­als I think, but they’ve piv­ot­ed now to coal mine, waste gas. They’ve, they, I think they bought a com­pa­ny actu­al­ly that did this. So they have fig­ured out a way to extract waste gas from the coal min­ing process. And then they refine it and sell it. And that got me won­der­ing if there’s a com­mod­i­ty for coal mine waste gas.

I don’t think there is a com­mod­i­ty chart. But then I was talk­ing to GPT about whether or not that is linked to LNG com­mod­i­ty pric­ing it said, yeah, kind of loose­ly because they’re both mar­ket­ing to the same [00:43:00] cus­tomers at the end of the day. Peo­ple who. Buy gas, it’s just a dif­fer­ent line, I guess.

Um, and I was try­ing to fig­ure out whether or not I need­ed to use the LNG com­mod­i­ty price to deter­mine whether or not, which is a sell at the moment. I think or not that should impact QPM in the end, I decid­ed not to. But, um, I want­ed to touch base with you and see how you would assess some­body like QPM.

TK: I am not famil­iar with QPM cam. It’s has­n’t come across my radar before. Um, we can do a pulled pork, one of it, if you like, in the future. But, um, cou­ple of things that, you know, ques­tions, I guess I have to, to research. One is, um, when you’re talk­ing about coal gas, is this coal scene gas, which was a thing in Queens­land decades ago. we’re gonna extract it and it as a, a, a gas alter­na­tive? Or

Cameron: Well,

TK: are they tak­ing, is it car­bon cap­ture and stor­age, I guess is my oth­er question?[00:44:00]

Cameron: I think it’s the lat­ter, but I’m not that sure. The web­site says QPM Ener­gy focus­es on the strate­gic cap­ture and ben­e­fi­cial use of waste coal mine gas. This results in sig­nif­i­cant car­bon abate­ment whilst pro­vid­ing Queens­land with a reli­able 24 7 source of ener­gy.

TK: Uh, it sounds like colline gas. Yeah. There were com­pa­nies around doing that for, for quite a while. And you know, going back a long time, going back a long time, it was a big thing. The Queens­land gov­ern­ment was trum­pet­ing that it was gonna solve our ener­gy cri­sis and it became a niche busi­ness. It did­n’t, did­n’t get as large as peo­ple thought. But yeah, I think it’s, it is a gas sub­sti­tute

Cameron: Yeah. Lat­er down fur­ther in the web­site, they talk about how they bought the Mobar gas project

TK: right.

Cameron: which is extract­ing gas from coal Seams have been in pro­duc­tion since 2006, so I think you’re right.

TK: Mm.

Cameron: So,

TK: it could be, have you, uh, the next ques­tion is when [00:45:00] did they piv­ot to that? And,

Cameron: that’s

TK: and

Cameron: only been in the last year or so,

TK: right. So you can’t over­lay the com­mod­i­ty.

Cameron: Could­n’t over­lay it. Yeah, I thought about that and could­n’t do it.

TK: yeah, yeah. Um, so I dun­no. Ask chap, GPT, how tra­di­tion­al­ly has coum gas, you know, what’s the pric­ing for cols gas? Is it bench­marked to l and g? Is it linked

Cameron: This is, this is what GPT said. QPM ener­gy is influ­enced more by Aus­tralian domes­tic ener­gy mar­kets than glob­al LNG trends.

TK: Right.

Cameron: may pro­vide a loose floor or ceil­ing, the rela­tion­ship is sec­ond order at best. While QPM ener­gy does not direct­ly engage in LNG exports, the broad­er LNG mar­ket can indi­rect­ly impact domes­tic gas dynam­ics.

Mm-hmm.

TK: I need a domes­tic gas price graph. I don’t know if there’d be one around, I don’t know if we, we use one cur­rent­ly, though. Pret­ty sure we don’t.

Cameron: sure. One of, one of our QAV Club mem­bers [00:46:00] prob­a­bly knows way more about the gas

TK: Yeah,

Cameron: do. So if you’re out there lis­ten­ing, shoot me an email and edu­cate me some quick news items. MIUs resources, uh, came out with their Q3 FY 25 pre­sen­ta­tion record, cash flow, and upgrad­ed guid­ance. Ooh, guid­ance from MIUs Resources.

Did­n’t we just, did­n’t we ping them recent­ly for

TK: we

Cameron: guid­ance?

TK: Uh, for, um, yes. Yes. In a

Cameron: Red flag? Is that, does that mean we take that off? No, we said

TK: No

Cameron: I think we said.

TK: new man­age­ment or at least one results, but I think new man­age­ment, yeah.

Cameron: MAH McMa­hon secures 172 mil­lion under­ground con­tract awards. If you’re a McMa­hon, uh, hold­er, um, could sig­nif­i­cant­ly increase their finan­cial posi­tion. Accord­ing to an arti­cle that I read in Hot Cop­per, [00:47:00] Wood­side is pro­ceed­ing with Louisiana LNG, but it won’t come cheap with the US $11.8 bil­lion price tag.

Wood­side Ener­gy is con­firmed that the Louisiana LNG project is mov­ing for­ward with an invest­ment of 11.1 US bil­lion tar­get­ing a sup­ply of 16.5 mega ton­nage of LNG annu­al­ly by 2030, so that might impact Wood­side. And last­ly, OML media has announced lead­er­ship change as CEO Kathy O’Con­nor plans depar­ture, not a sud­den red flag depar­ture.

Nice. Uh, tran­si­tion

TK: I

Cameron: O’Con­nor. She’s gonna step down in the sec­ond half of CY 25 after more than four years lead­ing the com­pa­ny.

TK: Yeah. And we have a request, I think, in our ques­tions sec­tion to do a pulled pork on them. So I’ll do that in the com­ing weeks.

Cameron: Good [00:48:00] stuff. Well, speak­ing of which do you w see­ing as we’re on lim­it­ed time today, do you want to, into your Paul pork?

TK: Yeah, sure. Uh, so my pulled pork is on, uh, motor­cy­cle hold­ings. Um. And, and the rea­son why I’m doing that, I’ve avoid­ed doing MTO in the past ’cause it has a small a DT, it’s not a big com­pa­ny. But there was an arti­cle in the Fin Review on the week­end, which, um, piqued my inter­est, uh, about Hamish Dou­glas that peo­ple will remem­ber from the Mag­el­lan Fund. Um, has bought a, a, a stake in, in, um. In, uh, the com­pa­ny and I’ll just read some extracts from that. Um, arti­cle, high pro­file stock pick­er, Hamish Dou­glas, who co-found­ed and ran Mag­el­lan Finan­cial until three years ago, has tak­en a sub­stan­tial stake in the coun­try’s largest whole­saler and retail­er of motor­cy­cles. Uh, Dou­glas through his pri­vate com­pa­ny’s to sup­port 10.45% of motor­cy­cle hold motor­cy­cle [00:49:00] hold­ings, which car­ries brands such as Hon­da, Harley David­son, and Ducati. Uh, he says, I bought it when I thought it was fun­da­men­tal­ly cheap. They’ve got a very inter­est­ing posi­tion as the clear num­ber one play­er in an indus­try that’s con­sol­i­dat­ing. Uh, it goes, uh, the arti­cle goes on the quote from a paper pro­duced by IBUs World Aus­trali­a’s motor­cy­cle sec­tor, and they not­ed that it was high­ly frag­ment­ed with many small cook small. He says small call mom and dad oper­a­tors. I guess that means small-ish, small cap mom and dad oper­a­tors ser­vic­ing very local­ized cus­tomers. are esti­mat­ed to be 700 deal­er­ships in Aus­tralia. Hold­ings has exploit­ed the frag­ment­ed nature of the indus­try using its scale and scope to trench entrench comp, com­pet­i­tive advan­tages against small­er deal­ers and engage in aggres­sive acqui­si­tion activ­i­ty. Uh, [00:50:00] report said that off-road motor­cy­cles remain the indus­try’s largest sell­ing seg­ment in Aus­tralia with 44% of the mar­ket com­pared with on-road bikes At 35% in the six months to Decem­ber 31, motor­cy­cle hold­ings report­ed a 20% rise in under­lin­ing earn­ings before inter­est and depre­ci­a­tion of 26.2 mil­lion in that first half.

It also reduced its net debt by one third to 24.2 mil­lion, or declar­ing an 8 cent for the frank div­i­dend com­pared to the 3 cent div­i­dend in the cor­re­spond­ing peri­od. a lot of good news in that, um, if you’re an MTO share­hold­er, but I decid­ed to do a pulled pork. Oh, good. go and go and sell

Cameron: is, sor­ry. Uh, we’ve, we bought it back in Decem­ber it’s up 29% since then. Bought it a

TK: Wow.

Cameron: $2 42. It’s done very well.

TK: Yeah. Uh, yeah. And it’s, it’s sen­ti­ment. It’s cer­tain­ly crossed its sen­ti­ment line, um, after [00:51:00] its last results. Uh, okay. So it is a small a DT stock, $71,000 trad­ed per day on aver­age. So it’s not gonna suit every­one lis­ten­ing, but it’s still worth talk­ing about giv­ing its good per­for­mance. they say pret­ty much the same thing that IBUs said about them. are a lead­ing motor­cy­cle deal­er­ship and acces­sories group in Aus­tralia. they also, um, uh, engage in the sale, well, they engage in the sale of new motor­cy­cles and used motor­cy­cles, acces­sories, and parts finance, insur­ance, and mechan­i­cal pro­tec­tion plans, as well as ser­vic­ing. Uh, motor­cy­cle Hold­ings impor­tant, dis­trib­ute a range of motor­cy­cles, off-road vehi­cles, parts and acces­sories, through­out Aus­tralia and their own deal­er net­work. Since 1989, motor­cy­cle Hold­ings has grown its deal­er­ship net­work, both organ­i­cal­ly and by acqui­si­tions and by being grant­ed addi­tion­al fran­chis­es in exist­ing deal­er­ships and now oper­ates from the largest num­ber of loca­tions in Aus­tralia. [00:52:00] Their sto­ry, uh, found­ed by David Ahmet, um, they have suc­cess­ful­ly expand­ed over many years.

So David joined Maki Yama­ha in 1988. Have you been past Maru­ka Yama­ha can Prob­a­bly on the mag­ic mo of Motors, Bar­ca South Bris­bane. The Maru­ka Mag­ic Mo of Motors used to be TV ads in Bris­bane when I was grow­ing up.

Cameron: I am not allowed to go south of the riv­er. Tony. They, uh, they, they’ve

TK: Peter

Cameron: poster

TK: Peter Dut­ton won’t let you,

Cameron: Yeah. Well, he’s

TK: oh,

Cameron: door. No, it’s,

TK: The ad used to say, uh, maru­ka Mag­ic Mabb of motors. Any­way, that’s, that’s one for the, that’s a blast from the past. So he start­ed off in Maki Yama­ha in 1988 took a part own­er­ship in 1989 with a, a chat by the name of John Oliv­er. Um, dif­fer­ent John Oliv­er to the one on in the us. Since 1999, we have grown [00:53:00] the deal­er­ship net­work both organ­i­cal­ly by acqui­si­tions and being grant­ed addi­tion­al fran­chisees, as I said, and now oper­ate from the largest num­ber of loca­tions in Aus­tralia. In 2011, the Archer Growth Fund became Motor­cy­cle Hold­ings largest share­hold­er fol­low­ing the pur­chase of the Oliv­er Fam­i­ly Share­hold­ing.

So John Oliv­er exits the busi­ness in 2011, the com­pa­ny list­ed on the ASX in 2016, and, uh, they toot their own horn there say­ing they became one of the most suc­cess­ful IPOs of that year. Uh. Since 2016, prob­a­bly the next biggest mile­stone was the, uh, acqui­si­tion of a com­pa­ny called Mojo. The acqui­si­tion of the Mojo Group, one of Aus­trali­a’s largest importers and whole­salers of motor­cy­cles. Gen­uine spare parts and acces­sories was com­plet­ed in Octo­ber, 2022. The oth­er thing about, um, mojo Group is that it also imports and sells scoot­ers and ATVs, elec­tric motor­cy­cles, and the spare parts and acces­sories that go with that. And they [00:54:00] have a 150 strong deal­er net­work. Uh, MTO, or sor­ry, mojo Group is head­quar­tered in Altona, uh, in Mel­bourne, uh, has a 5,000 square meter dis­tri­b­u­tion cen­ter up by a 2000 square meter facil­i­ty in Yala Queens­land. The acqui­si­tion pro­vid­ed sig­nif­i­cant growth by intro­duc­ing the impor­ta­tion of those boot, as I talked about. yeah, so that was MTO that, uh, the prin­ci­ples of com­pa­nies they’ve acquired over time have become board mem­bers, and I’ll talk about that in a minute. I can talk about it now.

So David, uh, this com­pa­ny has­n’t known a founder, David Arme, um, since 2011. He’s been on the board. That’s, which is kind of strange Doc­tor says since 2011. But he’s the founder and, um, goes way back to the start of the com­pa­ny. So I think he’s prob­a­bly been on the board for longer any­way. Uh. He, he owns 15.4% of [00:55:00] the com­pa­ny, Cas­son, who has 35 years of expe­ri­ence in the motor­cy­cle and bicy­cle indus­try.

Joined in 2017 as part of the acqui­si­tion of Cas­sons Group. Um, a motor­cy­cle and bicy­cle cloth­ing and acces­so­ry dis­tri­b­u­tion busi­ness. He owns 4.55%. last­ly, Michael Poin joined in 2022. Uh, he was the for­mer CEO of Mojo motor­cy­cles I spoke about before. um. O over­all, the direc­tors own 29% of the com­pa­ny, includ­ing the founder. Um, to go through the QAV num­bers, I’m using a stock price of $2 40, which is above the byline. it’s less, it’s uh, less than con­sen­sus tar­get. I. is greater than iv. One of a dol­lar 12 less than iv two of $2 50 is 6.25%, um, based on that extra div­i­dend I spoke about before. it just speaks in about above being the aver­age mort­gage rate in Aus­tralia.

So I give it a score [00:56:00] Stock Doc­tor. The finan­cial health and trend is strong and steady. Stock Edia ranked, the qual­i­ty is 89 out of a hun­dred. Uh, val­ue is being 96 out of a hun­dred and over­all being 99 out of a hun­dred. So ranked this com­pa­ny high­ly. The F score in is sev­en out of nine. So that’s the, um, the rank­ing of the qual­i­ty, uh, met­rics of the com­pa­ny PE is 11 times, which is high. Uh, but as of the last results it was 9.16, which is not quite the high­est the last three years. So it, uh, scores a zero for us. Pr/OpCaf is 3.99 times, which is low. So, um, we can buy this on just under four times oper­at­ing cash­flow, which is quite good. Net equi­ty per share or book val­ue is $2 78, so we can buy it for less than book and book plus 30, but I do high­light that, um, NTA net tan­gi­ble assets for this com­pa­ny around the 84 cents. we’ve seen this before in deal­er­ship, uh, rollups. [00:57:00] Um, last time we saw it was in the pool pork on a SG or those sports group where, uh, roll ups in the sec­tor means pay­ing good­will to buy out, um, uh, oth­er fran­chis­es, fran­chisors. And that good­will goes on the bal­ance sheet, which, um, gives it the, dis­par­i­ty between, uh, net equi­ty and, uh, net tan­gi­ble assets. don’t mind that in these cas­es because again, again, as long as they. the rea­son­able price for those deal­er­ships. Um, often­times, um, the deal­er­ship trades above what its asset back­ing is, you know, the inven­to­ry of stock, what­ev­er the, the, there’s, if there’s any sort of cal­cu­la­tion as to the fran­chise val­ue, um, uh, often­times some­one won’t sell until they get a, uh, a bit above that. So as long as the, the fran­chisees ease the fran­chise also pur­chase, remain rel­e­vant and trade well, then I think that it’s fine to go and, um, book val­ue. Uh, what else can I [00:58:00] say? Um, I did, did wan­na talk about, uh, CEO suc­ces­sion, which has just hap­pened, but I’ll just sum up the scores first of all. So, cur­rent­ly MTO scores an impres­sive 16 out of 17 for qual­i­ty and 94%. Uh, which is 94%. And the low prop calf mul­ti­ple means a QAV score of 0.24, pret­ty good. Um, risks, uh, it’s a retail busi­ness, so they may suf­fer in an eco­nom­ic down­turn, um, which may be com­ing. Uh, cer­tain­ly an uncer­tain future. They are diver­si­fy­ing more towards elec­tric bikes and scoot­ers, which are help­ing their ESG cre­den­tials. Um, motor­cy­cles over­all do use less fuel than cars and trucks, so um, also helps their ESG cre­den­tials, uh, if they can con­vert car dri­vers to motor­cy­cles. Um, but I high­light it because peo­ple with an [00:59:00] ESG screen will need to look close­ly at the busi­ness and make their mind up uh, on whether it’s, um, a pos­i­tive or a neg­a­tive in terms of that we remain neu­tral on those kinds of things and let our lis­ten­ers decide for them­selves. I did find, uh, the last thing to talk about in terms of risks, I did find, uh, a notice, um, the 27th of Sep­tem­ber, 2024. Uh. Which reads, um, motor­cy­cle Hold­ings announces the retire­ment of Mr. Dave Amit as Chief Exec­u­tive and man­ag­ing Direc­tor, the point the appoint­ment of Mr. Matthew Wisen­er as chief exec­u­tive of the com­pa­ny com­menc­ing in Decem­ber, 2024. Matthew brings over 20 years of senior lead­er­ship expe­ri­ence both whole­sale and retail with e auto­mo­tive indus­tries and, uh, et cetera, et cetera. he’s been, uh, man­ag­ing direc­tor of var­i­ous retail and whole­sale oper­a­tions and pub­lic com­pa­nies um, has expe­ri­ence in the bus in the [01:00:00] busi­ness sec­tor. So, looks quite, um, rea­son­able. what piqued my inter­est was, um, fur­ther on down the announce­ment after 13 years as CEO man­ag­ing direc­tor Mr.

Dave Amme will tran­si­tion from his exec­u­tive role to a non-exec­u­tive direc­tor from Decem­ber, 2024. Mr. Amme will con­tin­ue to be. Active­ly involved in shap­ing the strate­gic direc­tion of the com­pa­ny and pro­vide coun­sel to Matthew ensur­ing a smooth han­dover while retain­ing a large share­hold­ing. Uh, Amme said whilst retir­ing from the CEO role, I intend to remain involved in the strate­gic direc­tion of the coun­try com­pa­ny and exists Matthew, and any capac­i­ty I can. How­ev­er, I do need to focus on my health fol­low­ing a recent acci­dent, so the time is right for me to step aside and pass the baton onto Matthew. I’m sure motor­cy­cle hold­ings will ben­e­fit from Matthew’s track record of dri­ving busi­ness growth and focus on results. I will stay close­ly involved in the busi­ness ensure smooth tran­si­tion and intent to remain [01:01:00] a sig­nif­i­cant share­hold­er going for­ward. Did­n’t say what the acci­dent was. Um, I’m won­der­ing whether being involved in the motor­cy­cle indus­try the way he is, whether he is had a motor­cy­cle acci­dent, um, which I guess is one of the dan­gers of rid­ing, rid­ing, rid­ing motor­cy­cles. I added that to the risk involved in this com­pa­ny. They’re all rid­ing motor­bikes, and that may, that may be a risk. As one of my col­leagues said many years ago, what do you call a motor­cy­cle cyclist? A tem­po­rary Aus­tralian. So that might be a risk for the com­pa­ny.

Cameron: Wow. Did you get any assess­ment about their posi­tion on elec­tric

TK: I did­n’t only that they were, they, um, were try­ing to diver­si­fy that sec­tor of the, of the, um, busi­ness.

Cameron: I just asked Chachi, pt how big that niche is. It says in 2024, only 429 new elec­tric two [01:02:00] wheel­ers were sold in Aus­tralia, uh, in stark con­trast to the 94,224 new motor­cy­cles sold over­all.

TK: Yeah, I think they must have all been sold in King’s Cross fudg­ing by all the elec­tric bikes that the Deliv­eroo rid­ers were and scoot­ers Deliv­eroo rid­ers were

Cameron: Right. Yeah. Maybe that is the mar­ket for them too.

TK: Hmm,

Cameron: Yeah. I won­der why. I why they’re not, it’s not a big­ger, I dun­no what per­cent­age of cars are elec­tric these days, but it’s prob­a­bly a big­ger per­cent­age than that. I would imag­ine. I saw a thing in the finan­cial view today, you know, BYD is sell­ing six times the amount of vehi­cles as Tes­la in Aus­tralia.

TK: hmm,

Yes, I did see that arti­cle. isn’t it? And who’s who was a big investor in BYD

Cameron: Char­lie,

TK: Char­lie. cor­rect.

Cameron: Uh, I, I, get­ting back to our polit­i­cal thing, and you were talk­ing [01:03:00] about whether or not this gives, this man­date, gives albo the balls to do some things like reform of the tax, uh, leg­is­la­tion. I was won­der­ing if we’re giv­ing the balls to decou­ple from the Unit­ed States and throw away in with Chi­na.

TK: Well, Don­ald Trump called him up. Don­ald Trump called him up, you know, to wish him well, so they’re friends.

Cameron: Um, uh, sor­ry. They’re in where the, um, milk is on the, near the shoe rack there. I meant to tell you. I ca I took about the car. I must say they’re on the UHC milk thing. Sor­ry, Chris, are you look­ing for the car keys? Yes. Don­ald Trump called him up and they said nice things to each oth­er, which I. I don’t believe that sto­ry at all.

But any­way.

TK: All

Cameron: well thank you Tony. We do have one ques­tion from Trent, um, that we can prob­a­bly han­dle rel­a­tive­ly quick­ly. It says Helio is cur­rent­ly on the buy list is [01:04:00] con­firmed. A spe­cial div­i­dend from its sale of Loomis as div­i­dend is quite large, will breach its three point trend line on X div­i­dend and extreme­ly unlike­ly to bounce back above the pay­ment date.

So how would Tony han­dle this? This is one of Tren­t’s, uh, con­tin­u­ing series of ques­tions that he already knows the answer to because you’ve answered this 10,000 times over the years, but he’s try­ing to be nice.

TK: He is. I love Tren­t’s ques­tions. Yeah, we’ll call him Robin from now on will we? He just like that. Gets the Bat­man back slap face.

Cameron: right. He’s vol­un­teer­ing for the backs. Slap

TK: Yeah. Yes. Well done. Uh, look, uh, in the absence of any oth­er infor­ma­tion, I’ll hold it and then, uh, I says it’s quite pos­si­ble the sell line will redraw itself on the graph ’cause it is a big div­i­dend com­ing off it. The price should reflect the sale when it goes X div­i­dend and the return of that cap­i­tal. Um, and the price should drop it’s, I think a rel­a­tive­ly [01:05:00] short time peri­od of about three or four weeks between x div­i­dend date and the pay­ment date. um, it’s pos­si­ble that, uh, the share price might recov­er. Um, who knows? Um, yeah, it’s also pos­si­ble the three point trend line will redraw, it will redraw itself giv­en the, the share price may drop below the cur­rent. L two and pos­si­bly L one as well. So, um, in the absence of any oth­er infor­ma­tion, I won’t try and pre­dict I would hold it and then make a call when it hap­pens.

Cameron: Right.

TK: not finan­cial advice. Trent. You do what you need to do and sleep tired at night. well at night. Um, but thanks for the ques­tion and hope­ful­ly you, you prof­it from this.

It’s a good, it’s a good div­i­dend to receive tree

Cameron: Bren­t’s oth­er ques­tion was, uh, how does dou­ble mar­ket return Square with a left of she Gue­vara polit­i­cal view? this the kind of ques­tion that TK thinks mar­ket [01:06:00] research needs as a qual­i­fi­er to test the strength of the claims of the per­son­’s pref­er­ence? Um,

TK: that’s direct­ed at you, I think, rather than me.

Cameron: Yes. Oh yes. won­der­ing if any­one would pick up that.

And I’ve, peo­ple have asked me that, how can you be a com­mu­nist and talk about share invest­ing? I’m like, look, com­mu­nism reflects the world I would like to see. I would like to see a world where every­one is tak­en care of, every­one’s needs are met. And I would like to see us work towards a soci­ety where every­one is tak­en care of, and we engi­neer our soci­ety towards that.

Some form of, utopi­an Star Trek Com­mu­nism where every­one gets looked after. How­ev­er, I don’t live in that world. I live in a world where I have rent to pay and bills to pay. So I need to make mon­ey like any oth­er dirty cap­i­tal­ist in the mean­time. But polit­i­cal­ly, would love to see us move towards a more utopi­an I.

View and polit­i­cal­ly, that’s what I would love to see us talk­ing about more is how do we get [01:07:00] to what is kind of per­fect soci­ety that we would like to engi­neer, and what are we gonna do to get there? What are the steps to get from here to there? the kind of dia­logue I would like to encour­age, but I don’t get to see a lot of that.

We don’t do that. We just go, eh, let’s fid­dle around the edges. But, uh, we’re not try­ing, we’re not talk­ing about build­ing the, uh, soci­ety we want to be.

TK: Yes, look, I agree and hope again, hope­ful­ly with a large man­date, the gov­ern­ment can address some of those issues. Um, we’ll start to think about more about them more, but I agree with you. But like, if we’re gonna go, if we’re gonna, you know, base a polit­i­cal sys­tem around wish ful­fill­ment, I wan­na live indef­i­nite­ly, that, that’s my polit­i­cal

Cameron: that? Tony

TK: yes.

Cameron: nan­otech,

TK: Cap­i­tal­ism.

Cameron: as in our advi­sor.

TK: Yeah.

Cameron: you say that, but you know who’s pro­duc­ing most of the AI researchers in the world right [01:08:00] now?

TK: Chi­nese cap­i­tal­ist par­ty.

Cameron: No. No. Tony? No. Tony.

TK: Oh, so they’re actu­al­ly com­mu­nists in Chi­na, are they?

Cameron: Uh, do we this dis­cus­sion Every week

TK: well, like I say, if you go, uh, yes, because you describe, um, a utopi­an state, which is fine, but then can’t point to any­one doing it at the moment, where­as I can point to cap­i­tal­ism as some­thing that’s worked,

Cameron: Well, has it though? It’s pro­duced Don­ald Trump and

TK: that worked. Did­n’t say it worked per­fect­ly. There’s a lot of bad things about it.

Cameron: well, what’s, what’s worked

TK: I think, I think hon­est­ly, I think coun­tries like Aus­tralia has worked. Don’t shut me

Cameron: we’ve

TK: Don’t de

Cameron: have time like this.

TK: a reg­u­lat­ed cap­i­tal­ism.

Cameron: Yeah. Yeah. That’s the prob­lem though. That sounds great in the­o­ry. But the prob­lem with the prob­lem with cap­i­tal­ism is the [01:09:00] peo­ple with the mon­ey end up mak­ing sure that they’re not reg­u­lat­ed.

That’s

TK: Yeah, there’s lots of prob­lems with cap­i­tal­ism. You need reg­u­la­tion for sure.

Cameron: hmm. Alright, we’ll do a show on that next time, but, uh, we need to run off and do a US show need to get to kung fu. So, uh, we don’t even have time for after hours unless you’ve

TK: Uh

Cameron: horse rac­ing.

You need to throw in.

TK: uh, I’ve got a cou­ple of hors­es going to a sale on Thurs­day and that means I’ll be record­ing from some­where in New South Wales. Next week I’m going to Syd­ney and then head­ing down the coast of place in golf. So, um, prob­a­bly Bay way next week.

Cameron: Bate­man’s Bay. It’s love­ly.

TK: Mm. Good.

Cameron: All right, thank you, tk. Thank you every­body. Have a good week.

TK: Yes. Hap­py ASX.

[01:10:00] [01:11:00]