In this episode of QAV AU, Cameron and Tony kick off the new financial year by diving into end-of-year portfolio roundups. They compare the dummy portfolio’s 19.87% gain against the STW’s 13.61%, dissect U.S. portfolio returns versus the S&P 500, and unpack Tony’s concentrated seven-stock strategy. Listener Trent shares his 21% return confession. They then explore commodity dynamics and deep-dive into GR Engineering Services (GNG) as their Pulled Pork pick.
Transcription
Audio of AU Club
Cameron: [00:00:00] Welcome to QAV au TK.
It’s, uh, ch
qua. I know.
Tony Kynaston: cat
Cameron: No,
Tony Kynaston: Why not?
Cameron: yeah, it could be Cav, eh, I dunno. I’m going, I’m sticking with, yeah. Well that’s even got a u in it, doesn’t It
But they just ignore it. I’m, I’m sticking with QAV. This is, uh, the 1st of July. Happy new financial year, Tony 2025.
Tony Kynaston: Year.
Cameron: before we get into the happy,
Tony Kynaston: financial, year. We
Cameron: the only, that’s the only year you care about.
Uh, and unlike recent years, this has been a pretty happy, uh, enter the financial year for us. Um. RIP, Lalo Schiffrin and Bill Moyers. Though before we start two absolute legends and sort of heroes of mine, um, for my entire adult life, both passed away in the last few days. You’re a [00:01:00] big fan of either of those.
Tony Kynaston: fan of Lalo. I don’t know, bill Moyers. Um, yeah, I think there were so many good movies and TV shows in the seventies that Lalo did the soundtrack for. Just
Cameron: Oh my God. I was going over these and it’s funny because I, um, I listen to him a lot. He’s in my playlist, but recently re-watched Enter the Dragon, which is one of his, the theme to enter the dragon is absolutely epic. And I was talking to Chrissy like last week when we were watching it about Lalo and this and that and the other, and his career and with.
Dizzy Gillespie and all that kind of stuff, and then he passed away. But yeah, enter the dragon. He did 127 film soundtracks, including Enter the Dragon Mission Impossible, the original Dirty Harry Cincinnati kid. Bullet, cool hand. Luke the Eagle has landed THX 1 1 3 8, and Kelly’s heroes among many, many, many, many others.
Tony Kynaston: theme song for Kelly’s Heroes. That was the head of MGM records, burning
Cameron: Who, wrote it[00:02:00]
Really?
Tony Kynaston: I
Cameron: Wow.
Tony Kynaston: together a, a choir, the, whatever his name is, singers, and they, they had the hit with burning bridges. It was a hit in Australia.
I think It got close to number one
Cameron: Really
Tony Kynaston: well in the us, but yeah. And just the
Cameron: well, bill.
Tony Kynaston: of thing of, Hey, we’re
Cameron: I.
Tony Kynaston: a about these guys robbing a bank across enemy lines and the Germans by the bridges up, comes back with a song called Burning Bridges about a girl who’s a boyfriend.
It’s just like,
Cameron: Why not?
Tony Kynaston: yeah.
Cameron: Easy money. Um, bill Moyers was one of the great newsmen of the US in the last 50, 60 years. He started off, his first claim to fame was, he was Lyndon Bain, Johnson’s press secretary and, uh, campaign manager when he ran against Kennedy, but um, then became his private secretary, ended up. Leaving him, uh, they had falling out over Vietnam, I think, among other [00:03:00] things.
But then he went on and, and produced a whole bunch of great documentaries, was a newsman at PBS and CBS over the years when I first discovered him 35 years ago when, uh, my guru Bob gave me Bill Moyer’s six hour, uh, interview with Joseph Campbell. Um, the hero with a thousand faces. Yeah. The hero me if he did this long interview is what made Joseph Campbell famous before he made that Joseph Campbell was, you know, no one inside of small groups of academics, but really wasn’t famous.
And it was that, that the books came out of the, the documentary sat down and interviewed him for like six hours and put the whole thing out on PBS, I think, and that was had a big impact. On my interest in ancient history and, and mythology and philosophy when I was 19 or 20, when Bob gave it to me.
So yeah,
Tony Kynaston: was that pre Star Wars or after Star Wars? with,
Cameron: it was,
Tony Kynaston: Joseph.
Cameron: no, it [00:04:00] was after Star Wars. It was like 88 I think, when that came out. But, but Lucas had,
Tony Kynaston: Hmm.
Cameron: studied under Joseph Campbell, so, you know, he’d taken all of Joseph Campbell’s stuff.
Tony Kynaston: star Wars is the classic hero with a thousand faces.
Cameron: Yeah.
Yeah, yeah, Well, you know, lots of classics before that. But, uh, you know, Campbell articulated the, the story arc circle, I guess, for Lucas to simplify and, and, um, make the arch, the modern archetype for it. Anyway, so there you go. Back to investing portfolios, Tony.
Wow. Um.
Tony Kynaston: conversation.
Cameron: I know, but you know, this is sort of an after hours conversation.
I can, I can, I’ll do it later. We’ll, we’ll finish it later. Um, end of financial year report. Uh, dummy portfolio finished up nearly 20% 19.87% for the financial year versus the [00:05:00] STW up 13.61% according to Navexa. Great year for the index. Uh, but, uh, dp, not quite double, but pretty good. My super portfolio not as good.
It was up about 13.5%. My QAV light for the financial year, all four portfolios grouped together was up 15.17%. So, beat the index, but only by a couple of points.
Interestingly, the,
Tony Kynaston: hang on, Just,
Cameron: hmm.
Tony Kynaston: you’re doing there to group all the like portfolios together, but how many stocks is in that group portfolio?
Cameron: Yeah. Whether it be 60 ish, 50 to 40 to 50 to 60. Yeah.
Tony Kynaston: it’s
Cameron: So I know it gets close to
Yeah.
Hug. Yeah. It’s the one of the problem with the groups. Yeah. I can break ’em out, but I haven’t bothered. I’ll do that in a minute. Um, here’s the interesting thing. The stockopedia US portfolio for our [00:06:00] financial year, the last 12 months.
Was finished at 28.5% up versus the s and p 500, up 13.63%, exactly the same as the STW in Australia, 13.6%. What are the odds of that,
Tony Kynaston: That’s very strange.
Cameron: isn’t it?
Tony Kynaston: and p 500 wouldn’t have dividends accumulated either, would it? But the STW does. I think so. They, the capital appreciation will be
Cameron: That’s true. Um, according to the financial review, it said the ASX uh, ended up 10% best year since 2021. So I guess we have to say thank you Donald Trump for, uh, you know, just doing such a great job of, uh, running
the US economy. Why don’t you give us your results and I’ll break down the light results while you’re doing that.
Tony Kynaston: Yeah.
[00:07:00] so I’m using Share Site, which is a bit different to Navexa, but should be the same in terms of reporting. My performance was 17.85%, so, uh, not quite double market, but beat the index, which was lovely.
Cameron: And you are, and you are still sitting on like five or six stocks.
Tony Kynaston: Yeah, I think I’ve got seven from memory.
Cameron: Wow.
Tony Kynaston: concentrated, which is a good thing because my best performer Parenti is up 65%, including dividends over that, over the course of the financial year. So, uh, know, works well when you have a stock like that in a concentrated pfo, uh, portfolio. My worst stock was MMS Mc, uh, McMillan. Shakespeare, which I think I sold during the, uh, anyway, I’m not sure it, it was down 15%. Um, and of the other ones, I’ve got some Bank of Queensland in there, which I’ll include even though it’s, uh, was bought because Jenny was a board member, which she’s. She’s resigned from. [00:08:00] Um, but it has, it’s on the buy list now and it has been on the buy list.
I’m happy to include it. It was up 50%, uh, QBE. The insurance company was up 31%. And PRU mining the gold miner up 18.7 interesting. One was super retail group, SUL, uh, up 15%, but that included a 12% dividend yield. So that’s mainly dividends. Um, which, you know, ’cause I’ve held it for a while, uh, now on a yield basis taking over well and truly from the capital performance.
So yeah. So been a good year for the portfolio.
Cameron: Wow. Well, congratulations on that. Um, I’ve got the breakdown for the individual light portfolios and their very varying 22.1. Our first portfolio is up 9% for the financial year, as was 22.2, up about 8.7. So [00:09:00] they underperformed. 22.3 was up 16.4% and 23.1, the last portfolio was up 24%.
Tony Kynaston: Wow. What drove
Cameron: F that was, uh, PRN per, well, there’s quite a few.
Parenti PTI was up 69%. SRG was up 68%. SSM was up 60%.
Tony Kynaston: Wow.
Cameron: KOV was up 34%. So it had a, uh, you know, a handful of. Good winners this year. Um, but the others did not. Uh, but the dummy portfolio’s best performer was SRG up 79%
for the year.
Uh, also P‑R-N-S-R‑V up 47 KOV. 34 CVL up 27 PPM up 23. It had a lot of really good, like [00:10:00] dummy portfolios got 1, 2, 3, 4, 5, 6, 7, 8, 9 stocks that were up over 20% in the financial year.
Plus another couple KSC and IGL that were up 19% for the financial years. So, um, yeah, just a bunch of great winners. Some of which I think we’ve hold for quite a long time. Uh, SRG we only bought in August last year, so Wow. All of them. You know, what a great year. It had PRN, um, yeah. Bought that in May last year.
So anyway, there you go.
Tony Kynaston: Very good.
Cameron: So, um, I did jump on QAV Club Facebook page earlier today and ask people to share their, uh, financial year performance with us and nobody did yet. So thanks for that. Um, if anyone wants to share your performance with us [00:11:00] over the course of the next week or whatever, or. You can share it privately or publicly.
But yeah, let us know how you did. We wanna know how you performed. Hold on. Here we go. Trent. Trent did get back to us. Good on you, Trent. Solid back-to-back returns with QAV hitting 21% this year. Once again, surprised at how much divs made up of return, which was boosted this year to year. Capital returns and special dividends.
He calls out HLS and P. PM currently hold 15 positions fully sold 11 over the period. So a fair bit of turnover, but was spread across the year, not all around Trump Liberation Day over the financial year, I’ve held 26 stocks and 15 have positively contributed to overall return. Biggest rule break of year was partial selling some winners, which has negatively impacted returners.
Both are now higher than when I sold. Well, congratulations on, good on you for being honest. Confessing. It’s confessional. This is our, uh, QAV confession season. Uh, but uh, there [00:12:00] you go.
Tony Kynaston: Good. Well, thanks for sharing Fred, and well done. That’s great.
Cameron: Yeah. Yeah. So if anyone else wants to share your results with us, uh, we’d love to hear more.
Hopefully everyone had a good year. Uh, what else you got to talk about today? Tk?
Tony Kynaston: Well, uh, nothing in the news section, uh, but I’ve got a pulled pork on grain engineering if you’ve got nothing else.
Cameron: I just wanna talk briefly about Edia and ZED scores. Uh, for tho I know a few people are using Stockopedia and my Wikipedia checklist, and I’ve been going backwards and forwards over Zed scores again. Uh. ’cause they’re kind of annoying. And the, I’m doing a pulled pork on our US show today for a Korean steel company, posco.
And when I was doing a drill down on it, um, I realized that [00:13:00] the, it had two Z scores and stockopedia, the a z the one I download is a Z two. But then when I looked on the front page of Stockopedia, they were reporting a Zed one, which was about half the, I think the Zed two was about 3.8. So it got over my 3.5 cutoff and got a score.
But the one on the front page of Stockopedia for their um, profile had a 1.8, which was the Zed one. So I did this deep dive on Zed scores again, ’cause I’d forgotten my Z score. Uh, um, whatever, how, what it is and how it works. And there are different Zed scores for different sectors. So, uh, I know you know this, but for those of you out there, like me who don’t know this, Altman developed the Zed score stuff in the sixties and he was looking at manufacturing companies in the US and you know, what led some of them to go bankrupt and, and others not to, and that’s now the Z one.
But [00:14:00] non-manufacturing businesses have different. Ways that they use their assets and accounting, et, et cetera. So the Z two is used for non-manufacturing, non-financial firms. We know financial firms and Zed scores don’t really work very well. So I’ve been using Zed too because a lot of the companies that end up in our buy list aren’t manufacturing in the US.
A lot of them have been financial firms where we ignore it and shipping and you know, retail and stuff like that. But, um, the problem is that. Some, like this Korean steel manufacturer should have a Z one, so I need to have Z ones and Z twos, and I’ve run out of fields that I can use. You’re only allowed to have 25 fields in a stockopedia download, and I’ve used them all up.
So I got back to the point where I’m like, should I just delete the Zed score altogether and [00:15:00] not worry about it? It is somewhat of a. Uh, caution around potential bankruptcy. Um, but, you know, uh, we have other, we, we look at the F score, the Petrovsky F score. Um, we look at their cash generation, we look at different things.
So I, I don’t know, I’m, I’m wondering if I should just. Rely on the other financial metrics and remove the Z score altogether because it’s getting very complicated in the us My think in Australia, and we, you know, when I was originally building the Wikipedia thing and I was comparing, uh, our Stock Doctor checklist and the companies on it, and then looking at the stockopedia and the Zed scores.
And a lot of the companies that ranked very well in our checklist in Australia when I used stock, uh, uh, Stock Doctor had bad looking zed scores in Wikipedia. But [00:16:00] I can’t remember if I was looking at Zed one or Zed two and if it was Zed one and it’s based around manufacturing. Most of the companies on our checklist in Australia aren’t manufacturing.
’cause we don’t have a lot of big publicly listed manufacturing business or mining and financials and telecoms and whatever the hell else it is. So the, probably the, the Zed score doesn’t make a lot of sense with those. At least the Zed one doesn’t. Um, but, and then in the US, I mean they do have manufacturing in the US but the manufacturers that I’m coming up with, like these guys are actually Korean anyway, not us.
And POSCO is as we’ll see in the, when we get to the US pork, pork in their US show, it’s kind of, it’s not state owned anymore. It was originally state owned. It was privatized, but. The analysis that GPT gave me was that the, the South Korean government aren’t gonna allow POSCO [00:17:00] to fail because it’s sort of, it’s the seventh or eighth largest steel manufacturing company in the world, central to their industry, central to their trade.
Very, very key operator. So it’s not gonna go bankrupt is my point. Um, it’ll get bailed out. At the very worst by the Korean government, it’s not gonna fail overnight. And if something goes backwards, we have, you know, our cell triggers to exit it. If things start to go better. We have steel commodity things to get us out if the steel price goes backwards.
I’m wondering if I should just cut it all together, tk.
Tony Kynaston: Yeah, I, I think you should. I thought we already had, didn’t we discuss this? while ago. Uh, happy to
Cameron: No, I
Tony Kynaston: is more relevant, um, to what we need, which is a financial health score. I totally respect the PIOTROVSKY score, but, um, I, I could never get it to a whole heap of sense. Like when we were comparing [00:18:00] stocked the Stock Doctor for the Australian companies, um,
Cameron: The F score or the Z score.
Tony Kynaston: score
Cameron: Oh, right. The F score has a lot of overlap with the stocker.
Tony Kynaston: Stock
Cameron: Uh, financial health score. Yeah.
Tony Kynaston: yeah. Which was interesting. I always thought that was interesting because they, I think from limited of the Altman score. And how Stock Doctor originated, they’re both coming at it from the same They both went to look at failed companies and then worked out which metrics, um, could predict it and then inverted them and said, if you had, if you’re a long way from those scores, you were a good company of your, your ability to keep going and not go bankrupt.
So surprised that they, they, you know, both, um. They, they didn’t correlate. But anyway, but yeah, we’ve, we found the Zed score just from experience bouncing all over the place and not being anywhere near as helpful as the F score, least in our [00:19:00] world.
Cameron: Yeah, I mean, when it comes to manufacturing firms, I’m not so sure, but I, I think we have enough protections in place. Um, I think it’s okay. One of the interesting things about it though, is it seems to scare off, uh, like a low Z score scares off big funds in the us, uh, which means that some of these stocks.
That score well with us have a low Zed score, and that might be why we’re seeing value in them, because they’re not very favorable to big US funds that get scared off by that, along with a number of other things. So anyway, I’ll talk about it. I want get to POSCO later on, but I just wanted to run that idea past you just ditching it all together.
Tony Kynaston: we can, we’ll talk about this on the US show, or maybe not, but um, POSCO is a steel company, steel manufacturer.
Cameron: Well, primarily still. Yeah,
Tony Kynaston: the steel price [00:20:00] doing?
Cameron: good question. Um,
let me see.
It’s a cell.
Tony Kynaston: mm-hmm.
Cameron: Yeah, well, you know, we don’t own it anyway, but I’m still gonna talk about it. I just tell people, yeah, don’t buy it. It’s been going down. Everything’s going down. Actually. Commodities, a lithium is a buy. Lithium turned around now, a million turned around. But
Gold’s a Josephine.
Tony Kynaston: coals now are, are by again.
Cameron: It has been, uh, for a week or two I think. Yeah.
Tony Kynaston: I just noticed today, yeah, I couldn’t work. I was, I almost did a pulled pork on Yanko, but, um, if anyone wants me to do that, let me know. I’ve done it before, but now that thermal coals are by, it’s, it’s turned up. I.
Cameron: Yeah. Um. Aluminums are buy lithiums are buy, but wheat became a Josephine this week. Magnesium zinc became [00:21:00] josephine’s crude oil. We men, I mentioned, I think last week it was a bi briefly, and then it became a Josephine. But yeah, gold with the, I don’t know, recovery of something. Um, tariffs, whatever’s, I dunno.
For some reason gold has now stopped. Its, uh, joy ride briefly.
Oh, it’s back up.
Tony Kynaston: It’s a Joseph thing though. It’s not a cell.
Cameron: No, it’s Josephine. God, I don’t, wouldn’t even know how to, I’m looking at the
chart right now on,
Tony Kynaston: way from
Cameron: yeah. It’s got a crazy looking chart since, uh, the election, since the US election had just rocketed up. I dunno what that’s telling you. Yeah. Around the US election, it was trading at 2040 US dollars, and now it’s trading at $3,319.
Yeah. [00:22:00] Um, actually looking at gold today, it’s, uh, back to being a buy again. It’s turned around since I did it yesterday. Go figure.
Yeah. Well, there you go. I’m gonna have to change my sheet yet again. Um, well that’s all I’ve got. Tony,
Tony Kynaston: All right. How about a pulled
Cameron: wanna do your, do your pulled pork?
Tony Kynaston: Yeah, gr engineering services code is GNG. Now, I, I find it on our pulled poor of stocks we’ve covered, but it, I think we may have, I may have talked about it years and years and years ago, but anyway, I’m going to go over it today. It didn’t ring too many bells with me.
And it’s possibly because like a lot of stocks in our buy list, it’s, um, it’s in the. Engineering services field. So we have a number of stocks I’ve covered, um, in that space, and this is one of them. A DT is $380,000 [00:23:00] traded per day. So it’s a reasonably large stock. Um, will suit a lot of listeners. Based in Perth, but it does have offices in Brisbane, Indonesia, and it operates in Africa.
And it also has a, subsidiary in the US based in Tucson, Arizona. it was called Hanlon Engineering, but it’s now. Uh, under the GR Engineering Services banner, from their website, GR Engineering is a leading engineering consulting and contracting company that specializes in providing high quality engineering, design and construction services the mining and mineral processing industries. services cover all aspects of the project lifecycle from the initial evaluation and study phase through to design construction. Commissioning and operational support. So we’ve seen companies like this before. They’re, they’re mining services companies. [00:24:00] GR Engineering specialize in mine, feasibility studies, design and construction, project management and consulting. they also have a division that provides similar engineering services to the oil and gas industry in Australia and Southeast Asia. I guess one thing that might differentiate them a little bit is that they often provide fixed cost fixed maximum price, uh, solutions, uh, when they’re tendering for business and they often do turnkey solutions to, uh, construction projects as well. Uh, they op they operate a number of different brands, and their sub-brands include. Mi, A‑M-I-P-A‑C and Paradigm Engineering, and they, they tend to be, uh, well, they are leading providers of control systems, operational technology and engineering services in the mineral processing iron ore and energy sectors. Uh, the process controls, business [00:25:00] delivers, control systems, automation and digital solutions for key clients, such as First Quantum BHP, Rio Tinto Glen. Core technology, OC Teddy and other smaller conglomerates. So, only are they. Doing feasibility studies on mines, then building the mines or the processing plants, but they’re also, uh, uh, providing engineering services to the processing side of the business.
So just helping to dig on or outta the ground, for example, but also, um. Processing it before it goes overseas. uh, that’s gr engineering in a nutshell. share, the share price has been doing well lately, and it tends to bump up when they announce contract wins. And they’ve had a number of those in the last six months, including on the 20th of June this year. So last week basically, or 10 days ago, they won the. A contract for engineering, procurement and construction [00:26:00] for the expansion of the existing Eloise copper processing facility in North Queensland. For a IC mines, value was 77.6 million, including provisional sums. Um, that sort of caught my eye because a IC is also a QAV. Stock. Um, the code is a one m and on the day that that, uh, announcement was made, the stock jumped 7.3%. likewise, in April, uh, they won a contract from Horizon Minerals. HRZ is the code. was to do engineering studies work to support the refurbishment and repurposing of the Black swan processing plant for gold production. Likewise, the stock was up three over 3% on the day of that announcement. And back in September, announced that they had been awarded a $25 million contract to, uh, upgrade and com and recommission the Woodlawn [00:27:00] processing plant for a company called Develop Global, and the stock was up 5.3%. that, uh, announcement.
So this is something to be aware of, I guess if you’re interested in looking at this company to purchase, it’s gonna be, um, news driven and driven la lot by contract wins. The stock price has also been moving up they’ve announced their results. And their most recent half results for December 24 was strong. revenue for the half up till the end of, uh, December 24 uh, was $272 million versus $187 million for the second half in 23. ending December, 2023, net profit was 21 million for the same period versus 14 million. Earnings per share was 12.68 cents for the most recent half versus 8.50 cents per share a year before.
So all of those contract wins are having a material effect on the bottom line for the company [00:28:00] and in their half yearly announcement, uh, the MD said during the. Second half net cash flows from operating activities was $56.1 million, resulted in the cash balance of 111.8 million at 31st December, 2024. The higher cash generation meal borrowings, low capital intensity, and excellent project delivery, all contributed to the maintenance of a robust and stable balance sheet. Uh, so that’s, you know. A, a few ticks there from the quality side of things. lastly, just to look at the last five years, the share price has gone from 86 cents up to $3 25, so nearly a four fourfold increase over the last years.
So it’s been doing very, very well. Uh, it’s been on the bail list, uh, on and off for a long time over those five years. So, um. People may already be already be aware of it, may already own it, but, um, certainly doing well. [00:29:00] numbers, the QAV numbers, I’m using a price of 3 25 and unfortunately that’s 29% above the consensus target, which we don’t often see. also above the iv, one of a dollar 16 and IV two of $2 and six. So, the price is getting fully valued. yield is 6.15%, which is above the, uh, average mortgage rate at the moment. So it scores for that. Uh, Stock Doctor financial health is strong and recovering, so we scored a two for the recovering side of things and I like to see that Edia quality rank is. 93 for quality and overall 98. So it scores well in Wikipedia, the F score is seven out of nine, speaking of F scores, so very good. Um, what also caught my eye in looking at the numbers was, um, the ROE for this company is, uh, nearly 60%, 58.9%. So kind of echoes the comments that the MD made about the company, um, [00:30:00] being capital light.
So. Not just the tech sector, which is capital like services company is also capital, like strong, ROE. Uh, PE at the time of the last results was 13.3, which was not the highest or the lowest. The, the current PE is a little bit higher than that, and scored it on that, it would be negative. Uh, it is just outside the range, but at last results at the end of December.
13.3 Pr/OpCaf is 5.71 times. So even though, uh, on a PE basis, it’s getting up there and on the valuation basis it’s getting up there, it’s still throwing off lots of cash and on a Pr/OpCaf basis as well within our. Our guidelines, uh, net equity per share is only 44 cents, and they’ve got some goodwill from acquisitions.
So the NTA is only 27 cents, so we can’t buy this company for anywhere near book or book plus 30. Uh, interestingly enough, in the download from Stock Doctor, which I used, they have a [00:31:00] negative forecast earnings per share of minus 9%. So it gets a negative one for growth over pe, but I find. That. Conservative given the pipeline of work the company’s announcing and given the strong results recently, I’d be surprised if it didn’t, um, increase its earnings per share going forward. But, uh, Stock Doctor may know something more than we do. Uh, directors hold 11% of the company, including the owner, founder Giuseppe or Joe Totaro, uh, owns just over 5% and has had 40 years of.
Mining engineering experience. So we score it for an owner. Founder shares, uh, have been rising quite for quite a while, so it’s not a, a recent three point trend line upturn, so we can’t score it for that. Equity is lumpy and not consistently increasing, so we can’t score it for that. Uh, overall. I’m giving it a nine outta 13 for quality, which is 69% and a [00:32:00] QAV score of 0.12. it may drop off the bio list, um, if the share price keeps rising, because it’s getting close to the bottom now. Uh, so. You know, people, if you’re interested, have a look. It may not be there if the price keeps rising, um, in a little while. on the risk side of things, it, well, it’s a mining services company, so if mining has a downturn or if commodities have a downturn, uh, the, the pipeline may dry up. They do. Um, they do though on the processing side have a lot of recurrent so. They are diversified away from just getting tender winds to build mines. So that’s, that’s a good thing. But, um, a mining downturn will obviously affect them and. Uh, they are reliant on contract wins to keep their full-time engineering staff effectively utilized.
So I think their, their business model is to hire a couple of hundred engineers and then put them to work. And if they don’t have the work, I’m not sure how quickly they can get outta [00:33:00] those contracts. But, um, I. would be a problem if there was a quick and sudden downturn in the mining industry. Uh, I’m also gonna highlight the fact that even though this might be an advantage for them from a client point of view, but as we’ve seen in the, in the property development world, fixed price and max price contracts may have difficulty. If there are rising costs, which there have been over the last couple of years, doesn’t, hasn’t been called out as a problem, but, uh, maybe a problem if inflation. Know, it keeps driving the costs higher or there are other problems with the costs increases in there on the fixed price contract. So that may be a risk for them going forward. the strengths are the balance sheet, plenty of cash, plenty of, um, uh, prop calf, uh, in a capital like business. The owner, founder is very experienced and as I said before, repeat business on the processing side. So GR engineering. Have a look.
Cameron: Thank you tk, and uh, I can tell you when you last did it as a [00:34:00] pulled pork, it was November, 2022,
Tony Kynaston: Right.
Cameron: 5 43, the mounting yard.
there you go. Dunno why it was called that, but that’s the last time you did it. Uh, GNG, we don’t hold it in any of our portfolios. I can report, I think we have at some point, but we don’t right now.
Speaking of portfolios, I was wondering why the light portfolios 2, 2, 1 and 2 2, 2 underperform so badly. They had a couple of deadly ones. Um, they both held a MI. Which dropped 30% or so the other day, which took the wind outta their sails. And the 2, 2, 1 also held HLS
people may recall that dropped suddenly Heus not too long ago.
So
Tony Kynaston: was a
Cameron: it’s [00:35:00] interesting how.
Tony Kynaston: though, so you should have got the capital back into the portfolio.
Cameron: Yeah, I am not sure how that shows up in Navexa though, honestly. So, 2, 2, 1. Let me see. S,
yeah. Capital gain down 33%. Income return up 41%, total return, 8.38%. Eh, so we came out of it at a profit despite that, but in terms of the performance capital gain wise, it took the wind out of its, uh, the portfolio sails. Um, so it’s interesting to me like the, if I’m looking at the winners versus the losers in 2, 2, 1 versus say 2, 3, 1, which [00:36:00] had a 24% return.
It’s not that much difference, you know, it’s like one or two stocks really that perform well or don’t perform well and, uh, that, that can make a big difference. So, ’cause 2, 2, 2, 2, 1 for the financial year, I. It had a couple of really good ones, right? It had a MA up 69%. It had WGN up 65% RRL up 35 MLX up 35, BFL up 31, but it didn’t have three over 60%.
You know, it just, it was missing that one or two that that would’ve, uh. Maybe kicked its performance up as well as 2, 3, 1. Anyway, uh, it’s interesting when I look at its, uh, performance though, to the 2, 2, 1 portfolio up at [00:37:00] January, well, not even, yeah, by the beginning of February it was down 1% for the financial year.
It went from. In August, it was down 5% already for the financial year. As of January, it was down 1% versus the STW was up 11% at that stage already, so it was under performing by 12% in January. From January to the end of the financial year, it caught up. It ended up finishing 9% up versus 13.61. So the second half of the financial year, it actually did quite well despite.
Helio and a MI, which is a, a big one. If I look at the beginning of June 2, 2, 1 portfolio was up 12.61% for the year versus the STW up 14.3%. So it was catching up and then it had a MI just gutted it, knocked it down. So, uh, you know, [00:38:00] luck of the draw.
Tony Kynaston: Well, yeah, lack of a draw, but um, it should even add over time. It’s the same process being applied. Just
Cameron: Yeah, I mean y yeah, different years. I mean, some years. One portfolio does really well.
I remember 2, 2, 2, which underperformed this year. If I go back to like a couple of years ago, I. Previous calendar year. Yeah, no, I remember there was one year, it was up like 25% for the year. Can’t remember which year it was ’cause it had a couple of big winners.
So yeah, this year not so well. But over time, if I look at it, yeah, all time it’s outperforming the index only by a few points, 11% up eight. But it was, it was up 25% April, 2023. It was up 25% versus the STW up 4% over the same period of time. So [00:39:00] yeah, has some good years, has some average years, has some bad years. So keep telling people it’s sort of, um, the long haul thing, right?
Tony Kynaston: Absolutely.
Cameron: years, good years, bad years, average years. Just waiting for that really good year where you do 30, 40% return and it just sort of puts the wind in the sails for the next few years until you get another great year.
Tony Kynaston: Correct. Yeah,
Cameron: Patience pad one.
Tony Kynaston: Well, and the nature of the beast is we don’t know when that good year is coming. It’d be great to know when it was, you’d pack up and travel the world and come back and invest when that good year was about to happen. But
Cameron: Yeah, and I think it’s the hardest thing, um, for new investors like myself, uh, years ago to, to appreciate is it’s not. Doubling the market every [00:40:00] year. It’s one really good year. If you, if you stick to a disciplined investing system, buying undervalued stocks and holding them as long as you can, um, you know, you, you get one really, really good year and that sort of takes care of the rest of the years.
You just gotta
keep doing it.
Tony Kynaston: get dividends if you hold those stocks long enough where the yield becomes important can, and the yield itself can outperform the index.
Cameron: Right.
Tony Kynaston: Hmm.
Cameron: But people tend to have a couple of bad years or average years
and then go, ah, it’s not working, and go do something different.
Tony Kynaston: Bitcoin.
Cameron: Bye. What I was gonna say, all right, well thank you for GNG Tony, after hours, what you got for me?
Tony Kynaston: A, a few things. Uh, Jenny and I logged on Expect Expectantly to watch the new Nick Cage movie on Stan called The Surfer, we turned it off after [00:41:00] about 20 minutes. It was
Cameron: No,
don’t, don’t tell me that
Tony Kynaston: it was so bad.
Cameron: I was, I was gonna get a stand subscription just to watch it.
Tony Kynaston: Don’t, it’s like think, think Summer Bay, think home and away. Production values, script acting, and then kind of horror theme to it. And poor script, just poor production values. Really cliched, did
Cameron: Rotten Tomatoes. Critics rating 86%. Audience rating, 46%.
Tony Kynaston: well there you go. experts for you, isn’t it? Uh, I thought that was
Cameron: That’s a, that’s, that’s a big split
there.
Tony Kynaston: you know, an Australian production company has said, how about we roll the dice and put all the money into the, into hiring Nick [00:42:00] Cage and forget about everything else. I’ll just shoot it on my iPhone. Uh, you can do the keyboards, you can, can be lay low and do the soundtrack and uh, we’ll go from there and it’s just terrible.
We’ll go to the beach. Everything will be shot in the car park at the beach, and that’ll be it.
Cameron: Well, I, I dunno, the director, Lorcan Finnegan, but he’s got a pretty good track record. Like he is, he had a film before this Nightmare Radio, the Night Stalker, which sounds right up my alley just from the title, but it’s got a 40%. Raiding. Uh, but yeah. Oh man. This just like, sounds like my type of film. Candy is a late night radio DJ with a program where people call to tell her real horror stories.
One of her listeners begins to call her insistently candy, quickly discovers that there is a strange connection between them. Soon she will find out how far and obsessed fans willing to go. Sounds fantastic. Why does this have like six people listed as a director? That’s, that’s not a good sign. [00:43:00] Um, okay. I dunno what the story with that is.
But his other films know sibo, uh, 74% vivarium 73% without name 81%. So he’s got like a pretty good track record court.
Tony Kynaston: Well, yeah, I mean, I wanted to like it. I wanted to, you know, see an Aussie person do well or an Aussie production company do well. But yeah, we just turned it off. It was so bad.
Cameron: Okay.
All right.
else?
Tony Kynaston: Oh. But I saw a, seen a couple of documentaries recently, which are fantastic. There’s one on Rob Ford. know who that is?
Cameron: Yeah, yeah. The Canadian pre-Trump. Trump.
Tony Kynaston: Lord Mayor, when we were over there. And, uh,
about his time as mayor and about
Cameron: I.
Tony Kynaston: how he
Cameron: Is he the one who died or was his brother who died?
Tony Kynaston: he, he died. His brother then I think, became the of Ontario and carried on the Ford name and quite as outrageous as his brother, but um, was still [00:44:00] in the Trump. Vain. Um,
like it was like watching Trump before Trump. It was the doc documentary’s. Fascinating. And I guess, you know, we, we were there at the time so it resonated, but yeah. Well with a look. Very interesting.
Cameron: What’s it called?
Tony Kynaston: oh, I don’t know. It might even be called something like train wreck or car crash or something like that. Yeah.
Cameron: Okay, great.
Tony Kynaston: uh, watched the great documentary, uh, on the Go-Betweens recently, which is was, um, I hadn’t seen before. I think it was made in about 2017. It’s called right here, of the Go-Betweens. Yeah. really
Cameron: Oh,
Tony Kynaston: Loved it.
Cameron: I can’t believe we haven’t seen that.
Tony Kynaston: mm. So users,
you know, for the agent interviews, but the sort of way they do it is they have, They’ve got a Queensland, they’re out in the country and they [00:45:00] pull in each muso or each person who was involved in the Go-Betweens and them on the veranda and interview them, and then interlace film clips and documentary footage as well. So it’s, it’s really interesting, really good.
Cameron: Oh, wow. I’m gonna have to, where did you, where did you watch that? Do you know where it was?
Foxtel, Rupert Murdoch supporter. I don’t know.
Tony Kynaston: He sold it.
Cameron: Oh, has he? Oh, oh yes. Right. He sold it to Telstra. Was it? To Telstra.
Tony Kynaston: sold it to, they both sold it to a company. I think it’s pronounced DA or Daan or something. It’s a UK
Cameron: okay.
Tony Kynaston: broadcaster, which
Cameron: Hmm.
Tony Kynaston: maybe even worse ’cause I think it’s Saudi backed or something like that. Or it’s got, I think it’s got, uh, Saudi money in it. No one can work out how it makes money.
Cameron: Right. Maybe it doesn’t, maybe it doesn’t need to.
Tony Kynaston: no. It could be money laundering. Allegedly. I’m being farfetched. Uh, what else? Um, [00:46:00] the, you seen, there’s a series called The Agency with, uh, Michael Fassbender in it. That’s, we’ve,
Cameron: Oh, okay.
Tony Kynaston: Really good,
Cameron: No, I haven’t heard of it.
Tony Kynaston: type thing, but it’s set in Britain and great cast, even stars, the gerbil. Who, um, I don’t normally like, but he was good in it
Cameron: Al,
Tony Kynaston: and, um, yeah,
Cameron: you’d be talking about Richard, Richard Gere. That’s who you’re referring to as the gerbil.
Tony Kynaston: yeah.
Cameron: He must be getting on.
Tony Kynaston: he is. Yeah. So that was good. I really enjoyed that. Quite, quite complex. It’s in that sort of British spy mold rather than the American spy mold. Um,
Cameron: Right.
Tony Kynaston: lots of agents and things going on and having, having to go undercover and keep covers and what happens when they come out and all [00:47:00] that kind of stuff.
But I really enjoyed it. Uh, that was the agency. And then have you, I don’t know if you. it or not, I dunno if you told me, but like a 10 or 15 minute fan made documentary on Bullet that Quentin Tarantino So someone’s taken, you know, his uh, book he wrote last year on, um, what’s it called? He wrote a book on
Cameron: Yeah,
Tony Kynaston: Yeah.
Cameron: yeah, yeah. I read it.
Tony Kynaston: cap, the chapter of bullet. So he must have like done the audiobook for it. ’cause they take his of bullet and then put their own clips. Underneath it and it’s fantastic. It’s really good.
Cameron: Fantastic.
Tony Kynaston: You know, how he was competing with, uh, Paul Newman and, um, yeah, just how Goldfinger changed the way action movies were shot and cut and then that was used as a template for Bullet and Yeah. It’s just, and
Cameron: And Lalo
Tony Kynaston: Yep.
Cameron: soundtrack. [00:48:00] Yeah. I love the bullet theme. Oh great.
Tony Kynaston: So
Cameron: horses golf.
Tony Kynaston: Uh, no golf. I’m still, I went and played. So last Friday I went and played nine holes with my brother-in-law and my back still isn’t right, so I’m just gonna rest that for a bit longer.
Cameron: Alright.
Tony Kynaston: from Warwick. Which was nice. So they stayed with my sister in Melbourne and I went up there on during the week and Alex came over and we went, uh, looked, showed them around Melbourne and then went and played some kind of fancy p putt thing above Flinder Street Station at the moment.
So we did that
Cameron: Above Flinder Street Station.
Tony Kynaston: yeah, it’s like they’ve got these, um, exhibition halls above Finlay Street Station and it was kind of
Cameron: Yeah. Yeah.
Tony Kynaston: as, and art. Art installation. So there was like a theme to every hole and uh, there was a bar and stuff. So Nice. It was good.
Cameron: Wow.
Nice.
Tony Kynaston: um, off Flinder Street, which was lovely. Sitting [00:49:00] outside on a hilly Melbourne night under the heaters. It was great eating
Cameron: Ah, miss Melbourne, God damn Brisbane’s had Melbourne weather for the last couple of weeks and I’ve been loving it. Just, you know. Put jeans in a long sleeve top on and some my R Williams and you know, a scarf. I think I wore a scarf one day. It was great. Loved it.
Tony Kynaston: Yeah, I’m really enjoying the weather. It’s, uh, we’re getting lots of clear days and then rain overnight, even though it’s like eight or nine degrees. But it’s lovely. It’s just really nice, crisp, clear weather. I.
Cameron: Yeah, I love it.
I miss it.
Tony Kynaston: Yeah.
Cameron: And b.
Tony Kynaston: Blac is gonna run on Saturday if he gets in. So a bigger race.
He’s coming off a win. Uh, it may get belted out, but hopefully he gets a start. watch out for that. I.
Cameron: Right. Good luck on that. Well, uh, my week we went to, I think on pension last week, we were gonna, this, we went to see the, [00:50:00] uh, orava Quartet. It’s a Brisbane based quartet that’s part of Opera Queensland. And they did a and played three pieces. Uh, Beethoven’s First String Quartet, a Schumann. Piano quintet.
They had a pianist join them, but the, the, the highlight was the Kovich eighth String Quartet. My first time seeing Kovich performed live, and one of my favorite pieces, the Eighth String Quartet, which was the one that he, according to one of his friends, he planned to commit suicide. Um, around about that time, he said it was his epitaph.
It starts with his initials. Um, uh, which was one of his motifs. But yeah, a tremendous piece of music and it was very well played and so that was great.
Tony Kynaston: His initials. So
Cameron: finished,
Tony Kynaston: How do you do an s on the, on the string instrument.
Cameron: it’s in German. It’s in German, yeah, yeah, yeah, yeah, yeah. It’s the whole thing. It,
Tony Kynaston: Is he German?
Cameron: yes. No, he’s Russian.
Yeah.
Yeah. [00:51:00] But it’s hard to perform Russian initials. No, it’s just his initials in German. And there’s an H in there, but the H becomes an A in. Something. Anyway. Yeah.
Beautiful piece of music and, and he, he wrote it. He was in Dresden, he was in Germany when he wrote it. He was in Dresden visiting Dresden in 1960 and was just horrified at the, the ravages of Dresden after the bombing in World War ii. And, and it was the, the. The quartet was, um, dedicated to the victims of fascism and war, but uh, it was also his own, supposedly his own epitaph.
He said, no one’s gonna write an epitaph when I die, so I’m writing my own. And he was contemplating suicide at the time. It’s a very, very tragic, sad piece of music. But the second movement, it’s quite famous. It’s, um, this maelstrom that sounds like the bombing of Dresden. And, uh, it’s, um. [00:52:00] Yeah. Mesmerizing.
Any who? That was great. We will finished the Righteous Gemstones, the final episode of that last night. That was a bonkers ending. That was fun. If you haven’t seen that, uh, Walton Goggins performance in the Righteous Gemstones is Baby Billy.
my God. Just fantastic. I’m gonna miss Baby Belly.
Tony Kynaston: I haven’t watched the series, but I’ve seen enough clips of it to know who Baby Billy
Cameron: Uh.
Tony Kynaston: Yeah.
Cameron: Baby belly. Come on now. His performance is just so ridiculously sublimely over the top. Walton Goggins is fantastic. Uh, I’m still reading the Gorbachev memoirs, which is fascinating. Did go, did, uh, Chernobyl. Um, he’s in sort of 86. He’s in the middle of trying to roll out Paris and gls and, um, talking about Chernobyl and how the West positioned Chernobyl and their, their management of it, which he.
Totally disagreed with the West and Media’s perspective [00:53:00] of how they managed it, which we she’d expect. But, um, uh, interesting to hear his version of the whole thing. And, uh, yeah, I’ve been listening to a lot of Lalo Schiffrin and Nina Simone doing, going deep on Nina Simone’s back catalog love and. Nina Simone, but yeah, and Lalo la all the Lalo stuff, not just the film soundtracks, but the stuff that he did in jazz.
He’s got a jazz mass, which is fantastic. It’s like a lot of. Sort of classical, Mozart type mass music, Catholic mass, but jazz versions of it and his boss Nova stuff and yeah, a lot of what a career? 91, I think he was. Bill Moyers too was like 91. The two of them were in their early nineties. Very, very big, uh, ink Careers, influential careers.
So I’m enjoying that. That’s it for me. Yeah. All right. Well, that’s it. Oh, you wanna talk anything more about you? We, we, I cut you off when you were talking about Lalo [00:54:00] at the beginning. Kelly’s heroes you were talking about.
Tony Kynaston: it’s fine.
Cameron: That’s all good.
Tony Kynaston: remember that like almost every sort of. Sort of, you know, hard driving detective movie or something in the seventies, or spy movie had Lalo as the soundtrack. It was just so good. He, I think he even
Cameron: Yeah.
Tony Kynaston: TV
too. I’m not sure if he did Starsky and Hutch, but he was always, he was
Cameron: Well, mission Impossible was a Mission Impossible. Was a TV hero. Yeah, yeah,
Tony Kynaston: but it was, that was a bit more popular than what he’s known for. It’s that really sort of driving downbeat, more like a bullet style opening soundtrack.
Cameron: yeah. Well, and he said the mission impossible thing, he wrote in three minutes.
Tony Kynaston: Oh really?
Cameron: just, yeah. Um, speaking of which, just for, uh, Aussies at home, um, nine news, um, the [00:55:00] tar sequence from Cool Hand, Luke, uh, used by nine news into the nineties. You remember the nine news theme song from the nineties? I can’t play it ’cause we’ll get pinged for copyright, blah, blah, blah, blah, blah.
But yeah, he was 93, not nine one. His uh, yeah, nine years. Used some of his music. But all the Clint Eastwood stuff, the dirty Harry’s, all of those. He did a lot of Steve McQueen stuff. Um. Yeah, just massive, massive career and uh, a lot of it’s great stuff. A lot of stuff is forgettable too, I guess after you can do 127 soundtracks, but.
Tony Kynaston: Yeah,
Cameron: I think if you can do one timeless thing, it’s not too bad in a career, let alone pen
timeless, you know, pieces of music or however many he did. He is like John Williams up there, just churned him out time after time, after [00:56:00] time.
Tony Kynaston: Very different sort of style of music to John Williams, but yeah, I agree there
Cameron: Yeah.
Tony Kynaston: Yep.
Cameron: Yeah, absolutely. Uh, alright, well that’s it. Let’s, let’s go talk America tk.
have
a good week everyone, or Cav?
Tony Kynaston: C.
Cameron: Cav a good week?
Tony Kynaston: a, let’s have a good
Cameron: Yeah. Cav a good year.
Tony Kynaston: But with the
Cameron: New year.
Tony Kynaston: rates next week this time.
Cameron: Oh, you think? Okay.
Tony Kynaston: Hmm. Hopefully.
[00:57:00]
[00:58:00]

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