QAV AU 831 — A‑Musing

 

Cameron: Wel­come back to QAV Aus­tralia.

Tony Kynas­ton: Let’s be hard­core focused on the share mar­ket care.

Cameron: not as fun as talk­ing about kung fu. this is, uh, we’re record­ing this on the 5th of August, 2025. I can’t find my notes, so I can’t even say what episode 8, 8 31, I think it is. Eight 30. Yes. 8 31. Uh, how have you been? Tony, how’s your week been?

What’s

Tony Kynas­ton: Good. Not much news. Played a lot of golf. The weath­er’s turn­ing for the bet­ter. It’s, it’s not tem­per­a­ture wise, it’s not feel­ing like win­ter’s gone, but it, we’ve had a, a week of sun­ny days, so I played, uh, four games of golf this week, which has been fan­tas­tic.

Cameron: How’s the

Tony Kynas­ton: Back­’s hold­ing up. Yeah. Um, been doing the gym work all through win­ter, so, uh, yeah, so far, so good.

Yeah.

Cameron: go. Well, you can tell me more about that and after hours. Tony, let’s get into the, uh, let’s get into some news and some ques­tions. We’ve got a cou­ple of ques­tions this week, which is nice for a

Tony Kynas­ton: It’s great. Thanks for those.

Cameron: I wan­na apol­o­gize. [00:01:00] I wan­na apol­o­gize to all our club mem­bers. I screwed up the buy list yes­ter­day.

Um, because I wrote a clever lit­tle macro. It was the sim­plest, sil­li­est thing when I’m doing, when I’m com­pil­ing it all, I need to just fil­ter one page. You know, I need to fil­ter by prop, uh, not fil­ter by, um, um, QAV score and, and, and, you know, stack rank and by QAV score and fil­ter out cer­tain ADTs and those with qual­i­fied audits.

And I thought, I’ll just write a, I’m sick of like going fil­ter, fil­ter, fil­ter. I’ll just write a lit­tle macro that’ll just like do it all. And I hit the Mabb, wrote the macro, ran the macro, took it, blah, blah, blah. Turns out there was some­thing in the macro that should­n’t have been there that past­ed a whole bunch of data in.

So it, uh. And I should have known because the final list had a bunch of new stocks in it. And I, and I always think if there’s a bunch of new stocks you haven’t seen before, that’s usu­al­ly a sign that some­thing’s gone wrong. So I went and checked a cou­ple of them and they looked okay. I was like, eh, eh, okay, maybe it’s okay, but was­n’t.

[00:02:00] Thank you to Daniel, one of our club mem­bers for email­ing me last night and say­ing, eh, I think that’s right. So any­way, I put out a new ver­sion. If you haven’t got the new ver­sion, go to the link in the email or the blog posts or the Face­book or the what­ev­ers and get the lat­est ver­sion. Um, mov­ing right along, BPT, Tony, uh, we talked a lit­tle bit about this, uh, I think in the Amer­i­can show last week.

I’m not sure if we cov­ered it in the Aus­tralian show ’cause I added it to my notes. But, um, BPT has become a three point trend line sell and. No,

Tony Kynas­ton: bet­ter.

Cameron: not today.

Tony Kynas­ton: Mm-hmm.

Cameron: Uh, okay. Well it was

Tony Kynas­ton: Yeah, it was

Cameron: point.

Tony Kynas­ton: last week.

Cameron: Um, damnit. I want­ed to ask you about, oh yeah, it’s just above it. I, want­ed to clar­i­fy this with you because we did have a [00:03:00] con­ver­sa­tion about sell­ing cer­tain com­pa­nies because they’re big and maybe we just hold ’em once they come on the list.

Uh, but I think you said BP t’s not big enough. Is that right?

Tony Kynas­ton: Well, yeah, two things. I mean, that was just amus­ing. I haven’t sort of come to a con­clu­sion on whether we should hold large cap stocks. But any­way, BPT would­n’t be big enough. It’s mar­ket cap is. What’s that? 2.7 bil­lion? Yeah,

Cameron: not

Tony Kynas­ton: no. Well,

Cameron: No.

Tony Kynas­ton: I mean, I was think­ing about CBA and Mac­quar­ie group in par­tic­u­lar. Um, and per­haps JB HiFi, which I looked up JB Hi FI’s mar­ket cap, which is 12.6 cur­rent­ly, but it has dou­bled in val­ue.

Um, so it’s was prob­a­bly about 6 bil­lion when I was think­ing about hold­ing it despite the cell line. But look, I haven’t decid­ed whether to do that or not yet. Um,

Cameron: Just

Tony Kynas­ton: just amus­ing. Yeah, I keep putting the, [00:04:00] I keep, I keep throw­ing these things out into the uni­verse and the pod­cast and the hope that some­one out there is going, Hey, I’ve, I, I got an opin­ion on that, or I’ve got some data on that, but, uh, it’s not hap­pen­ing.

Cameron: Right, right. Uh, okay. Amus­ing not a a, a space mus­ing.

Tony Kynas­ton: I have a the­o­ry.

Cameron: it’s just

Tony Kynas­ton: My the­o­ry is by a elk. That’s, that’s an A, not a elk.

Cameron: I. Is this a

Tony Kynas­ton: It is the­o­ry on dinosaurs.

Cameron: sound­ed like you’re doing your Eric, your Eric

Tony Kynas­ton: Yes. There lit­tle, lit­tle at one end. Big in the mid­dle and lit­tle at the oth­er end. And that’s my the­o­ry. It is. That’s mine by aal.

Cameron: actu­al­ly sounds a lit­tle bit goonies, that

Tony Kynas­ton: Oh, okay. Yeah. No, it’s uh, I think it’s cli actu­al­ly. Hmm.

Cameron: Right. Yes. Mov­ing right along. Uh, I did [00:05:00] have to sell some­thing from the dum­my port­fo­lio in a live port­fo­lio last week. Boom. Logis­tics ball, BOLI had to sell and I haven’t replaced it yet ’cause I haven’t found any­thing big enough that, uh, has report­ed or has a sort of report­ing peri­od.

’cause we’re still report­ing sea­son. Right.

Tony Kynas­ton: a NZ or tow­er. I think there’s some oth­er finan­cial ser­vices stocks which often have March in their as their report­ing date. They could be, um, they could be Joseph

Cameron: yeah, not on the buy list as of yes­ter­day.

Tony Kynas­ton: Oh, okay. I did mine this morn­ing. Plin, I’ve got plen­ty group report­ed in March, a NZ report­ed in March. Beach has just report­ed, so it’s actu­al­ly one of the first ones to hit our buy list with new num­bers as is Tri­bune [00:06:00] resources. Uh, bank of Queens­land was Feb­ru­ary, tow­er was March. Uh, URW.

Cameron: Jan­u­ary.

Tony Kynas­ton: Sor­ry.

Cameron: We can’t buy that. It’s de-list­ing. EOW is

Tony Kynas­ton: cor­rect.

Yep. And then E Road. So there’s a few there, but like have it check to see if they’re buys on the ELA or not.

Cameron: Uh, yeah, I think so. Some­thing that were fil­tered out for some rea­son

Tony Kynas­ton: Okay.

Cameron: port­fo­lios, but I maybe I might be able to buy, I’m not sure what I own and don’t own in the dum­my. I might be able to have to the dum­my, I have to have

Tony Kynas­ton: Yep.

Cameron: actu­al­ly, so actu­al­ly the main rea­son I did­n’t is because the buy list that I looked at yes­ter­day was the bro­ken buy list. I come to think of it, and I did­n’t fix the buy list until late last night, and I haven’t had a chance to look yet today. So any­way, I did have to sell some­thing. It’s, it’s not often that I have to sell

Tony Kynas­ton: Yeah,

Cameron: big deal when I have to

Tony Kynas­ton: yeah,

Cameron: Hmm.

Tony Kynas­ton: yeah. Trump’s been good for the share [00:07:00] mar­ket,

Cameron: Oh man. Like, yeah, you see, he fired

Tony Kynas­ton: the head of the stats depart­ment. Yeah.

Cameron: the jobs

Tony Kynas­ton: Mm-hmm.

Cameron: like the jobs num­bers.

Tony Kynas­ton: Mm-hmm. Mm.

Cameron: Um, it’s What do you Mabb, what do you make of it all, Tony? I mean, the econ­o­my appar­ent­ly is not going

Tony Kynas­ton: No.

Cameron: despite the share mar­ket

Tony Kynas­ton: And

Cameron: boom­ing.

Tony Kynas­ton: the stats man­ag­er prob­a­bly won’t improve the econ­o­my.

Cameron: It’s not a good

Tony Kynas­ton: No. It’s straight out of, I mean, you are a his­to­ri­an. What’s it like 1930s Ger­many or Stal­in, or, yeah.

Cameron: It, it, it, it’s more rem­i­nis­cent of Stal­in next, you know, they’ll be get­ting rid of sci­en­tists ’cause they don’t,

Tony Kynas­ton: Right.

Cameron: does­n’t fit with the, uh, does­n’t fit with

Tony Kynas­ton: Well, they’re already, he’s already doing that. Defund­ing uni­ver­si­ties and research. Yeah.

Cameron: [00:08:00] yeah, yeah. It’s, it’s straight out of, um, sort of the Stal­in era when there was a par­tic­u­lar ide­ol­o­gy that. You had to stick to. And if the facts and the data did­n’t stick, the did­n’t, did­n’t map to the ide­ol­o­gy, then you got rid of the facts and the data

Tony Kynas­ton: Yeah.

Cameron: it. And you, uh, I mean it’s, and I’ve, I’ve tried real­ly hard to under­stand that in, in Stal­in’s era. ’cause Stal­in was­n’t a

Tony Kynas­ton: Mm-hmm.

Cameron: Like I don’t think Trump is a dumb guy either. Like if you re, if you lis­ten to the Mooch, the Mooch says. get to be elect­ed pres­i­dent twice if by being a dumb guy. Like he’s smart. But it’s par­tic­u­lar kind of

Tony Kynas­ton: Hmm,

Cameron: a street smart, cun­ning smart. And Stal­in was a smart guy, but set the coun­try back in so

Tony Kynas­ton: hmm.

Cameron: by enforc­ing first.

Mao did the same [00:09:00] thing, ide­ol­o­gy before facts and data. I mean, it’s, and it’s hard for me to, again was a smart guy, hard for me to unpick entire, I mean, I under­stand their fear of counter ide­ol­o­gy under­min­ing the rev­o­lu­tion and under­min­ing all the hard work and the vic­to­ries that they had shed blood for, seems just coun­ter­pro­duc­tive to get rid of data and sci­ence and the peo­ple behind it because it does­n’t map to the mes­sage that you wan­na sell, uh, in the long run.

So any­way. But yes, that’s what this

Tony Kynas­ton: Yeah, me too. Yep. So ques­tions? Is that next?

Cameron: Do you have

Tony Kynas­ton: Oh, I did, I have heaps. No, I have heaps and news. So what do you want? First,

Cameron: Oh, what do you wan­na

Tony Kynas­ton: I’ll talk about news.

Cameron: Okay. You that.

Tony Kynas­ton: All right. So, uh, the first thing is to note is that, uh, [00:10:00] sir Michael Hill, founder of the jew­el­ry brand, Michael Hill, epony­mous jew­el­ry brand, Michael Hill, dialed last week at the age of 86. Uh, he. I guess, um, there was an arti­cle going back over his career. So Michael cre­at­ed the jew­el­ry brand in 79 and re New Zealand with his wife, lady Chris­tine.

They of course, still have Night­wood in New Zealand. Michael Hill then expand­ed to Aus­tralia in 1980 with the busi­ness now oper­at­ing more than 200 stores across the coun­try in addi­tion to stores in New Zealand and Cana­da. Jew­el­ry, how­ev­er, was not St. Michael’s first love. Instead it was music. He dreamed of becom­ing a con­cert vio­lin­ist, but was told that as a 17-year-old it was too late for him to reach the pin­na­cle of his craft.

Instead, he found him­self work­ing at his uncle’s fam­i­ly owned jew­el­ry store in New Zealand. The Michael K. Michael Hill Com­pa­ny has remem­bered its founder [00:11:00] as a tal­ent­ed busi­ness­man. So Michael had a nat­ur­al gift for sto­ry­telling, a key knife for visu­al mer­chan­dis­ing, and an instinct for attract­ing cus­tomers, and a gift for sell­ing.

The com­pa­ny said he won inter­na­tion­al awards for his win­dow dis­plays and rev­o­lu­tion­ized the stores adver­tis­ing with bold, uncon­ven­tion­al cam­paigns. Michael Hill, chair­man Rob Fife said, and endur­ing curios­i­ty, open-mind­ed­ness and cre­ativ­i­ty that chal­lenged all of us to embrace ever­more lofty goals and be uncon­strained in our think­ing, a lega­cy that will con­tin­ue to inspire us.

He said, so valet Michael Hill and um. From anoth­er per­spec­tive, he, he built a golf course in, in the south island of New Zealand called Jacks Point, which some of my friends have played. I haven’t got­ten over there yet, but would­n’t mind at some stage. And, uh, going way back, he was a pleas­ant enough neigh­bor when, um, we were neigh­bors of a place called Dock­side in Kan­ga­roo Point in Bris­bane, in the late, uh, late eight­ies, ear­ly nineties, as he was [00:12:00] mov­ing to Aus­tralia.

Cameron: Oh wow. you ever go ask him for a cup of sug­ar

Tony Kynas­ton: Michael Hill Jew­el­er. No, I did­n’t, no, he’s just pleas­ant. We some­times catch the fer­ry to town togeth­er. Have a chat, but yeah. Nice guy.

Cameron: Real­ly? Oh well. Yeah. Well he built a, built a, an

Tony Kynas­ton: He did. Yep. Uh, I had a, a cou­ple of news arti­cles on Beach to talk about, and as you said, it did become a sale towards the end of last week. They put out their quar­ter­ly report, which, um, was­n’t received well, and then they, uh, decid­ed to put their annu­al num­bers out on Mon­day. So they’re one of the first com­pa­nies off the off the ranked, uh, in com­pa­ny report­ing sea­son.

Um, the first arti­cle deals with the. Accord­ing­ly num­bers and that saw the share price drop. So this is from the AFR Street talk sec­tion. Beach Ener­gy Chief Exec­u­tive Brett Woods said the [00:13:00] oil and gas pro­duc­er is ready to pur­sue acqui­si­tions again despite shock­ing investors with a half bil­lion dol­lar impair­ment and a gas reserves down­grade that looks at to wipe almost 300 mil­lion from its share mar­ket val­ue.

Shares and beach. Whose biggest share­hold­er is Ker­ry Stokes. SGH Lim­it­ed dived as much as 11.6% after the com­pa­ny also flagged anoth­er slight delay at the over bud­get weight­i­er gas project in West­ern Aus­tralia. Its key growth, ven­ture and soft­er than expect­ed out­look for pro­duc­tion in its Otway ven­ture in West­ern Vic­to­ria.

Some ana­lysts sug­gest­ed that devel­op­ments may enter the div­i­dend pay­out to share­hold­ers to be announced on Mon­day in Beach’s full year earn­ings report. It did­n’t. It looks like the share the div­i­dend was increased. Woods who was wide­ly regard­ed as the pick of sev­en CEO and now Beach Chair­man Ryan Stokes described the June quar­ter as strong in a quar­ter­ly update.

He empha­sized mate­r­i­al growth in pro­duc­tion and rev­enue for the year end­ed June [00:14:00] 30, and a strength­ened bal­ance sheet that left beach well placed to chase growth. He said as we look to FY 26, our strong bal­ance sheet, low cost oper­a­tion and domes­tic focus make beach unique­ly posi­tioned to pur­sue both organ­ic and oppor­tunis­tic growth to deliv­er on our vision to become Aus­trali­a’s lead­ing domes­tic ener­gy com­pa­ny would said.

So that’s kind of strange giv­en that they took a big write down and the shares went down. He’s say­ing it was a good year. He then goes on, the com­ments come as Beach’s name as being tossed around as a poten­tial play­er in an indus­try shake­up spurred by the 36.4 bil­lion takeover bid for San­tos led by Abu Dhabi Nation­al Oil Com­pa­ny.

Some have sug­gest­ed that Ad Knock and its part­ners could take on the local part­ners such as B Beach to ease for­eign invest­ment approval while oth­ers say beach could acquire San­tos domes­tic gas assets, which may be sold as part of that process. Beach’s San­tos is part­ner in the Coop­er Basin Ven­ture, which sup­plies gas to the [00:15:00] Ggl LNG Export Plant and the East Coast Mar­ket Beach advised of an impair­ment charge of 674 mil­lion pre-tax to be tak­en in its full year results, which have been brought for­ward the week to August the fourth, which was yes­ter­day.

The charge most­ly relates to cuts and the prices beach­es, assum­ing for pro­duc­tion from its Coop­er Basin Ven­ture in South Aus­trali­a’s North and from the Perth Basin and wa. So that’s the rea­son why the share price went down and became a sell. It took a, a write down in their assets. Uh, it’s a bit like, you know, a gold min­er doing the same, say­ing the mine’s not gonna last as long or what­ev­er.

Um, not a cash hit to prof­it, but, um, well, but, but a hit to prof­it because they have to bal­ance that right down with a, a loss in the p and l side of the bal­ance sheet. Um, but it sort of smacks to me as a new CEO, again, clear­ing the decks, um, tak­ing over a com­pa­ny before it turns around, and the shares were up today after anoth­er arti­cle on the fin­ger review.

Talked more about. A [00:16:00] con­sen­sus form­ing that beach will some­how, uh, come out with the San­tos assets if, um, the offer of Ad Knock goes ahead to buy San­tos and that it’s part of the play to get the For­eign Invest­ment Review Board to allow that takeover to occur by secur­ing a hun­dred per­cent Aus­tralian owned gas for Aus­tralia, for the domes­tic mar­ket.

Uh, which is all sup­po­si­tion, but it’s kind of dri­ving this news that’s dri­ving the share price at the moment.

Cameron: Right. Well, we don’t have to sell it right now. That’s good

Tony Kynas­ton: Yeah, exact­ly. Uh, what else can I say? Um, cou­ple of oth­er com­pa­nies, which caught my eye dur­ing the week, uh, motor­cy­cle Hold­ings, MTO, uh, is up dra­mat­i­cal­ly. Um,

Cameron: Had a

Tony Kynas­ton: it did, so it was, uh, it announced that they were going to acquire a cou­ple of motor­cy­cle deal­er­ships, one called Peter Stevens and one called Harley Heav­en.

Um, which is apt­ly name, I guess. And, uh, on the day of the announce­ment, the shares were up [00:17:00] 17%, but they’ve been ris­ing ever since. And in the last week they’re up about, well, since the announce­ment a few weeks ago, they’re up 50%, um, on no oth­er news. So, you know, the ques­tion is, is, is the mar­ket just tak­ing its time to digest the acqui­si­tion details, which is a small com­pa­ny so it would­n’t get much bro­ker­age cov­er­age.

So some­times they’re slow to rerate, uh, but also it’s com­ing into result sea­son. So I’m won­der­ing whether there’s some, um, good results in the offer­ing, which may be start­ing to leak per­haps, or there could be some­thing else. Um, who knows. But, uh, it’s cer­tain­ly done well for peo­ple who own motor­cy­cle hold­ings.

And the oth­er one, that’s, the oth­er one that’s done well is plen­ty group. So they put out a pos­i­tive. report quar­ter A one for them. I think they report in March, uh, plen­ty. And they, the, the report said Plen­ty group announced the com­pa­ny’s loan port­fo­lio, which is a dri­ver of rev­enue and prof­itabil­i­ty, increased $2.7 bil­lion at 30th of June, 2025.

A 21% increase, uh, over the 30th of June, [00:18:00] 2024 port­fo­lio, and a 6% increase from the March, 2025 num­ber. Low annu­al­ized net cred­it loss­es of 94 basis points against 130 in the pri­or cur­rent peri­od, and 116 basis points in the pri­or quar­ter and quar­ter­ly rev­enue, uh, of 73.3, up 20% on the PCP. So good result from them, which drove the share price up as well.

Cameron: Group are up 30% in our port­fo­lio since I added them. Well, I added one par­cel ear­ly May, anoth­er par­cel towards the end of May. They’re both up around about 30, 31%. And MTOI added to a port­fo­lio E ear­ly May. It’s up 44% since then.

Tony Kynas­ton: Boom, boom.

Cameron: I added par­cel at, uh, Decem­ber last year. It’s up 87% since 20th of Decem­ber when we added it. So yeah, [00:19:00] absolute­ly great results so far from

Tony Kynas­ton: Should we, should we call this episode Motor­cy­cle Hold­ings? Chucks a wheel­ie.

Cameron: Oh no, I’ve think I’ve

Tony Kynas­ton: Um,

Cameron: that. We’ve already talked about

Tony Kynas­ton: Yeah.

Cameron: one, ah, mus­ing. is ah, mus­ing.

Tony Kynas­ton: All right. Um, and one that also caught my eye, uh, Vas­sar. Now it has­n’t been on our buy list for a long time. It’s cur­rent­ly QAV score of 0.03. And I tried to go back and see when I did the pulled pork on it, ’cause I’m pret­ty con­fi­dent we cov­ered it many years ago. Um, it was­n’t on the pulled pork list, but I think the pulled pork list goes back about two years.

Um, and I went back to an old buy list and it was on the buy list any­way in mid 2023. So that’s prob­a­bly about the time when I talked about it. Um, it had, back then it only had an 80 t of 11,000. So it was a small com­pa­ny and it still is real­ly, and the price was 12 cents. But today the A DT is 125,000 [00:20:00] and the price is 51 cents.

So, um. Good luck if any­one held onto since then, I, I haven’t owned it ’cause it’s too small, but, um, it’s cer­tain­ly done well. It’s a water rights com­pa­ny. I remem­ber doing the pulled pork on it a few years ago ’cause I had­n’t heard of it, but it’s been doing, uh, good things a blade as well.

Cameron: Hmm. Yeah, I don’t hold, check­ing through my buy list, uh, my port­fo­lio. It’s a shame.

Tony Kynas­ton: Uh, last thing I want­ed to talk about, and I kind of debat­ed with myself whether I’d men­tioned it or not, but, uh, I, I’ve decid­ed to because it’s like we’re on the end of the pro­duc­tiv­i­ty round table and so it kind of plays into that. But, um, there’s, I’ve noticed in the last, you know, year or so, par­tic­u­lar­ly from.

Uh, look, our friend Alan Kohler, there’s been a lot of talk about, you know, boomers hav­ing the best of times and young peo­ple are doing it tough and can’t afford to buy a house. Buy a house, all that kind of stuff. And while I think ele­ments of that are true, um, a lot of it’s [00:21:00] true. Uh, I think this arti­cle kind of puts things into per­spec­tive.

It was in the Wash­ing­ton, in the Wall Street Jour­nal, so it may not have the same num­bers applic­a­ble to Aus­tralia, but because these are us num­bers, but the, what it said was that, uh. The, uh, it’s kind of a strange gram­mar here. The head­line is 31%, and then the arti­cle reads how much high­er the aver­age net worth of mil­len­ni­als and old­er mem­bers of Gen Z was in ear­ly 2025 than baby boomers at sim­i­lar ages and 20% high­er than Gen Xs.

Accord­ing to Anna Her­nan­dez Kent, a researcher for­mer­ly at the St. Louis Fed. Many mil­len­ni­als think it’s time to retire the nar­ra­tive that their gen­er­a­tion got a raw deal, but still remain anx­ious about the future after com­ing of age, dur­ing the 2007 to 2009 reces­sion. So, um, I, I raised that because one of the things which I’m also kind of aware of and don’t like is this [00:22:00] idea that, uh, you know, peo­ple keep call­ing for, say, the removal of neg­a­tive gear­ing on prop­er­ty.

Um, you know, it’s cre­at­ed wealth on the Boomer net­work and we should get rid of it. I don’t like the idea of. Pulling up the lath­er after you get to the next lev­el. Um, if, if you do that too much, then yes, boomers will still make mon­ey out of neg­a­tive gear­ing prop­er­ty. But if you stop it, then how are the young kids gonna make, you know, progress with buy­ing hous­es?

’cause that’s how I got into the prop­er­ty mar­ket, was buy­ing a prop­er­ty and rent­ing it out. And then the inter­est rates deductible against my salaried income. And it was a, a much cheap­er way of get­ting into the prop­er­ty mar­ket than buy­ing a house, liv­ing in it, and pay­ing the whole deal myself. So I’m, I’m quite.

Look, I’m kind of resigned, but I’m quite fear­ful of the fact that this pro­duc­tiv­i­ty round table’s pos­si­bly just gonna end up in me pay­ing more tax­es, which is, you know, peo­ple can argue the, the virtues of that. But, um, [00:23:00] giv­ing the gov­ern­ment more mon­ey nev­er real­ly helped any­one. It does­n’t, it does­n’t improve pro­duc­tiv­i­ty.

We’re at, we’re at a stage in, in the pro­duc­tiv­i­ty cycle where I think I saw num­bers say­ing that we’re either at a high or a major­i­ty of of peo­ple now rely on the gov­ern­ment for, for income rather than the pri­vate sec­tor. And that’s not good for pro­duc­tiv­i­ty. And I under­stand kine eco­nom­ics and I know that’s all a result of the COVID, um, fund­ing of, uh, you know, pay­ing out peo­ple and, uh, get the gov­ern­ment pick­ing up the slack when the pri­vate econ­o­my fal­ters and they get all that, that’s fine.

Um, but cer­tain­ly increas­ing tax­a­tion won’t help pro­duc­tiv­i­ty, uh, and cer­tain­ly stop­ping things which ben­e­fit­ed me from get­ting a foothold. Um. In increas­ing my equi­ty is not gonna help younger peo­ple increase their equi­ty. So I’ll just make those two obser­va­tions. That’s my rant for the week. You can put that on Tik­Tok.

But, um, and I’ll be pleas­ant­ly sur­prised if the pro­duc­tiv­i­ty com­mis­sion comes out with [00:24:00] some­thing dif­fer­ent to just tax­ing me more. But, uh, we’ll see. Um, yeah, uh, I’ll, I’ll leave that out there for what it is.

Cameron: I think they’re look­ing at a lot of AI stuff, aren’t they? From Scott FARs com­ments in the last week.

Tony Kynas­ton: Yeah. But unfor­tu­nate­ly, they’re also look­ing at the trade union’s rec­om­men­da­tion that, um, com­pa­nies have to agree to use AI with­out mak­ing work­ers any worse off, which is a fair enough posi­tion. But if the pro­duc­tiv­i­ty com­mis­sion or the gov­ern­ment adopts this pol­i­cy, it’s gonna decrease pro­duc­tiv­i­ty, not increase pro­duc­tiv­i­ty.

’ cause uh, you know, as peo­ple like Steve San­ti­no says that. Dis­lo­ca­tions in the econ­o­my mean yes, you lose jobs in one sec­tor, but you some­times gain them in anoth­er and, uh, some­times the employ­ment moves side­ways. So there’s got­ta be some flex­i­bil­i­ty in using AI to gain pro­duc­tiv­i­ty.

Cameron: Mm. Yeah. Well, you know my view on that, so

Tony Kynas­ton: what? [00:25:00] What’s your view That we should all just get a uni­ver­sal basic income and sur­ren­der to ai?

Cameron: Well, no, but I don’t, I still can’t fig­ure out what jobs humans are gonna be able to do bet­ter, faster, or cheap­er than a com­bi­na­tion of AI and robots in the next decade. The, this whole idea that there’ll be new jobs that we can’t imag­ine yet that humans will go and do has been true in the past, but this time it’s dif­fer­ent.

Tony, we, we are deal­ing with,

Tony Kynas­ton: Uh huh.

Cameron: we are deal­ing with AI that can do,

Tony Kynas­ton: enough rope here.

Cameron: pret­ty much any job that humans can do. did a, uh, uh, we, Steve and I record­ed a futur­is­tic episode yes­ter­day and I was talk­ing about a Microsoft study that came out last week about the top 40 jobs that they feel are under threat from AI in the short [00:26:00] term. And yeah, you know, it’s just the top 40, but it’s a lot of jobs.

A lot of jobs are gonna be threat­ened and, uh, I can’t fig­ure out, you know, the mod­el looks like of jobs that AI and robots com­bined won’t be able to do

Tony Kynas­ton: Yeah, well it’s quite poss and look, I respect that view and I also try and over­lay it with the human view, which says that AI might not be allowed to do some jobs. We’ll just say no, you know, I don’t want my ass wiped by a robot. So, you know, for­get it.

Cameron: only way I can see it not gob­bling up every­thing is if we put

Tony Kynas­ton: Hmm.

Cameron: reg­u­la­to­ry hur­dles, uh, to pre­vent it from doing it. But I don’t know

Tony Kynas­ton: Well, they may not be reg­u­la­to­ry. I mean, we might find out that we still pre­fer to go and talk to a coun­selor rather than talk­ing to a com­put­er or a robot. So they [00:27:00] may not be, I agree, they prob­a­bly are. There prob­a­bly will be reg­u­la­to­ry hur­dles, but there may not be, there might just be human pref­er­ence to deal with anoth­er human being too.

I don’t know. I can’t, I can’t pre­dict it.

Cameron: Nei­ther can I. Yeah. But, uh, it’s hard. I’ve spent, you know, the last cou­ple of years try­ing to fig­ure out what the future looks like AI ful­ly comes online. I mean, I think peo­ple who look at AI today and think, well, this is what we’re gonna base the future on are mak­ing the cat­e­go­ry error. I think, you know, as I keep say­ing on my oth­er show, and a half years ago when Chat GPT came out, we were all amazed that it could write a coher­ent sen­tence. Now it’s writ­ing

Tony Kynas­ton: Mm-hmm.

Cameron: and we’re pro­duc­ing video using VO three that from a text prompt that looks like it’s. Real humans doing real talk. That’s two and a half

Tony Kynas­ton: Mm-hmm.

Cameron: So what’s it gonna look like anoth­er two and a half years from now? And again, we don’t know, but assum­ing that all the peo­ple run­ning the indus­try [00:28:00] aren’t com­plete­ly full of shit, um, it’s, there’s still a lot of run­way left for it to get bet­ter and bet­ter and bet­ter.

And so what the world looks like when we have super intel­li­gent. AI in our back pock­et. And then Robots Human, Steve just bought his first humanoid

Tony Kynas­ton: Mm

Cameron: it’s get­ting deliv­ered in Decem­ber, for a open source, ful­ly teach­able, pro­gram­ma­ble, humanoid robot. Uh, what it looks like when every­one has one of those in the house that can, that does­n’t sleep, just needs to swap a bat­tery pack every six hours or what­ev­er and can do all of the chores around the house, et cetera, et cetera.

And they’re on mine sites and they’re doing your, they’re your plumber and

Tony Kynas­ton: mm

Cameron: your, uh, gar­den­er and your chef and your babysit­ter and all those sorts of things. I don’t know, man. The hell, I know it’s gonna be a very

Tony Kynas­ton: mm No, I agree. Any­way, get­ting back to the pro­duc­tiv­i­ty round table, it’s, it’s from a good [00:29:00] per­spec­tive. I think it’s great that I’m see­ing so many arti­cles and debate about how to improve pro­duc­tiv­i­ty in the coun­try. I think that’s at least a good out­come of. What’s going on? So I’ve applaud that.

Cameron: I.

Tony Kynas­ton: All right. I got­ta pulled pork on vault min­er­als.

Cameron: Uh, I won­dered if you’d pick them. They were one of the new ones on the

Tony Kynas­ton: Yeah.

Cameron: on the list after I fixed the list.

Tony Kynas­ton: And I tried to go,

Cameron: some

Tony Kynas­ton: yeah, sure. We’ll save the pulled pork. That’s a good idea. No, great ques­tions. Thank you. I said we’ll hold the pull, pull will be the ques­tions and they’re great ques­tions.

Cameron: he said I tried to, he said I tried to do some­thing and then you, I cut you off acci­den­tal­ly

Tony Kynas­ton: Can’t think, sor­ry.

Cameron: Okay. Alright. Ques­tions, Scott. What’s hap­pen­ing with GTN? From what I can under­stand, there was a return of cap­i­tal of 23 cents. Per secu­ri­ty. The shares have dropped by a sim­i­lar amount. Why are they return­ing cap­i­tal?

I can see it was vot­ed on. But what’s the goal behind this? Share­hold­ers want­i­ng mon­ey. [00:30:00] Isn’t that the goal behind cap­i­tal return?

Tony Kynas­ton: Yeah, look, I, I don’t, I don’t know for sure what it is. I, I read some of the papers around the exec extra­or­di­nary gen­er­al meet­ing that was held recent­ly to vote on that, which was approved. It, it looks like it comes down to the best use of, of equi­ty ver­sus debt. It’s the old weight­ed aver­age cost of cap­i­tal ques­tion.

Um. And so if you look at the com­pa­ny, first of all, GTM pays out a hun­dred per­cent of its prof­its in div­i­dends. Uh, and they do that because they claim they can’t find a bet­ter use for the mon­ey. That’s fine. Um, and so it’s trad­ing on a high yield. Uh, and there­fore to pay out the div­i­dend that’s cost­ing them six or 7%, what­ev­er the num­ber is, I’m not sure off­hand.

Uh, where­as if they, uh, take out debt at a low­er inter­est [00:31:00] rate, um, then it’s actu­al­ly cost­ing them less so they return the cap­i­tal back to share­hold­ers. Um, and I think what will prob­a­bly hap­pen is they’ll reduce the div­i­dend, but I can’t guar­an­tee that. But that’s, that’s the argu­ment any­ways. And it’s cost­ing them more to pay a div­i­dend, uh, now to share­hold­ers, and it’s cost­ing them to bor­row mon­ey to fund the growth of the com­pa­ny.

And so they’re return­ing. They’re basi­cal­ly bor­row­ing cap­i­tal and return­ing it as debt, even though it’s two sep­a­rate trans­ac­tions and the amounts are slight­ly dif­fer­ent, I think, I think they’re return­ing about $44 mil­lion and they’re bor­row­ing about $35 mil­lion, some­thing like that. Um, so that’s the think­ing behind it.

It, it can be a rather archa­ic account­ing sort of debate around this because there are pros and cons on both sides, which just go beyond that cost of pay­ing a div­i­dend ver­sus cost of bor­row­ing because you’re obvi­ous­ly tak­ing on more risk if you take on debt. [00:32:00] So if, um, inter­est rates go up or the com­pa­ny does­n’t make a prof­it in one year, it’s still got­ta pay the inter­est on the debt, which is, um, gonna be a, could be a mill­stone, um, uh, around its neck.

Uh, and of course it’s giv­ing back, giv­ing back cap­i­tal to share­hold­ers also con­strains it from. Being able to fund an acqui­si­tion if some­thing good comes along too. And the com­pa­nies was at pains to say that they could­n’t see any­thing worth acquir­ing, so they’re gonna return the cap­i­tal. But I guess that means that they could ask for it back again in a few years time if they are pre­sent­ed with an oppor­tu­ni­ty to use it.

Um, but that’s kind of the think­ing behind it or cer­tain­ly the mes­sage put out in the meet­ing notes. Before the EGMI want­ed to, with­out giv­ing per­son­al finan­cial advice, Scott, I want­ed to just gen­er­al­ly say, if you look at the graph of this one, it’s dropped below its cell line. Um, but if you add back the fact you’re being paid or you’re being giv­en 23 cents per share in [00:33:00] cap­i­tal back and add that to the price, it’s, it’s back up above.

Its its sell line. Um, I think the pay­ment date is next week for that return of cap­i­tal. So if it was a div­i­dend, I’d nor­mal­ly say if it’s still below its three point trend sell line after that date, it’s a sell. Um, I sus­pect what’s gonna hap­pen because this is a cap­i­tal return that’s slight­ly dif­fer­ent.

It may work out to be the same, but it’s slight­ly dif­fer­ent and a bit unusu­al. I’m think­ing that. Where the share price is now, may well become an L two and so it drops the sell price for this com­pa­ny. So I’d be a lit­tle bit lenient with this one and, and give it a bit of time to see if it does make a new L two and set a new sell price in the next week or so, maybe two weeks.

Um, I don’t have a hard and fast rule here, but it’d be a shame to sell out and then find out the com­pa­ny’s found its flaw after every­one’s got their mon­ey and it’s kind of rerat­ed back to a new lev­el and it says an L two and, um, the sell prices dropped dra­mat­i­cal­ly. So just I’d be mon­i­tor­ing that if I was Scott [00:34:00] to see how it lands.

Cameron: You did a pulled

Tony Kynas­ton: I did.

Cameron: late

Tony Kynas­ton: Yeah.

Cameron: I was just,

Tony Kynas­ton: They’re the heli­copter news. news peo­ple.

Cameron: Yeah. Right. And so Craig Cole­man, who’s a non-exec­u­tive direc­tor, owns 54% of the stock. So it’s a big pay­day for Craig

Tony Kynas­ton: Cor­rect, which could also be dri­ving this as well,

Cameron: Yes.

Tony Kynas­ton: espe­cial­ly if, espe­cial­ly, I don’t know the sit­u­a­tion of Craig or what his moti­va­tions are, but he could have bor­rowed to buy the com­pa­ny so he could decide that he wants to extin­guish his debt. It’s a typ­i­cal pri­vate equi­ty play to, you know, take to lever­age your­self, buy some­thing and then sell off assets and pay your­self back right off the debt and you’ve got a free entry into the com­pa­ny.

So, I, I, I’m not alleg­ing any­thing, I dun­no what his sit­u­a­tion is, but it’s, that’s also a poten­tial rea­son for [00:35:00] this.

Cameron: Yeah. Right. Okay. Thank you for that. Um, next ques­tion is from, I just lost my

Tony Kynas­ton: Aaron.

Cameron: old GTN ref­er­ence

Tony Kynas­ton: Aaron.

Cameron: darl. I vague­ly remem­ber some dis­cus­sion a while ago about trad­ing com­modi­ties on a short­er than five year time span, if they’ve had a rapid rise, was a deter­mi­na­tion made about these kind of rapid com­mod­i­ty increas­es. I’m think­ing here about gold, which has had a near ver­ti­cal rise over the last 18 months. a three PTL to its five year graph would mean giv­ing up all of that before hit­ting a cell price. Admit­ted­ly, some gold com­pa­nies may be sold ear­li­er, but using RRL as an exam­ple, it would also lose half of its cur­rent val­ue before hit­ting a three point trend line sell. And then there was an adden­dum from a dif­fer­ent Scott, he said, also, Cameron, with Trump pulling a new tar­iff truth social post every five min­utes, it seems cop­per today would, and [00:36:00] should we con­sid­er hold­ing off on com­modi­ties until the tar­iff dust has set­tled in about three and a half years when he has gone which I replied, oh, you think you’ll be gone?

That’s so cute. what’s your thoughts on com­modi­ties and, uh, gold in par­tic­u­lar,

Tony Kynas­ton: I’ll take the easy one first from Scott. Um, no, I don’t think he should. I, I would­n’t wait per­son­al­ly for, um, things to set­tle down. It’s gonna be a tumul­tuous three and a half years, if not a tumul­tuous. 20 years or what­ev­er. Um, and if we ignore com­modi­ties, then we’re ignor­ing gold, which, uh, is hav­ing a bull run dri­ven by the, I think the uncer­tain­ty cre­at­ed by the White House at the moment.

Uh, so I, I’d be inclined to, to still keep using com­modi­ties and the charts, and this is what they’re for. The rules are there to guide you through peri­ods of upheaval. So when you can’t make sense of the world or can’t make sense of the econ­o­my or the [00:37:00] com­mod­i­ty or the stock or its price, more impor­tant­ly, um, the rules are the rules.

So. They guide you through. So, no, I, I’m gonna keep using them. Um, to Daryl’s ques­tion, which is a good one, and I did talk a lit­tle while ago, I’m not sure if I talked about us chang­ing the rules or said that if peo­ple were, um, uh, if peo­ple weren’t sleep­ing at night because they were wor­ried about some­thing get­ting too high above cell line, and then they should, if they want­ed to use a two year graph.

Um, and I think one of our lis­ten­ers very ear­ly on called it the hug line. So basi­cal­ly if some­thing starts to go up steeply, you would mend the sell graph to two years and it starts to hug clos­er to the share price than, um, what they are now. So, um, Dar­rell, it’s, it, it’s up to you depend­ing on how, you know, risk averse you are, you could use a two year one, I’m not.

Cou­ple of things on that. Um, what some­times hap­pens is that. You know, the, the com­mod­i­ty price or the stock price stays high for a while, and then the L [00:38:00] one on the graph, the low­est point on the graph rolls off it and it gets a new L one. And then we get a new cell line, which is a bit high­er, um, that I’ve seen that before as well.

So, uh, I’m not using a two year graph for my gold stocks or for gold. Um, I had a bit of a chuck­le at Dar­ryl’s com­ment about a near ver­ti­cal rise in the gold price over the last 18 months. It’s cer­tain­ly been spec­tac­u­lar, but it’s used to me, it’s near ver­ti­cal. It’s, it’s, um. Prob­a­bly more like 40 degrees or 30 degrees on the graph, but it’s, it’s doing well.

And I’m gonna throw anoth­er, ah, mus­ing out there on this one. Some­thing I’ve been think­ing about with this prob­lem is to, is to look at the sell price and look at the com­mod­i­ty price or the stock price and maybe to either sell or to start to light­en when the, when the price gets to be two times the sell price.

So when we get these sit­u­a­tions where, like gold is at the moment, I think it’s, it’s prob­a­bly two times its sell [00:39:00] price. Last time I checked, um, or cer­tain­ly get­ting close, that might be a warn­ing sig­nal and I haven’t done enough research on that to make it a rule yet. But I’ll look into it. You know, I’m gonna throw it out to the lis­ten­ers to have a look at it too.

Go back through your, your stocks or your cur­rent port­fo­lios and if you have some exam­ples, let me know so we can, we can start to see if there’s enough data that sup­port, such as this deci­sion. A bit of research I did, um, I went back to. FMG ’cause that’s always kind of my touch­stone with these things because, you know, it rose well above its sell price before it came back to its sell price.

And it was real­ly the drop in the com­mod­i­ty of iron ore, which made us so out of FMG in time. So the cur­rent sys­tem kind of worked in that case, but it, it is a good share price graft to look at ’cause of its volatil­i­ty. And um, even at its height, uh, which was around 30 bucks, it was just short of twice.

Its sell price at the equiv­a­lent time, which is around 17 bucks. So did­n’t [00:40:00] quite get to two times. So maybe there’s some­thing a lit­tle less strin­gent than two times. But I also looked at the iron ore price and back in. Novem­ber 23, it got to its high­est price for, um, the last five years any­way, uh, and it was, um, a bit over 200 bucks, which was twice its sell price.

And I looked at the FMG graph and if we’d sold then I think the price for FMG was about $23 at the time and it went all the way up to around 30 and then crashed all the way down to 15. So, um, we would­n’t have had the increase in price and we did sell out at the right time, or I did any­way, so it worked.

Um, but it was kind of a sig­nal, an ear­ly sig­nal with the iron ore price at twice sell price to, to per­haps exit that mar­ket any­way, so I’ll throw that out there as an idea. And Dar­ryl, you might wan­na have a look at that and do some research and gimme your thoughts or any­body else. But, um, I’ll look into it a bit fur­ther as well.

Cameron: [00:41:00] I am look­ing at the gold chart. I calc the cur­rent sell price at a lit­tle bit south of $2,300. The gold price is cur­rent­ly $3,400.

Tony Kynas­ton: two times. Yeah. Okay.

Cameron: the um, L one by the way is, um, looks like around about July, August, Sep­tem­ber, 2022.

Tony Kynas­ton: So it changes next month, maybe?

Cameron: No, July, 2022.

Tony Kynas­ton: Oh, it’s five. Sor­ry. It’s only three years. Yeah. Yeah. It’s got two years. Yeah. Right.

Cameron: L one

Tony Kynas­ton: Yep.

Cameron: Mm.

Tony Kynas­ton: So it’s a great,

Cameron: two is not that much high­er either, by the way. So yeah, it’s not gonna change for

Tony Kynas­ton: okay, so it’s a great issue Dar­ryl rais­es. It’s been raised for on and off for the last five years. Um, and I haven’t [00:42:00] changed it yet, but

Cameron: don’t like liv­ing up their gains.

Tony Kynas­ton: Well, I think they’re more scared of, of like a, my sit­u­a­tion where you, like, as you said, you’ve bought it, it’s gone up a lot and it comes back and ’cause the sale prices well below it’s high and um, you give it back at the price you bought it for.

Cameron: You know, in our US port­fo­lio, W Willis Lease Finance com­pa­ny was up 300% at the end of last year, post-Trump. It’s fall­en by 30% this year, which has sucked the oxy­gen of our

Tony Kynas­ton: mm

Cameron: returns for the year. It’s still up 200% from where was when I bought it though. So, yeah, I mean I’ve, we’ve giv­en up a lot of, uh, prof­it on that in the last six months, but who knows

Tony Kynas­ton: Yeah. Oh,

Cameron: around again.

I don’t

Tony Kynas­ton: that’s, and that’s the prob­lem, isn’t it? It might, you dun­no whether this is short term re retrac­tion for a com­pa­ny like Willis Lease or whether it’s at the start of a trend to long-term [00:43:00] trend.

Cameron: I dun­no why it was up 300% in the first

Tony Kynas­ton: Yeah,

Cameron: I’ve got no insight into the macro micro­eco­nom­ics of lease financ­ing, uh, in the us so,

Tony Kynas­ton: well, the recent,

Cameron: that’s the thing, like in the, in this,

Tony Kynas­ton: no, sor­ry, you go.

Cameron: was gonna say in the five or six years we’ve been doing this, like the amount of Myers I’ve had. That I’ve had to give up every­thing. Uh, you know, it’s gone back to zero. It’s, I could prob­a­bly count ’em on

Tony Kynas­ton: Hmm. It.

Cameron: prob­a­bly would­n’t need all the fin­gers on one hand. Real­ly. It’s hap­pened a cou­ple of times and it’s heart­break­ing when it hap­pens. they real­ly are the anom­alies. It’s not the rule where you give up every­thing, you might give up a bit, but again, then you have the ones that just keep going and going and going and, uh, they, they stut­ter a lit­tle bit, then they pick back up and go, great guns.

It’s, it’s amaz­ing to me. Some­times I’ll look at the buy list, uh, not the [00:44:00] buy list, the port­fo­lio, um, I’ll be look­ing at stocks that have gone up Lemme just, um, I’m just gonna stack rank by, uh, you know, prof­it on this. Um. A OV up 300% since we bought it in April, 2020 COVID. Um, but there’s some here that, um, you know, I remem­ber like, I remem­ber buy­ing and sell­ing S‑G-G-L‑V, this is one that always jumps out at me. They’re like,

Tony Kynas­ton: Rice grow­ers. Yep.

Cameron: are lim­it­ed. Yeah. buy­ing and sell­ing that a few times, uh, in the first cou­ple of years and, you know, we’d always sort of stut­ter and fail and I’d have to rule one it or three point line sell it or what­ev­er. Then this last par­cel I added in Decem­ber, [00:45:00] 2023. It’s up 90% since then. And time I see it, I go, oh, I kind of remem­ber when I added that again. I was kind of my teeth. Uh, not these guys again. They, they nev­er work out and then, but then you for­get about

Tony Kynas­ton: Yeah.

Cameron: they just keep going and keep going and do well,

Tony Kynas­ton: Yeah, I just had a look at the price graph or KOV and the, the, in the last kind of cou­ple of months, it’s moved away from its cell line, but it’s still nowhere near dou­ble its sell price. And for pret­ty much the whole of the last five years, the cell line’s moved up with the move­ment in price. So that’s kind of an easy one to, to decide on.

Um, but I guess my point is. Apart from the sell though, what’s the dif­fer­ence between a core vest and a, a gold stock, a Perseus min­ing or a, what was the one Reg­is that, uh, darl has just the sell prices will diverged from the stock price. [00:46:00] Um, so the under­ly­ing busi­ness is going up. That’s great. So, but, but what forced me to, what is mak­ing me think about whether we look at a, a met­ric like twice the sell price is because gen­er­al­ly this is a gen­er­al sort of state­ment.

Most stocks fol­low a, a a a fur­row or a trough. So they have a, a line across the top as they go up and a line across the bot­tom as they go up. So our L ones and L two lines and our H one and H two lines, and they gen­er­al­ly squig­gle back­wards and for­wards between those. Occa­sion­al­ly they’ll break out and the lines get redrawn.

But, um, it’s, it’s, as you said before, it’s more rare than not that they go way above that sort of. Con­strained band that they’ve been trad­ing in. Um, so they gen­er­al­ly have a, an incline slant left, you know, low­er left to upper right or vice ver­sa. But they gen­er­al­ly trade with­in the range on that slant. So, um, yeah.[00:47:00]

Um, it could be that if they, if it, I mean it could be that if they break out on the upside of that range, that the, there’s been a rea­son for a re-rat­ing in the busi­ness, you know, it’s acquired some­thing or it’s, um, some­thing’s changed in the indus­try or gov­ern­ment reg­u­la­tion or what­ev­er. And maybe that should be tak­en into account, but, but it could also be the case that it’s just peo­ple are pay­ing up for it too much and that we’ll revert back.

So Dar­ryl could be right. So, um, I’ll keep look­ing at that and come back in the future if there are any rule changes.

Cameron: Hmm. Do you wan­na tack­le, oh, you tack­led Scot­t’s first,

Tony Kynas­ton: Yeah,

Cameron: So thank you Scott, Scott and Dar­ryl

Tony Kynas­ton: they were, yeah.

Cameron: You wan­na do your pulled pork now?

Tony Kynas­ton: Yep.

Cameron: v vol Vol.

Tony Kynas­ton: Not elec­tric­i­ty vols, but gold vols vault min­er­als. And I, I tried to look up the pool fork­lift and I could­n’t see it, but this [00:48:00] com­pa­ny last year was formed by a merg­er between Sil­ver Lake Resources and Red five. Um, two gold min­ers hap­pened in June, 2024, and I thought I might’ve done a pulled pork on one of those many years ago.

Cameron: resources.

Tony Kynas­ton: Yeah, it was cer­tain­ly on the bio list in the past. I don’t remem­ber Red five being on the bio list. Um, so pos­si­bly have cov­ered part of this one before. But any­way, it’s worth look­ing at Again, it’s a com­bined com­pa­ny, so it’s dif­fer­ent. Uh, this com­pa­ny has three major gold oper­a­tions in WA and they’re real­ly kind of, um, areas of, because they, they have more than one mine and they often­times have a pro­cess­ing, an all pro­cess­ing plant with them.

But their three dis­tricts are Leona Deflec­tor and Mount Mon­ga, and they’re about to restart a, an old gold mine in on TAR on Ontario and Cana­da called Sug­ar Zone. So four, four gold min­ing areas or dis­tricts, um, three in WA and one [00:49:00] in Cana­da. Uh, they, as I said, they merged Sil­ver Lake, merged with red five.

Red five’s been around for a while, so. It, it was incor­po­rat­ed back in 1995. Uh, so around a long time. Um, what else can I say about them? Uh, at the time of the merg­er, they appoint­ed, uh, chap called Luke Tomkin as man­ag­ing Direc­tor and Chief Exec­u­tive Offi­cer on June 18th, 2024. And he brings over 38 years of expe­ri­ence in the min­ing indus­try, includ­ing senior man­age­ment roles at WMC, West­ern Min­ing, uh, sons of Galia, and a sev­en year tenure as man­ag­ing direc­tor at Mount Gib­son, which was on the BI list many years ago as well.

So, um, he’s, uh. He was the, the MD of Sil­ver Lake Resources pri­or to the merg­er. Merg­er as well. So, been around for a long time. Plen­ty of expe­ri­ence, uh, good [00:50:00] quar­ter­ly results. And bear in mind, the com­pa­ny was only merged in the mid­dle of last year, so we don’t have more than a cou­ple of halves of, of merge com­pa­ny results to go on.

But the LA lat­est quar­ter­ly were good. Uh, and I think it was the MD said, uh, vault fur­ther strength­ened the foun­da­tions and out­look for the busi­ness with con­tin­ued strong free cash flow. Despite the deliv­ery of 38% of pro­duc­tion into the rapid­ly reduc­ing hedge book and con­tin­ued inter­nal­ly fund­ed rein­vest­ment in the busi­ness, the King of the Hill plant upgrade con­tin­ued the progress and explo­ration drilling accel­er­at­ed, which has vault well posi­tioned to deliv­er medi­um to long-term growth in the pro­lif­i­cal­ly yanar dis­trict.

Uh, goes on to, to men­tion that it has an all in sus­tain­able sus­tain­able cost of $2,657. And I think you said before, the gold price in Aus­tralian dol­lars is around [00:51:00] 3,300. So that’s quite a healthy mar­gin for this com­pa­ny actu­al­ly. Sor­ry. It says, um, they say that they real­ize the sales price of 4,200 per ounce Aus­tralian.

So that’s, um, that’s quite good. And they go on to talk about all their oth­er, um, met­rics and, and, uh, invest­ments and devel­op­ments, but it’s all grow­ing and they’re invest­ing cap­i­tal and throw­ing off lots of cash, which we like. Uh, I thought out of all of that, the com­ments on hedg­ing were an inter­est­ing one.

So they go on to say, as of 30th of June, 2025, the com­pa­ny’s for­ward Gold Hedg­ing pro­gram totaled 132,500 ounces to be deliv­ered over the next 15 months at an aver­age for­ward price of 2,876 per ounce. The hedge book inflec­tion point is rapid­ly approach­ing with sched­uled deliv­er­ies to step down from H two next year with 56% of the out­stand­ing hedged ounces sched­uled for deliv­ery.

And H one [00:52:00] FY 26 vault will exit FY 26 mate­ri­al­ly un hedged. So what that means is that, um, at, even though they were achiev­ing $4,200 on sales to the mar­ket, they are still deliv­er­ing on, um, options that buy­ers have tak­en out on their gold. Sales at 2,800. So their mar­gins have been depressed, but as, uh, of the mid­dle of next year, if the gold price holds up, then um, they’ll make, be mak­ing even more mon­ey than they are now.

And that’s a twoedged sword because if the gold price drops, and they might have to increase their hedg­ing against the, the guard against it, drop­ping below their, um, uh, their, uh, prof­itable abil­i­ty to, uh, process gold. Um, and look, it’s, I would­n’t say it was a rule of thumb, but I’ve seen it before where a, a com­mod­i­ty depress­es, the com­pa­ny hedges the book to pro­tect its [00:53:00] mar­gins.

After a cou­ple of years, the com­mod­i­ty price increas­es dra­mat­i­cal­ly. They come off on hedge, the com­mod­i­ty price goes down and they reh. So it’s a bit of a dance some­times with this, I’m not say­ing it will be in this case, but, uh, and they can always reh if they come out of hedg­ing and the gold price is low­er.

Um, so it’s not real­ly too much of a risk. Um, and it’s prob­a­bly skewed to the upside. I mean, I don’t like to pre­dict, but can you see volatil­i­ty decreas­ing in the Trump admin­is­tra­tion next year? Um, it’s, it’s pos­si­bly unlike­ly could hap­pen, but it’s pos­si­bly unlike­ly. Uh, there was a cou­ple of arti­cles.

Cameron: gold price by the, the Aus­tralian gold price is 5,225

Tony Kynas­ton: okay. So if they got 4,200, I guess that might include the hedg­ing sales in there as well. Press­ing it a bit, but yeah. But if they get anoth­er thou­sand dol­lars per ounce on every ounce sold in FY 26, that’s a big increase in mar­gin for them. [00:54:00] Uh, a cou­ple of, um, notes recent­ly, uh, this. I think they’re both from the Fin Review.

Oh, no ones from the Fin Review, uh, arti­cle said, here’s one ASX Gold Min­er that’s tip to Rerate, and it’s an inter­view with a chap called Philip Lee from SG His­cock. And, uh, he was asked the ques­tion, which stock in your fund has the most near term upside? And he says, vault Min­er­als is a recent edi­tion and is among the more under­val­ued names in the gold sec­tor.

The recent­ly com­plet­ed merg­er between Red Five and Sil­ver Lake Resources has cre­at­ed a more diver­si­fied and resilient pro­duc­er, or the man­age­ment team, may not be among the more pro­mo pro­mo­tion­al in the mar­ket. That track record of oper­a­tional deliv­ery, cost, dis­ci­pline, and inte­gra­tion exe­cu­tion speaks for itself.

We view the com­bined group’s oper­a­tional depth as a core strength. So that was, um, bit of a tick for vault from then and, [00:55:00] uh, from yes­ter­day actu­al­ly. ’cause vault was up four or 5% today. Um, and it was up 6% yes­ter­day. So it’s, it’s already doing well. Uh, this is an arti­cle from yes­ter­day’s Cap­i­tal Brief, which gets put out after the mar­ket shuts.

Yes­ter­day being the 4th of August. Gold min­ers led gains on the ASX 200 after the spot price soared. In a pre­vi­ous ses­sion fol­low­ing the release of U of Soft US jobs data and the roll­out of Pres­i­dent Don­ald Trump’s glob­al tar­iff regime fault min­er­als were up 6.8% and the shares gained the most on the bench­mark index yes­ter­day.

So, um, maybe that will stop hap­pen­ing in the future, maybe if Trump gets their fire. If that’s mar­ket mak­er reporter in the US, things will set­tle down. But, um, we’ll see. Any­way, that’s [00:56:00] enough on Vault, uh, QAV num­bers for Vault. Um, and I do wan­na high­light these are still their Decem­ber 20, 24 results. We don’t have 2025 yet.

So as with all these com­ments on stocks. You know, I’d be wait­ing, I am wait­ing for 2025 results before pulling the trig­ger on any­thing. Uh, so with the 2024 num­bers are very good. Stock price, uh, was 39.50 cents before the mar­ket opened this morn­ing when I did my down­load, uh, which is greater than IV one of 13 cents, and just below IV two of 40 cents.

It is, how­ev­er, two thirds of con­sen­sus tar­get. So, um, vault is rea­son­ably cov­ered by ana­lyst bro­kers. So they, um, they think it’s under­val­ued Stock Doc­tor, finan­cial health and trend is strong and steady and it’s a bor­der­line star stock. So we get a score of 0.5 for that does­n’t have a div­i­dend, so we can’t score it for that.

Pr/OpCaf is 7.68 times, which is why it’s at the bot­tom of our buy list ’cause it’s [00:57:00] just slight­ly above sev­en um times. But I did look at the, the down­load. And Stock Doc­tor also pro­duce a prop calf num­ber, and they’re say­ing it’s only 5.9 times. I haven’t had a chance to pick apart the dis­crep­an­cy, but it often relates to the num­ber of shares used in the cal­cu­la­tion.

Um, and I guess if the merg­ers gone through in the last 12 months, there could be things hap­pen­ing to the shares increas­ing dra­mat­i­cal­ly, or maybe some­thing’s come out of escrow and being sold. I don’t know. But, um, I haven’t had a chance to rec, uh, to rec­on­cile that. But either way, it’s still, um, on the, on the bot­tom of the buy list, net equi­ty per share was 28 cents and plus 30% is 36 cents.

So we can’t buy this for, uh, book val­ue or book val­ue, plus 30 earn­ings per share. Fore­cast growth in Stock Doc­tor is 63%, which is huge. Um, I’m won­der­ing if that’s off the pre-merg­er num­ber or not, but again, haven’t had a chance to pull it apart. But any­way, growth over PE is [00:58:00] 3.93 times, so it scores a two in the check­list.

Does­n’t have an own­er founder, so he can’t score it for that. Recent uptrend is above the byline, so we score it for that. Any record low pe, but I do has­ten to a, there’s only three PEs avail­able since the merg­er, con­sis­tent­ly increas­ing equi­ty, um, and again, boost­ed by the merg­er in two of the halves any­way.

Um, but it was going up before the merg­er with Red five. So we score it for that. Uh, all in all, it’s um, 12 out of 16 or 78% for qual­i­ty and a QAV score of 0.1, um, which is slight­ly high­er if we use Stock Doc­tor prop calf in that num­ber. Um, I think the risks and plus­es are pret­ty obvi­ous risks are that the gold price does retreat from its all time highs.

I think it’s unlike­ly in the short term giv­en volatil­i­ty in the mar­kets, but, you know, I don’t like to pre­dict. Uh, as I said before, being unhedged in 2027 can be a risk and a [00:59:00] bless­ing. I sus­pect, again, with the gold price, um, being dri­ven by volatil­i­ty in being a safe haven, that that’ll prob­a­bly turn out well for them.

But I’m not gonna pre­dict, uh, again, a dou­ble-edged sword. Risk and advan­tage, they’re run­ning gold Mines now across two con­ti­nents, both in WA and in Cana­da. So prob­a­bly could­n’t find two gold mines geo­graph­i­cal­ly more apart in terms of flight times any­way, um, so that they may incur some sov­er­eign risk, although, you know, it’s low in Cana­da and Aus­tralia.

1. You know, if I could try and pre­dict any so sort of sov­er­eign risk, it might be that there’s some kind of extra tax put on, you know, resource stocks, um, ’cause they’re mak­ing too much mon­ey. Uh, but you know, who knows? That’s a pre­dic­tion that may not come true, prob­a­bly won’t come true, but it’s out there.

Uh, the oth­er risk I think for this com­pa­ny is the bull­ish fore­casts aren’t met. So they’ve just merged two com­pa­nies togeth­er. [01:00:00] There’s often road­blocks in these kinds, or sor­ry, road bumps in these speed bumps in these kinds of merg­ers. And, um, they’re report­ing every­thing sun­ny at the moment. But, um. You know, it’s a big­ger and more com­plex beast than it was.

Who knows? Um, they, and they’re basi­cal­ly hav­ing to be held to, you know, deliv­er­ing on the prospec­tus. Um, which can be dif­fi­cult, uh, even in the best of times. So they may come up with a, a speed bump, um, along the way, which might derail them. And, uh, on the plus sides, you know, it’s great that they can make hay hay while the gold price is high.

Um, espe­cial­ly if they’re unhedged in, in a short peri­od of time. They are call­ing out lots of explo­ration upside. So, um, they’ve got four gold mine ten­e­ment areas and there’s, um, still poten­tial upside in each of those areas, and they are explor­ing. So I would­n’t be sur­prised if they came up with some more gold reserves.

And I guess, you know, apart from the fact that it’s gonna be bloody hard fly­ing back and forths from Ontario to man­age [01:01:00] a gold mine there and a gold mine in wa. Hav­ing four gold mines does pro­duce, uh, does pro­vide diver­si­fi­ca­tion for them. If any­one does start to run out of resource, they’ve got oth­er ones to pick up the slack.

So that’s a vault you on the buy list and worth a look and wait for the new results to come out soon.

Cameron: Thank you, tk. Well, I think that’s, uh, that’s

Tony Kynas­ton: Yeah.

Cameron: any­thing else before,

Tony Kynas­ton: No, I’m done. Thanks.

Cameron: Then we’ll go do QAV Amer­i­ca and I’ll talk about anoth­er Berk­shire of buy this

Tony Kynas­ton: Also called GTN. Yeah.

Cameron: Yes. Not to be con­fused with the Aus­tralian GTN. Uh, what do you got for me in after hours this

Tony Kynas­ton: Not much. Still read­ing Michael Pal­in’s Diaries, which is quite a long book, enjoy­ing it. I, I guess the rea­son for rais­ing it is I saw on the [01:02:00] news in the last day or so these wife died recent­ly, Helen, who fea­tures promi­nent­ly in the diaries and, and you know, I saw an inter­view with Michael Palin, who’s turned 82 this year where he is quite dev­as­tat­ed by that, that news.

And, um, yeah, it was sad

Cameron: by the news or by her

Tony Kynas­ton: by her pass­ing. Yeah. And, uh, what else can I say? Foun­da­tion series three is start­ing to drop and it’s much bet­ter than the first two sea­sons, so I’m enjoy­ing it. It’s final­ly hit at straps. It was pret­ty ordi­nary I thought, in the first two sea­sons, but I’ve always been a fan of the book site, per­sis­tent and sea­son threes, you know, rol­ler­ing along much, much bet­ter.

And the char­ac­ters are devel­op­ing a lot bet­ter than they were in the first two sea­sons. So that’s worth.

Cameron: Hmm. No, I did­n’t, I haven’t looked at it because you sort of did­n’t, uh, review the

Tony Kynas­ton: Hmm.

Cameron: Well,

Tony Kynas­ton: That’s it for me.

Cameron: I don’t have much for you. I’ve, [01:03:00] um, I’ve been read­ing Lucious and Epi­cu­rus most of the last week. My night­time read­ing back to, I start­ed read­ing a poet. Um, friend of mine, old school mate, Tony, I think’s been on the show, has he been on the show? Tony Ash­win talk­ing about real estate devel­op­ment dur­ing COVID and the Gold

Tony Kynas­ton: I don’t think so. Yeah,

Cameron: he’s a real estate devel­op­er. I’m the Gold Coast now. Any­way, I was chat­ting to him and he men­tioned this poet Mary White to me. Um, so I was read­ing her poet­ry and she men­tioned Lucretius and I real­ized that’s what I wan­na real­ly read is her. So I went back and reread Lucretius on the nature of things you ever read Lucretius

Tony Kynas­ton: no.

Cameron: it’s great mas­ter­piece writ­ten in rough­ly 60 BCE.

He was a con­tem­po­rary of Cicero and Julius Cae­sar. We know that because, uh, Cicero men­tions him in a cou­ple of his let­ters. Um, [01:04:00] he, he was an epi­cure­an philoso­pher. We know noth­ing about him except he wrote this. poem called, uh, on the Nature of Things, which basi­cal­ly encap­su­lat­ed epi­cure­an phi­los­o­phy in, in a poem. we know the poem was a big inspi­ra­tion to of the lat­ter Roman poets like Vir­gil. But it, and, and it dis­ap­peared for dur­ing the dark Ages, and we knew it exist­ed because Vir­gil men­tioned it and Cicero men­tioned it, and then a copy was found. Ray and I talked about it on our Renais­sance show in the 15 hun­dreds.

Uh, a copy was found moldy on the floor of a base­ment of a monastery some­where in Ger­many, and it was res­cued. now have a sec­ond copy that was found in the wreck­age of [01:05:00] Vil­la of the Pap­pi, uh, out­side of Her­cu­la­neum, which they believe prob­a­bly belonged to Cae­sar’s father-in-law. it’s anoth­er sto­ry, but it’s, it’s a ter­rif­ic, uh, and a ter­rif­ic encap­su­la­tion of Epi­cure­an phi­los­o­phy. But it was basi­cal­ly about atoms. You know, the epi­cure­ans fig­ured out Democ­ra­tis and Epi­cu­rus in 300, b, CE, that. Every­thing was made of Adams and that was the basis of their phi­los­o­phy. Every­thing is made of Adams and Adams are eter­nal. real­ly is born or dies. It’s just Adams recon­fig­ur­ing them­selves. when you read Lucious is expla­na­tion for how they intu­it­ed this. It’s bril­liant. He says, you know, you wear a gold ring and it wears down over the years, but you nev­er notice it wear­ing down. You don’t see any­thing dis­ap­pear­ing from it, but some­thing’s [01:06:00] dis­ap­pear­ing because it wears down over the years.

Or water drip­ping on a rock cre­ates a groove in the rock. You don’t see any­thing hap­pen­ing, but some­thing is being removed from the rock. There­fore, the rock and the ring must be made of small. Uh, that we can’t see, but that’s what every­thing is made up of. And what hap­pens to those things?

Well, they must get worn off and shaved off, and then they go make oth­er things. And they, they had this whole under­stand­ing of

Tony Kynas­ton: Hmm,

Cameron: 300, B, CE, and, you know, that was the basis of their phi­los­o­phy, that it’s all just atoms. And it always blows my mind when I read it and, uh, real­ize that they, they had no sci­en­tif­ic beyond vision

Tony Kynas­ton: Hmm.

Cameron: the­o­ret­i­cal physics basi­cal­ly.

They just thought about it and fig­ured out, well, this must be true. Any­way, it’s good

Tony Kynas­ton: It was,

Cameron: That’s about it. What have I been lis­ten­ing to? [01:07:00] Um, lot of Kovich, bit of Van Mor­ri­son today because this com­pa­ny that I’m talk­ing about owns a busi­ness called Tupe­lo

Tony Kynas­ton: uh,

Cameron: and that got me into lis­ten­ing to Van Mor­ri­son today.

Do you like Van

Tony Kynas­ton: I do, yeah. Yep. Great voice.

Cameron: All right, well we should go

Tony Kynas­ton: Okay.

Cameron: So, uh, that’s QAV Aus­tralia for this week. Thanks for the ques­tions again peo­ple, and, uh, thank you Tony for com­ing on and

Tony Kynas­ton: Yeah. Right. Hap­py ASX every­one. Thanks.

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