QAV AU 835 — Rule 34 Of ETFs

AU 835 AUDIO

Cameron: [00:00:00] Okay. Wel­come to QAV Aus­tralia, episode 8 3 5 tk, how are you?

Tony Kynas­ton: Very well, thank you Cam. How are you?

Cameron: I. dun­no, but we were just talk­ing off air and my voice was down here and as soon as I turned the record on, my voice comes up here and I don’t know why it sort of does that. Hel­lo?

Tony Kynas­ton: Maybe you sit, up straight when you start record­ing.

Cameron: Yeah, that’s what I should be doing too. My

Tony Kynas­ton: Hmm.

Cameron: Um, Tony, it, it has been the most volatile report­ing sea­son on record, accord­ing to Richard. Shell bark an equi­ties mar­ket strate­gist at UBS who said that in terms of share price moves on result day, there were out­sized reac­tions. Um, so we’re not the only. that have been notic­ing how crazy that has been, um, in your 30 odd years of expe­ri­ence, uh, I I’m assum­ing you think it’s sort of unusu­al.

Do you have any the­o­ries on [00:01:00] why there are some in this finan­cial review arti­cle that I, uh, got that quote from?

Tony Kynas­ton: Yeah, well the arti­cle talks about, uh, the fact there’s much more index invest­ing and pas­sive invest­ing around and less fund man­agers doing what they call price dis­cov­ery. So react­ing to the new num­bers when they come out. Um, that’s prob­a­bly part of it. Uh, I dun­no if it’s the most volatile report­ing sea­son.

I’ve seen, I’ve cer­tain­ly seen report­ing sea­sons that move where stocks move 20%, which is about what they have this time. But I, I square­ly put it down to the fact that we had almost, uh, we had radio silence dur­ing con­fes­sion sea­son. I did­n’t hear much at all come out from peo­ple say­ing, uh, hey, we’re, uh, you know, we’re putting our num­bers togeth­er now and it’s not look­ing like we guid­ed, um, or this is, this is gonna be unusu­al.

Let’s get it out there. Uh, I, I think that’s the rea­son. Um, you can’t tell me. Like, I think the arti­cle refers to stocks like CSL, so big stocks which have moved when their reports came [00:02:00] out. But you can’t tell me. CSL did­n’t know what was com­ing a month before­hand. Um, I’m pick­ing on them. They might have their rea­sons, but, uh, but yeah, I think it’s been a com­plete fail­ure of con­fes­sion and the com­plete fail­ure of the ASX to be effec­tive at hold­ing these com­pa­nies to con­tin­u­ous dis­clo­sure.

Cameron: I do have to give a. Sort of golf clap uh, Lach­lan Hol­loway from Morn­ingstar. He’s an equi­ty strate­gist at Morn­ingstar. In the finan­cial review arti­cle, he said, these are once in a gen­er­a­tion moves the ani­mal, spir­its of the mar­ket are fick­le, and when the winds change, it can be bru­tal. I just like that, like nor­mal­ly I’m read­ing the finan­cial review sort of yawn­ing, but I love it when some­body, some­body can throw in a lit­tle bit of poet­ic, uh, ter­mi­nol­o­gy the ani­mal spir­its of the mar­ket of fick­le.

It reminds me of that. It me of that Sein­feld episode when George goes out s pre­tend­ing [00:03:00] to, uh, Maris­sa Tome, I think he was a marine biol­o­gist, uh, the golf ball is stuck in the blow hole. The, the sea was angry that day. My friends like an old man try­ing to take back soup at the deli. Um, uh,

Tony Kynas­ton: Yeah.

Cameron: went on earn­ings beats and miss­es are gen­er­al­ly met with a sim­i­lar move in the share price.

It’s per­haps a lit­tle myopic as to jus­ti­fy a 10% fall in intrin­sic val­ue. You must assume not only that next year’s earn­ings in our 10% low­er but in effect, so too every year into per­pe­tu­ity. In many cas­es, this is untrue, but it’s often how Mr. Mar­ket works.

Tony Kynas­ton: Yeah, and that’s anoth­er point which I did­n’t make. It is how Mr. Mar­ket works. It was a good analy­sis, but, um, you know, I think I’ve spo­ken before about my expe­ri­ences and when I used to turn up to earn­ings results announce­ments many years ago, and you’d see the same har­ried ana­lysts in suits with their ties slight­ly [00:04:00] undone because they’d been run­ning all over town, run­ning upstairs to get to the next meet­ing, and then they’d flip their lap­top open and put in their orders based on the results, try­ing to, you know, get in there before the stock dropped or get in there before the stock rose.

Um. Yeah, it was 2000 stocks report­ing with­in four weeks. It’s, uh, yeah, it’s, um, it’s a shoot first a ask ques­tions lat­er type approach to analy­sis. And that’s anoth­er rea­son I think that you see volatil­i­ty and, and we’ll see in the, in the, in Sep­tem­ber, you some­times these stocks start to revert back to their mean quite quick­ly because peo­ple, after they digest­ed the results prop­er­ly, will change their opin­ion.

Cameron: I often, and I know lots of our mem­bers go through this process as well, when we see a share price drop by 10, 15, 20% on the day the report comes out and we read the report and we go, well, it was pret­ty [00:05:00] good, real­ly.

Tony Kynas­ton: Mm-hmm. Yeah.

Cameron: then we think, did the mar­ket over­re­act? Yes. But it trips one of our cell trig­gers. And we’re often like, well, should we just ignore that?

Tony Kynas­ton: I.

Cameron: wait till the mar­ket calms the hell down and, and, uh, it, it comes back again. I mean, there should there be a, a caveat on a cell, on a cell trig­gers that be ignored with, you know, if it, if the trips one with­in like, 48 hours of, uh, report com­ing out, I don’t know because then some­times the reports are, do jus­ti­fy the drop and it

Tony Kynas­ton: Yeah.

Yeah. It, it’s a hard, that’s a hard one to answer. I’m, I’m not averse to giv­ing it a day’s gross, but you’re on the risk of it drop­ping fur­ther. Um, yeah. So it’s a, that’s a hard one to call, um, rules, or rules I guess. Uh, but yeah, I, I take your point. It’s, um, report­ing sea­son is volatile and it can be volatile, not [00:06:00] because the busi­ness under­neath is volatile.

It could just be that there’s been an earn­ings mess, you know, so, like you said. We’ll look at the, I’ll look at the report and think, yeah, those num­bers are pret­ty good, but if they’re slight­ly below what the mar­ket thought they were gonna be, it can be a sell off. Um, which, you know, makes lit­tle sense to me.

Cameron: Well, let’s move on to, uh, some news of the week. Our port­fo­lio, dum­my port­fo­lio in the last 30 days is up near­ly 12% in 30 days.

Tony Kynas­ton: Well, we know that earn­ing sea­son often is the biggest mover for our port­fo­lios.

Cameron: Let’s just sell and go home for the rest of the

Tony Kynas­ton: Yeah.

Cameron: Uh, that’s ver­sus the SPDR 200, which is up 3.4% in the last 30 days. So. It’s been a good month for us, by the way. Uh, accord­ing to Navexa, 11% of our return is cap­i­tal [00:07:00] gain and for that peri­od, and the oth­er half to 1% is income return over the last, uh, well we do year to date, cur­rent cal­en­dar year.

Yeah, sure. Why not? Our cur­rent Calen, oh my God. Let’s go home. Our cur­rent cal­en­dar year, we’re up

Tony Kynas­ton: We are at home.

Cameron: We’re up. Oh yeah. We’re up 23% for the cur­rent cal­en­dar year ver­sus just under 12% for the index. So we’re doing dou­ble the index for the year. Uh, 17.4% of our return is cap­i­tal gain. The oth­er 6% is income return.

Tony Kynas­ton: Mm-hmm.

Cameron: Um, last five years, uh, becomes a lit­tle bit more rea­son­able. We’re up 18%, uh, per year, over five years ver­sus 12% for the index. [00:08:00] So, um, yeah. Doing all right. It’s doing okay.

Tony Kynas­ton: It is work­ing and, and it, you know, it’s, um, well, I dun­no how to put this with­out sound­ing like shade and Freud. So I’ll say it’s val­i­dat­ing when I see stocks like CSL and Wool­worths drop­ping by large amounts when their results come out. Um, and I find it val­i­dat­ing because I’ve, I, you know, there are plen­ty of stocks which are held in port­fo­lios because they’re in the index or because they’ve had good, you know, good runs in the past, but they’re hard to jus­ti­fy on cur­rent val­u­a­tions, but peo­ple keep hold­ing them.

Um, yeah, and we don’t, and I think that’s one of the rea­sons. I mean, as, as we said in way back in prob­a­bly episode one or one of the ear­li­est ones, it’s the way to beat the index is to take out the bad stocks. And, um, CSL and Wool­worths aren’t bad stocks, but it’s, um, you know, they’re, um, yeah. Uh, [00:09:00] it’s not stocks that we wan­na hold.

Cameron: Well, I said that the dum­my port­fo­lio is up 12% for the last 30 days ver­sus about 3% for the index. That’s the Aus­tralian port­fo­lio, but when I flip over to the US port­fo­lio for the last 30 days. Our port­fo­lio is up about 12% ver­sus the index up about 3%, so it’s exact­ly the

Tony Kynas­ton: Mm-hmm.

Cameron: slight­ly

Tony Kynas­ton: Uh,

Cameron: per­cent were up ver­sus three point a half for the index, but it’s, it’s a mir­ror, which is crazy.

Tony Kynas­ton: it is, isn’t it? Yeah.

Cameron: we’ve seen that a cou­ple of times late­ly where the US port­fo­lio is just map­ping the Aus­tralian port­fo­lio for the last, well, for the year to date though not as good, port­fo­lio is up 23%. The US port­fo­lio is down 7.5% ver­sus the index up 10. But as I keep point­ing out, that’s because at the end of last year, our US port­fo­lio was up [00:10:00] about 85%. the index up about 30. then Trump had lib­er­a­tion debate and our stocks came back quite a lot. So

Tony Kynas­ton: Right.

Cameron: were, they were, right and hot and high before Trump decid­ed to fix the Amer­i­can econ­o­my by cre­at­ing chaos every­where. Actu­al­ly, it’s fun­ny. In our US show today I’m gonna be doing a pul pork on a real­ly inter­est­ing com­pa­ny a Brazil­ian euca­lyp­tus pulp and paper man­u­fac­tur­er.

The largest, the largest euca­lyp­tus pulp and paper oper­a­tion in the world. And, uh, just sort of read­ing from their CEO, the tur­moil that Trump’s tar­iffs have thrown their busi­ness into, both in terms of the US as a mar­ket and Chi­na as a mar­ket. yeah, it’s must be a night­mare run­ning any of those busi­ness­es right now. Any who, [00:11:00] uh, what else have I got? Um,

Tony Kynas­ton: You are gonna talk about tar­iffs, aren’t you?

Cameron: I was, uh,

Tony Kynas­ton: Hmm.

Cameron: Pres­i­dent Trump’s tar­iffs have been declared ille­gal for the sec­ond time by a fed­er­al court, a

Tony Kynas­ton: Hmm.

Cameron: is in CNBC. A few days ago, fed­er­al Appeals court ruled that most of Pres­i­dent Don­ald Trump’s glob­al tar­iffs are ille­gal, strik­ing a mas­sive blow to the core of his aggres­sive trade pol­i­cy. rul­ing is the Trump admin­is­tra­tion’s sec­ond straight loss in the make or break case known as VOS selec­tions ver­sus Trump. Trump attacked the appeals court as high­ly par­ti­san and assert­ed that the Supreme Court, which isn’t high­ly par­ti­san, will rule in his favor. I added the last bit in there. Um, so he is doing ille­gal tar­iffs because only Con­gress, as I under­stand it, has the abil­i­ty to cre­ate tar­iffs. the

Tony Kynas­ton: That’s,[00:12:00]

that’s the

cr,

isn’t that the crux of it? That the exec­u­tive can do it in the cas­es of an emer­gency, so they’re fight­ing over what the term emer­gency means.

Cameron: I dun­no. Um,

Tony Kynas­ton: some­thing like that.

Cameron: Court of Appeals for the fed­er­al cir­cuit held in the sev­en four rul­ing that the law trump invoked when he grant­ed his most expan­sive tar­iffs, includ­ing his rec­i­p­ro­cal in quotes, tar­iffs does not actu­al­ly grant him the pow­er to impose those tar­iffs. Um, so there you go. Does­n’t get into the legal, the, the jus­ti­fi­ca­tion of it.

Tony Kynas­ton: Yeah. Right.

Cameron: Oh, yes. The Trump admin­is­tra­tion has argued that the IE EPA A empow­ers the pres­i­dent to effec­tive­ly impose coun­try spe­cif­ic tar­iffs at any lev­el. If he deems them nec­es­sary to address a nation­al emer­gency. What’s the nation­al emer­gency Trump’s.

Tony Kynas­ton: Trump got [00:13:00] elect­ed.

Cameron: I’ve been lov­ing. So there’s, I dun­no if you’ve been fol­low­ing this, but there’s the rumor mills in online over the last week that he’s actu­al­ly or sick. Has­n’t been s, has­n’t been seen in pub­lic, you know, was­n’t, uh, tweet­ing or truth social­ing, you know, was­n’t giv­ing ran­dom speech­es at golf cours­es and stuff. So, yes, the, uh, rumor mills are run­ning wild about him at the moment.

Tony Kynas­ton: I’ve seen the pho­tographs of an enlarged hand and bruis­ing on the ankles, et cetera. But, um, I don’t, it’s, I would think those pho­tographs are very easy to fake. Um, who knows,

Cameron: pho­tos are real. The, um, the

Tony Kynas­ton: right? You,

you took them, you know?

Cameron: The White House has come out and con­firmed that he’s

Tony Kynas­ton: Um, okay.

Cameron: that doc­tors are

Tony Kynas­ton: Right.

Cameron: But there’s a lot of con­spir­a­cy the­o­ries around what the real con­di­tion is and, you know, [00:14:00] um, et cetera, et cetera.

So we’ll see. So, um, like the whole, like if it goes to the Supreme Court and the Supreme Court that the tar­iffs are ille­gal and he does­n’t have the author­i­ty, I imag­ine he does, he would­n’t have too much trou­ble get­ting Con­gress to approve them. It might tie them up for a while, but he, at, at the moment, he con­trols

Tony Kynas­ton: Yeah.

Cameron: he should be able to get that push through.

But,

Tony Kynas­ton: Yeah. Kind of sur­pris­ing he has­n’t done that already. I guess the, the, I guess he could draft leg­is­la­tion to cater for the fact that the tar­iffs are fair­ly vari­able, but with­out going to Con­gress, he’s not lock­ing in amounts into law. He’s got a lot of free room to change the rates all the time, so maybe that’s why he has­n’t gone through Con­gress yet.

Cameron: Then of course the Shang­hai Coop­er­a­tion Orga­ni­za­tion has been meet­ing the [00:15:00] last few days, Putin she and Modi among oth­ers. Uh, heads of gov­ern­ments rep­re­sent­ing near­ly 50% of the world’s pop­u­la­tion. togeth­er and hav­ing a chat about what to do against Amer­i­ca is

Tony Kynas­ton: It, it’s, it’s more than fas­ci­nat­ing. I, you give Modi and Xi Jin Pink and for­mal legit­i­mate alliance and put their set aside, their dif­fer­ences, it’s prob­a­bly game over.

Real­ly? Mm-hmm. I,

Cameron: Fas­ci­nat­ing. Just to watch it all play out in real time, these sorts of.

Tony Kynas­ton: yeah. I.

Cameron: um, in the neg­a­tive sense of the word from the US slid­ing down land­slide nor­mal­ly for some rea­son. Why is, why is a land­slide got a pos­i­tive con­no­ta­tion? Oh, they won in a land­slide. Land­slides are nev­er a good thing.

Real­ly?

Tony Kynas­ton: No.

Cameron: gets wiped out if you’re in a land­slide. I dun­no how that took [00:16:00] on a pos­i­tive con­no­ta­tion. But any­way, yes. Which the US just sort of crum­bling. I had a, I had one of my long term lis­ten­ers, a guy who runs a bio­phar­ma­ceu­ti­cal com­pa­ny out­ta Boston. Doug, shout out to Doug. I don’t think he lis­tens to this, but, uh, he’s got a facil­i­ty in Bris­bane that he comes out once a year to vis­it. They’re doing can­cer research and, uh, the last time he was here was, a year ago, so just in the run up to the elec­tion. And he was very con­fi­dent that, uh, Kamala was gonna win. And now he’s just kind of like,

Tony Kynas­ton: Yes.

Cameron: he said it’s like just liv­ing in a night­mare over there. He’s a, he’s a Demo­c­rat, obvi­ous­ly, but, um, yeah, he’s like, it’s just, it’s just a ongo­ing train wreck, like liv­ing in the mid­dle of a train wreck.

Can’t believe it. Any who?

Tony Kynas­ton: As, as you said, for a long time, there’s cer­tain, cer­tain­ly start­ing to look like a big divide, if not a civ­il War devel­op­ing. Um, I’m just judg­ing that based on a lot of the [00:17:00] things that David Markham passed posts on Face­book. He does­n’t real­ize it, but a lot of it is point­ing towards a civ­il war. Um, you know, lat­est when I saw was the blue states refus­ing to col­lect tax­es for the fed­er­al gov­ern­ment and pass them on.

You know, so when things like that start to hap­pen, it’s, it’s not too far away from some kind of con­flict per­haps armed. Yep. Who knows?

Cameron: On the bull­shit fil­ter. Last week I start­ed a new series on fas­cism and it was some­thing I’ve been threat­en­ing to do for six months. Um, going through the his­to­ry of fas­cism and look­ing at the dif­fer­ent, uh. Vari­a­tions of it in the 20th cen­tu­ry. And then with the intent of mov­ing on to look­ing at going on in the US today and ask­ing the ques­tion, well, is it, or is it, I mean, it’s a word that gets bandied around a lot,

Tony Kynas­ton: Hmm.

Cameron: you know, what is fas­cism?

How do you [00:18:00] define it? And as it turns out, it’s incred­i­bly dif­fi­cult real­ly, because it took so many dif­fer­ent forms, even in the ear­ly 20th cen­tu­ry. But there are, there are a num­ber of schol­ars and his­to­ri­ans have writ­ten books on it that I’ve been read­ing. And um, you know, it’s one of those things that if it walks like a duck and it quacks like a duck, then it prob­a­bly has duck like qual­i­ties, you know?

Tony Kynas­ton: Yeah, and it’s, and it’s

prob­a­bly per­haps the word fas­cism. It can be sub­sti­tut­ed by author author­i­tar­i­an­ism, which kind of removes it from just, I think, I think when I hear fas­cism, I think of Hitler, Ger­many, and um, of course that’s not the only def­i­n­i­tion of fas­cism. It’s been around a lot longer before that.

Um, and you know, Trump does­n’t, prob­a­bly won’t look like the mod­el that Hitler had in Ger­many. It does­n’t mean he’s not an author­i­tar­i­an. Um, and there aren’t ele­ments of fas­cism in what he does. Um, but you know, you [00:19:00] could say that about oth­er right wing lead­ers in the past as well.

Cameron: wing, you have left wing author­i­tar­i­ans and

Tony Kynas­ton: Yeah,

Cameron: and

Tony Kynas­ton: for sure.

Cameron: is par­tic­u­lar­ly right wing. You know, um, I, I’ve always gone back to Trot­sky, ’cause Trot­sky wrote a lot about fas­cism in the thir­ties and for­ties, you know, as a first­hand wit­ness to it, exam­in­ing it from a Marx­ist per­spec­tive.

Uh, but you know, he always. Said that fas­cism is what hap­pens when wealthy elite feel like their usu­al con­trol mech­a­nisms of the pro­le­tari­at, uh, aren’t work­ing they need to crack down. So it’s a far right crack­down on soci­ety to bring it back into align­ment with their goals and objec­tives. So, um, and essen­tial­ly, I was talk­ing to Doug about this, like when you think about 20th cen­tu­ry fas­cism, you think about Ger­many and Italy and Spain in par­tic­u­lar.

These were coun­tries [00:20:00] that had been through War One dev­as­tat­ed civ­il war. In Spain’s case, they were, um, eco­nom­i­cal­ly very, very ham­pered. They were Ger­many and Italy very late to the great expan­sion game of the 18th and 19th cen­turies. ’cause they did­n’t uni­fy until late in the 19th cen­tu­ry. So they missed out on get­ting access to the goods and resources and they were feel­ing locked in and ham­pered by the oth­er major colo­nial pow­ers eco­nom­i­cal­ly. Um, and so the peo­ple were poor and des­per­ate and right for to come along and say, Hey, I can lead you to the promised land. The US on the oth­er hand, rich­est, most pow­er­ful coun­try in human his­to­ry should be a land of milk and hon­ey for every­body. Uh, does­n’t real­ly fit that arche­type. Uh, so

Tony Kynas­ton: Well, it kind of,

Cameron: Hmm,

Tony Kynas­ton: I’m sor­ry, I did­n’t [00:21:00] mean to inter­rupt. You did­n’t mean to be fas­cist. Um, no, I was gonna say it kind of does, uh, ’cause what­ev­er the rea­sons for it, it, it’s, it’s often. Presage by a break­down in, uh, well, peo­ple call it equal­i­ty here or egal­i­tar­i­an­ism here, but I think it’s more than that. I think it’s, I think it’s, once the major­i­ty of the pop­u­la­tion does­n’t feel safe, does­n’t feel like they’re pro­gress­ing, does­n’t feel like they’re com­fort­able, um, then things break down and it just becomes a, you know, a num­bers game.

Then what­ev­er, who­ev­er can whip them into the great­est fren­zy gets all the might. And whether that’s because of, you said his­tor­i­cal rea­sons or whether it’s just like in the US’ case right now that, you know, their birth rate’s declin­ing, the life expectan­cy’s declin­ing, peo­ple can’t get access to med­i­cine, they can’t afford edu­ca­tion, don’t [00:22:00] get sued, you can’t afford to defend your­self.

All those kinds of things are just, you know, break­ing the social con­tract. I mean, I, I’ve always been amazed at how smart. You, I, you know, your reg­u­lar per­son is, I’ll use a term I don’t like, but your aver­age per­son is, they under­stand what’s going on. They also under­stand that they don’t wan­na get involved.

As long as I’m, as long as I’ve got a job, as long as I can put food in the table, as long as my kids are okay, as long as my health’s okay, as long as I’m, you know, gonna live a long, hap­py life. I don’t real­ly care what Bezos does in space or Elon does with drugs or how many kids he saws or what Trump does in the White House.

But that’s break­ing down now. ’cause it’s, it’s, it’s, you know, clas­si­cal­ly it’s like it’s the reverse of what’s hap­pen­ing in Chi­na. Chi­na does­n’t real­ly care. Chi­nese peo­ple don’t real­ly care whether it’s the CCP in pow­er or any­body else in pow­er. As long as they, they’re safe, they’ve got a job, they’re hap­py, their fam­i­ly’s not, life is get­ting bet­ter.

Yeah. But that’s what’s break­ing down in the [00:23:00] US and that’s what I think is caus­ing, um, a swing to some­one who can appeal to the mass­es and to look like they’re giv­ing legit­i­ma­cy to their gripes.

Cameron: But that’s my point. Life should be get­ting bet­ter

Tony Kynas­ton: Yeah, it should be.

Absolute­ly.

Cameron: glob­al super­pow­er for 70 years

Tony Kynas­ton: Absolute­ly. Yeah. It’s just had too much cap­i­tal­ism, too much. Um, cor­po­rate pow­er, the mil­i­tary indus­tri­al com­plex. I,

Cameron: Indeed. All right. What do you got on your list of non uh, fas­cist talk­ing points for this week? Tony?

Tony Kynas­ton: well back with some hap­py news cam. It’s actu­al­ly been a rea­son­ably good report­ing sea­son for QAV stocks and first, first plane off the rank, first cab off the rank is Qan­tas. Um, and I think our, our. Don’t wan­na put words in your mouth, but I recall back when we added it to one of the port­fo­lios, you said it’s already at 10 bucks.

Is it real­ly gonna get any high­er? It’s, it’s kind of at its high peak from before [00:24:00] any­way, it, it looks like it has or def­i­nite­ly has. And, um, the prof­its seem to be bol­stered. Accord­ing to the Fin Review, by the arrival of more than a dozen next gen­er­a­tion air­craft, which has helped Qan­tas deliv­er record mar­gins at Jet­star and led to a $2.39 bil­lion prof­it at Qan­tas well ahead of expec­ta­tions.

And the sec­ond high­est in the air­line’s his­to­ry, the full year result, which includ­ed a spe­cial one 50 mil­lion pay­ment to share­hold­ers, sent shares surg­ing 9%, and was a wel­come change for Chief Exec­u­tive Vanes­sa Hud­son, who has faced ques­tions about whether the air­lines and work­place cul­ture has improved after sev­er­al tough years.

So, you know, share price has gone up. Um, good result. Bear in mind the back­drop, uh, I think that was the result, came quick­ly on the heels of a record fine for, um, uh, Qan­tas Out­sourc­ing, its bag­gage han­dling divi­sion dur­ing COVID. Um, so it, I mean, the mar­ket’s had a long time, a [00:25:00] long time to digest that fine as it was pend­ing and tak­en through the courts.

Um, uh. But you know, you, you’d expect when the fine came down like that, the share price would go down. It did­n’t. And then the results came out and it went up and it’s pret­ty close to its record high. And it’s also inter­est­ing that it’s on the back of new planes. And I think I did the pulled pork on Qan­tas last year where I said it’s all gonna come down to how quick­ly they can refresh their, refresh their fleet.

Um, and, um, the new CEO seems to, uh, be going a long way to doing that effi­cient­ly and quick­ly and boost­ing mar­gins by doing it.

Cameron: Yeah, I hold QAs in a num­ber of port­fo­lios, includ­ing my super. It’s in some light port­fo­lios. It’s in the dum­my port­fo­lio. In, uh, one of the light port­fo­lios. I bought it in Sep­tem­ber last year at $6 83, so it’s up 70% since then. The oth­er port­fo­lio’s, Novem­ber 24 at about [00:26:00] $8 59 bucks. It’s up 30, 35%. oh, my super was one of those, Novem­ber last year it’s up 30% in my super, same time I put it in the dp. yeah, it’s done well. But it is one of those stocks that, you know, you, you look at the chart and you think, ooh, it’s, it’s, look­ing like it’s peak­ing. But, know, fol­low the sys­tem.

Tony Kynas­ton: Yeah.

Cameron: be the smart guy in the room, not me.

Tony Kynas­ton: Yeah, I was gonna say if charts made mon­ey, map­mak­ers would be king, but that’s not the case.

Cameron: Yeah.

Tony Kynas­ton: yeah. Um. Look it. I, I agree. It’s an air­line. War­ren Buf­fet famous­ly said, you know, if he, if he had use of a time machine, he’d fly back to Kit­ty Hawke in 1903 and shoot Wilburn or Wilbur and Orville. So it’s like he’s, he, he believes air­lines are wealth, wealth destroys.

Um, uh, I, I have no doubt that QAs one day again, will turn bad, but, uh, we’ll just, [00:27:00] you know, let the process guide us on that one.

Cameron: Yeah.

Tony Kynas­ton: Uh, anoth­er one that, um, anoth­er one that’s done well is Motor­cy­cle Hold­ings. MTO,

Cameron: Mm-hmm.

Tony Kynas­ton: again, a pulled pork that I did, and, uh, it’s come out with good results. At the same time, the, um, one of the, I think it was the founder, but cer­tain­ly the, the, uh, retir­ing, uh, CEO who stepped down, uh, sold a lot of shares, um, a.

Uh, and that, again, that should have been a, you know, a rea­son to sell off for the share price, but it has­n’t. So, um, last week motor­cy­cle hold­ings announced $650 mil­lion in record sales rev­enue and a 12.8% increase in earn­ings before inter­est tax depre­ci­a­tion, and amor­ti­za­tion and net prof­it rose 27.7% and the stock­’s gone up from there.

Cameron: Yeah, it’s been anoth­er nice [00:28:00] one for us. I’ve had it in a light port­fo­lio since Decem­ber last year. It’s up 96%. It’s not bad for 10 months.

Tony Kynas­ton: Pret­ty good, isn’t it?

Cameron: I mean, it’s not Zep

Tony Kynas­ton: Okay.

Cameron: Zap

Tony Kynas­ton: I’d be hap­py with 96%.

Cameron: zap The, uh, list­ed in the New York Stock Exchange Chi­nese smart­watch stock that I cov­ered on QAV Amer­i­ca five or six weeks ago is up 1400% now since I cov­ered it.

Tony Kynas­ton: Uh,

yeah. Uh, so yeah, so a cou­ple of, um, cou­ple of good results for us. Uh, inter­est­ing chart that caught my eye over the week­end. Uh, the chart, uh, orig­i­nates from Morn­ingstar. I think I saw it, Alan Kohler’s week­ly, uh, report. But, um, it’s a chart of the num­ber of US list­ed com­pa­nies, which is a lit­tle bit over 4,000.

And the num­ber of [00:29:00] US list­ed ETFs, which is now slight­ly more than four, the num­ber of list­ed com­pa­nies. So there are now, there are now more ETFs in the US track­ing the com­pa­nies than there are com­pa­nies under­ly­ing, I guess they also track com­modi­ties and cur­ren­cies as well. But, um, I think that’s crazy.

Yeah.

Cameron: it? Oh my God. Why do you need that many ETFs? They’re just like

Tony Kynas­ton: You don’t?

Cameron: you know, how to, you know, we only invest in com­pa­nies that are run by peo­ple with one leg and

Tony Kynas­ton: Mm-hmm.

Cameron: the name of Bob. Like, if that’s your thing, it’s like porn. like porn. There’s, there’s, there’s a

Tony Kynas­ton: Oh, right,

Cameron: No mat­ter how niche.

Tony Kynas­ton: right. Yeah.

Cameron: a,

Tony Kynas­ton: Uh,

Cameron: it’s like rule

Tony Kynas­ton: what, what’s that?

Cameron: Uh, if, if no mat­ter how, no mat­ter how, uh, extreme the niche is, there’s porn built around or some­thing like that

be

Tony Kynas­ton: Okay. [00:30:00] Uh,

Cameron: one of

Tony Kynas­ton: well, I think the rea­son is, you know, again, going back to a Char­lie quote, um, show me the incen­tives and I’ll show you the result. So. Peo­ple are mak­ing mon­ey out of ETFs and they don’t, you know, they don’t make mon­ey by start­ing one, and that’s it. They keep issu­ing new ones to attract more trade towards their fees pure­ly and sim­ply what it is.

Cameron: it’s Rule

Tony Kynas­ton: you know, the bit of,

I think, I think it’s also a fal­la­cy too because as we know from, um, watch­ing it over the years that in the major­i­ty of, uh, active­ly man­aged funds don’t beat the index. And that’s, um, that’s pret­ty much a tru­ism. It’s been proven that many times. Uh, and that was what, uh, orig­i­nal­ly launched index funds, which became ETFs, uh.

I dun­no when 20, 30 years ago, I think Charles Schwab pio­neered that busi­ness from mem­o­ry. Um, but it’s just become per­verse now because, uh, [00:31:00] you know, that one key fact that active­ly trad­ed man­agers under­per­formed the index on aver­age, on mass, um, has now mor­phed into ETFs being effec­tive­ly active­ly man­aged.

Because, you know, like as you say, you, you can buy a gold ETF, you can buy a US dol­lar ETF, you can buy a val­ue ETF or what­ev­er. You basi­cal­ly, you know, doing the same thing as before an ETF and anoth­er, a man­aged fund with a fund man­ag­er active­ly man­ag­ing it. So, um, a lot of those ETFs will also under­per­form the index.

Cameron: Rule 34 is an inter­net meme, which claims that some form of pornog­ra­phy exists con­cern­ing every pos­si­ble top­ic. The phrase Rule 34 was coined from an August 13th, 2003 web com­ic cap­tured Rule 34. There is porn of it, no excep­tions. Um, the com­ic was drawn by Tan­go Star­ry to depict his shock at see­ing Calvin and Hobbes par­o­dy porn. [00:32:00] Although the com­ic fad­ed into obscu­ri­ty, the cap­tion instant­ly became pop­u­lar on the inter­net. Since then, the phrase has been adapt­ed into dif­fer­ent syn­tac­tic ver­sions and has been used as a verb, a list of rules of the inter­net cre­at­ed on the web­site. Four chan includes Rule 34 with a list of sim­i­lar tongue in cheek cheek max­ims.

So I think we need one for an ETF. Now, there needs to be a rule for ETFs

Tony Kynas­ton: Well, there’s a, there’s a,

there’s an ETF called sin, SIM, which looks after invest in com­pa­nies which are not scor­ing well on the ECG scale. Um, maybe we could take it over.

Cameron: well we just need a QAV ETF. Yeah. Uh, alright, so what else you got?

Tony Kynas­ton: What else have I got? I’ve got a pulled pork to do, which I can do now. We can do questions.[00:33:00]

Cameron: Let’s do ques­tions.

Tony Kynas­ton: Yep.

Cameron: I think is the first one. Hi Cam. Screen­shot below is from CMC Mar­kets for PRN, which does not stand for porn, although it’s fresh in my head now. Porn Par­en­ti up until 15 min­utes ago, when­ev­er he sent me this and before they released what looks like excel­lent results, the high bid price was about $2 32.

Then it has gone nuts as you can see below. Think the price had gone up to sort of $2 50 or some­thing. It may be an obvi­ous answer, but why would some­one put a bid in at 7% or 17 cents high­er than the high­est offer price? So the screen­shot that he sent me shows some­body had put in an order for 1,099 shares at a price of $2 50 the shares were trad­ing at $2 32. Uh, [00:34:00] we’ve cov­ered this before, but I could­n’t remem­ber the answer. What would, do you have a the­o­ry on this, Tony?

Tony Kynas­ton: Oh, it’s hard to say. Um, it’s a small, very small par­cel of shares. So it could be fat fin­gers. They could have meant $2 30, who knows? But, um. My sus­pi­cion is that some­one try­ing to manip­u­late the mar­ket price. Um, and, and I’m, it’s a hunch that’s all it is. I’ve got no over­whelm­ing evi­dence for this, but I see it more and more these days is that there are low parcels trad­ed, um, typ­i­cal­ly in the very late dying stages of the mar­ket before it clos­es, which will then set the clos­ing price either a lot high­er or a lot low­er than what the stock has trad­ed at before­hand.

Um, and. Uh, again, my hunch is that’s, uh, either some­one try­ing to gain the algo­rithm traders, al algo­rith­mic traders who might look for share price [00:35:00] move­ments to, um, before they put an order in. Or it’s also an algo­rith­mic trad­er who, um, is, uh, either try­ing to manip­u­late the price or, or, um, you know, um, just buy­ing small parcels of shares at, at a price above the or below the cur­rent price and wants to make sure the order gets, gets picked up.

Um, the oth­er, the oth­er thing I did sort of tin­ker with is that the per­son who put it on $2 50 may well have expect­ed the mar­ket to react strong­ly to the results announce­ment and to, for it to roar through two 50. And they want­ed to get an order in that, um, would be accept­ed, but you know, why would­n’t have been two 40?

Same sort of out­come. I, I just don’t know.

Yeah.

A strange one.

Cameron: I did ask GPT its the­o­ries. Um, did­n’t real­ly have any­thing either. Noth­ing that made sense. So, yeah, good ques­tion Scott.

Tony Kynas­ton: I,

Cameron: uh, one of our [00:36:00] lis­ten­ers out there will have anoth­er the­o­ry.

Tony Kynas­ton: mm.

Cameron: ques­tion is from Dave. I have received two emails recent­ly regard­ing join­ing class actions, one for BPT Beach Ener­gy.

I bought as a QAV stock and one for a two MA two milk. I bought when I was play­ing the field before ful­ly com­mit­ting to QAV Dave

Tony Kynas­ton: Monogamies, you got­ta stick with it.

Yeah.

Cameron: Hussie Dave not expect­ing Tony to research either in detail or pro­vide finan­cial advice, but could he talk to any pri­or expe­ri­ence or knowl­edge he has? Seems a lay down mazzer to join and take what­ev­er dol­lars may get won with no down­side if they lose.

Tony Kynas­ton: Yeah, I’ve cer­tain­ly joined a cou­ple of these in the past, over the years. Um, and I, you know, I feel like these class action law­suits have real­ly pick­ing up the slack for what the ASX should be doing. ’cause they gen­er­al­ly, um, they’re, they’re [00:37:00] using the courts to, to pros­e­cute the case that the com­pa­ny made, um, or did­n’t make the appro­pri­ate announce­ments.

And peo­ple were buy­ing shares in a peri­od when the com­pa­ny knew some­thing which they did­n’t dis­close, but the share­hold­er pur­chas­ing did­n’t. And there­fore the share­hold­er has lost mon­ey. Um, I don’t know the ins and outs of beach or, uh, the oth­er one that, um, Dave was talk­ing about. So I can’t com­ment on those and I’m not a par­ty to those.

Uh, look, it’s an imper­fect way to get some kind of rec­om­pense because the one or two where I have been paid out, uh, a take a long peri­od of time that can, you know, sort of drag on for three to five years through the courts and while they pre­pare their cas­es, um, and gath­er share­hold­ers to the class action, uh, it’s get­ting bet­ter.

But in the past you were receiv­ing a lot less than the amount that was paid out and the lawyers were tak­ing a, a large stake of the pie. And I guess that’s fair ’cause they, they’re not charg­ing you a fee, so they take the [00:38:00] risk. Um, but there has been some, I dun­no if it’s leg­is­la­tion or at least rules imposed by the court now.

Which lim­its, um. The caps, the amount that the lawyers can take on a fee for no ser­vice class action. So it’s get­ting slight­ly bet­ter, but you won’t, like, you know, if you see a ban­ner head­line that this class action result­ed in a $200 mil­lion pay­ment, it can be a lot less than that. That goes to the share­hold­ers who are in the class action.

Um, a lot, in a lot going to the, the lawyers, uh, it’s, it’s had a bit of a dis­tort­ing effect on com­pa­nies because it means insur­ance. Um, indem­ni­ty insur­ance has to go up for all com­pa­nies real­ly, because all of these, um, court cas­es can result in a claim being made on their insur­ance to, um, to pay for the fact that they thought, the board thought it was doing the right thing, but it was­n’t.

Um, and it’s now been proved by the quar­ter that was­n’t, so the insur­ance can get paid out. Um, so that’s kind of seen dra­mat­ic ris­es in p and i insur­ance pre­mi­ums over the years, which is a [00:39:00] drag on busi­ness to some extent. Um, so, you know, it’s not the per­fect sys­tem, but if the ASX. Again, did its job prop­er­ly and nip these things in the bud, there’d be a lot less of them.

So, uh, yes, Dave? In short, yes, I’ve signed up for them. Um, you know, even with large share­hold­ings, the pay­outs can be minus­cule com­pared to the share­hold­ing, but you’re still get­ting some­thing back for the pain of hav­ing, um, hav­ing poten­tial­ly and alleged­ly been mis­led by the, by the com­pa­ny when you are buy­ing the shares.

Cameron: Yeah. I’ve got a late ques­tion that came in from Andrew. no prep on this one, but, let’s wing it. He says, cam haven’t seen any chat­ter on waf, west African Resources. WAF pick some up when it was on the buy list in mid 2021 for 99 cents. I was a naughty boy and did­n’t sell it when it went south, but with gold boom­ing, it has been hav­ing a [00:40:00] tear.

It’s up over $3 at the moment. Cash gen­er­at­ing machine, was until trad­ing halt on Fri­day as the Bak­i­na Faso gov­ern­ment want­ed 35% more of their lat­est mine. com­pa­ny did­n’t update the mar­ket before open on. Mon­day so shares are now sus­pend­ed. I was aware of the risk of West Africa and was get­ting a good dis­count to buy this. What to do now. Need to wait until there is an agree­ment between gov­ern­ment and com­pa­ny and then hope­ful­ly shares don’t tank too dras­ti­cal­ly. I also hold PRU think­ing about sell­ing while up a hun­dred per­cent to reduce my expo­sure to West Africa. What does the great man TK think about this sit­u­a­tion?

He’s spo­ken about coun­try risk in West Africa in par­tic­u­lar before would be good to hear his thoughts. it RRL that I got burnt by?

Tony Kynas­ton: It was the one whose CEO was held by the gov­ern­ment, which I think was, was it? I’m not sure. Regal or Res­olute?

Cameron: [00:41:00] Reg­is,

Tony Kynas­ton: Reg­is, per­haps. Yep.

Cameron: maybe.

Tony Kynas­ton: I own Perseus and I haven’t sold any, so, um, I can’t com­ment on West African resources ’cause this is the first I’ve heard of the cur­rent issue in the trad­ing hole. I’ve owned them in the past.

I don’t owe them now. Um, when we went through this before, when we, with, with the oth­er gold min­er in Africa, whether it was Reg­is or Regal or who­ev­er, um, you know, I, I said, well, I’m just going to apply the rules and see what hap­pens. Um. I, I did note today with Per­cys that, uh, their results came out. I haven’t had a chance to go through them.

They, on the first blush, they don’t look that great, but the share price has­n’t dropped, so I’m not sell­ing. Um, I, I did see that Stock Doc­tor had, uh, removed them from their star stock sta­tus, so that may have an impact, um, on them. But, um, yeah, uh, again, I’ll just keep apply­ing the rules that, [00:42:00] uh, that I apply.

So I can’t real­ly give you much more than that. You, you can’t do much now if the stock­’s been sus­pend­ed. Um, and if it comes up and it’s gone down a lot, well, you’ve still made a lot of mon­ey. So, um, yeah. See, see what hap­pens.

Cameron: It’s unlike­ly to go back to 99 cents,

but

Tony Kynas­ton: Hmm.

Cameron: come down quite a bit. Yeah, I, I mean, I hold Perseus in a bunch of port­fo­lios too. My super includ­ed some light port­fo­lios. It’s up some­where between 40 and 80% depend­ing on when I added it. So again, it has, even if it comes back a bit, we’ve got a lot of, uh, prof­it to take there.

Tony Kynas­ton: Yeah. And you know, again, this comes back to this, um, mus­ing I had a cou­ple of weeks ago about whether if a, a stock gets to twice sell price, whether we should­n’t take some prof­its and West African resource is right there at the moment. It sell price is a dol­lar 51 and its share price before it was put into a hold is $3 and 4 cents.

[00:43:00] And, um, Per­cys is fair­ly sim­i­lar in terms of being dou­ble its sell price. So, uh, yeah, maybe that’s a trad­ing rule that we need to inves­ti­gate fur­ther. I I, and maybe it’s a rule where you sell some and not all, um, just as insur­ance. Uh, but when I did some research on it, it seemed like there were just as many cas­es where the.

Share price kept going up as there were, that the share price came down. So I could­n’t real­ly for­mu­late a rule around it. But, you know, hey, look, you know, if you, if you’re wor­ried about it, then yeah, sell some, um, you’ve made some mon­ey. Uh, you don’t have to apply the rules slav­ish­ly if it’s wor­ry­ing you.

Cameron: Yeah.

Tony Kynas­ton: and there are oth­er things to buy, so, you know, I’m not, I’m not gonna, I’m not hold­ing a gun to any­one’s head say­ing, Hey, come on, this is QAV bud­dy. Total line,

Cameron: unlike the gov­ern­ment of Bea Faso,

not

hold­ing a gun there.

Tony Kynas­ton: Uh, yeah. [00:44:00] But yeah, so, uh, that’s all I can say real­ly with­out know­ing any­thing more about the cir­cum­stances.

Cameron: I think Bea Faso’s been, um, tak­ing tips from Pres­i­dent Trump. Uh, well, if you wan­na do busi­ness here, you got­ta gimme 10% of the com­pa­ny.

Tony Kynas­ton: Yeah. That’s amaz­ing, isn’t it?

Cameron: Hmm.

Tony Kynas­ton: Uh, that’s, yeah, I, I can’t think of a gov­ern­ment in the past which has done that in that kind of way. Um, Aus­tralian gov­ern­ments, you know, take, put equi­ty into com­pa­nies and think the lat­est exam­ple is the smelter in south, in South Aus­tralia. But, uh, it gen­er­al­ly does it to keep the thing going so you can, um, the, the, the staff can keep their jobs and the local area keeps its econ­o­my.

Um, and there’s pit­falls with that as well. ’cause that could just be burn­ing tax­pay­ers mon­ey. But

Cameron: Hmm.

Tony Kynas­ton: for,

it to hap­pen in the US and the way it has is very unusu­al.

Cameron: Hmm, indeed. All right. There you go, Andrew. Good luck with that. Let us know [00:45:00] how I don’t hold West Africa and resources any­more. I sold it when it became a rule one. Um, so I won’t be keep­ing an eye on it, but us in the loop on that. Let us know how it plays out. I tell you, I did have to sell some­thing though this week, Tony.

Um, I did have to sell EVO Embark, um, ear­ly edu­ca­tion. They became a three point sell this week.

Tony Kynas­ton: Is that the code?

Cameron: EVO? Yeah.

Tony Kynas­ton: Okay. What’s the code for evo­lu­tion min­ing then?

Cameron: Uh, don’t know, but it’s not

Tony Kynas­ton: Oh, you are,

no, you’re right. Views and bark. Yeah. Okay. Okay. Yeah. Well, the edu­ca­tion, the child­hood edu­ca­tion sec­tor is still, still, um, cav­i­tat­ing after the prob­lems with one of its staff mem­bers, [00:46:00] um, doing things they should­n’t do, the chil­dren, which is real­ly sad. Uh,

so, um, I can, I can see why you’d have to sell it.

Cameron: Yeah. Alright. You wan­na do your Paul pork? Who are you doing

Tony Kynas­ton: I do

Cameron: Tk.

Tony Kynas­ton: well, a, a new stock on the, um, buy list, which I was pleas­ant­ly sur­prised to see turn up this week. ’cause we don’t nor­mal­ly get fin­techs or too many fin­techs. This is Tyro pay­ments. TYRI should­n’t say we get, we don’t get fin­techs. We do pep­per. Mon­ey’s still still shoot­ing the lights out and still on the top of our, our buy list.

But, um, yeah, I mean orig­i­nal­ly these kinds of stocks were put in the growth bas­ket. And this is anoth­er exam­ple of a stock that float­ed and has come down a long way from its ini­tial pub­lic offer­ing price and is now get­ting back towards val­ue para­me­ters. Um. Stock, the new results are in Stock, [00:47:00] Doc­tor, so we can use the, the lat­est results, which is good to do our analy­sis.

And I want­ed to do it as well, even though it’s not at the top of our buy list, but it has an a DT of 1.88 odd mil­lion dol­lars. So, um, it’s a large a DT stock, which should suit, uh, our lis­ten­ers to, um, to invest in. If, if they’re wor­ried about liq­uid­i­ty, uh, who are they? Well. This is accord­ing to Stock.

Doc­tor Taro Pay­ments is an Aus­tralian finan­cial tech­nol­o­gy com­pa­ny spe­cial­iz­ing in mer­chant pay­ment solu­tions. Found­ed in 2003 and list­ed on the ASX in 2019, Tara has grown into one of the largest non-bank mer­chant acquir­ers in Aus­tralia. The com­pa­ny pro­vides F os ter­mi­nals inte­grat­ed pay­ment solu­tions and bank­ing prod­ucts tai­lored to small and medi­um sized enter­pris­es, par­tic­u­lar­ly in the retail, hos­pi­tal­i­ty, and health sec­tors.

Uh, earn­ings are pri­mar­i­ly, pri­mar­i­ly dri­ven by mer­chant trans­ac­tion vol­umes, fees, and inter­est [00:48:00] income from bank­ing ser­vices. Uh, while the struc­tur­al trend toward elec­tron­ic pay­ments sup­ports long-term demand, prof­itabil­i­ty has his­tor­i­cal­ly been con­strained by high com­pe­ti­tion, invest­ment required in tech­nol­o­gy and pric­ing pres­sures from larg­er incum­bents.

So that’s. That’s a sum­ma­ry of, of Tyro. Uh, they claim on their web­site to have 76,000 mer­chants across Aus­tralia. So they’re, they’re pret­ty wide­ly entrenched to, to go through their his­to­ry. They were found­ed in 2003 by Paul Wood, Peter Hague, and Andrew Roth Roth­well. And inter­est­ing­ly enough, none of those peo­ple are around today on the reg­is­ter, or at least on the board.

Um, which I is a bit unusu­al for this kind of com­pa­ny. Typ­i­cal­ly, you’ll, you’ll see it get a score for hav­ing an own­er, founder, uh. In 2005, Tyro processed its first live trans­ac­tion, 2009. It was the first com­pa­ny to launch inte­grat­ed fpos Medicare rebates, which is why it’s got a, [00:49:00] a big foot­print in the health sec­tor.

2010 was the first to launch non­stop acquir­ing ser­vices so that if peo­ple aren’t famil­iar with banks, they often, um, use what’s called, uh, OLTP com­put­ers. So they have com­plete mir­ror­ing. So if one com­put­er goes down, the, that seam­less­ly trans­fers to the sec­ond one, which keeps things like, um, uh, FPOS machines, bank­ing sys­tems, um, ATMs or linked into the, to the main­frames with­out, uh, falling over.

Uh, 2016, uh, they launched their first bank­ing prod­uct, the Tyro Bank account, and they were the first tech­nol­o­gy com­pa­ny to obtain a full Aus­tralian bank­ing license and oper­ate as an autho­rized deposit tak­ing insti­tu­tion. Not a, not a mean feat too. That’s a very hard thing. To get with lots of reg­u­la­tions, and it also can con­strain a com­pa­ny because of the, uh, a PR, the finan­cial reg­u­la­tor requires the banks to hold a cer­tain amount of tier one cap­i­tal.

So you’ve always got, [00:50:00] uh, cap­i­tal sit­ting on your bal­ance sheet that isn’t being invest­ed or at least invest­ed in any­thing. But, um, liq­uid, uh, high­ly rat­ed things like gov­ern­ment bonds. Uh, in 2020, the largest, they were the largest IPA by mar­ket cap on the ASX In 2019. In 2021, Tyre became Bendi­go Bank’s exclu­sive mer­chant acquir­ing part­ner, and they also acquired a dig­i­tal.

Health pay­ments busi­ness called Mepa Solu­tions. So that’s the his­to­ry of the com­pa­ny in a, in a nut­shell, lat­est results were inter­est­ing, and I did­n’t think they were that good. So trans­ac­tion vol­umes were large­ly flat. They were up 0.2%. Gross prof­it was up 4.4% and oper­at­ing costs were down 2.2%. So rea­son­ably good news.

But then going down fur­ther, NPA was down 30%, so not great. Uh, they did have a cou­ple of things to say about, um, going for­ward in the, in the, uh, results announce­ment. And the CEO said that [00:51:00] active bank­ing users grew 43% with one in three new mer­chants now open­ing a ADE bank account. So their for­ay into bank­ing is get­ting trac­tion.

And in FY 25, the CEO said that they built the foun­da­tions that will see us launch into new under­served indus­tries where they can cre­ate a strong com­pet­i­tive advan­tage. The indus­tries include pet insur­ance, aged care, unat­tend­ed pay­ments, and auto­mo­tive sales and ser­vic­ing. So, uh, they’ve tra­di­tion­al­ly been in retail, hos­pi­tal­i­ty, and health­care, and they’re expand­ing into oth­er, into oth­er mar­kets now.

And I guess the issue there is that, um, they’ve been very good about, uh, link­ing their me. Acquir­ing fpos into, um, host, uh, PO point of sale sys­tems and back office sys­tems like Xero. Um, and there are lots of those on the mar­ket, uh, par­tic­u­lar­ly point of sale sys­tems. They often get tai­lored for an indus­try, and I know that, um, you know, when I was, uh, work­ing in Shell, the auto­mo­tive, um, sales and [00:52:00] ser­vic­ing indus­try had its own spe­cial point of sale sys­tem, which looked at, you know, parts markups and labor ratios and things like that.

So, um, this com­pa­ny’s been very good at, uh, link­ing their FOS into those kinds of point of sale sys­tems and mak­ing the trans­ac­tions and pay­ments a seam­less part of the, the point of sale sys­tem. Um, how­ev­er, shares fell as much as 12.5% on the day of the results announce­ment, and that was back on August 13.

And, uh, where are we? Um. Shares of Aus­trali­a’s tarot pay­ments gained as much as 12.8% to a dol­lar 21, hit­ting their high­er since late Feb­ru­ary, 2024, this was on, uh. This was before the results announce­ment, I think. And, um, that was because, and this is big news for the com­pa­ny pay­ments plat­form. Tyro said that, uh, pay­ments plat­form oper­a­tor, Tyro says it has received a takeover [00:53:00] approach from mul­ti­ple par­ties in recent months.

Uh, the com­ments came after its shares gained more than 10% and were put into a halt by the ASX. The com­pa­ny does not dis­close name of par­ties or offer price and stocked report­ed the stock was up 41.7% year to date. So it’s been going up and down a lot. Um, some­thing else news base that drove the volatil­i­ty was the fact that the CEO announced he was leav­ing.

And, uh, to date there’s been no replace­ment announced. So, um. Cap­i­tal Brief said Taro, CEO, man­ag­ing direc­tor John Dav­ey resigned on June 5th, 2025 to take a new CEO role at a pri­vate equi­ty backed com­pa­ny out­side the finan­cial ser­vices sec­tor. Dav­ey will remain with Tar­ro for up to six months to ensure a smooth lead­er­ship tran­si­tion, or the com­pa­ny con­ducts an exec­u­tive search for his suc­ces­sor.

He joined Tyro in 2021 and was report­ed C appoint­ed CEO in Sep­tem­ber, 2022. Uh, Tyro shares on that news were down [00:54:00] 10.4%. Um, so there’s been a lot of volatil­i­ty and I guess it was summed up in a AFR. Arti­cle last week, the head­line was Take Over Tar­get Tyro Reports Prof­its, but trans­ac­tions are going nowhere.

Weak­er activ­i­ty under a long stand­ing deal with Bendi­go and Ade­laide Bank has the total trans­ac­tions processed by Taro, almost unchanged over the past year. The com­pa­ny is Al already fac­ing investor I after it. Bel bla­tant­ly con­firmed that it had been approached by poten­tial suit­ors this month. Tyro whose chief exec­u­tive John Dav­ey is leav­ing the busi­ness even though it has not announced the replace­ment, has refused to detail the takeover offers.

Uh. I will just skip through the, um, the announce­ment, uh, and David acknowl­edg­ing the declin­ing val­ue of the Bendi­go trans­ac­tion, but down­played its sig­nif­i­cance in the com­pa­ny’s returns from a con­tri­bu­tion per­spec­tive, [00:55:00] Bendi­go is pret­ty small now, $4.2 bil­lion out of the $43 bil­lion total. So while it is some­thing we are focused on, we think we are see­ing some good trac­tion with the Bendi­go team.

He said Tim Piper, an ana­lyst at UBS, said there were pos­i­tive signs in tyro’s accounts, includ­ing improv­ing trans­ac­tion vol­umes in the third quar­ter of the year, and under­ly­ing earn­ings rough­ly in line with the guid­ance, it’s pos­i­tive to see signs of a turn­ing point in trans­ac­tion vol­ume. Piper said, uh, Toro was the largest float of 2019, surg­ing to a $1.4 bil­lion val­u­a­tion at the time.

It was backed by Atlass­ian bil­lion­aire, Mike Can­non Brooks. Since then, the com­pa­ny’s val­u­a­tion has slipped to 592 mil­lion. Uh, shares fell anoth­er 5%. Um, after the prof­it announce­ment, uh, share­hold­ers had been urg­ing the board to final­ize a takeover deal. Even as the com­pa­ny described the unso­licit­ed, the pro­pos­als was too cheap.

Ear­li­er this year, the Aus­tralian Finan­cial Review Street talk col­umn revealed Amer­i­can [00:56:00] pay­ment, joint stripe had ini­ti­at­ed takeover talks with Tyro. So that was in the AFR on August 26th. So what’s hap­pen­ing with this com­pa­ny, and I sus­pect the share price, even though it’s gone down a cou­ple of times on bad news, is up, uh, large­ly on the belief that, uh, it’s a takeover tar­get.

And as we’ve seen seen before, many times when we see some­thing on the buy list, we can see val­ue in it. We’re not alone and it’s often, uh, snapped up or some­times snapped up by a, a acquis­i­tive larg­er com­pa­ny look­ing at the num­bers, and I’m doing the analy­sis of the price of a dol­lar 25. Point five, uh, which is 89% below con­sen­sus tar­get, but way above iv one of 19 cents an iv, two of 40 cents.

Uh, the com­pa­ny has no div­i­dend, so we can’t score it for that Stock Doc­tor. Finan­cial health and trend is strong and recov­er­ing, so it gets a two for recov­er­ing a one for strong. [00:57:00] Wikipedia has a qual­i­ty rank of 84, which isn’t too bad, but, um, I’d like to see it a bit high­er. F score is five eight of nine, which is again good, but.

You know, prob­a­bly in the aver­age range, over­all stock rank of 87, which isn’t too bad, um, it does trade on a PE of 33 times, which is not the high­est or the low­est, but cer­tain­ly, um, expen­sive. How­ev­er, even though that’s high, the prop calf it’s trad­ing on is only 4.77 times. So plen­ty of cash being gen­er­at­ed by this com­pa­ny, but it’s obvi­ous­ly spend­ing a fair bit of that.

And I would expect that that’s going into tech­nol­o­gy devel­op­ment. Um, and per­haps acqui­si­tions, uh, net equi­ty per share is 43 cents. Uh, so we can’t buy it for any­where near book val­ue. Um, and that’s 43 cents is high­er than the net tan­gi­ble assets, um, which reflects the fact that they’ve made acqui­si­tions over the years.

Earn­ings per share growth is fore­cast at 6%, so we can’t give it a score for growth over pe, [00:58:00] which is quite low, does­n’t have an own­er, founder, and direc­tors are only hold­ing 1% of the stock accord­ing to Stock Doc­tor. So, um, found that a bit sur­pris­ing. Um, I did­n’t do enough research to know whether the founders per­haps, you know, exit­ed the com­pa­ny at the float, um, or soon after, or when they exact­ly exit­ed and for what rea­son.

But, um, yeah, often sur­pris­ing to see the, the found­ing comp, the founders of the com­pa­ny not stick around. Uh, the com­pa­ny does pos­sess con­sis­tent­ly increas­ing equi­ty, which is a good sign over­all. The qual­i­ty that I give this com­pa­ny is, uh, 60%, uh, nine out­ta 15, and the QAV score is 0.13. So it’s, um, just above our thresh­old cut­off of 0.1, uh, risk.

There’s a, there’s a fair bit of, um. I will say indus­try pres­sure on this com­pa­ny, or it’s a very com­pet­i­tive indus­try. Um, cer­tain­ly the, um, the biggest risk is that the takeover that’s been talked about does­n’t [00:59:00] progress. Uh, I expect to see the share price reduce, um, if that hap­pens. Uh, anoth­er risk is the CEO replace­ment and they’ll find it hard to replace the CEO if as well as, uh, uh, while there is takeover spec­u­la­tion around the stock because it could be a very short tenure tenure for some­one com­ing in.

So, um, if the takeover goes ahead, hap­py days. If it does­n’t, then the share price will retreat and they’ve got­ta find a CEO. So, um, bit of pres­sure on them there. Uh, they, they face intense com­pe­ti­tion from not only the major banks in Aus­tralia, but oth­er fin­techs and also oth­er glob­al pay­ments play­ers, includ­ing Stripe.

So it’s a fair­ly com­pet­i­tive indus­try. Uh. What else can I say? Um, the risks are that, uh, they do suf­fer out­ages. Even though they do run, uh, these online trans­ac­tion pro­cess­ing sys­tems with, um, dupli­ca­tion in them, they can, they can still be, uh, they can still have, um, uh, out­ages for what­ev­er [01:00:00] rea­son aside from the main­frame.

Um, and that that can risk rep­u­ta­tion. And, you know, if you’re a small cof­fee shop and your mer­chant ter­mi­nal goes down too many times, you’re gonna prob­a­bly change providers. There’s a reg­u­la­to­ry risk in this, um, in this indus­try. And, and the first thing I thought of when I read a, you know, saw Tara on the bowlers, ’cause what’s gonna hap­pen with the RBA pro­pos­al to ban card pay­ment sur­charges, which comes in for July, 2026, um, I would’ve thought that would affect their, um, their turnover.

But, uh, they seem to be fair­ly, fair­ly sang sang­we about it. Um, per­haps it’s because they expect that the card vol­umes will con­tin­ue, but it’s just the mer­chan­t’s going to reduce their sur­charge by 1% or one and a half per­cent, what­ev­er they, they pass on to cus­tomers for using cred­it cards, for exam­ple,

uh,

Cameron: that’s

Tony Kynas­ton: find, sor­ry.

Cameron: that’s being banned? Cred­it

Tony Kynas­ton: Yeah. [01:01:00] Yep. RBA bans them from the mid­dle of next year, July, 2026.

Cameron: Wow.

Tony Kynas­ton: Yeah. Big impacts on bank loy­al­ty pro­grams because that’s gen­er­al­ly there’s their, um, their ser­vice fees, uh, are inflat­ed and the, the mar­gins used to offer those. And this came into effect in Europe, um, I think last year, cer­tain­ly recent­ly.

And yeah, cer­tain­ly loy­al­ty pro­grams over there took a hit and became less attrac­tive to cus­tomers. So there’s that dimen­sion to it. But, um, yeah, I mean, it, it should mean that peo­ple pay less for their cup of cof­fee by 1% or so when it comes in.

Cameron: every­thing

Tony Kynas­ton: And every­thing. Yeah.

Cameron: card. Right? That’s a

Tony Kynas­ton: Cor­rect.

Yeah,

Cameron: Inter­est­ing. And do you know why, what the ratio­nale is from the RBA?

Tony Kynas­ton: yeah,

Just for that very rea­son. It’s a, it’s a, it’s an imped­i­ment, um, on the econ­o­my. I,

Cameron: Hmm. Okay.

Tony Kynas­ton: so I’ll use [01:02:00] the buzz­word pro­duc­tiv­i­ty.

Cameron: it’s a wrought.

Tony Kynas­ton: Yeah. Pret­ty much.

Cameron: Yeah. right.

Tony Kynas­ton: Um, some of the oth­er risks, the, this indus­try, the com­pa­ny has, um, this one in par­tic­u­lar has a lot of small to medi­um enter­prise mer­chants. As I said before, hos­pi­tal­i­ty, med­ical prac­tices, that kind of thing. Hotels, um, and cof­fee shops, retail, and they are, you know, they’re the most vul­ner­a­ble if there is an eco­nom­ic down­turn.

So as soon as, um, the econ­o­my comes off the boil and trans­ac­tions go down, it will hurt this com­pa­ny. Um. They’re, um, it’s a con­tin­u­ous cycle of inno­va­tion, which is, which they seem to han­dle, but it’s got­ta be a, a risk, um, that some­one comes along with a much bet­ter way of doing things. Um, and I guess the last risk is, uh, poten­tial data breach­es, which have hit com­pa­nies with trans­ac­tions going across them, [01:03:00] um, which could impact the trust that that con­sumers have in this brand, or that, um, SMEs have in this brand, but it’s not all down­side.

Um, on the plus side, uh, you know, there’s a takeover a foot, so they, you know, gen­er­al­ly takeover pre­mi­ums are 30%. So, um, some of that’s already in the share price, but, um, you may go up high­er when the takeover is final­ized. If it does get final­ized. Uh, it is a pos­i­tive for this com­pa­ny that it’s diver­si­fy­ing into oth­er mer­chant cat­e­gories, so it con­tin­ues to expand its base and it does have a strong it.

Her­itage and a strong r and d focus. So I think they’re all pos­i­tives for the com­pa­ny, but yeah. Inter­est­ing that it’s on the buy list. Um, not the kind of com­pa­ny we not often see, uh, Fin­Tech or cap­i­tal like type com­pa­ny you could call it. Um, poten­tial­ly, I’m not sure if that’s the case giv­en all the mer­chant ter­mi­nals they have out there.

So maybe it’s not a cap­i­tal like com­pa­ny, but it’s um, it’s uh, not your sort of indus­tri­al or bank or [01:04:00] min­ing com­pa­ny that we often see or air­line that we see on the buy list every day.

Cameron: Mm. And it’s named after one of my favorite lit­tle towns in Queens­land, Tao

Tony Kynas­ton: Real­ly?

Cameron: You ever

Tony Kynas­ton: Huh? No, I can’t say I have.

Cameron: In between Gimpy and Bundy and, uh, there’s a great lit­tle cafe there that we will often stop at and get a cof­fee when we’re dri­ving up to vis­it my mom. And the guy that owns the cafe owns not one. But two, uh, what’s the car from Back to the Future? The

Tony Kynas­ton: Lau­re­ates.

Cameron: DeLore­ans. He

Tony Kynas­ton: Yeah.

Right.

Cameron: col­lec­tor. There’s often one of his DeLore­ans parked at the front of his cafe, which is always fun to see.

Tony Kynas­ton: I saw recent­ly that Back to the Future was gonna use a fridge as the time machine until, uh, some­one point­ed out that yeah. That kids might, uh, climb into fridges, be attract­ed to it because of the movie. Hmm,

Cameron: [01:05:00] Yeah. Yeah, yeah. Oh, good. Thank you for that, Tony. I, I’ve, uh, it is inter­est­ing to see a com­pa­ny like that on our buy list. We don’t see

Tony Kynas­ton: hmm.

Cameron: of tech com­pa­nies like

Tony Kynas­ton: Hmm.

Cameron: with the num­bers that work for us. Speak­ing of, uh, num­bers that don’t work for us, bank of Queens­land, I noticed while you were talk­ing it’d become a three point sell. I own them in a num­ber of port­fo­lios, includ­ing my super, but they’ve edged back up. They’re now sit­ting on their cell line, $7 and 5 cents. They were down to 7.03. They’ve edged back up to 7.05. I

Tony Kynas­ton: how far away are they from a div­i­dend as well?

Cameron: uh,

Tony Kynas­ton: to be care­ful of this these days.

Cameron: there’s noth­ing in Stock, Doc­tor. I checked that. I think the last one was May, so prob­a­bly anoth­er

Tony Kynas­ton: Uh,

Cameron: think their annu­al report is due out in Sep­tem­ber.

Tony Kynas­ton: yeah. So are they a, are they a March, [01:06:00] Sep­tem­ber reporter as often the banks are?

Cameron: yes, I

Tony Kynas­ton: Right. Okay.

Cameron: hold on. They’re sched­uled to release their finan­cial results on the 15th of Octo­ber, so there’ll prob­a­bly be a div­i­dend after that.

Tony Kynas­ton: Yeah.

Cameron: they did come out with a announce­ment, a strat­e­gy and trad­ing update on the 28th of August, which is what seems to have. Caused an eight or 9% slide in their share price

Tony Kynas­ton: I won’t do that again. Good on them though, for con­tin­u­ous gov­er­nance.

Cameron: yes. Your wife isn’t on the board of BOQ any longer, is she?

Tony Kynas­ton: No. She still has some shares, so I’ll talk to her about whether it’s time to sell them or not.

Cameron: There’s the Bank of Queens­land has pre­vi­ous­ly indi­cat­ed its intent to opti­mize bal­ance sheet effi­cien­cy and grow cap­i­tal light rev­enue streams to improve return on equi­ty. Recent­ly, this has involved recy­cling cap­i­tal from low­er return­ing home lend­ing into busi­ness lend­ing. is [01:07:00] explor­ing a whole of loan sale process for up to $3.8 bil­lion of its equip­ment finance port­fo­lio. pro­posed trans­ac­tion is aimed at enhanc­ing cap­i­tal flex­i­bil­i­ty, improv­ing ROE, and sup­port­ing scaler cus­tomer growth through an off bal­ance sheet, for­ward flow orig­i­na­tion and ser­vic­ing arrange­ment. Wow.

Tony Kynas­ton: It’s for the bank jar­gon there isn’t there.

Cameron: yeah.

Tony Kynas­ton: I did see that and as one of the ana­lysts said, it’s a bank out­sourc­ing a bank, it’s like, what’s, what’s the point? Um, yeah.

Cameron: it’s

Tony Kynas­ton: Uh,

Cameron: equip­ment finance port­fo­lio to some­one else, basi­cal­ly,

Tony Kynas­ton: well the financ­ing for it, it looks like they’ll keep the cus­tomer rela­tion­ships and clip the tick­et, but some­one else is gonna be the bank and pro­vide the, the actu­al cap­i­tal that’s sent out. And, and I kind of sym­pa­thize with it because they’re say­ing, well, we can get, you know, bet­ter income if we lend that mon­ey to banks rather than lend­ing it to peo­ple to lease [01:08:00] cars or trac­tors or what­ev­er they’re using it for.

Um, yeah. But, uh, that was­n’t received as good news by the mar­ket.

Cameron: although their pro­jec­tions for the term, the full year results, uh, that cash earn­ings will be up nine to 12% ver­sus FY 24 cash, ROE up 50 to 70 basis points ver­sus FY 24. There’s a few one-off adjust­ments, branch strat­e­gy costs, restruc­tur­ing costs. Um, and they’re with­draw­ing some of their ROE and cost to income tar­gets due to ongo­ing uncer­tain­ty in indus­try head­winds. But, uh, there you go. So keep an eye on that. I,

Tony Kynas­ton: I think just if I can, but in too, I think again, with the reg­u­la­tor

there, there has been, I dun­no where it’s go, where it’s gone to, but there was a kite flown dur­ing the pro­duc­tiv­i­ty sum­mit that the, the region­al bank should have some of their cap­i­tal con­straints [01:09:00] less well light­ened. So at the moment, I think we spoke about this one to the pulled pork on Bank of Queens­land region­al banks, because they aren’t as big as the major banks have to hold more of their cap­i­tal, um, as this tier one cap­i­tal con­cept I spoke about before.

Um. Requires, and they have to hold more than the, the major banks do, which means that their mar­gins are con­strained when they have to com­pete against the major banks to wish­ing mort­gages, um, which hits their bot­tom line. And, and, um, you know, it, it’s, it’s good from a reg­u­la­to­ry point of view because it’s, you know, if there is a, ever a bank that goes broke, it’s gonna be a small one before it’s a big one, I would’ve thought.

Um, that’s con­ven­tion­al wis­dom any­way. Uh, and, uh, but it’s bad from a com­pet­i­tive point of view because the small, nim­ble play­er nev­er gets to com­pete on the lev­el play­ing field with the larg­er play­er. So, um, if that comes to pass, I would’ve thought there’d be a rerat­ing in shares of co com­pa­nies like Bank of Queens­land.

Cameron: Right.

Tony Kynas­ton: Very much. I watch [01:10:00] this space though.

Cameron: Right. Okay. Well, thank you tk. That’s all that I have. after hours. do you got?

Tony Kynas­ton: Well, while we were away, uh, net I think it was Net­flix released, uh, Leon the Pro­fes­sion­al again.

And it,

it rock­et­ed up to the, the up the list in terms of the most watched movies. And we watched it. The, I intro­duced it to Rud­dy and Wall when we were up play­ing golf in Yarra Won­ga one night and just loved it again.

Always, always have loved it. Um, but just holds up so well. I’ve got, um, you know, sort of uncom­fort­able scenes with a very young Natal­ie Port­man

Cameron: yeah,

Tony Kynas­ton: and genre, no form­ing a rela­tion­ship.

Um, noth­ing ever hap­pens on that side of things, and John Ren knows very care­ful about it. But, uh, yeah, it’s a strange rela­tion­ship, but just [01:11:00] a, it’s, I love Luke Bas­son.

I love, um, Gary Old­man does, he’s fan one of his best roles as the, as the head of the DEA, what­ev­er town they’re in New York. It’s fan­tas­tic.

Cameron: Peri­od was like peak Gary Old­man in the

Tony Kynas­ton: It was,

Cameron: the fifth ele­ment, that True Romance where he was just pulling out his most drug, fierce char­ac­ters. They were always great. I,

Tony Kynas­ton: yeah, real­ly enjoyed it. And then the oth­er one I watched dur­ing the week was the doc­u­men­tary on Devo, which, um, was fan­tas­tic as well.

Cameron: right. I haven’t

Tony Kynas­ton: Yeah, yeah. It’s, it’s just out in the last week or so. It’s real­ly good. Um, always been a Devo fan. Saw them when they first toured Aus­tralia back in the late sev­en­ties, ear­ly eight­ies.

Um, great, great to see live. Um, always been kind of very icon­o­clas­tic, but, but the doc­u­men­tary goes right back into the phi­los­o­phy behind Divo. You know, it’s, [01:12:00] there were song titles which you sort of looked at and scratched your head, but they actu­al­ly have mean­ing from var­i­ous books they’ve read. And the real­ly sur­pris­ing thing for me was that, um, uh, moth­ers Bor­ough and I and Casals were stu­dents at Kent State dur­ing the Kent State mas­sacre and the riots, and

that real­ly shook their world and sent them down this, um, you know, rab­bit hole of what’s wrong with Amer­i­ca and de-evo­lu­tion and all these kinds of things, which, which they took a long time to turn into sort of pop music, um, and went through lots of iter­a­tions and would do things like go and play in bars where they just play, you know, real­ly out there.

You know, aton­al music and almost con­front the crowd and then get booed and off the stage and get into fights and all this kind of stuff. And then, uh, up to the time when the, you know, they had, [01:13:00] um, uncon­trol­lable Urge, I think was their first big sin­gle and start­ed to play­ing CBG­Bs with the Ramones and bands like that.

And they were just sur­prised that, you know, Jack Nichol­son was in the crowd and John Lennon was in the crowd. And they just became sort of fla­vor of the month as the new thing that came along. And then sort of went on from there, always fight­ing with their record com­pa­ny, chang­ing record com­pa­nies, sort of bal­anc­ing the record com­pa­nies demand for a top 10 sin­gle with stuff that they want­ed to do.

And con­tin­u­ous­ly toured, con­tin­u­ous­ly exper­i­ment­ed with their videos like they were, it was fun­ny ’cause they, I. When their, I think it was their sec­ond record came out, the record com­pa­ny want­ed to put cutouts of Devo in all the stores and they said, wait, wait, wait, wait a minute. What’s that cost­ing? And they said, $10,000.

And they said, can we take that and make a video? And the record com­pa­ny said, okay. ’cause music videos weren’t done then. And they made a, one of their videos, which hap­pened to coin­cide with the launch of MTV. So Divo got high rota­tion and then sort of [01:14:00] six months lat­er when the rest of the music indus­try caught up with it, they could­n’t get played on MTV any­more until, I think it was Whip­pet came along.

So yeah, just real­ly inter­est­ing clash of this idea of we’re going through a de evo­lu­tion­ary cycle with com­mer­cial hits and tour­ing and yeah, real­ly inter­est­ing doc­u­men­tary.

Cameron: Oh, great. I’ll have to check it out. I mean, I don’t, I’ve nev­er real­ly gone deep, deep into depot. I mean, I’ve lis­tened to them from time to time, but I’ve nev­er real­ly gone deep and I should part of that, like the CBGB sort of

Tony Kynas­ton: Mm

Cameron: I like, like all the artists that were big in there, that’s sort of, that’s my, it’s my jam.

Those guys

Tony Kynas­ton: mm

Cameron: they explain the flower pots on their heads.

Tony Kynas­ton: Uh oh. They prob­a­bly do, but I’ve for­got­ten. But yeah, all these things get explained. Like they’re either on the back of a com­ic book or they’re in a book that, like a, a under­ground man­i­festo that some­one read. Yeah. Like, I can’t tell you the [01:15:00] rea­son. And then they had the, they had the plas­tic Ronald Rea­gan hair­cuts they used to wear as well on their heads.

They sort of swept back side part black hair, um, until, uh, they, they got sick of telling peo­ple It’s Ronald Rea­gan. It’s not JFK.

Cameron: Right. Yeah. Very good. I don’t have much to report. Noth­ing real­ly jumps out at me this week. Although I have been sort of obsessed with sh Leningrad Sym­pho­ny a lot this week. Been lis­ten­ing to that on repeat, dif­fer­ent record­ings of it. Lis­tened to, uh, an audio, well, start­ed lis­ten­ing to an audio book about and the, uh. Cir­cum­stances under which it was com­posed and per­formed dur­ing the siege of Leningrad, which was his home­town. And, uh, they were per­form­ing, I think it was like a year, like the siege went for [01:16:00] 872 days. It was like mil­lions of, you know, um, Sovi­et civil­ians died. And, um. It was can­ni­bal­ism and all that kind of stuff.

They were talk­ing about the, the orches­tra, the Len Grad Sym­pho­ny had been shipped out of the, got now as had Shas­takovich a month or so into the siege. They weren’t there, so a con­duc­tor who was gonna put it on had to musi­cians they were pulling in musi­cians from the front line. Just any­one with any musi­cal abil­i­ty was being pulled in.

Even guys that, and women that had­n’t played in clas­si­cal music, they were like jazz musi­cians or what­ev­er. You can play an instru­ment. You get hauled in. And there was, they were all like starv­ing. They were stick thin ’cause there was this famine. The city had been under siege for like a year, I think, at this time.

And if they turned up late for a rehearsal, they did­n’t get their food ration card [01:17:00] for the day. And one guy, he had to bury his wife who had died of star­va­tion that morn­ing and then he was late for rehearsal and the con­duc­tor would­n’t give him his food ration card. the most inter­est­ing part of the sto­ry was Ger­mans were. Shelling the hell out of Len grad. And so to pro­vide some qui­et for the per­for­mance so the audi­ence could hear the pre­mier per­for­mance, there was this one par­tic­u­lar artillery com­man­der on the Russ­ian side that bombed the crap out of the Nazi posi­tions and hour before the per­for­mance, just to make sure they would­n’t be able to do any­thing for that. Well, it’s the, it was like an hour and a half the sym­pho­ny goes for, so they could buy an hour and a half of qui­et time so the peo­ple could actu­al­ly hear this thing per­formed. As, as it turns out, the per­for­mance was ter­ri­ble because the musi­cians were all dying of famine and, and most of them weren’t clas­si­cal­ly trained, so it was­n’t a great [01:18:00] per­for­mance. uh, the, the, um, there’s a lot of first­hand tes­ti­mo­ny in this book. Peo­ple were say­ing that the ole of Leningrad that were left went dressed in their best clothes to this thing you know, stick thin because of the famine. And for most of them, many of them any­way, it was the last time they ever got to put on their good clothes because they died.

You know, that, that, that was the last thing they got to do

to the

Tony Kynas­ton: Hmm.

Cameron: of the Leningrad, uh, sym­pho­ny. I watched a doc­u­men­tary on YouTube about it, and the guy was say­ing, there’s prob­a­bly nev­er been a piece of music, uh, and per­formed under these cir­cum­stances. It was like the great­est con­duc­tor of the 20th cen­tu­ry by many. Esti­ma­tions con­duct­ing, uh, writ­ing, uh, a piece about it, the, the defense of his home city, while it was under siege by the [01:19:00] Nazis per­formed, while it was under siege by the Nazis cel­e­brat­ed around the world at the time. There’s a, on YouTube, there’s a record­ing of the per­for­mance of it on NBC by the NBC Sym­pho­ny Orches­tra.

NBC had their own sym­pho­ny orches­tra appar­ent­ly in 1942 when it final­ly got smug­gled out of Rus­sia on micro­film and was con­duct­ed by Toscani­ni. No, not this one was­n’t con­duct­ed by Toscani­ni, but he con­duct­ed the first per­for­mance of in the us. But um, yeah, just lis­ten­ing to the pre­am­ble, the, the on NBC of them explain­ing the impor­tance of this, like it was a, a, sym­pho­ny writ­ten about stand­ing up to the Nazis. and it was a, yeah, any­way, it’s a great piece of music. You know, I love my kovich, so, um, I, it’s kind of been, been obsessed with that for the last week. That’s about it all I have to report. if peo­ple haven’t heard that, and lis­ten to sh Kovich [01:20:00] sev­enth Sym­pho­ny. Just, even if it’s just the first go, lis­ten to the first five min­utes of it.

You don’t need to lis­ten to the whole 90 min­utes. But even the first five min­utes is, it’s pret­ty amaz­ing open­ing to it. defi­ant open­ing to it. Well, that’s it. That, and fas­cism has been my week. Tony. Um, fit­ting­ly. Fit­ting­ly,

Tony Kynas­ton: Linen grad and fas­cism.

Cameron: yeah.

Tony Kynas­ton: Mm.

Cameron: Well, let’s go and talk about, uh, what, who did I say it was, uh, Soth.

Tony Kynas­ton: Brazil­ian Tim­ber Com­pa­ny.

Cameron: Yes. Brazil­ian Euca­lyp­tus. Uh. Farm­ing slash uh, paper and we’ll talk about why is being grown in Brazil fas­ci­nates me when I go to the US

Tony Kynas­ton: Mm

Cameron: going to Nicaragua, uh, years ago for cig­ar thing and just euca­lyp­tus trees every­where as we were [01:21:00] dri­ving down the road.

It’s very weird to see euca­lyp­tus

Tony Kynas­ton: mm It isn’t it?

Cameron: any­way.

Tony Kynas­ton: Had the same feel­ing in San Fran when I was there once.

Cameron: Yeah, lin­ing the streets in San Diego too. The euca­lyp­tus trees every­where. Remem­ber the last time we were in San Diego?

Tony Kynas­ton: Mm-hmm.

All right, thanks. Hap­py as.

Bernard: Q A V is a check­list-based sys­tem of val­ue invest­ing devel­oped by Tony Khigh­ne­ston over 25 years. To learn more about how it works and how you can learn the sys­tem, vis­it our web­site, Q A V Pod­cast dot com dot A U.

This pod­cast is an infor­ma­tion provider and in giv­ing you prod­uct infor­ma­tion we are not mak­ing any sug­ges­tion or rec­om­men­da­tion about a par­tic­u­lar prod­uct. The infor­ma­tion has been pre­pared with­out tak­ing into account your indi­vid­ual invest­ment objec­tives, finan­cial cir­cum­stances or needs. [01:22:00] Before you decide whether or not to acquire a par­tic­u­lar finan­cial prod­uct you should assess whether it is appro­pri­ate for you in the light of your own per­son­al cir­cum­stances, hav­ing regard to your own objec­tives, finan­cial sit­u­a­tion and needs. You may wish to obtain finan­cial advice from a suit­ably qual­i­fied advis­er before mak­ing any deci­sion to acquire a finan­cial prod­uct. Please note that all infor­ma­tion about per­for­mance returns is his­tor­i­cal. Past per­for­mance should not be relied upon as an indi­ca­tor of future per­for­mance; unit prices and the val­ue of your invest­ment may fall as well as rise. The results are gen­er­al advice only and not per­son­al prod­uct advice.

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