QAV AU 843 — Disclaimer of Opinion

AU 843 Audio

[00:00:00]

Cameron: Did last week. Uh,

Tony Kynas­ton: Well, I’m just hav­ing a chat with you.

Cameron: I know, but we’re sup­posed to record it. It was for Wel­come to QAV tk.

Tony Kynas­ton: Thank you.

Cameron: How you doing?

Tony Kynas­ton: well. Thank you.

Cameron: That’s good. Is it hot down there? It was 38 here in Bris­bane yes­ter­day. Yeah.

Tony Kynas­ton: no, it’s, uh, I think it’s about 17, 18 down here today. Sun’s out. Nice.

Cameron: Sun’s out. Guns out.

Tony Kynas­ton: Oh, I don’t have any guns, but yeah. And at 17 or 18 degrees, most peo­ple are still get­ting around in long sleeves.

Cameron: Yeah. Well, they would Well, that’s good. Um, well, Tony, the mar­ket is, uh, down today. I was just, uh, catch­ing up before we jumped on. No, I, no real rea­son why that I can, as far as I can tell, some­thing, some­thing, some­thing, some­thing about some­thing. Trump gonna meet with Pres­i­dent Xi, do a deal he reck­ons, which will [00:01:00] last for about a week, and then he’ll throw a hun­dred per­cent tar­iffs on every­thing again.

Tony Kynas­ton: Uh, did you see the lat­est one about, uh, Doug Ford? The, the Doug Ford ad in the us?

Cameron: No.

Tony Kynas­ton: Oh, Doug. For some re I don’t know why Doug Ford’s as bad as Trump, real­ly, in terms of

Cameron: Yeah,

Tony Kynas­ton: type leader. Uh,

Cameron: yeah.

Tony Kynas­ton: heard he was the pre­mier for Ontario, but that, that may have changed. But any­way, he, he put a clip of Ronald Rea­gan say­ing tar­iffs are bad for economies,

Cameron: Oh, I heard about that. The Cana­di­an ad.

Tony Kynas­ton: Um, so I was­n’t sanc­tioned by the fed­er­al gov­ern­ment, and then Trump increased tar­iffs on Cana­da in response to it.

Cameron: I read about that and it was, it was, uh, as I under­stand it, they had sort of edit­ed the orig­i­nal clip. It was slight­ly out­ta con­text, but, um, ’cause Rea­gan was apply­ing tar­iffs but was [00:02:00] say­ing, but they’re sort of a short term mech­a­nism. They’re not good long term, et cetera, et cetera. So,

Tony Kynas­ton: he was jus­ti­fy­ing it.

Cameron: yeah.

Tony Kynas­ton: jus­ti­fy­ing a one-off use of Ter­race to try and get a bet­ter free trade agree­ment. Yeah.

Cameron: Yeah. Oh, well Tony, um,

Tony Kynas­ton: Do you think we’ll get an

Cameron: see

Tony Kynas­ton: the, the new ball­room on the East Wing of the White House? Some stage?

Cameron: top ball­room

Tony Kynas­ton: I think if we’re

Cameron: man,

Tony Kynas­ton: get an invite.

Cameron: because, you know, when I think, um, fan­cy balls. I think Don­ald Trump, right? Like

Tony Kynas­ton: Hang on.

Cameron: that was­n’t, that was, that was­n’t a Dante. I mean,

Tony Kynas­ton: okay. ’cause

Cameron: uh,

Tony Kynas­ton: think small hands when you think of Don­ald Trump.

Cameron: like he’s not exact­ly the guy you expect, you know, in tails in a top hat out there doing Fred Astaire, what’s he gonna do [00:03:00] in a ball­room? He’s not like, is it just gonna be full of McDon­ald’s? And, uh,

Tony Kynas­ton: could be a

Cameron: uh, uh, uh, yeah,

Tony Kynas­ton: could do the

Cameron: yeah.

Yeah.

Tony Kynas­ton: Uh.

Cameron: sure what he’s plan­ning on doing in the ball­room. May I, I think maybe he’s gonna, I thought he’d turn it into like a lit­tle prison and he could throw his favorite pris­on­ers that I grab in there so he can walk around and poke ’em with a stick or some­thing. But.

Tony Kynas­ton: it’s a, it’s, it’s appar­ent. Okay. So appar­ent­ly it’s, I would­n’t say a repli­ca, it’s mod­eled on the one he’s got at Mabb Largo, which he uses all the time to throw fundrais­ers and

Cameron: The din­ners, they have din­ners and stuff there,

Tony Kynas­ton: yeah. the, and it’s being paid for by the pri­vate sec­tor, appar­ent­ly there’s no gov­ern­ment mon­ey going into it. Um, no such thing as a free lodge. So chances are gov­ern­ment mon­ey flows back into the pri­vate sec­tor some­how. any­way, um, [00:04:00] but look, it’s, you know, it’s, it’s also, it’s, some peo­ple are argu­ing. It’s, it’s long over­due because every time they need to do a state recep­tion, they have to put up a on the lawn and, know, dig­ni­taries are going to the toi­lets and por­ta pot­ties and things like that.

So um. It’s an upgrade. It’s, it’s pos­si­bly some­where in the mid­dle that it was due for an, uh, upgrade. But he did the, the dean broth­ers and sent the bull­doz­er into Knock over the East Wing in the mid­dle of the night with­out approvals. So it’s become the, it’s become the head­line.

Cameron: Dean Broth­ers.

Tony Kynas­ton: Yeah. The guys who used to work for j Bki Peter­son and knocked over the Belle­vue Hotel

Cameron: Uh, see before my time

Tony Kynas­ton: Yeah.

Cameron: Cloud­land. Yeah, I’ve heard the Cloud­land sto­ry. Mm, I thought you were talk­ing about the Rydale broth­ers, but Okay. Um, dif­fer­ent broth­ers. So Tony, the mar­ket, um, I’ll start with port­fo­lio stuff just because why the hell not, uh, it’s [00:05:00] always good. Um, the dum­my port­fo­lio for this finan­cial year, which we’re almost six months into, eh, well, not real­ly, what are we, five months into four months?

Yeah. Uh, the dum­my port­fo­lio is up 24% this finan­cial year ver­sus the SPDR up sev­en. Uh, the light group of port­fo­lios or four of ’em up 25% for this finan­cial year ver­sus sev­en.

Tony Kynas­ton: Good.

Cameron: My super port­fo­lio only up 15.5%. It’s only doing dou­ble mar­ket, not triple mar­ket for this finan­cial year.

Tony Kynas­ton: Do you feel left out? Up?

Cameron: I do, I’m a lit­tle bit, uh, bit­ter by that.

I’ve only got 3, 4, 5, 6, 7, 8 stocks in it. And uh, obvi­ous­ly they’re all, um, top 300 ASX 300. I think I’m lim­it­ed to buy­ing with Aus­tralian Super. [00:06:00] Um, best per­form­ing of those is NWH, which won’t say what that stands for, but it’s up 64% this finan­cial year, which is not too bad. Best per­form­ers in the light group are PLT up 66%.

SRG up. 68%. I should, hold on. I should do these. I should just dont rank these. PRN up 68% SRG up. 68 S‑G-L-L‑V. It’s the wheat trad­ing guys, I think. Are they?

Tony Kynas­ton: grow­ers. Yeah.

Cameron: Rice, yeah. Up 67

Tony Kynas­ton: Wow.

Cameron: up. 66 NWH. Again, gn.

Tony Kynas­ton: AI fueled and video pow­ered rice grow­ers. Hey.

Cameron: And for the dum­my port­fo­lio, best per­form­ers are pret­ty much the same list. P‑R-N-S-O-G-P-L-T-D-U‑R up anoth­er 50% this finan­cial year, CVL [00:07:00] up 38. Um, just going, things are going gang­busters on the all odds except for. Rudy’s favorite stock

Tony Kynas­ton: CSL, the all

Cameron: saw in the,

Tony Kynas­ton: The,

Cameron: yeah, the all weath­er stock I saw in the, I saw in the Fin this morn­ing.

CSL shares fell 15% in ear­ly trad­ing

Tony Kynas­ton: wow.

Cameron: to a more than six year low. The stock had already lost about 28% of its val­ue since August before Tues­day’s announce­ments. Tues­day’s announce­ments were that, um, it’s not going good. Uh, slashed its earn­ings and rev­enue fore­cast due to falling US vac­ci­na­tion rates and shelved plans to demerge.

Its acquires Secu­rus Seus vac­cines busi­ness,

Tony Kynas­ton: Hmm.

Cameron: send­ing its shares to fresh six year lows. The glob­al biotech giant also faces a vote to remove the entire board. It’s in annu­al gen­er­al meet­ing.

Tony Kynas­ton: [00:08:00] name’s, fight­ing words. It’s um, that’s an amaz­ing drop in one day for a large cap com­pa­ny. 15%. an awful lot of trad­ing. Yeah.

Cameron: Yeah. So,

Tony Kynas­ton: a shame, isn’t it? I mean, if vac­cines are on decline in the us that’s a, that’s just a shame. That’s an indict­ment in my opin­ion.

Cameron: yeah. Well, it’s not real­ly sur­pris­ing with the cur­rent admin­is­tra­tion, is it?

Tony Kynas­ton: say­ing. But it’s, it’s a shame.

Cameron: It’s not like he’s out there telling peo­ple to get vac­ci­nat­ed.

Tony Kynas­ton: He’s, they’re telling him not to take Tylenol. It’s like, it’s, it’s even worse than that.

Cameron: Yeah. What do you got on your list of talk­ing points, tk, any­thing?

Tony Kynas­ton: Well, just, I guess fly­ing on from that about the mar­ket, um, I’ll just get my notes open here. There was anoth­er arti­cle today in the Fin about the first guardian fail­ure. remem­ber that camp­ing, I think we talked about it a month ago, or six, six weeks ago or so, [00:09:00] it was front page news about, uh, a fund, a super fund that had and peo­ple lost a lot of mon­ey.

Some­thing like a hun­dred mil­lion dol­lars or, or more. any­way, it’s back on the front page of the paper today, and it’s cer­tain­ly rever­ber­at­ing through the whole funds man­age­ment, finan­cial ser­vices sec­tor. What, what went wrong? Who’s to blame? What’s gonna hap­pen? want­ed to touch on it today.

And I guess, um, you know, I had some con­ver­sa­tions about it over the week­end and I’m just real­ly glad, real­ly kind of hap­py that I’m, you know, we’re doing this edu­ca­tion for peo­ple, for investors so they can after their own mon­ey because it’s, it’s, it’s in the words of, um, some, well, the Newt Rock­ney, I think it was the Amer­i­can foot­ball coach.

It’s dejavu all over again, We had the Ham Roy­al Com­mis­sion, and that shook out a lot of the of inter­est, a lot of the excess fees, a lot of the prob­lems with the, with the [00:10:00] funds man­age­ment slash super, um, super­an­nu­a­tion indus­try. That was a num­ber of years ago now. And, um, it kind of stopped what’s, what’s called the ver­ti­cal inte­gra­tion mod­el.

So in the past we had big fund man­agers like a MP, would pro­duce their own funds, which were then sold through their own net­works of finan­cial plan­ners and became Roy­al Com­mis­sion elim­i­nat­ed that busi­ness prac­tice as a con­flict of inter­est. a MP still exists, but they, they, um. Oper­at­ed in a more inde­pen­dent way, but the major banks sold their wealth man­age­ment, uh, busi­ness­es. um, there were oth­er out­comes of the Roy­al Com­mis­sion. Of course, there was elim­i­na­tion of some fees to finan­cial plan­ners, some com­mis­sions to them. There was improv­ing qual­i­fi­ca­tions for plan­ners, et cetera. So every­one’s aware of those, but I real­ly feel like the indus­try has now evolved since then, but we’re get­ting back to the same sort of So, um, it’s a bit of a watch this space, [00:11:00] but, but again, um, but what’s hap­pen­ing is that in the, in the wake of all of that change, plat­forms have been grow­ing dra­mat­i­cal­ly. So peo­ple like Netwealth or Hub 24, and, uh, some of them are trustees for the funds or for the offer­ings on their plat­form. Some of them out­source at the com­pa­nies like EQT, there, but there are still some incen­tives for plan­ners to favor­ing some funds. It’s a lot more sort of soft. Ped­al­ing these days, from what I can tell, you know, like I don’t know a whole lot about it, but there can be dis­counts in fees to clients, there can be mar­ket­ing funds paid to advi­sors to to, to mar­ket, um, um, funds to clients, et cetera. But, so there’s still a bit of soft com­mis­sion­ing going around and, and still some incen­tives. Um, and I guess they’ll all be shak­en out. Uh, but the real prob­lem, and I wan­na high­light this, the real prob­lem isn’t there are [00:12:00] kind of per­pet­u­al risks of con­flicts of inter­est in, in super­an­nu­a­tion fees. And you kind of, I kind of expect that giv­en the amount of mon­ey that’s in Aus­tralia, that’s because of the com­pul­so­ry super­an­nu­a­tion sys­tem and it needs to be invest­ed.

But the real prob­lem is that the default offer­ings, the, the large super funds. Gen­er­al­ly return less than the index, but they charge more fees. And, I’ll quote from today’s AFR, this, this is in an arti­cle where I think it was the CEO of Netwealth came out and asked the rel­e­vant gov­ern­ment min­is­ter to bail out the investors, the small investors in the first guardian fund on the basis that they were defraud­ed.

And there is a, there is like a, a rem­e­dy fund that the gov­ern­ment offers to reim­burse peo­ple who were defraud­ed if they’ve invest­ed a super­an­nu­a­tion fund. And then there’s been a fair bit of debate around whether that’s. Got moral con­flict in it in that, um, some­one can, could run a Super­fund, defraud peo­ple and get away, [00:13:00] um, know­ing that the gov­ern­ment will make the peo­ple good again.

So it might actu­al­ly increase the num­ber of fraud events in the super­an­nu­a­tion indus­try. But any­way, uh, I wan­na quote from the AFR. It says, increas­ing num­bers of high wealth retirees, or peo­ple close to retire­ment are mov­ing away from indus­try funds of finan­cial advi­sors who help man­age invest­ments using plat­forms. Some wealth man­age­ment busi­ness­es like Netwealth retain the trustee role on their plat­forms, while oth­er wealth man­agers like Hub 24 out­size it to out­source it to group. Like equi­ty trustees, asic, uh, froze the assets, the first guardian last Feb­ru­ary after block­ing invest­ments in SHIELD a year ear­li­er. It is tak­ing a range of actions tar­get­ing those involved in pro­mot­ing or man­ag­ing the schemes, but this will take years to resolve. So on in the arti­cle, it firm­ly says peo­ple are mov­ing away from the. The funds man­age­ment. Um, man­age­ment, sor­ry, from the super funds, par­tic­u­lar­ly the indus­try ones because, um, they’re [00:14:00] get­ting eight to 10% returns, which is at best index like returns for high­er fees.

So aren’t stu­pid. So, um, you know, there’ll be a lot of ham­mer­ing going on, a lot of inves­ti­gat­ing of the indus­try and the plat­forms and the trustees and the rat­ings agen­cies. I think one of the shake­outs though, which I’m watch­ing, and I’m par­tic­u­lar­ly, I would­n’t say con­cerned about, but I think it has the, um. Has the risk of entrench­ing This idea of get­ting index like returns for high­er fees is that, uh, the plat­forms will prob­a­bly start to only put big funds on their plat­forms. If they, if they’re, they feel that, that they’re at risk, if there’s a small­er fund on their plat­form that it might defraud peo­ple or it might go bro­ken and they might be fin­gered for, um, some kind of pay­out, then

Cameron: Tis­sue.

Tony Kynas­ton: move away from the small end of the mar­ket.

And Mac­quar­ie, the Mac­quar­ie group has done this. Peo­ple may have read in the paper as well that, that they’ve tak­en [00:15:00] off small funds and that just means that super­an­nu­a­tion is gonna go back to, or poten­tial­ly go back to. Indus­try funds, big com­pa­nies like a MP, all the likes of the Black­Rocks and the Van­guards, et cetera, who put their, who are large funds who, um, may be allowed to go onto the plat­form because they’re blue chip. And again, the prob­lem will be they will all hug the index, but they’ll charge fees for it. So any­way, that’s my lit­tle rant. Um, I don’t think it’s a good out­come for the indus­try. Per­haps it’s inevitable, uh, like I said at the out­set, I’m real­ly, real­ly that we’re teach­ing peo­ple how to do this for them­selves.

And they can, they may still use plat­forms, but at least they’re, they’re doing kin­da like what you just said before, they’re invest­ing in their own stocks rather than, pay­ing fees to a fund man­ag­er.

Cameron: Yeah. And when you say peo­ple aren’t stu­pid, I agree, but I think we are gen­uine­ly une­d­u­cat­ed [00:16:00] about how all this sort of stuff works. I mean, I, I was, before we start­ed doing the show, I, I assume a lot of our lis­ten­ers prob­a­bly were like me to vary­ing degrees. Some peo­ple might have known more, but you know, a lot of us just don’t.

It’s, it’s, it’s delib­er­ate­ly murky, I think, out there. And it, we don’t get a good edu­ca­tion. It’s not com­mon sense how to, how to nav­i­gate these sorts of things.

Tony Kynas­ton: Edu­ca­tion. There is a real in the edu­ca­tion sys­tem when it comes to just look­ing after your own finances.

Cameron: And, and on the flip side, a ton of mar­ket­ing talk­ing about this fund, that fund these great returns, these great returns. And you don’t know, I mean, unless you’ve got a bit of a, an edu­ca­tion in it, who knows what’s good, what’s not good.

Tony Kynas­ton: And appar­ent­ly that’s, and again, I’ll be care­ful what I say here ’cause there’s lit­i­ga­tion fly­ing all over the place. But one of the things that hap­pened with First Guardian was a finan­cial plan­ning net­work. Paid a [00:17:00] lot of mon­ey to Face­book, which appar­ent­ly may have been lent to them by First Guardian, or some of it was lent to them by First Guardian.

Paid a lot of mon­ey to social media to, offer a com­pare your super type. Um, web­site and direct peo­ple to it. If you’re not hap­py with your super or just even, you know, come, come and com­pare your super on our web­site, they did, and, and then of course they got a con­tact straight away from, uh, some­one who sold them into, took the mon­ey out.

Like, we’ll trans­fer it out­ta super for you or out of the fund you’re in now, and put it into a, a bet­ter per­form­ing fund. Um, so like I said, it’s if, if peo­ple were unhap­py with the cur­rent super­an­nu­a­tion indus­try with the big funds, then they would­n’t have gone to a Com­pare your Super web­site. They just would’ve scrolled past. Um, so, so they’re smart enough to know that they’re being ripped off, but they’re dumb enough or une­d­u­cat­ed enough to know what to do about it and, and to guard against scams. And noth­ing against the peo­ple who fell for it. I mean, it’s, [00:18:00] it’s a com­pelling argu­ment to move away from, uh, the per­form­ing fund that you’re pay­ing fees for. it. Um, yeah, and we spo­ken before about the bar­ri­ers to get­ting prop­er finan­cial advice. These days since Hane, you’ve got­ta pay

Cameron: Yeah.

Tony Kynas­ton: for a know your cus­tomer. Um, first meet­ing, uh, you know, finan­cial advice is now, you know, basi­cal­ly the, the play­ground of the rich or, or only open to the rich, or c or

Cameron: Yeah.

Tony Kynas­ton: um, you know, mid­dle income and above type peo­ple in Aus­tralia.

So, um, the indus­try isn’t work­ing for oth­er peo­ple, I think is prob­a­bly a good way to put it. And if they start to make the plat­forms or incen­tivize the plat­forms to head back to the big end of town, then it’s just gonna keep going.

Cameron: I read an arti­cle some­where, might have been in the New York Times, uh, over the last cou­ple of days about, uh, cryp­to scams and pig butcher­ing. Have you heard of pig butcher­ing?

Tony Kynas­ton: Only the real one. The only the real thing.

Cameron: Yeah. [00:19:00] It’s, it’s a thing in cryp­to is. They con­tact peo­ple that have some cryp­to hold­ings and say, Hey, we’ve got this cryp­to fund. You put your cryp­to in it and we’re gonna get you these great returns. Peo­ple start small, they put, you know, X amount in, and then they get con­tact say­ing, oh look, uh, it’s not enough, uh, to get the real­ly good returns, you need to put extra in.

And they, they keep fat­ten­ing up the pig, uh, to put more and more in, and then it all just dis­ap­pears and they’ve, you know, lost $500,000 worth of cryp­to or what­ev­er they’ve got. And yeah.

Tony Kynas­ton: that the one where they were ask­ing old peo­ple to make deposits at ATMs and tobac­co stores or some­thing I read about?

Cameron: Yeah, that’s one of them. Yeah, there’s a whole bunch of them, but they’re huge. Like the, the amount of cryp­to scams that are going on is, uh, crazy. Mov­ing right along Tony. CCVI want­ed to ask you about our old friends at [00:20:00] CCV, uh, in Sep­tem­ber, we kind of red flagged CCV because this CFO resigned. And then I had­n’t real­ly paid much atten­tion, but they were on the buy list again this week.

And when I looked it up, it said they appoint­ed a new CFO sort of less than a week after they, uh, re the last one resigned. And so I was won­der­ing, first of all, if we were removed the red flag.

Tony Kynas­ton: Oh look, always hard to tell Cam. I, I would say so. Look, that hap­pened quite quick­ly, did­n’t it? It was a, a week

Cameron: Mm-hmm.

Tony Kynas­ton: CFO resigned, they had a new one ready to go. So that, to

Cameron: Hmm

Tony Kynas­ton: that means it’s pos­si­ble it took him only a week to find some­one, but it’s also pos­si­ble that it was in the works before the CFO left.

So it’s prob­a­bly okay, I think. Um, but there’s a lot going on with CCV and PC alert­ed us to [00:21:00] alert­ed us to that in the Face­book group, and I just thought it might be worth­while step­ping through some of that that’s going on because, uh, CCV have announced the cap­i­tal rais­ing as well. think it

Cameron: Yeah.

Tony Kynas­ton: Yeah, and the scheme

Cameron: Yep.

Tony Kynas­ton: out 3rd of Novem­ber, um, peo­ple should be aware of it if it’s on the buy list again this week and they’re think­ing about buy­ing it. Just do a bit of research and decide whether you wan­na buy now and par­tic­i­pate in the rais­ing, or whether you wan­na hold off and wait until after the rais­ing.

So, um, either I think, um, not gonna give spe­cif­ic finan­cial advice. Have a look at it. Do your own research. The, the scheme rais­ing is essen­tial­ly, I mean, the mass of the scheme rais­ing is that, the shares were 35 cents. I think they may be in a trad­ing halt now. They may have come out today, um, after the announce­ment. but the share price before the raise was 35 cents. raise is a one year share for 9.57 exist­ing shares, which is a rough­ly [00:22:00] 10.5% dis­count. Um, or about. Just under 4 cents, 3.65 cents per share. So you’d expect after the raise, if the maths holds, that the price would be around 30, 31 to 31 and a half cents. There’s some round­ing in there and that they only trad­ed half cents. so the offer price is there­fore a slight dis­count to the expect­ed price post raise about a 13% dis­count of the pre halt price. So that seems okay to me, like you’re still buy­ing at a slight dis­count if you par­tic­i­pate in the raise. again, it’s always watch the space. ’cause the, the raise will take a num­ber of weeks to hap­pen. The share price, the trad­ing halt will be lift­ed. The share price might trade down low­er towards the price of the raise. So you might be able to, at some stage, buy the shares on mar­ket cheap­er than you can buy them in the raise.

So just pay atten­tion if you’re think­ing about buy­ing, and, atten­tion to what the, um, raise price is and what the share [00:23:00] price is. Um. It’s always impor­tant to know what the funds are gonna be used for. So, uh, cash Con­vert­ers, they intend to use the mon­ey to buy out, uh, one of their fran­chisees net­works, and it’s part of a strat­e­gy.

They have to increase the num­ber of com­pa­ny owned stores. Um, so they’re slow­ly sort of. from a fran­chise net­work to a com­pa­ny owned store net­work mod­el. They think that’s bet­ter off in terms of, um, buy­ing pow­er and syn­er­gies and, amort, amor­tiz­ing costs, et cetera, across their net­work. So, um, that’s their strat­e­gy. Um, there’s a whole­sale and a retail com­po­nent going onto the rais­ing, uh, um, uh, with the rais­ing. So retail share­hold­ers will get the abil­i­ty to par­tic­i­pate, which is not always the case. Um, so it’s good to see that hap­pen. Uh, cash Con­vert­ers is a bit of a strange, um, com­pa­ny and that it has a large share­hold­er, a com­pa­ny called Easy Corp from the US who, uh, oper­ate sim­i­lar type [00:24:00] stores around the world. they bought into Cash Con­vert­ers, but they haven’t tak­en it over. So they own under half of the com­pa­ny, and they have said they’ll par­tic­i­pate in the cap­i­tal rais­ing, they’ll sub under­write it and under­write the whole­sale, and some under­write the retail, which means that if there’s a short­fall, that they’ll pick it up. Um, and Cash Con­vert­ers did point out that, uh, easy Corp, even if they do, um, under­write the rais­ing, they will still not get much more than about 44.6%, um, share­hold­ing in the com­pa­ny, excuse me. Uh, and they are Easy Corp is bound by what’s called the creep pro­vi­sion of the Cor­po­ra­tions Act, which means if you are share­hold­er and have above 20% in a com­pa­ny, you can only take over anoth­er 3% in 86 month peri­od.

So, um, uh, even though they under­write the raise, they’ll still be bound by that creep clause [00:25:00] pro­vi­sion, and it’s expect­ed that they won’t that dur­ing the raise. Um, so Cash Con­vert­ers on the Byers QAV score of 0.25, I would expect that to be large­ly unchanged fol­low­ing the raise, but I guess peo­ple can watch it over the next com­ing weeks, upcom­ing weeks. Um, some will, some of that will depend on what the share price does after the trad­ing hold­ers is removed. to see it drop in line with the, the maths I talked about before. and look, I have, I have no view about whether makes Con­vert­ers a bet­ter takeover prospect for Easy Corp. It’s pos­si­ble they, they might think so and they might launch a full bid, but, um, they’ve been pret­ty qui­et on the re reg­is­ter to date. So, uh, I can’t um, have any con­fi­dence that that would hap­pen. but we do often see buy, uh, you know, our buy list stocks tak­en over because, um, they’re val­ue stocks and we’re not the only ones who see val­ue in them. So, uh, yeah, there’s a lot going on at Cash Con­vert­ers. Um, they’re on the [00:26:00] buy list, but, uh, cer­tain­ly do your own research.

Cameron: In one of the dum­my port­fo­lios. I had ’em Decem­ber last year. They’re up 43% since then, so it’s not bad.

Tony Kynas­ton: Yeah.

Cameron: Uh, when you said the creep pro­vi­sion, I thought this was a call­back to g Gor­don Lid­dy from last week’s show and the, uh, com­mit­tee to reelect the pres­i­dent that was the name of

Tony Kynas­ton: yeah, it was,

Cameron: his out­fit that did the Water­gate Break-Ins com­mit­tee to reelect the pres­i­dent creep.

I mean, com­ing up with a code name for an oper­a­tion like that is, uh, tells you every­thing you real­ly need to know. Right? They were creep­ing around the Water­gate and, uh, what’s his face as psy­chi­a­trists office? Um, not Ralph Nad­er, Daniel who was the. Uh, Pen­ta­gon Papers guy, Daniel,

Tony Kynas­ton: Oh, yeah, yeah, yeah. Um,

Cameron: blah, blah, blah, blah, blah.

Tony Kynas­ton: Right.

Cameron: What’s his name? Daniel. Daniel.

Tony Kynas­ton: on. I’ll tell you.

Cameron: Any­way, [00:27:00] yeah. I could GPT it, but I can’t be both­ered.

Tony Kynas­ton: I’m just look­ing it up now.

Cameron: Um, good friend of Julian Assange. She passed away I think not that long ago. Some­thing Berg Daniel

Tony Kynas­ton: Ells­berg.

Cameron: on the tip of my tongue. Just as you said that. Yeah. They broke into his psy­chi­a­trist’s office to steal his psy­chi­atric records.

To try and

Tony Kynas­ton: just merch­ing.

Cameron: him. Yeah, yeah. Ruin his rep­u­ta­tion. ’cause he was leak­ing all of the Pen­ta­gon paper stuff. Uh, okay. That’s CCV Gold Tony down 10% since last week’s high. All those peo­ple lin­ing up.

Tony Kynas­ton: Yeah. Who­ev­er

Cameron: St. Mar­t­in’s place or wher­ev­er it was.

Tony Kynas­ton: it, was the top, top of the mar­ket

Cameron: Well, you know, it, it might be top. It’s, I’ve done some tik­toks about gold, uh, recent­ly, one of which did Okay. It’s had like 90,000 views and a lot of debate, lot of, a lot of gold fans out there get­ting stuck in me and try­ing to make argu­ments for [00:28:00] gold. And, you know, it’s inter­est­ing. It’s the same argu­ments every time.

Oh, when soci­ety col­laps­es, it’s gonna be use­ful. I’m like, real­ly? Real­ly? You real­ly? That’s, that’s,

Tony Kynas­ton: your

Cameron: that’s what it’s, that have been using gold as a cur­ren­cy for 5,000 years. They were using shells too. Are you stock­ing up on seashells? I mean,

Tony Kynas­ton: Ooh.

Cameron: what?

Tony Kynas­ton: Ooh.

Cameron: know

Tony Kynas­ton: go. I might

Cameron: Hmm.

Tony Kynas­ton: after this

Cameron: sell mar­ket.

Tony Kynas­ton: Yeah, get some seashells. But you can do a Tik­Tok say­ing For­get gold and Bit­coin. The next big thing is seashells.

Cameron: Yeah, yeah, yeah. The seashell bub­ble. Um, but there you go. So that’s, that’s all I got on gold. But it’s, it’s, it’s that, it’s, uh, well, if it’s, if it’s val­ue­less, why are, why is Chi­na stock­ing up on it? Why are cen­tral banks stock­ing up on it? And I keep explain­ing, well, cen­tral banks have dif­fer­ent pri­or­i­ties than you and me as investors, right?

They do have to have their mon­ey [00:29:00] deployed in dif­fer­ent, dif­fer­ent, dif­fer­ent things. They have hedges against this and that and the oth­er. And, but, uh, the brain­wash­ing around gold is runs deep and peo­ple are very, very pas­sion­ate about it. I’ve learn very pas­sion­ate.

Tony Kynas­ton: it’s

Cameron: is, which is good.

Tony Kynas­ton: real­ly, isn’t it?

Cameron: It is. Well, I did one about Bit­coin too.

Tony Kynas­ton: Oh,

Cameron: It’s been the same sort of thing.

Tony Kynas­ton: Yeah.

Cameron: I’m hit hit­ting all the fun but­tons.

Tony Kynas­ton: Uh, the, the, the most inter­est­ing arti­cle I saw about gold, this was an off­hand throw­away com­ment in it week, was the Wiley in, um, in India. And India, as you said, um, has a cen­tral bank, which has been a big buy­er of gold. They were pret­ty qui­et last week. So, um, I’ll be inter­est­ed to see what hap­pens to gold this week.

Post to wild­ly, whether hav­ing less buy­ers in the mar­ket caused it to come off, or whether there was some­thing else that caused it to come off. ’cause every­one’s thrash­ing around try­ing to work out why do they come off 10%? the sort of com­mon the­o­ry was that peo­ple were tak­ing prof­its and sell­ing [00:30:00] out. Um, but you know, that begs the ques­tion, well, weren’t they tak­ing prof­its the week before? were they wait­ing for the line at, the front of a b, c Gold Bull to get to 1500 peo­ple before they took take prof­its? What, what caused ’em to sell, I guess? Um, and why not this

Cameron: Over their three point trend line. You know, it’s the oth­er argu­ment that every­one on the tik­toks has is fiat cur­ren­cy is use­less and is debased and it’s val­ue­less and it’s going back­wards. And gold is bet­ter than fiat cur­ren­cy. And I keep ask­ing the same ques­tion. Then why are the peo­ple who are sell­ing you the gold accept­ing your worth­less fiat cur­ren­cy in exchange?

Should­n’t they be hold­ing onto their gold if that is true? Or either they dis­agree with you or they know some­thing you don’t know. And uh, any­way,

Tony Kynas­ton: Well, they are

Cameron: try­ing to have log­i­cal argu­ments with them is fun­ny.

Tony Kynas­ton: of, con­flat­ing the, prob­a­bly the biggest rea­son why gold are going up, in my opin­ion. And that’s because the US dol­lar is going down. so the reserve banks around the world who have to [00:31:00] keep their cur­ren­cies sta­ble are buy­ing some­thing like gold to bol­ster the fact that the US dol­lars are worth less. So it’s

Cameron: Yeah,

Tony Kynas­ton: that’s the

Cameron: well, uh

Tony Kynas­ton: swap US dol­lars for gold and us. Do they think the US dol­lar’s going down and gold’s going

Cameron: hmm

Tony Kynas­ton: a no brain­er if you, if your job is to sta­bi­lize cur­ren­cies.

Cameron: hmm. But you can take that fiat cur­ren­cy and go and invest it in stocks and get 20% returns, which is gonna do bet­ter over the long term than your gold,

Tony Kynas­ton: True.

Cameron: uh, auto sports group. Tony, I saw in the news, I just did a news run before we went to where Auto Sports Group has announced a div­i­dend pay­ment of 4.50 cents indi­cat­ing earn­ings cov­er­age and poten­tial for future growth.

Annu­al div­i­dend yield is 2%. Earn­ings per share is fore­cast­ed to rise by 104% over the next year. So, uh, a SG on our buy [00:32:00] list fair­ly reg­u­lar­ly.

Tony Kynas­ton: Yep.

Cameron: I hold it in, uh, one of the light port­fo­lios. It’s up 89% since May this year. Holy crap.

Tony Kynas­ton: look­ing graph, isn’t it?

Cameron: I’m not look­ing at the graph just at my spread­sheet, but down 2% today, but up 89% since May. What? Wow.

Tony Kynas­ton: course it’s a pulled pork I did a cou­ple of years ago as well. So curse is well and

Cameron: That’s it.

Tony Kynas­ton: Yeah,

Cameron: Don’t make me open the spread­sheet. Um, ’cause we’re gonna talk about, uh, DGLA lit­tle bit lat­er. Um, you did a poor pork on that a few years ago.

Tony Kynas­ton: know,

Cameron: Uh, Wood­side.

Tony Kynas­ton: it’s

Cameron: Hmm. I.

Tony Kynas­ton: fake news cam.

Cameron: Fake news, right? Aus­trali­a’s Wood­side lifts oil and gas pro­duc­tion guid­ance. Uh, this is from as sto­ry I saw today. Yahoo [00:33:00] Finance, Wood­side Ener­gy, the biggest oil and gas firm, biggest Aus­tralian oil and gas firm on Wednes­day raised its pro­duc­tion guid­ance and low­ered the expect­ed pro­duc­tion costs for 2025, cit­ing the con­tin­ued strong per­for­mance of its key pro­duc­ing assets.

Wood­side now expects 2025 full year pro­duc­tion in the range, 192 to 197 mil­lion bar­rels of oil equiv­a­lent BOE up from 88 mil­lion BOE 195 mil­lion BOE, pre­vi­ous­ly antic­i­pat­ed. So, uh, that’s good. Anoth­er one of our, uh, all weath­er stocks, as Rudy would say. Do we own, I dun­no, I don’t hold WDSI guess because oil was prob­a­bly a sell at some point.

Tony Kynas­ton: All Ords been a sell. It’s gone up a lit­tle bit in the last week or so, um, giv­en greater sanc­tions and agree­ments on peo­ple buy­ing oil from Rus­sia or not buy­ing oil from Rus­sia. Uh,

Cameron: Mm.

Tony Kynas­ton: still, I think Wood­side’s is, has gone up recent­ly, but it’s still below our buy [00:34:00] price.

Cameron: Oil is cur­rent­ly a Josephine for us. Um, not far off its cell line, actu­al­ly still, but a lit­tle bit above it. I think it was a cell up until a week or two ago, just on the comp sta­tus. Um, one of the, the two big move­ments this week when I did it, LNG became a buy and wheat became a buy. Did­n’t real­ly change much on our buy list though, except Beach Ener­gy.

I guess that makes Beach Ener­gy a buy. I think it’s more LNG than crude,

Tony Kynas­ton: I think

Cameron: accord­ing to my.

Tony Kynas­ton: Was it? Do you have a break­down?

Cameron: I do. Um, it’s not on the buy list, so, but

Tony Kynas­ton: they bought BP’s oil and gas divi­sion, but they do do a lot of l and g too.

Cameron: let me just ping up my sheet. I have [00:35:00] it down a 70% LNG and 30% crew the last time I looked at its num­bers. So yeah, if it was on the buy list, that would be good. But it ain’t so, it, it ain’t

Tony Kynas­ton: Get­ting up. I

Cameron: oils. Ain’t oils, Tony.

Tony Kynas­ton: um, its graph, it’s get­ting up there. It’s, it’s, it’s come off, its bot­tom. no longer a sell. And it’s a whole, but it’s get­ting close to, its by price. So it’s by price today. $23, uh, sor­ry. 25 53. Sheer price. 24 point 33. So it’s a dol­lar off. Rough­ly dol­lar 20 off.

Cameron: Right. Got any­thing else to talk about?

Tony Kynas­ton: No, just as you said before. Um, the oth­er ques­tions, DGL I’ve got a pulled pork to do, but we can do the ques­tion first if you like.

Cameron: On cx.

Tony Kynas­ton: No, I’d already done one on, um, Euro Hart­ley I got

Cameron: Okay.

Tony Kynas­ton: request. I can do, I can do c

Cameron: Right.

Tony Kynas­ton: next week. Um, I, I do cau­tion. They’re a very small a ET and not in the B [00:36:00] list any­more, so, but I can do one on c Xed.

Cameron: So Phil asked if he could do that, and then he said maybe an update on a pre­vi­ous Paul pork. DGL Fake news. Tony says sus­pend­ed from the ASX due to not get­ting their annu­al report in the CFO left and can’t get back on the ASX because orders to won’t sign off on the annu­al report. This was a Paul Pork in episode 6 47 back in Novem­ber, 2023, so near­ly two years ago.

Uh, has not had a good run since then. I did have a look at some of their lat­est releas­es on Stock. Doc­tor this morn­ing looks like a bit of a mess.

Tony Kynas­ton: Yeah, that’s putting it light­ly, I think. Um, yeah. So DGL are a chem­i­cal man­u­fac­tur­ing and logis­tics and stor­age busi­ness. And as you said, the pulled pork back in Novem­ber, 2023. Um, where they are now is, is inter­est­ing and not in a good, not in a good way. So my [00:37:00] sum­ma­ry, and then, and you for­give me if I get this wrong, but my sum­ma­ry is that they put in a new ERP sys­tem enter­prise, uh, plan­ning sys­tem. uh, that has meant that there has been ques­tions around the stock take count. Um, the com­pa­ny came out and said that they thought, uh, that the. The stock take was accu­rate to with­in about 3%. they also said that was pret­ty much the stan­dard in the indus­try and they gave some rea­sons for that, that they’re a chem­i­cal com­pa­ny and they, you get spillage when you’re mov­ing them around and they expand and con­tract, um, with heat and tem­per­a­ture, well tem­per­a­ture.

And, um, so if you’re count­ing by vol­ume, that can make a dif­fer­ence as well. and I mean, I, I, I that because work­ing in the, in for Shell and the oil indus­try, you did see, par­tic­u­lar­ly in out­back places in Aus­tralia, that um, when you mea­sure the tank in the mid­dle of the day, it was, it had more fuel in it than when you mea­sured [00:38:00] it overnight.

Um, ’cause tem­per­a­ture does expand. Chem­i­cals. So, I get that. But the audi­tors also claimed that the, the sys­tem for inven­to­ry, uh, count­ing in, in, um, this with this com­pa­ny allowed for man­age­ment over­rides, and that that was the prob­lem they had, is that they did­n’t know how much of the, of the stock move­ments and stock count­ing was being over­rid­den by these man­age­ment over­rides, and there­fore they could­n’t give a, um, an opin­ion about whether the stock count was right. So the com­pa­ny is, um, putting plans in place to fix that. I, I imag­ine it’s gonna require anoth­er, apart, apart from the sys­tems changes and retrain­ing, it’s gonna require anoth­er stock count, and then they have to con­vince the audi­tors and then they have to con­vince the ASX because, um, when the audi­tors. did­n’t sign off on the results at the end of FY 25. Uh, they could­n’t sub­mit their accounts on time to the [00:39:00] ASX, and so they’d been in a trad­ing halt. Uh, and they’re still on the trad­ing halt. So the audi­tors a com­pa­ny called PKF. issued what’s called a dis­claimer of opin­ion in the annu­al report um. What they said was pret­ty much what they said. The fail­ures iden­ti­fied specif­i­cal­ly relate to the poten­tial for man­age­ment over­ride of con­trols. As a result of the weak­ness­es in the sys­tems of inter­nal con­trol and cor­po­rate gov­er­nance process­es allied to com­plex account­ing and report­ing sys­tems. Addi­tion­al issues were iden­ti­fied relat­ing to the exis­tence and val­u­a­tion of inven­to­ry, which was in part impact­ed by the imple­men­ta­tion of a new group wide ERP sys­tem dur­ing year end. As a result of these mat­ters, we were unable to deter­mine whether any adjust­ments might have been found nec­es­sary in respect of record­ed or unrecord­ed inven­to­ries and any oth­er ele­ments com­pris­ing the con­sol­i­dat­ed state­ment of finan­cial posi­tion as at 30th of June. Um, so these are pret­ty rare [00:40:00] dis­claimer of opin­ions and. I think you’d prob­a­bly say there’s a worst form of audit, um, mark you can get if you’re a, a com­pa­ny. so we’ve, we’ve talked about qual­i­fied audits. This is def­i­nite­ly a qual­i­fied audit, but it, it basi­cal­ly means the audi­tor is unable to form an opin­ion on the finan­cial state­ments.

In oth­er words, there are a mess and we can’t cer­ti­fy them. Um, I think it will take a while to, to, to get this com­pa­ny ED again. And then I think it, you know, it’s gonna face investor con­fi­dence issues, so I’m not sure what that will mean for the share price. I, I can’t see it being a good thing. Um, I guess to mit­i­gate all that, the com­pa­ny have been pret­ty good at com­ing out.

They’ve restat­ed their accounts once they thought they had a, anoth­er stock count done. Uh, there was­n’t a huge move­ment in the num­bers, but, but they have restat­ed, um, the, the CFO left dur­ing this process and. I’ll use that word­ing. I don’t know if the CFO was respon­si­ble [00:41:00] for all this. I, I imag­ine they’re in charge of the account­ing sys­tems and the ERP sys­tems and the stock take sys­tems, et cetera.

But any­way, they’ve left and they have an act­ing inter­nal can­di­date while they try and recruit a new CFO. And I admit that will be fair­ly dif­fi­cult giv­en the pub­lic nature of what’s going on with their, their accounts. Um, but the, the under­ly­ing busi­ness, despite the fact that, um, there’s some uncer­tain­ty, I guess I’ll say around their stock count, is still going pret­ty well from what I can tell and what their num­bers say.

They did take, did take anoth­er hit to their finances. And I’ll declare that now. So, um, can see if I can find that. But, uh, what, what hap­pened in a nut­shell was they took a big write down in their. Um, annu­al report, uh, or to their annu­al prof­it. Um, ’cause they did pub­lish unau­dit­ed num­bers. What hap­pened was part of this busi­ness sells, um, [00:42:00] lead acid bat­ter­ies through two out­lets.

One in Vic­to­ria, one in New South Wales, led acid bat­tery mar­ket. Um, it’s under intense price pres­sure and the Vic­to­ri­an, um, busi­ness lost a lot of mon­ey, so they shut it down and moved every­thing to New South Wales. But they had to take like, I think it was a $28 mil­lion write down on that busi­ness, in terms of mak­ing peo­ple redun­dant, writ­ing off the assets they had there.

The, I think they did to, to sell it and did­n’t get the. Oh, I dun­no. They took a big write down any­way to get out­ta that busi­ness or to con­sol­i­date it in New South Wales, so that took them into a, a non-cash loss. But on the cash basis, every­thing else in the busi­ness was doing fine. So put that out there as the, as the oth­er side to this argu­ment, the under­ly­ing busi­ness, even though it took a big non-cash write down in this half, looks like it’s doing fine, looked like it was doing fine.

I did a pulled pork on it. Um, I, I would hope and expect that they [00:43:00] will sort out their account­ing issues if they put a new ERP sys­tem in. They’ll get help to fix that. do anoth­er stock count, they’ll get, um, the audi­tors to be com­fort­able with that. And then they have to get the ASX to be com­fort­able with all that, none of which will hap­pen quick­ly. So they could be, um, they could be off the mar­kets, off the boards for a while. Um, that’s all I know about it. That’s just from research­ing the announce­ments and, and what­ev­er else I’ve read. not a good place to be in and, uh, you know, sor­ry, that, that, um, some peo­ple have bought into this, I dun­no if it was a cell that cam.

I haven’t looked up, up in the brit­tle lat­er to see after 2023 whether it would became a cell. but yeah, it’s, um, it’s gonna take a while for this to get rein­stat­ed and then we’ll see what, what hap­pens to the share price after that.

Cameron: Yeah, I don’t have it, um,

Tony Kynas­ton: Yeah, I could­n’t,

Cameron: in,

Tony Kynas­ton: I could­n’t get

Cameron: hmm.

Tony Kynas­ton: list because we don’t, don’t down­load stocks that aren’t list­ed. [00:44:00] So if you’re in a trad­ing halt, you don’t get part, you’re not part of the down­load from Stock Doc­tor.

Cameron: Ah, yeah, right. Well, no, I’m look­ing through, um, I, I run a script every week, which is the his­tor­i­cal three point trend line sell, so I can track if stocks had been a sell in the past. This, this isn’t show­ing up. Um, it’s been declin­ing for a while though. I mean, I think it prob­a­bly would’ve been a sell actu­al­ly ear­ly this year, maybe.

Look­ing at the chart, um, ear­ly 2025, maybe March or April. Um, cur­rent­ly the sell line is 48.70 cents a sell price. Cur­rent price is 54 cents, so it’s slight­ly above it’s sell line at the moment, but I think it been a cell six months ago.

Tony Kynas­ton: Yeah.

[00:45:00] I can’t see it in the bread let­ter. ’cause again, the bread lay­er won’t give us a, that’s not list­ed.

Cameron: Yeah, the bread lat­er or the buy list you mean?

Tony Kynas­ton: both I think. Let me

Cameron: Well, it’s in the bread lat­er.

Tony Kynas­ton: it okay? Sor­ry.

Cameron: Yeah. I mean, I dun­no, I dun­no how the bread lat­er is get­ting a price if it’s, if su sus­pend­ed from quo­ta­tion. But, uh, there you go.

Tony Kynas­ton: The bread lay­er does have it.

Cameron: Hmm.

Tony Kynas­ton: it in a, a, an old­er date and just see what hap­pens. Um, I put in first of the first 2025. See if it was a cell at that stage. Yeah. So I just arbi­trar­i­ly put 1st of Jan­u­ary and giv­en it was halfway, rough­ly halfway between the pool pork and now, and it was a cell then, so, um, I think it may have been a sell along the way.

Cameron: Yeah, I put in the 1st of April 25 and it was a cell then to, ’cause it’s been declin­ing for [00:46:00] quite some time.

Tony Kynas­ton: Yep.

Cameron: declin­ing since April, 2022. Looks like it only float­ed in May 21. Went up and then came down. Any who? There you go. So thanks for, uh,

Tony Kynas­ton: Yeah.

Cameron: on that, Phil.

Tony Kynas­ton: uh, apolo­gies, Phil, if you’re still hold­ing, but I, I hope it works out for you. cam, do you, when you are check­ing for audits in your code, do

Cameron: Mm.

Tony Kynas­ton: do you find that, do you look for, what was it called, a, um, dis­claimer of opin­ion?

Cameron: Well, I

Tony Kynas­ton: check for

Cameron: don’t, yeah, I do. I’ll have to check that one. What date did that come out? Just look­ing at their thing,

Tony Kynas­ton: it would’ve been, um,

Cameron: their annu­al report.

Tony Kynas­ton: yes,

Cameron: 17th of Octo­ber. They got sus­pend­ed on the 1st of Octo­ber.

Tony Kynas­ton: Yeah. So it could

Cameron: ’ cause it was delayed.

Tony Kynas­ton: Yeah. So any­way, this is [00:47:00] prob­a­bly one of, I haven’t, I can’t recall com­ing across as opin­ion before in, in my invest­ing career. So I think it’s

Cameron: Hmm.

Tony Kynas­ton: Um. At least rare for QAV type stocks.

Cameron: I will, uh, make a note to check my script for that. But yeah, I, I, it was pret­ty bold. I read that and it was like they were straight up front. Weren’t they going? Yeah, we we’re not, we don’t have an opin­ion on this ’cause we can’t get the right infor­ma­tion that we need.

Alright, Tony. That’s that, uh, Paul Pork euros, motor­cy­cles are, they’re motor­cy­cles.

Tony Kynas­ton: No stock­bro­kers.

Cameron: I have, I knew that

Tony Kynas­ton: Oh.

Cameron: Stock­bro­kers. That’s har, it’s Hart­ley’s, not Harley’s. Okay. All right. Good. Yeah.

Tony Kynas­ton: Hart­ley group. Yeah. Yeah. For a long time they were just Euros and they merged with Hart­ley’s. Um, anoth­er stock­broking slash invest­ment bank­ing slash funds man­age­ment busi­ness. they’re based in Perth. [00:48:00] They’re a West Aus­tralian. guess that’s the key to under­stand­ing this busi­ness. And there’s prob­a­bly three or four bro­ker­age hous­es in have been close to the min­ing indus­try over the years, and they kind of make their way as a busi­ness by get­ting in close with mines when they start out, raise mon­ey for them.

And then, as the mines get big­ger and big­ger, they raise more cap­i­tal at high­er and high­er amounts. And so, uh, these kinds of com­pa­nies, um, make mon­ey from that. Um, orig­i­nal­ly found­ed and list­ed in 2000 as a stock­bro­ker in in Perth, then, uh, through both organ­ic growth and acqui­si­tions, I, would say that they’re now, not the largest WA finan­cial ser­vices firms.

You know, prob­a­bly top two. Uh, OC 8th of Octo­ber, 2020, euros com­plet­ed the acqui­si­tion of Hart­ley’s Lim­it­ed. was anoth­er stock­broking busi­ness that went back to 1955 [00:49:00] in Perth and, uh, euros, Hart­ley’s, euros. Hart­ley’s Group now has over 190 employ­ees, um, in their Perth office in the nation­al and inter­na­tion­al client base.

Um. So they own a cou­ple of brands. The Entrust Wealth Man­age­ment Busi­ness and the West Os, west Oz funds man­age­ment busi­ness. They have some­thing like 24,000 clients and $3.4 bil­lion of funds under man­age­ment. Um, and that was actu­al­ly, that’s a year or so ago, old now. So I think it’s up, up more like around four, over $4 bil­lion now. Um, they, they do of course focus on ASX, ASX list­ed Resource Ener­gy and WA indus­tri­al com­pa­nies, and they tend to focus on com­pa­nies with a mar­ket cap between 5 mil­lion and 5 bil­lion. Uh, so that kind of micro cap through to, um, [00:50:00] mid to large cap. Um, they, when they formed in 2020, they con­sol­i­dat­ed four Perth bro­ker­ages, black Swan, entrust Euros, and then even­tu­al­ly Hart­ley’s and uh, s. They, sor­ry. They acquired Black Squa along the way in Entrust Wealth Man­age­ment along the way in 2014 and 2015. Um, so what can I say? What else can I say about them? They make a lot of mon­ey out of, um, under­writ­ing and place­ment fees. So the break­down is that bro­ker­age makes up about 32% of income wealth man­age­ment, about 22%, but under­writ­ing and place­ment fees make up 39%.

So a lot of their income is about. out and about amongst the WA min­ing set. Uh, so for exam­ple, um, last year Euros, Hart­ley’s led, uh, [00:51:00] Spar­tan Resources, which were a WA Explor­er. Um, they led their 222, uh, 20 220 mil­lion insti­tu­tion­al place place­ment. then Spar­tan recent­ly agreed to a $4.2 bil­lion merg­er with MIUs resources. they were also co-lead on a $200 mil­lion equi­ty rais­ing for the ASX list­ed ship builder, Austal, who’ve been on the buy list before with us as well. Um. They have made a name for them­selves as the bro­ker of choice for Gina Rein­hardt, and in the late 2023, they helped Rein­hardt buy up to a bil­lion dol­lars of shares the then takeover tar­get line town resources, for Han­cock Prospect­ing. So, um, a lot of deals that they do, and that’s, that’s a large part of their, their make­up. it’s impor­tant in the min­ing world to have strong con­nec­tions in, in the WA mar­ket and to [00:52:00] sup­port small min­ers who one day can become big and under­take big­ger place­ments and m and a deals. Uh, so that’s. That’s basi­cal­ly the com­pa­ny in a nut­shell.

Um, finan­cials were good in their last lat­est 20, 25 results, and that’s real­ly when the share price had start­ed to turn round. Again. It had been strong COVID. It came off in the last few years and now it’s turned around again. So rev­enue was up 10.6%, but prof­it was up, um, 87.7%. quite a, quite a bit. and this, I guess, is, fits into that clas­sic theme of buy­ing picks and shov­els in the gold boom strat­e­gy. So this is a com­pa­ny which should do well dur­ing min­ing booms, and of course we’ll turn down when, uh, when there isn’t a min­ing boom. Um, there was a bit of spec­u­la­tion around that. They were a takeover tar­get for RBC, the Roy­al Bank of Cana­da that has, um, stock­broking and invest­ment bank­ing inter­ests around the world. that was [00:53:00] report­ed in June in the AFR, but. Does­n’t appear to have pro­gressed from, um, any­thing oth­er than the ini­tial con­tacts. Okay. QAV num­bers for this com­pa­ny, a DT is not that large. It’s 52,000 odd dol­lars per day. So it’ll suit some lis­ten­ers, but not the larg­er investors. Uh, cur­rent price for the analy­sis is a dol­lar one and a half, which is above iv one of 32 cents.

We don’t have an IV two, so we don’t have a fore­cast. Earn­ings per share. And I guess, I dun­no if it’s the case with Euros, but we often, there aren’t that many list­ed stock­bro­kers. Euros might be the only one left. There were more in the past and it sort of was a bit of a of a game that rival firms did­n’t research, um, rival firms, ’cause they did­n’t want you to invest with Euros.

They want­ed you to buy shares in their own com­pa­ny. So, um, uh, there’s. Does­n’t seem to be much bro­ker cov­er­age. There’s no con­sen­sus fore­cast or no fore­cast earn­ings per share, for this com­pa­ny. So I can’t give a, an IV two [00:54:00] for it. Yield is 5.4%, which is just below the aver­age mort­gage rate. Uh, so we can’t give it a score for that, but that’s a pret­ty strong yield. Stock Doc­tor, finan­cial health and trend is strong and steady. And stock edia qual­i­ty rank is 97, so very high on stock ed’s. Rank­ing scale for qual­i­ty F score is six out of nine in stock Edia, so that’s pret­ty good too. And their over­all rank is 93, so that’s not shab­by either. PE for this com­pa­ny is 16.27 times, which is not the high­est or the low­est, so we don’t score it for that. I guess the real win­ner for this com­pa­ny is, um. Prop calf, which is 3.98 times, so have any debt, and it has returned cap­i­tal to share­hold­ers this year and it’s done it in in pri­or years as well. So it’s very finan­cial­ly, um, sound from that per­spec­tive. And trad­ing on a low prop calf num­ber, which puts it on our buy list. equi­ty per share is 74 cents, [00:55:00] um, which means book plus 30% is 96 cents, just a lit­tle bit below the cur­rent share price of a dol­lar one unchange. So we can’t, we can’t buy it for book plus 30. And I also wan­na high­light that, uh, the book val­ue for the com­pa­ny as we mea­sure it, is high­er than the net tan­gi­ble asset, which is only 50 cents.

So as I said before, the com­pa­ny has grown through acqui­si­tions and there’s some good rules sit­ting on their bal­ance sheet. direc­tors hold 11% and there is an own­er, founder, at least back from the Euros days, a guy called Andrew McKen­zie, who remains exec­u­tive chair­man, um, on the board. And I guess. of that title run­ning the com­pa­ny as well. It’s a recent three point trend line buy, so, uh, we score it for that does­n’t have con­sis­tent­ly grow­ing equi­ty, uh, so we can’t score it for that. So over­all score, 75% for qual­i­ty nine out of the pos­si­ble 12 and the QAV score of 0.19. So it’s, um, about the mid­dle of the buy list, the risk, um, fair­ly obvi­ous if there’s a down­turn in [00:56:00] the min­ing indus­try, it’ll hit this, uh, com­pa­ny’s abil­i­ty to do deals. Um, but the pos­i­tives are the reverse of that, obvi­ous­ly, that, um, they’re entrenched in the per scene dur­ing a min­ing boom. So there are plen­ty of deals going on and I dun­no what, what to make about the takeover talk. But, um, again, if it’s on our buy list there’s no debt and lots of cash, then I would­n’t be sur­prised if it’s, it’s not being con­sid­ered, um, by oth­er peo­ple besides us. So that’s you Rosen Hart­ley’s Group.

Cameron: Thank you Tony. Um, I think I do hold them in a port­fo­lio. Uh, no. Yes, a light port­fo­lio added them on August, 2025. They’re up 6% and they’re close to a three point trend line sell accord­ing to this.

Tony Kynas­ton: Yeah, I think

Cameron: Um.

Tony Kynas­ton: they’re just rebound­ed. So uh, sell price is [00:57:00] 49. Uh, hang on. Got the wrong, uh, wrong share up still?

Cameron: I’ve got this sell price at 97,

Tony Kynas­ton: I’ve got 99. Okay.

Cameron: right?

Tony Kynas­ton: cur­rent­ly trad­ing a dol­lar one. So yeah, you’re right. A cou­ple of cents above their sale. And

Cameron: Hmm

Tony Kynas­ton: of 84.

Cameron: hmm. Real­ly good. All right. Well that’s the main part of the show. We got noth­ing for me after hours, Tony?

Tony Kynas­ton: Uh,

Cameron: Yeah.

Tony Kynas­ton: work­ing my way through Scors­ese, which is just bril­liant, just lov­ing it. Um, equal­ly is inter­est­ing to go through all the low lights of his career when he made movies that weren’t as, um, well received, like Udan. And, um, you know, he, he made a small movie, which I love, called After Hours, which did­n’t, which did okay. he

Cameron: Man, I’ve,

Tony Kynas­ton: Bring­ing

Cameron: I only heard about, so I only heard about after hours like a few months [00:58:00] ago and I’ve been try­ing to track it down. I watched the trail­er. I’ve been try­ing to track down where to watch it. It looks great.

Tony Kynas­ton: is great. Grif­fin Dunn stars in it, and it was

Cameron: Yeah.

Tony Kynas­ton: Scors­ese he come, what was he com­ing off the back of? He came off the back of a flop. Oh. King of Com­e­dy, I think. And, um,

Cameron: King of Com­e­dy be a flop. It’s like, it’s a great movie. King of Com­e­dy. I think they,

Tony Kynas­ton: Was­n’t well

Cameron: it was just,

Tony Kynas­ton: out though. yeah,

Cameron: yeah, real­ly just to like, sort of that dark com­e­dy thing. Peo­ple did­n’t asso­ciate Scors­ese with that.

Tony Kynas­ton: yeah. And, and he, the way he tells it, it was more of it, the Niro vehi­cle. The Niro real­ly want­ed to make it, and Scors­ese’s heart was­n’t in it so much. So, um, that was inter­est­ing. But, um, yeah, I

Cameron: San­dra Bern­hardt, Jer­ry Lewis.

Tony Kynas­ton: Yeah.

Cameron: Great.

Tony Kynas­ton: Great. Uh, so they shot, the way they shot it was, um, had all these scenes where Jer­ry Lewis would be walk­ing down like Fifth Avenue or New York or some­thing, or going to 30 Rock or what­ev­er to um, shoot some­thing. [00:59:00] And, um. You know, Scors­ese be pulling his hair out say­ing, we got­ta have the extras here. They got­ta be doing this. Lewis said, no, just watch. Roll the cam­era. He start­ed walk­ing down the street and cars would pull up, Jer­ry, how you doing? And he just sort of wave and keep walk­ing and peo­ple would come up and he signed all the grass and just keep walk­ing.

Com­plete­ly unscript­ed. But he knew exact­ly what would hap­pen if he walked down the street.

Cameron: Yeah. Yeah. Wow. He’s Jer­ry Lewis. Yeah.

Tony Kynas­ton: Yeah, So, but, but great. And then they go through the last temp­ta­tion of Christ, which was fan­tas­tic. And know, how, how the Chris­t­ian Right. You know, took up arms against it and he had to wear a bul­let­proof vest­ed the Acad­e­my Awards that year and all this kind of stuff.

So yeah, just amaz­ing. series. Great series.

Cameron: I look for­ward to check­ing it out. Um, by the way, I did mean to men­tion I checked my audit script. It does look for dis­claimer of opin­ion. Yeah. It did­n’t have DGL because I think the last time I ran it, it was before the report came out. I ran it in Sep­tem­ber, so I’ve [01:00:00] got­ta run it again. I’ll have to,

Tony Kynas­ton: Yeah.

Cameron: all the major reports would’ve been out by then, but I’ll have to, I might just set it to run once a month.

Tony Kynas­ton: Yeah. It’s a good idea.

Cameron: Alright. What else you got?

Tony Kynas­ton: No, that’s it. Hors­es are rac­ing. So I got, um, lake For­est on Wednes­day, Bendi­go Cup dates rac­ing there if this goes out in time. And then, uh, qua doto next week, uh, per­haps on Mel­bourne Cup Day, but also per­haps on kind in Cup Day the fol­low­ing day in, on Wednes­day next week.

Cameron: Fine And cup day, is that what you’re call­ing it?

Tony Kynas­ton: Yep.

Cameron: Hmm.

Tony Kynas­ton: Jen­ny and I are going up for it too.

We’ve got a event up there. We’re going to, it’s a good idea. I’ll call a, I’ll walk in and say, uh,

Cameron: Hmm.

Tony Kynas­ton: bet­ter let me in. Yeah.

Cameron: Eson Cup Day. Uh, well, I, what am I, I’m still read­ing Grav­i­ty’s Rain­bow. Not sure I’m gonna con­tin­ue with it. It’s too, too con­vo­lut­ed to read at mid­night. I’m like, what the hell is going on with this? [01:01:00] Um,

Tony Kynas­ton: It

Cameron: yeah, it’s about it,

Tony Kynas­ton: con­vo­lut­ed sto­ry.

Cameron: man. I was talk­ing to Chat­G­PT, GPT about it ’cause I have to look stuff up, like, what’s he talk­ing about here?

Because he’s like, so many sort of sci­en­tif­ic and his­tor­i­cal ref­er­ences, just absolute­ly embed­ded in it. And I’m like, what’s this? What’s that? What’s the oth­er? But, um, I kept say­ing, I thought this guy was the pro­tag­o­nist pirate. There’s some­body. He goes, well, no, he was for the first 30 pages. Then it flipped to this guy.

And eh, it’ll flip back to Pirate, but it’s not, you know, it’s, it’s all over the place.

Tony Kynas­ton: Yep.

Cameron: Keeps you on your toes. Um, fin­ished. Ele­phant Man. Loved it. Um. But, you know, again, sort of beau­ti­ful, very, very sim­ple, sweet, sad, sort of a sto­ry. Not, uh, your typ­i­cal Lynch vehi­cle, although at the end when he, I dun­no if you remem­ber, but at the end as he’s dying, spoil­er alert, peo­ple haven’t seen the film from 1980.

[01:02:00] Um, the face of his moth­er appears in space and just sort of hov­ers there. Very Lau­ra Palmy. Like it’s got this whole sort of, it fin­ish­es with a sort of a pre­view of Lau­ra Palmy sort of head in space dead some­thing, some­thing which, you know, and Twin Peaks did­n’t come out for anoth­er 10 years or what­ev­er it was.

Was it 1990? I think Twin Peaks. But any­way, um, yeah, that’s about it. Oh, we had a karate grad­ing, uh, karate kung fu grad­ing on Fri­day that went well. No bro­ken bones. No bro­ken noses. Uh, we sur­vived that.

Tony Kynas­ton: So take us through it. You were beset by attack­ers for an hour or so and you had to fight them off. Is that how it goes?

Cameron: Well, two hours. Uh, the first, first 90 min­utes was prob­a­bly demon­stra­tion, so we have to do our tech­niques. Dum­my sets, forms paired up with one per­son who’s like a black belt. Usu­al­ly they’re [01:03:00] throw­ing ran­dom punch­es, kicks, what­ev­er at you. And see if’s like, show me this, show me that. Show me this tech­nique.

Show me that tech­nique. And you just have to stand there and block and counter punch and coun­ter­strike sweeps. We did a lot of sweeps. Hit ’em, take ’em to the ground, punch ’em in the face. Did­n’t do base­ball, bat or knife defense. Um, he did­n’t, we ran out­ta time. I think there was so much stuff he want­ed to see and we just ran out­ta time for that, unfor­tu­nate­ly.

Then, oh, and the dum­my sec­tion of the wood­en dum­my. We had to get on the, do our dum­my sets on the wood­en dum­mies, all that kin­da stuff. Then spar­ring. So then we did like, I don’t know how long the spar­ring went for. Felt like an hour. It was prob­a­bly 10 min­utes actu­al­ly. It was, I think we went through about 15 rounds of spar­ring, 15 to 20 rounds of spar­ring.

And I think they went for two min­utes each. So yeah. What is, so it was prob­a­bly half an hour to 40 min­utes of spar­ring. And the guy who was with me at the end, he said to me after­wards, [01:04:00] I kicked you in the ribs and you did­n’t flinch. I thought, oh, Cameron’s done. And I said, ah, just, I, I was just too tired to block it.

I just thought, ah, I’m gonna wear it. And he said, yeah, but you did­n’t even move. You did­n’t even try to block it. I was like, yeah, I was too tired, man. Too tired to try and block it. But that was good. I was real­ly proud of Chris­sy. She did real­ly well. Um, uh, so yeah, our next, uh, belt is our black belt, so we’ve prob­a­bly got 18 months to get ready for that.

So. That’ll be the next thing to do.

Tony Kynas­ton: Does that mean you can go out and become a kung fu train­er or a sifu and open up your own, what do they call ’em? Doge.

Cameron: Jojo. That’s Japan­ese. Yeah. We call him a Kon in Chi­nese. It’s a Kon. Uh, well, pos­si­bly, yeah. Bruce Lee only did like two years of Wing Chung and he went to Amer­i­ca and start­ed his own school of Kun Do. But um, yeah, I don’t think that’s in the cards. [01:05:00] Although when AI takes over every­thing, then maybe teach­ing kung fu is all we got left till the robots come and teach Kung fu.

I saw Elon had his robots doing kung fu demon­stra­tions this week at the, at a movie pre­miere in la

Tony Kynas­ton: Were they plugged in or were they autonomous.

Cameron: No, it was a Tron, uh, pre­miere, I think. And he had a, he had a one of his robots out the front doing kung fu. So that’s that. Alright. And we’ve got a US show to do where I’m gonna be talk­ing about Amer­i­can Air­lines, even though they’re Josephine. That’s a long sto­ry. I’m gonna talk about ’em. Any­way, I prepped the whole thing and then real­ized they were Josephine.

I’m like, ah, I’m not doing anoth­er one now. I just spent like three hours prepar­ing for this. I’m gonna have to do it any­way.

Tony Kynas­ton: Yep.

Cameron: Alright. Quite a good week every­one. Thank you TK

Tony Kynas­ton: Bye.

Bernard: Q A V is a check­list-based sys­tem of val­ue invest­ing devel­oped by Tony  Khyne­ston. over 25 [01:06:00] 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. 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; [01:07:00] 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.

Trans­paren­cy is impor­tant to us. We will always be very open and hon­est about the stocks we own. We will also always give our audi­ence advance notice when we intend to buy or sell a stock that we are going to talk about on the pod­cast. This is so we can nev­er be accused of pump­ing a stock to our own advan­tage. If we talk about a stock we cur­rent­ly own, we will make it known that we own it.

This email is autho­rised by Antho­ny  Khyne­ston. Autho­rised Rep­re­sen­ta­tive Num­ber zero zero 1 2 9 2 7 1 8 of M F & Co. Asset Man­age­ment Pro­pri­etary Lim­it­ed (A F S L five 2 zero 4 4 2).
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Quote of the day: “As the physi­cist Richard Feyn­man said, [01:08:00] ‘Sci­ence is what we have learned about how to keep from fool­ing our­selves.”

The Begin­ning of Infin­i­ty

David Deutsch