QAV AU 844 — AI Freeze, Buffett’s Billions

QAV AU 844 Audio

Cameron: [00:00:00] Wel­come to QAV Aus­tralia. This is episode some­thing, some­thing, some­thing. I should have my notes up. 8 44. We’re record­ing this on the 3rd of Novem­ber, 2025. Wel­come, tk. That’s a love­ly shirt you’re wear­ing today.

Tony Kynas­ton: Thank you. Just a reminder not to feed me neg­a­tive waves.

Cameron: Yeah. For the peo­ple not watch­ing the video stream, you want to explain your T‑shirt or should I explain it?

Tony Kynas­ton: You can prob­a­bly read it bet­ter than mine. It’s in reverse. Reverse font.

Cameron: It’s a love­ly, uh, why don’t you knock off with them? Neg­a­tive waves, t‑shirts, star­ring with a pho­to of, uh, him from that movie.

Tony Kynas­ton: Don­ald Suther­land play­ing

Cameron: Yes.

Tony Kynas­ton: Heroes. Yes,

Cameron: yes. Thank you.

Tony Kynas­ton: was try­ing to work out how to explain Kel­ly’s heroes. I’d prob­a­bly say it’s [00:01:00] my. mixed up film. Favorite frac­tured film. It’s not per­fect. Lots of, lots of prob­lems in it,

Cameron: right.

Tony Kynas­ton: Great cast, great fun, great sound­track,

Cameron: Lots of great lines.

Tony Kynas­ton: great per­for­mances from Don­ald Sul­li­van, Sul­li­van and Don Rick­les in par­tic­u­lar too.

Great.

Cameron: Well, I’ll tell you who’s not per­form­ing well this week Tony is the mar­ket

Tony Kynas­ton: It’s only Mon­day.

Cameron: mar­ket. Wow. Last week I’m talk­ing about. And then in the last week, my buy list was pret­ty short this week because a lot of things are josephine’s as a result of the mar­ket being down last week.

Tony Kynas­ton: Is it, it’s not quite a Riley indi­ca­tor yet, though, is it?

Cameron: No, I, I haven’t called the Riley indi­ca­tor yet. Uh, we’ll, we’ll wait and see. But, um, you know, this, uh, I had to sell. Oh, my alar­m’s gone off telling me to pay [00:02:00] atten­tion to the bread that’s in the oven. We’re record­ing this on a Mon­day instead of a Tues­day because there’s some horse race on tomor­row. I’m some­thing going on.

Tony Kynas­ton: race that stops the nations on tomor­row, Tues­day,

Cameron: QAV stops because there’s a race on. Yeah.

Tony Kynas­ton: So

Cameron: So we’re doing this a Yeah, no wor­ries. We’re doing it. Well, thank you for doing it today. We’re doing it a lit­tle bit ear­li­er than nor­mal, um, which means that I’ve just been scram­bling to get my buy list and every­thing done today, BA but it’s bit bit short because, uh, mar­ket’s down and I actu­al­ly had to sell some­thing for the first time in a long time.

LAU Lind­say Aus­tralia is down and, uh, broke. Its three point trend­line sell. I’ll talk about that in a sec­ond, but before we get into that, tell me why the mar­ket has been down tk.

Tony Kynas­ton: Well, the, not only does the Mel­bourne Cup run tomor­row, but so does the reserve. Meet rule on inter­est rates and uh, infla­tion fig­ures came out at the end of last week and they weren’t good. [00:03:00] They were high­er than pret­ty much any­one expect­ed. And it’s, the mar­ket’s gone from, I think it was almost an even bet that the rates would be cut tomor­row to it’s now like a 95% cer­tain­ty that they won’t be So I think that’s meant, you know, peo­ple are, peo­ple real­ly, those inter­est rates move mar­kets and it’s always sur­prised me to a large extent, but peo­ple are now tak­ing some mon­ey off the table, I think because of infla­tion­ary fees.

Cameron: Well, I don’t under­stand what’s going on that in the, in the mar­ket and infla­tion and all that kind of stuff. It’s beyond my pay grade. But I tell you, what I do know is that com­modi­ties are all pret­ty much a buy this week except for crude, which is still a Josephine accord­ing to my reck­on­ing. And a few minor things like nick­el and mag­ne­sium, man­ganese, iron, ores are buy golds are by ther­mal and coke and cola both buys [00:04:00] ther­mal.

Coal became a buy this week. Cop­pers are bi plat­inums are by alu­minums, are by zinc, and tin are by steel. And LNG are buys wheat and even lithi­um are bis.

Tony Kynas­ton: Hmm.

Cameron: Tita­ni­um diox­ide is still a cell, but that does­n’t real­ly play a huge role in our, uh, B list, but it’s on our thing for some rea­son. It must have been on there at some point.

Tony Kynas­ton: sands com­pa­nies.

Cameron: Uh, yeah.

Tony Kynas­ton: Hmm.

Cameron: So every­thing’s, uh, like in com­mod­i­ty wise, every­thing’s. Going strong. I assume this has got some­thing to do with some­thing, some­thing glob­al mar­kets, some­thing trade wars off. I don’t know what’s going on. Trump did meet with Pres­i­dent C last week and they agreed that they agree that they should have more agree­ments and they agree that they’re gonna con­tin­ue to talk about things.

Yeah.

Tony Kynas­ton: I thought they were pret­ty much like at each oth­er’s throats and now they’re meet­ing once a month until they resolve issues. So that’s good to see. That’s it’s, it’s bet­ter than [00:05:00] the alter­na­tive, I guess. So that’s good to see that they’re engag­ing, try­ing to nego­ti­ate things out.

Cameron: Well, no. What, what, what’s not good, um, is Jerome Pow­ell’s take on the job mar­ket over there. I saw this arti­cle in For­tune mag­a­zine. Jerome Pow­ell says the AI hir­ing apoc­a­lypse is real. Job cre­ation is pret­ty close to zero. Steve San­ti­no and I did a,

Tony Kynas­ton: hang on, on

Cameron: uh.

Tony Kynas­ton: that would­n’t be a direct quote. Jerome Pow­ell would not have said the AI jobs apoc­a­lypse is real.

Cameron: He said dur­ing a press con­fer­ence Wednes­day fol­low­ing the FOMC meet­ing, job cre­ation is pret­ty close to zero. He, um,

Tony Kynas­ton: Did­n’t

Cameron: not­ed a sig­nif­i­cant, he not­ed a sig­nif­i­cant num­ber of com­pa­nies have recent­ly announced lay announced lay­offs of hir­ing paus­es with many of them explic­it­ly, explic­it­ly cit­ing AI as the rea­son quote, much of the time [00:06:00] they’re talk­ing about AI and what it can do.

Pow­ell told reporters after the fed’s rate cut deci­sion warn­ing, large employ­ers are sig­nal­ing they won’t need to add head count for years. We’re watch­ing that very care­ful­ly he added, so no, he did­n’t say the hir­ing apoc­a­lypse is real, but that bit in the head­line was­n’t in quotes. It was, job cre­ation is pret­ty close to zero, which is in quotes.

That was a lit­tle bit of edi­to­ri­al­iz­ing by the, by Eva Ros­berg, uh, in For­tune Mag­a­zine. But it’s inter­est­ing, so Steve and I were doing a futur­is­tic on Fri­day, and we talked about we’re not see­ing mas­sive job lay­offs yet. We, we sort of looked at where AI and robot­ics have come in the last three years. So going back to, because it was about three years ago this month, uh, that Chat­G­PT launched.

We talked about where it’s come in the last three years and where robot­ics has come in the last three years, humanoid robots, uh, and where we think they’ll both be three years, [00:07:00] hence. And one of the things we talked about is we are still not see­ing mas­sive job lay­offs. From ai, uh, some of the big tech com­pa­nies have announced lay­offs, and I think Ama­zon laid off said they were lay­ing off 14,000 peo­ple last week, but they said it’s because they need to come up with mon­ey to build new AI data cen­ters.

So they’re get­ting rid of peo­ple to pay for build­ing more AI data cen­ters, find­ing it in the bud­get. Um, but, uh, what Pow­ell is see­ing is com­pa­nies say­ing Maybe, maybe we’re not lay­ing off peo­ple, but we’re not gonna hire peo­ple either because we expect AI’s gonna do a lot of the work and we won’t need to hire peo­ple in the short term.

So that’s inter­est­ing. I, I expect that’ll play out here as well.

Tony Kynas­ton: yeah. I mean there’s so many impli­ca­tions from that. It’s nor­mal­ly that would be reces­sion­ary, I would think. And, and at the moment, I think in the arti­cle, pow­er men­tioned four com­pa­nies and they’re big ones. Ama­zon, tar­get, uh, were two of them any­way, um, as I can recall. [00:08:00] Uh, and then he men­tioned com­pa­nies weren’t hir­ing, which is also has big impli­ca­tions. Nor­mal­ly that would be reces­sion­ary. You know, if pe if the, if the job mar­ket freezes up, then yeah, peo­ple are out of work. They can’t afford to buy things, econ­o­my slows. and the econ­o­my is a bit dif­fer­ent in the US I mean, our infla­tion fig­ures came out, they were above what the RBA band band is, so that, so the, that’s why the RBA prob­a­bly won’t cut. but Jerome Pow­ell did cut in the US so they’re not hav­ing the same infla­tion­ary prob­lems we hav­ing. Um, and you know, usu­al­ly you cut to try and get hir­ing up as well. ’cause it, should ease some mon­ey in bud­gets, uh, for indebt­ed com­pa­nies any­way, to be able to hire more peo­ple. So it, it’s inter­est­ing, but you know, what I turned my mind to was the sec­ondary impli­ca­tions can, because a lot of the jobs that, well, not much was report­ed as [00:09:00] to what the jobs were oth­er than, Microsoft, uh, sor­ry. Um, Ama­zon said they were hire, uh, get­ting rid of mid­dle man­age­ment and Pow­ell men­tions that it was grad hir­ing that was freez­ing. So it seems to me that if that’s the area at the moment that’s affect­ed and if it’s lim­it­ed to that, you would think if you are, it’ll have impli­ca­tions going down the track for peo­ple who hav­ing to decide to go to uni­ver­si­ty or not. ’cause it’s kind of end­ing that sort of career pro­gres­sion of go and do a uni­ver­si­ty course, go into a big com­pa­ny and, and get a decent job and a, you know, even­tu­al­ly buy a house, et cetera, et cetera. So that, that may well be, know, um, erod­ed going for­ward. By the same token, if you are uni­ver­si­ty edu­ca­tor, you’ve prob­a­bly got one of the best chances of get­ting a job some­where else. May not be in the indus­try of your first choice. It might not be in the career of your first choice, but, you know, I’ve seen it [00:10:00] before when there’ve been large lay­offs in com­pa­nies. I’ve worked for that. Um, some of my col­leagues who, you know, have had expe­ri­ence and have been well-trained and been to uni­ver­si­ty, et cetera, they either go and work for oth­er indus­tries or they, you know, some of them went to real estate, some of them went to becom­ing devel­op­ers, prop­er­ty devel­op­ers or what­ev­er.

So it, it may not be as dis­lo­cat­ing as if, as when, you know, if, if Ama­zon said, we’re lay­ing off all of our blue col­lar work­force and replac­ing them with robots, I think that’ll be a, per­haps a more dis­lo­cat­ing hit to

Cameron: I think they already, I think they already did that

Tony Kynas­ton: Have they?

Cameron: some years ago. Yeah. You ever seen video of an Ama­zon ware­house?

Tony Kynas­ton: seen, I haven’t seen Ama­zon’s, I’ve seen the one in the uk which does the super­mar­kets where it’s. Like a grid of robots going left and right and x and y axes, and then up from a ver­ti­cal drop of, uh, parcels. Yeah. And putting togeth­er

Cameron: That’s what Ama­zons are like too.

Tony Kynas­ton: Right. Yep.

Cameron: Hmm.

Tony Kynas­ton: Um, but, but again, I mean that [00:11:00] if that’s already hap­pened, it has­n’t real­ly affect­ed the econ­o­my. So those peo­ple prob­a­bly picked up jobs some­where else as well. Um, I think the oth­er impor­tant sec­ondary effect is it’s prob­a­bly, you know, hard, it’s harsh to say, but it’s prob­a­bly a good thing for the share mar­ket. If Ama­zon and Tar­get and the oth­er com­pa­nies that were men­tioned can make the same sort of prof­it or increase their prof­it and with low­er costs, then their stock price is gonna go up.

So it’s a good thing for the

Cameron: Well, they’re not, they’re not sav­ing that mon­ey. They say they’ve got­ta, they, they need to spend that mon­ey to build data cen­ters to run their ai.

Tony Kynas­ton: Yeah. But that’s still a growth invest­ment, isn’t it? So,

Cameron: Hmm. Ai I guess. Yeah.

Tony Kynas­ton: maybe it’s not gonna come through straight away, but it should come through if, if AI con­tin­ues to pro­duc­tiv­i­ty gains. Um, so yeah, they’re, the two that I’d be look­ing at is who’s it affect­ing, what are they doing, and then what’s the impact for us as investors?

And, it’ll be, who [00:12:00] knows? I dun­no the answer to those two things. I sus­pect the impact to, for us to investors is to see the Mag sev­en con­tin­ue to march for­ward. Because there’s, in that arti­cle it said some­where that, um, I dun­no if it was Pow­ell or some­body else who was inter­viewed, they said, we don’t think this is like the.com boom, because the com­pa­nies which are ben­e­fit­ing from AI have pos­i­tive cash­flow and they’re pro­duc­ing prof­its. So, you know, that’s, that is a dif­fer­ence between now and 99.

Cameron: Hmm. Yeah, a bifur­cat­ed econ­o­my. He talks about where wealth­i­er Amer­i­cans con­tin­ue to spend freely, but those at the bot­tom are trad­ing down to cheap­er goods. Con­sumers at the low­er end are strug­gling and buy­ing less, and shift­ing to low­er cost prod­ucts, he said. You, they, he said econ­o­mists. Well, I dun­no if he said this some­body.

He said The econ­o­mists have coined a new term, the great freeze to describe the dis­mal labor mar­ket con­di­tions with unem­ploy­ment among recent col­lege grads top­ping 5% and AI threat­en­ing to [00:13:00] auto­mate entry lev­el office jobs. Many Gen Z work­ers are turn­ing to grad­u­ate school as a strate­gic time­out.

Accord­ing to a chal­lenger Gray and Christ­mas report, US employ­ees have announced near­ly 946,000 lay­offs so far this year. The high­est total since 2020 with more than 17,000 explic­it­ly tied to AI and anoth­er 20,000 automa­tion. And I opened up the chal­lenge of Gray and Christ­mas report, which is from Sep­tem­ber.

And it says, uh, doge actions remain the lead­ing rea­son for job cut announce­ments in 2025. Uh, this includes direct reduc­tions to the fed­er­al work­force and its con­trac­tors. And I dun­no, you know, and that’s obvi­ous­ly before the bud­get

Tony Kynas­ton: Mm.

Cameron: shut down that they’ve had over there. So I dun­no what’s going, what impact that’s gonna have in the next report.

Tony Kynas­ton: Well, there’s

Cameron: Any­way,

Tony Kynas­ton: to say it will lead to lay­offs. So, um, the freeze, you know, there’s [00:14:00] no, it’s kind of a doge action. I don’t think Doge is doing it, but I think the gov­ern­ment in the US may well not con­tin­ue on with all the wage bill that it has be pri­or to the freeze.

Cameron: so that’s going on. Um. I know you wan­na talk about Buf­fet, but before we do that, I wan­na talk about Lind­say Aus­tralia. What a, what a col­lapse Lind­say has had. They were one of the super­stars in our port­fo­lios in 2023, and, uh, I got out of them today. I owned them in the dum­my port­fo­lio and I owned them in, I had two parcels in one of the light port­fo­lios.

Had to sell the lot today. Um, got out of it at a prof­it in all cas­es. Uh, but it held them since 2022, may, June, 2022, bought at 42 cents in one case in June 22. Sold today for around about 60 [00:15:00] cents, so that par­cel was up 43. I think the dum­my port­fo­lio I bought even ear­li­er, and I think got out of it around 50% up over what­ev­er that is.

Two and a half years, give or take. But at one point in ear­ly 2023, it was trad­ing around a buck 40, and it’s more than halved since then. So I tried to fig­ure out what hap­pened. I know we’ve talked about Lind­say from time to time on the show, but you’ll, you’ll prob­a­bly with your steel trap mem­o­ry, be able to fill in the gaps in this sto­ry.

But, uh, I don’t wan­na hit you with any neg­a­tive waves about this, but, so com­ing out­ta COVID, they had some good growth. And then in 2023, a com­pa­ny called Scot’s Refrig­er­at­ed Logis­tics. Col­lapsed. Lind­say scooped up a bunch of con­tracts and cus­tomers, some assets out of that. They had a rev­enue bump, was up over [00:16:00] 20% share price went nuts, uh, but then bunch of wet weath­er hit in 2024 in Queens­land and New South Wales.

40 plus rail dis­rup­tions and NPA fell 17% due to high­er depre­ci­a­tion in finance costs. And the stock start­ed to slide down and has con­tin­ued to slide to today. Uh, you know, where rail volatil­i­ty, those sorts of things prove that the big prof­it bump that they got was­n’t real­ly sus­tain­able. So, uh, that’s my take on it.

You got any­thing more you can add to the Lind­say sto­ry?

Tony Kynas­ton: No, I’m just try­ing to have a

Cameron: And should we have sold it in 2023? You have been talk­ing about, we’ve been talk­ing about, you know, these ideas of sell­ing things when they come back a lit­tle bit.

Tony Kynas­ton: Yeah, look, I, in [00:17:00] hind­sight, this is a case where, yeah, maybe we should have, but as we know, there’ll be oth­er cas­es where

Cameron: Yeah,

Tony Kynas­ton: hang­ing on’s bet­ter too. So it’s, it is a bit of a sta­tis­ti­cal game. Um, and I haven’t, I haven’t been able to crack the code to say which one will go up and which one will go down at the time.

So um, it’s hard cer­tain­ly don’t have much expe­ri­ence in the indus­try to be able to guide me. So, all I can, you know, put things down to is if, is that the big drops in this com­pa­ny hap­pened after the results announce­ment. So in

Cameron: Right.

Tony Kynas­ton: they announced results stocked down 16% on the day. the same in, when was that?

Oh, just recent­ly. 25th of the eighth. Um, down 9.6% on the news. So, um, peo­ple aren’t lik­ing what they’re see­ing in the num­bers.

Cameron: Yeah, well I did replace it already in the light port­fo­lios any­way with MAHA par­cel of MAH and a par­cel of MAF, the [00:18:00] two MAs today, McMa­hon and Mabb Finan­cial. I haven’t replaced the dum­my port­fo­lio par­cel yet. I just haven’t had time to fig­ure out what I’m gonna replace it with, but that aside, just a quick port­fo­lio update.

The dum­my port­fo­lio, uh, in the last 30 days is up about 1% ver­sus the bench­mark, which is down one point a half per­cent in the last 30 days. Cur­rent cal­en­dar year dum­my port­fo­lio is up 31% ver­sus the bench­mark up 12.

Tony Kynas­ton: Hmm.

Cameron: Whoa. And, uh, in the last five years, dum­my port­fo­lio is up about 19 and a half ver­sus 12.4 for the bench­mark.

Tony Kynas­ton: Back to the good old 19.5%. Hey.

Cameron: [00:19:00] Yeah, yeah. Um, the light group, by con­trast last 30 days, that’s the four port­fo­lios togeth­er that’s up about 2% ver­sus the bench­mark down 1.3 Cur­rent cal­en­dar year, the light group is up 35% ver­sus 12. And, um, I, I dun­no, five years, but all time the light group is up 21% ver­sus the bench­mark up 11. So track­ing on dou­ble and it’s all come in the last, since July, real­ly?

The last few months.

Tony Kynas­ton: That’s great, great results. And the rea­son for talk­ing about 19.5 is that that’s the bench­mark for us, and that’s the great War­ren Buf­fet’s returns. We haven’t always gen­er­at­ed those kinds of returns, but it’s always good to see that we’re there

Cameron: Yeah. And you know, it comes and goes, but it tends to always sort of hov­er around that dou­ble mar­ket

Tony Kynas­ton: Mm-hmm.

Cameron: the long haul. [00:20:00] Uh, well that’s, yeah, that’s all good. You wan­na got some news items you want to talk about?

Tony Kynas­ton: Well, yeah, I, I just won­dered whether you want­ed to read Scot­t’s com­ments, apro­pos of mar­ket returns before I do.

Cameron: Yeah, well he is got a ques­tion. Well. No, we’ve got a, yeah, we’re ques­tion­ing an announce­ment any­way, so yeah, Scott said, uh, Scott sent us an email. Uh, hi cam. Real­ly enjoy­ing the pod­cast, the insights and the week­ly buy lists. Is it weird? I get excit­ed wait­ing on Sun­day or Mon­day to see it on the web­site.

Yeah, a lit­tle bit Scott. Lit­tle bit weird.

Tony Kynas­ton: not at all.

Cameron: Um.

Tony Kynas­ton: It’s good to get excit­ed by the mar­ket.

Cameron: Just want­ed to pass on my thanks to UNTK. I am look­ing at my port­fo­lio where I’m hold­ing 13 QAV stock picks and only one is down VVA by am mere 0.54%, which I bought a few weeks back. The best are a range of 64% PRU 55% P‑R-N-P-L‑T [00:21:00] 47% and PPM 37%. Com­pa­nies I prob­a­bly would not have even con­sid­ered invest­ing in before, even bet­ter.

I did a lit­tle dive into per­for­mance before QAV and after QAV, and it is amaz­ing to see pre QAV Decem­ber, 2024 to March, 2025, down 4.3% in think­ing WTF post QAV April onwards, up 22.5%. What a turn­around. Keep up the good work. Thanks Scott. That’s great Scott. Um, well done and uh, he did. Bring my atten­tion late last week to a rumor in the Fin that Pep­per mon­ey PPM was in dis­cus­sions to acquire the Rams home loan port­fo­lio from West­pac, and that was con­firmed this morn­ing.

Pep­per mon­ey today announces that a con­sor­tium with mem­bers includ­ing Pep­per mon­ey and KKR the [00:22:00] con­sor­tium. Is that Kravis Cole and Roberts, is it that say, is it the old KKR?

Tony Kynas­ton: it’s the old KKR that bid for Coles Mey­er that was part of the bar­bar­ians at the gate and, and I think they actu­al­ly owned a large chunk of pep­per mon­ey as well.

Cameron: Wow. They like that. They had a whole bunch of scan­dals back in the eight­ies. Was it eight­ies, nineties? Yeah.

Tony Kynas­ton: I’m not sure.

Cameron: I thought back in the whole, uh, junk bonds days, they had a lot of stuff. I’m not sure if I’m get­ting con­fused with some­one else. Any­way,

Tony Kynas­ton: Milken,

Cameron: they’ve, they’ve, yeah, they’ve agreed to acquire the Rams home loan port­fo­lio from West­pac Bank­ing Cor­po­ra­tion.

The port­fo­lio com­pris­es approx­i­mate­ly $21.4 bil­lion in res­i­den­tial mort­gages, as at 30th of Sep­tem­ber, 2025. So, uh, that came out this morn­ing. Let’s see what hap­pened to PPM share price. [00:23:00] Oh, um, noth­ing. No, it spiked mas­sive­ly. It jumped, it cl Yeah, it closed to $2 23 last week. Jumped up to $2 56 this morn­ing.

It’s come back a bit to $2 43, but that’s still a, a 10% spike this morn­ing. Lit­tle bit more than 10% spike. Yeah. So, uh.

Tony Kynas­ton: top of our buy list for a while,

Cameron: For months. I, it’s been there for­ev­er. I do hold it in the dum­my port­fo­lio, bought it in May of 2025 at a dol­lar 64. It’s now $2 43, so it’s up 48% since then. Also have it in one of the light port­fo­lios.

Bought it on at the same time. So, uh, I’m sure quite a few of our lis­ten­ers must hold PPM. It’s sort of a rel­a­tive­ly, uh, rea­son. What’s the aver­age dai­ly trade? 556,000. [00:24:00] So big enough for some peo­ple, not for you, but for mere humans prob­a­bly. And it’s still at the top of the buy list? Well, it was when I ran it over the week­end.

I’m not sure where it would be right now, but had a qual­i­ty score over the week­end of 28.6%. That’s low. That a QAV score of 0.395. I won­der why the qual­i­ty score is so low. It must be over­priced in a bunch of met­rics,

Tony Kynas­ton: Yeah, I

Cameron: but a low,

Tony Kynas­ton: for a while.

Cameron: but prob­a­bly a low prop calf.

Tony Kynas­ton: that reminds me too of, um, if, if you ever get a chance to watch Bar­bar­ians at the gate or read the book, I guess based on ter­rif­ic movie if you I love those. Um, uh, Hol­ly­wood Recre­ation of Real Events type movies. James Gar­ner plays the head of the Bis­co, who was the first lever­age buy­out, um, tar­get by KKR. I think they were, they, they com­pet­ed with Milken, the junk bonkin to [00:25:00] up the com­pa­ny and let man­age­ment buy it out. So, um, and real­ly enter­tain­ing movie and a great insight they have. How all that kind of thing works. Pri­vate equi­ty works.

Cameron: I think I read the book in the nineties. Yeah. When it came out.

Tony Kynas­ton: Yeah.

Cameron: It’s been a while.

Tony Kynas­ton: And thanks Scott. Thanks for pass­ing on your com­ments. They’re appre­ci­at­ed and Scott makes a good point and it, it’s, it applied to me as well. Still does, I sup­pose, is that, um, it, it, it, using the sys­tem that we use, you get exposed to a lot of com­pa­nies you would nev­er have heard about, nev­er have both­ered to inves­ti­gate for invest­ment, um, like the ones that he list­ed, but like, um, pep­per mon­ey, you know, I,

Cameron: Yeah,

Tony Kynas­ton: if I was a rook­ie investor, I prob­a­bly would nev­er have looked at it.

So, um, a real­ly inter­est­ing dimen­sion of, of invest­ing in the way that we do.

Cameron: and it, and it, it gets high­light­ed to me every week when we do the Amer­i­can show, like these com­pa­nies that you know. They’re [00:26:00] weird and won­der­ful and all sorts of dif­fer­ent dimen­sions and dif­fer­ent indus­tries, and I haven’t heard of most of them. Occa­sion­al­ly we do a, a brand like we did Amer­i­can Air­lines, I think last show, but, uh, a lot of them I’ve nev­er heard of and prob­a­bly would nev­er heard of, and yet they turn up on our buy list and then most of the time they, so far they’ve just been going nuts over there.

But peo­ple in in Red­dit can’t find any­thing to buy. They keep talk­ing about Google in the val­ue invest­ing sub­red­dits. Oh, Google, let’s jump on Google. They’re all mu nuts about Google. I’m like, what? Real­ly? Any­way, so yeah. Thank you Scott.

Tony Kynas­ton: not the only one. ’cause, um, I want­ed to talk about War­ren Buf­fett. There was an arti­cle

Cameron: Yeah.

Tony Kynas­ton: after their quar­ter­ly announce­ment, and, uh, he’s now sit­ting on, I think it was 500 odd US bil­lion dol­lars of, uh, of cash that he can’t invest.

Cameron: Yeah.

Tony Kynas­ton: Which is amaz­ing and it, and uh, the ana­lysts were say­ing, well, it’s because he can’t find any­thing to [00:27:00] buy. So I think we should help him out. Can, we should, um, send him a free link to the US show and

Cameron: Yeah.

Tony Kynas­ton: and have a look at Amer­i­can Air­lines or one of the oth­er com­pa­nies we’ve spo­ken about. um,

Cameron: Yeah.

Tony Kynas­ton: lis­ten­ers here may not lis­ten to the US show, but there’s been some knock­out and now knock­out com­pa­nies and knock­out results from, um, using our sys­tem over there too.

Has­n’t there

Cameron: Oh, crazy. Like, I mean, a lot of good results, but the insane one was that, um, Chi­nese.

Tony Kynas­ton: The Chi­nese watch.

Cameron: Smart­watch com­pa­ny net, I think NEPP, which is up 1500% since I dis­cov­ered it a few months ago on the buy list and did a deep dive on it, pulled pork on it. But most of them, most of them are up a lot like 20, 30, 40, 50% since we cov­ered them in months.

Um, the mar­ket over there is going com­plete­ly bonkers.

Tony Kynas­ton: And, and no mag sev­en stocks in that too, by the way. They’re um,

Cameron: Of course not. No.

Tony Kynas­ton: Well, the leas­ing [00:28:00] com­pa­ny. Well, Willis leas­ing the air­craft leas­ing com­pa­ny or air­craft engine leas­ing com­pa­ny. Ship­ping com­pa­nies. Um, yeah.

Cameron: Yeah.

Tony Kynas­ton: maybe some over­lap with the Aus­tralian list. There’s an old drilling com­pa­ny in there.

Yeah.

Cameron: But as I keep point­ing out, um, when we do that show our, um, port­fo­lio over there, the US port­fo­lio has­n’t had a good year com­pared to the Aus­tralian port­fo­lios that are all going bonkers. It had a great year last year, but um, this year it’s come back a long ways. It’s lost a lot of the gains that it got last year.

So it’s still, uh, last I checked, sort of neck and neck with, uh, the, um, index over there, the s and p 500. Since I, I’ve been run­ning the port­fo­lio over there since late 20, 23, Sep­tem­ber, a lit­tle bit over two years. Our per­for­mance over that time is 58% ver­sus the s and p up 54, so we’re beat­ing it. But [00:29:00] you know, a year ago we were doing triple.

Tony Kynas­ton: Hmm.

Cameron: It, it’s come back a long way since then. So thank you Don­ald Trump for

Tony Kynas­ton: tar­iffs.

Cameron: the great work that you’re doing. Um, biggest num­ber of lay­offs since, uh, COVID, since your last term. And, uh, and a lot of those stocks have come back as well.

Tony Kynas­ton: Any­way, back to Berk­shire Hath­away. It’s the, the amount is $584 bil­lion is the cash us

Cameron: Whoa.

Tony Kynas­ton: sit­ting on their, um, bal­ance sheet. And of course, the, the thing is though, in what, bit over? Well, no two months time. War­ren ceas­es to be in charge of that cash. He, um. Retires, uh, still be on the board, but, um, he’s hand­ing over to Greg Abel, who’s been run­ning the, uh, non-insur­ance part of Berk­shire Hath­away for a while. All the reports are, he’s been doing a good job and that he’s well liked in the com­pa­ny and respect­ed and all the rest of it. But Berk­shire Hath­away [00:30:00] stock, which has done well over the last, well over the years real­ly, but in the last year, I think is, uh, down, um, 10 odd per­cent when the mar­ket’s up 20 or so per­cent, down 11% this year. So I, I’ve always feared own­ing Berk­shire Hath­away when and Char­lie pass on, because I think it’s gonna be a, time of, um, uh, just the mar­ket get­ting used to the man­age­ment to reassess­ing its style. Can man­age­ment mea­sure up to War­ren? there a spe­cial source in one per­son or is it actu­al­ly part of the cul­ture now?

And, uh, you know, the insur­ance busi­ness­es will still do well and Greg will man­age the oth­er side well. I’ve always thought this would get bro­ken up. Um, it’s prob­a­bly hard­er to do these days than the past because it’s so big. It’s gonna be a large takeover attempt to break it up. One of the things though, that a pri­vate equi­ty com­pa­ny will look like, look for in break­ing up a com­pa­ny is a large cash stock­pile. [00:31:00] Uh, ’ cause they can put that to work pay­ing off their debt or pay­ing their, or pay­ing the inter­est on their debt they’re lever­aged to buy the com­pa­ny. So I think Berk­shire Hath­away’s in a very inter­est­ing space at the moment and it’s a, what hap­pens for the next 12 months, I think.

Cameron: Yeah, I mean, why would any­one agree to sell it? The, like the, the buf­fet fam­i­ly still own a big chunk of it, don’t they?

Tony Kynas­ton: but they do. But Buf­fet’s don’t for­get, it’s giv­ing away all his share­hold­ing. I think he’s giv­en away quite a bit and not, and the rest goes over time after he pass­es. So gonna be in the hands of a lot of char­i­ty foun­da­tions if the share price does­n’t keep going up after he leaves, um, for what­ev­er rea­son, um, either man­age­ment has­n’t done as good a job or the mar­ket’s lost its love affair with it.

Um, yeah, I think it’s right for the, for the tak­ing, tak­ing and break­ing. Because, you know, tra­di­tion­al­ly mar­kets don’t like [00:32:00] con­glom­er­ates. I mean, there’s only one I can think of in Aus­tralia, real­ly. West Farm­ers, maybe the sev­en group is build­ing up anoth­er one, you know, but tra­di­tion­al­ly, fund man­agers have said. You are basi­cal­ly a fund man­ag­er. Um, I’d rather put togeth­er my own port­fo­lio of stocks, of the com­po­nent parts and, and you know, in West Farms’ case, um, if one of their hold­ings, um, if Bun­ning starts to go bad, for exam­ple, and Kmart does well and their coal mines go bad, then, they’d rather wear it and just try and man­age their way through.

But if it was in a fund, if, if the coal mines and the Bun­nings and the Kmart com­pa­nies were shares in a fund, then you could sell the part, the part you don’t like straight away. So, it, I know, um, west Farms has always had a good track record and it’s, it’s, um, a blue chip in the Aus­tralian mar­ket, and the same with Berk­shire Hath­away and the Amer­i­can mar­ket. But tra­di­tion­al­ly, the mar­kets don’t like con­glom­er­ates ’cause they, they see the bad assets [00:33:00] being tied up with the good and they can’t get rid of them. If, uh, if, which they could, if they were list­ed sep­a­rate­ly.

Cameron: Well, we’ll see how it plays out, but yeah, we’ll be, we’ll be strange to have a Berk­shire ha Hath­away with­out either Char­lie or War­ren run­ning it.

Tony Kynas­ton: Hmm. Exact­ly. It’d be very

Cameron: I mean, there’s just so much mys­tique and I guess. Brand val­ue asso­ci­at­ed with War­ren’s uh, lead­er­ship there. That’ll be inter­est­ing to see how the mar­ket reacts to that.

Tony Kynas­ton: Well, def­i­nite­ly, I’ve often said that War­ren’s secret sauce, of course, is invest­ing, but his, his sauce, the secret secret sauce is his mar­ket­ing. He’s been such a, an amaz­ing mar­keter. He’s always been a home­ly, whole­some, pos­i­tive, good, good sto­ry based in US cap­i­tal­ism with cap­i­tal­ism and Mid­west Amer­i­ca and all that kind of thing.

So he’s just been so good at that. What­ev­er bad news he has, he always gets out there straight away and talks about it, does­n’t try and hide it.

Cameron: [00:34:00] Hmm

Tony Kynas­ton: yeah. Um, and he’s had plen­ty of bad steps along the way, which he hap­pi­ly admits. Um,

Cameron: hmm.

Tony Kynas­ton: I, I guess, you know, you’d, you’d ask if he had, if he would’ve sur­vived, if he was in a, if he was a paid CEO rather than an own­er of the com­pa­ny, some of the mis­steps.

Like if you think back to Solomon’s broth­ers when he bought those, and then had to. Um, basi­cal­ly step in and run it when the US gov­ern­ment caught them out in a BOD bond train­ing scan­dal. So, um, yeah, all sorts of things like that, uh, um, hap­pened to them and they’ve sur­vived. And it’s a large­ly, you know, as much as his mar­ket­ing abil­i­ty and per­haps man­age­ment abil­i­ty as it is to his invest­ment abil­i­ty,

Cameron: Uh, well, just speak­ing of, uh, big firms like that, I did go back and look at the KKR junk bond his­to­ry. Uh, they did­n’t get them­selves into trou­ble, but their acqui­si­tion of RJR Nabis­co in 1988 for $25 bil­lion was [00:35:00] financed by Michael Milken and Drex­el Burn­ham Lam­bert. That’s how I remem­ber them being involved in the sto­ry.

I remem­ber they played a role in the Milken sto­ry. It was one of the big deals, uh, from the eight­ies.

Tony Kynas­ton: And they’re still

Cameron: Yeah, yeah, yeah. I mean, I Milken went to jail, but I think he got out and he’s doing some­thing right. He wa I think he was,

Tony Kynas­ton: some­where.

Cameron: yeah, he wa was­n’t allowed to trade. He was like dis­barred or the ever, what­ev­er the trad­ing equiv­a­lent is of being dis­barred.

I think

Tony Kynas­ton: Yeah. But he also did go to jail and, um, but he’s out of jail. I, I imag­ine the dis­bar­ment fin­ished now too. ’cause this is going back to what, 20, 30 years ago now at least.

Cameron: he’s 79 years old. Co-founder of the Milken Fam­i­ly Foun­da­tion. He was par­doned by Don­ald Trump in 2020. A sur­prise

Tony Kynas­ton: Uh.

Cameron: was indict­ed for rack­e­teer­ing [00:36:00] inse­cu­ri­ties. For­ward in 1989 in an insid­er trad­ing inves­ti­ga­tion. Sen­tenced to 10 years in prison, fined 600 mil­lion and per­ma­nent­ly barred from the secu­ri­ties indus­try.

His sen­tence was lat­er reduced to two years for coop­er­at­ing with tes­ti­mo­ny against his for­mer col­leagues and for good behav­ior. Then got par­doned by Trump. Uh, yes. Co-founder of the Milken Fam­i­ly Foun­da­tion, chair­man of the Milken Insti­tute and founder of Med­ical Phil­an­thropies fund­ing research into melanoma, can­cer and oth­er life-threat­en­ing dis­eases.

A prostate can­cer sur­vivor Milken, has devot­ed sig­nif­i­cant resources to research on the dis­ease. There you go. You

Tony Kynas­ton: Hmm.

Cameron: turned good. Good. Turned it around.

Tony Kynas­ton: And the oth­er thing I always asso­ciate him with is the Preda­tor’s Ball, which had the won­der­ful, won­der­ful tagline. If you’re not on the invite list, you are on the menu.

Cameron: Well, I should, uh, off air. I’ll tell you about the Hal­loween par­ty that, [00:37:00] uh, Tay­lor and Adam went to the oth­er night.

Tony Kynas­ton: right.

Cameron: It was a, it was a bit, a bit like that. Yeah. Remind me when we get off air. Uh, okay. What else you got?

Tony Kynas­ton: Uh, I just want­ed to, um, com­ment a lit­tle bit, uh, just quick­ly on the Wool­worths ver­sus Kohl’s, um, tus­sle. What’s going on in the mar­ket? So, Wool­worths came out with bad or less than stel­lar results. Kohls came out with good results and share price went up and the Wool­worths share price went down. I think most peo­ple are, most ana­lysts are attribut­ing that to years of invest­ment in improv­ing the effi­cien­cies of dis­tri­b­u­tion cen­ters on the Kohls side. And Woolies has­n’t caught up with that, I just want­ed to, to say on air, if, if they’re lis­ten­ing, if all Woolies are like the one that I go to in, in Rose­bud down here in Rose­bud North, um.

You your socks up. I mean, there, it’s a, it’s a won­der­ful super­mar­ket. It’s been fresh­ly [00:38:00] ren­o­vat­ed. Staff are great, but it’s always full of stock refillers, peo­ple run­ning around doing order­ing ful­fill­ment from the store or click and col­lect from the store. And it’s real­ly hard to get around.

So I know, um, in Vic­to­ria and par­tic­u­lar­ly that retail staff are unfor­tu­nate­ly sub­ject­ed to more and more abuse. And I can kind of see one of the rea­sons why, because know, these, back when I worked in retail, you kept your roles clear and these ones aren’t, they’re very dif­fi­cult to get around. So that might be one of the rea­sons why Wool­worth sales are down. Yeah, and don’t get me start­ed on Bun­nings.

Cameron: Reminds me, I need to go to Bun­nings today,

Tony Kynas­ton: Our ser­vice has real­ly gone down­hill there.

Cameron: right? Yeah.

Tony Kynas­ton: in my local one. I was in there dur­ing the week and must have been 12 peo­ple in the line to check out. And then the man­ag­er came past and told the woman who was stand­ing at the front of [00:39:00] the way, it does­n’t mat­ter what sex they were, the per­son stand­ing at the front, greet­ing staff as they come in now you bet­ter open up the anoth­er reg­is­ter.

So it’s like she’s stand­ing there watch­ing it we’re all

Cameron: Yeah.

Tony Kynas­ton: Yeah,

Cameron: Yeah. Hmm.

Tony Kynas­ton: not good. All right. So

Cameron: All.

Tony Kynas­ton: my rant about retail. Uh, I think oh, I did some late news can, um, anoth­er com­pa­ny on our buy list, IGL, which is the print­er Ive group, IGL is the stock code. today announced um, two rel­a­tive­ly small acqui­si­tions com­pa­ny called Resu one called Bud­get Mail Ser­vices. so they’re both, um. based busi­ness­es or mar­ket­ing busi­ness­es,

Cameron: Mm

Tony Kynas­ton: uh, and did­n’t, they’re not, they weren’t that big. They, I think, uh, this is report­ing that, uh, our group paid $3 mil­lion for those two com­pa­nies. um, they’re [00:40:00] expect­ing, uh, an uplift to prof­it expect­ed 20% return on cap­i­tal, on the invest­ments. And the, one of the print busi­ness­es has $80 mil­lion of rev­enue con­tract­ed over the next five years. So I

Cameron: mm

Tony Kynas­ton: how that affects the share price, but that was in today’s announce­ments.

Cameron: It’s up about 4%. Today was up about 10, but it’s slid back. We do hold it in the dum­my port­fo­lio since April last year, it’s up 20%. Also in some light port­fo­lios. Bought it on the same day. They’re all up 20% and. Since April this year. Sor­ry, April, 2025. So, uh, yeah, it’s not too bad. Good on you. I’ve group anoth­er QAV stock doing good work.

Got­ta tell you though, every­thing else is down today. Just a lot of, lot of red on my uh, spread­sheet for today.

Tony Kynas­ton: Yeah, right.

Cameron: A lot of red.

Tony Kynas­ton: me. I had a look at my stock

Cameron: Hmm

Tony Kynas­ton: [00:41:00] It’s very

Cameron: hmm.

Tony Kynas­ton: to see, um, almost across the board, Fred, but, uh, it was today

Cameron: Tell you what’s not red is a MA group up 9% today.

Tony Kynas­ton: the

Cameron: Just gonna look in there. Is that what it is? I’m gonna look in their, uh, announce­ments, see if I can see what’s going on.

Ah, yeah. Results of 2025. Annu­al gen­er­al meet­ing that. Hmm. They had a qua quar­ter­ly busi­ness update that came out on the 31st of Octo­ber. Share price went down 8% and then today 2025 annu­al gen­er­al meet­ing address, it’s up 9%. So go fig­ure. Any­way, so real­ly

Tony Kynas­ton: Yep.

Cameron: it’s just, it’s just recov­ered from what hap­pened on Fri­day, but, uh, hold it in one of the light port­fo­lios [00:42:00] since April this year.

Again, it’s up 67%,

Tony Kynas­ton: Hmm.

Cameron: so noth­ing to snort out there. Good. On your a MA group, what­ev­er you’re doing.

Tony Kynas­ton: Fix­ing cars.

Cameron: Wow. Yeah. Alright. That’s that. What, who you what Paul Pork you got today? Tk, I.

Tony Kynas­ton: got a pulled pork and it was a request from last week on CXZ or ZCXZ. I’m gonna call it being Aus­tralian, which is con­nec­tion mobil­i­ty. And it was con­nec­tion telem­at­ics, I think when I did a pulled pork on this one back in 2024, just, uh, 31st of July, 2024, episode 7, 3 1. So if any­one’s inter­est­ed, they can go back and have a lis­ten to it, back then. Um, look at, I’ll say at the out­set, it’s a very low a DT of $5,000. And I’ll also point out that, um, when Cam does a buy list and [00:43:00] pub­lish­es it, you don’t include stocks with, uh, a DT of less than 15,000. So it was on the buy list back then. It’s not there now, but that’s only because of that A DT. Bot­tom lim­it that you place on things.

So if any­one’s inter­est­ed, that’s why, um, it’s kind of a hard one to check the graphs on because, uh, it’s, it’s in, or it’s ba the share price has dec­i­mals in it. when I did the analy­sis yes­ter­day, the share price was 2.90 cents. Uh, and, um, sor­ry, the share price was 2.90 cents in 2024 when I did the analy­sis as I as over the week­end, it was 2.70 cents, so down a lit­tle bit.

Um, but if you look at the Brett lat­er, it’s large­ly unchanged ’cause the Brett lat­er rounds it up to 3 cents. And, um, the bread lighter on the week­end said it was a, a hold, actu­al­ly said it was a buy, today when I went back and had a look at [00:44:00] Haz­ard as a cell, so that’s, um, inter­est­ing as well. So, um, I actu­al­ly went to the graph and Stock Doc­tor because you can, uh, get bet­ter gran­u­lar­i­ty and if you do it man­u­al­ly in Stock, Doc­tor, and I had a look it was still, um, still a hold in Stock Doc­tor above it s byline, but yeah, it’s one that’s gonna move around a lit­tle bit and the ator isn’t ous enough to see some of those moves, so just be care­ful with that if you are look­ing at it. Um, do a quick recap on the com­pa­ny, uh, rather than do a deep dive on what they do. So Con­nec­tion oper­ates fleet man­age­ment soft­ware and it’s a soft­ware as a ser­vices. So they rent out their, or lease out their, um, their soft­ware. Uh, they oper­ate inter­na­tion­al­ly, Aus­tralia, the us, Cana­da, and Mex­i­co is where they have cus­tomers, but it’s main­ly focused on Motors in the US and their soft­ware, uh, con­nec­tion soft­ware called On Track used [00:45:00] by GM to man­age what they call their cour­tesy fleet.

So if you’re going to get your car ser­viced and they give you a loan car for the day, or if you want to get picked up and, dropped off if you’re drop­ping your, your car in for a ser­vice and or if you are doing test dri­ves and vehi­cles, the GM deal­er­ships have this soft­ware in their vehi­cles and they can. Um, track where the cars are, track their, their, opti­mize their fleet usage in terms of how effi­cient­ly they’re being used, their route they’re tak­ing, um, the tolls they’re pay­ing, all that kind of thing. and it seems to be, um, quite, quite well liked by gm. So, uh, GM. in 2019, signed a five year deal with, uh, with con­nec­tion to, um, to roll out this soft­ware across the us.

It had been in use as a tri­al just a lit­tle bit before that. And, uh, back in Jan­u­ary, [00:46:00] 2019, con­nec­tion announced that they had. Near­ly 70,000 reg­is­tra­tions for the soft­ware, um, includ­ing 11 and a half thou­sand from the Cadil­lac Cour­tesy Trans­port Alter­na­tive Pro­gram. And the uptake of reg­is­tra­tions had increased sig­nif­i­cant­ly since the cus­tomers, since the com­pa­ny esti­mat­ed fig­ures of more than 23 vehi­cles in Octo­ber, 2018. the CEO at the time says that was a sig­nif­i­cant turn­ing point in the com­pa­ny’s his­to­ry as it val­i­dates and gives cred­i­bil­i­ty to its telem­at­ics soft­ware pro­grams and its devel­op­ment team’s abil­i­ty to deliv­er pro­grams on time and on bud­get. That was the chair­man, mark Caru­so say­ing that it also demon­strates the won­der­ful oppor­tu­ni­ty we have as a com­pa­ny. Hav­ing exclu­sive agree­ments with our val­ued part­ner, gen­er­al Motors Cor­po­ra­tion, where our tech­nol­o­gy solu­tions are built into all GM vehi­cle vehi­cles from fac­to­ry. He added on track. Fleet man­age­ment soft­ware enables Gen­er­al Motors [00:47:00] to man­age demon­strat­ed vehi­cles across 3,666 US-based reg­is­tered deal­ers, includ­ing Buick, GMC, Chevro­let, and Cadil­lac, to sup­port the ser­vice and cus­tomer care process­es under the CTP and CTA pro­grams. So that was an arti­cle in small caps, um, by Dan­i­ca Colonate in 2019. they, uh, also have a sim­i­lar of soft­ware called Con­nec­tion uh, that is used by oth­er vehi­cle man­u­fac­tur­ers. Gm, signed an exclu­sive deal for On Track, but they, uh, con­nec­tion telem­at­ics also puts out. soft­ware for oth­er users in dif­fer­ent juris­dic­tions.

So, anoth­er com­ment by them in stock Head in 2021 says, the con­nec­tion believes that there is a high bar­ri­er to entry, um, to its OEM GM busi­ness. This is main­ly due to the high devel­op­ment cost, which could be up to $5 mil­lion required to devel­op the [00:48:00] soft­ware. also a train­ing process that involves more than 10,000 users, and once the solu­tion is inte­grat­ed with the GM sys­tem, it is dif­fi­cult and cost­ly to untan­gle.

So they’re, they’re real­ly in embed with gm. Um, they, I think I read in their report that reports that they have 99% of their rev­enue com­ing from that con­tract. the real­ly inter­est­ing thing I think is com­ing up, uh, because it was a five year deal signed in 2019, which means it comes up for rene­go­ti­a­tion next year and.

Uh, giv­en that GM would have the whip hand, I would think in the, that nego­ti­a­tion, it would might mean a dif­fer­ent set of arrange­ments for this com­pa­ny, or it might mean that, uh, GM takes the busi­ness some­where else. So it’s a, it’s a high risk for the com­pa­ny. uh, the oth­er thing that struck me in re just going through this, this cor­po­rate’s, uh, his­to­ry is [00:49:00] that, um, they’ve, they’ve had a, a his­to­ry, I guess, of piv­ot­ing to dif­fer­ent things.

And this is the last um, in their his­to­ry. Um, so they kind of do some­thing, uh, if it works out, great, if it does­n’t, they’ll change and, acquire some­thing or devel­op some­thing and then go all in on that. And so, over the life of the com­pa­ny, it start­ed back in 1945. And its orig­i­nal incar­na­tion along the way. Um, it’s been called Hen­ry B. Smith Lim­it­ed, Group Lim­it­ed, ECSI, lim­it­ed Con­nec­tion Media Lim­it­ed, more recent­ly con­nec­tion telem­at­ics. And then, uh, in 2023 changed to Con­nec­tion Mobil­i­ty. it’s, it’s kind of, um, a, a play­er which has tried some­thing and then moved on. So just wan­na high­light that next year in 2026.

Um, it, it real­ly is a, um, a, a big moment for this com­pa­ny and poten­tial­ly presents, um, a big risk could, could go well. [00:50:00] GM might be hap­py with their ser­vice and we’ll extend, but, um, but we’ll see. Um, aside for the moment, the results were good. So net prof­it before tax. 3.2 mil­lion in FY 25 ver­sus 2.7 mil­lion in FY 24. in FY 25, total rev­enues increased by 14% to 11.2 mil­lion. And, uh, earn­ings per share was 0.30 cents up from 0.20 cents per share. So very good results. And that’s kind of con­tin­ues on the trend for the last, uh, five years. So the con­tract has been work­ing out well for this com­pa­ny. Uh, what else can I say about them?

They have been under­tak­ing a buy­back, a share buy­back, and they are, they have announced that they’re also at the same time active­ly seek­ing com­pli­men­ta­ry m and a tar­gets. So they may well acquire some­thing with all the cash that they’re, throw­ing off at the moment. Um, if I look at it from a QAV point of [00:51:00] view, uh, I use the stock price of. 2.70 cent or 0.27 cents, um, which is, uh, greater than IV one of 0.2. We don’t have IV two. No one’s cov­er­ing this stock. There’s no con­sen­sus tar­get. get an IV two cal­cu­la­tion, don’t get a fore­cast. Earn­ings per share, which enables me to do that cal­cu­la­tion. Uh, there’s no div­i­dend, so we can’t score it for that Stock Doc­tor.

Finan­cial health and trend is strong and steady. Stock Edia qual­i­ty rank is 96. That’s, that’s very high. The F score is six out of nine, which is good. How­ev­er, stock Edia give it a, a very low momen­tum rank of 16. So, that’s one of their, fac­tors that they put into their score. So the over­all rank for this com­pa­ny is 78, which is down the list for the, for that, not too bad, but down the list. ROE is 36% for any­one who tracks that. And it’s because it’s a cap­i­tal like busi­ness. So the. soft­ware as a ser­vice means that, um, you, uh, don’t have the cap­i­tal of, of [00:52:00] pro­duc­ing the equip­ment and send­ing it out and wait­ing for it to be sold. You lease it out instead, and the high of rev­enue goes back into r and d, which is always a good thing to see as well, means that their prod­ucts come con­tin­u­ous­ly improv­ing. Uh, PE results was 5.87 times, which was the low­est over the three, uh, three years. Six halves. is sev­en times, so it’s, it’s start­ing to get on the high side as far as we’re con­cerned, but just sneaks in, um, net equi­ty per share was 0.01 cents, so we can’t buy it for book val­ue or book plus 30, direc­tors hold 20%.

Um, but there’s no own­er founder as such. So the MD. Own 7%. And the direc­tor, Nick Kalala, is a fund man­ag­er. So he owns the rest, um, of the board­’s hold­ings any­way, uh, so we still score it ’cause we just look at the per­cent­age held by board, which is 20%, but not real­ly a, a typ­i­cal own­er founder sit­u­a­tion. [00:53:00] increas­ing equi­ty has been con­sis­tent over the five years, so that’s good. Or five halves. Sor­ry. So that’s good. And total qual­i­ty score is high, nine out of 11 or 82%. And the QAV score is 0.12. So it kind of sneaks into the bot­tom of our bio list large­ly because the prop calf is, is nudg­ing our, our upper thresh­old. Um, but it’s on the buy list. If, if we took that fil­ter, took the, fil­ter off, um, low a DT stocks. Um, the pos­i­tive side of things is it’s obvi­ous­ly has a good rela­tion­ship with gm, which would be hard to get. and it’s a soft­ware as a ser­vice. Com­pa­ny putting lots of mon­ey into r and d. So, uh, that’s a good, both good things to see cap­i­tal like busi­ness­es, um, are, are good. But I real­ly wan­na high­light this risk to what hap­pens in 2016. I just, uh, they did call out, which I said before in their annu­al report that 99% of the com­pa­ny’s rev­enue came from the GM con­tract. they [00:54:00] actu­al­ly said in their annu­al report, a loss of or sig­nif­i­cant reduc­tion from this cus­tomer would have a mate­r­i­al adverse effect on the com­pa­ny’s finan­cial con­di­tions. and they go on to say some­thing else, which I thought was a very strange thing. Um, in their annu­al report, and there’s a sec­tion of annu­al reports where there a com­pa­ny is meant to talk about devel­op­ments after the report­ing date, but that they may have known about when they put togeth­er the annu­al report. And it con­tains a clause, and I’ll read it out, it says, like­ly devel­op­ments. expect­ed results of oper­a­tions. That’s the head­ing oth­er than Mabb Mat­ters already dis­closed in the review of oper­a­tions pur­suant sec­tions to 2 9 9 3 and 2 9 9 a three of the Cor­po­ra­tions Act. it says this report omits infor­ma­tion relat­ing to like­ly devel­op­ments in the com­pa­ny’s oper­a­tions in the future because to do so will result in the opin­ion of direc­tors in unrea­son­able prej­u­dice to the con­sol­i­dat­ed enti­ty. So, um, I don’t know if we’ve missed their, [00:55:00] it means some­thing’s hap­pened and they’re not gonna tell you. which I think is against, you know, against con­tin­u­ous dis­clo­sure. If I’m read­ing this the way I think I’m read­ing this, um, I, I don’t wan­na spec­u­late, it’s just spec­u­la­tion. Uh, all I’ll do is point out that they’ve come out and said some­thing’s hap­pened.

We’re not gonna dis­close it. ’cause it’ll, um, it’ll prej­u­dice the, um, com­pa­ny. and we have a big con­tract due for renew­al com­ing up. Uh, that, that gave me a bit of a uncom­fort­able feel­ing about, um, what’s gonna hap­pen. don’t, I can’t give spe­cif­ic advice. I don’t want to give spe­cif­ic advice, but if I was hold­ing the stock, I may very much con­sid­er, um, sit­ting on the side­lines for a while until we get some clar­i­ty, uh, on the GM con­tract.

Um, the fact that man­age­ment are qui­et on it and it’s com­ing up and they’ve said some­thing like that in the annu­al report, makes me a lit­tle con­cerned. think if I was asic I’d be writ­ing to them say­ing, uh, you bet­ter spec­i­fy what this is. Um, [00:56:00] ASIC prob­a­bly aren’t aware of it because it’s such a small com­pa­ny and the ana­lysts aren’t fol­low­ing it ’cause it’s such a small com­pa­ny.

So, it’s some­thing I haven’t seen before, but, um, it, it did trig­ger my alarm bells read­ing it and look, if, if I sold, if I own this com­pa­ny and sold out of it. And then they came out and said. renewed the con­tract, it’s hunky dory with gm, then the, the stock­’s gonna shoot up and I will have missed out.

But I think in terms of tak­ing insur­ance i’d, I’d be, you know, sit­ting on the side­lines. I’ve been through this sit­u­a­tion a num­ber of times before where a com­pa­ny is, um, some­times it’s like a, a med­ical com­pa­ny where they are wait­ing for, say, FDA approval of a drug in the us every­one gets excit­ed that the comp, the, you know, reports have been good. the stud­ies that have been done to get the FDA approval, approval have been good stock price gets bid up and then the FDA came out and say, no, we can’t approve it. And the stock price tanks. So [00:57:00] way I tend to play these kinds of impend­ing mar­ket announce­ments, espe­cial­ly if they’re com­pa­ny mak­ing or break­ing, to sit in the side­lines and, and either look at some­thing else or wait and see what hap­pens when, um, when the con­tract approval or what­ev­er it is, comes to pass. So thanks for rais­ing it as a, as one to have a look at it. Nor­mal­ly it would­n’t have been in a pulled pool ’cause it’s so small, but CXZ is, um, is, has been doing well. And the ques­tion, the ques­tion on my mind is what hap­pens when the con­tract, when renew­al comes up with gm?

Cameron: Thank you, Tony. Just one point of order. Uh, the last time we did that, on the 31st of July last year, I did the pulled pork on CX Z.

Tony Kynas­ton: okay. There you go.

Cameron: In that episode you did a pulled pork on Ven­tu­ra Health, VIT. Uh, since then, the CX Z share price has­n’t real­ly moved. Ven­tu­ra Health has down 32% since you did it. So my [00:58:00] Paul Pork won the day.

Uh,

Tony Kynas­ton: Okay. Okay. Hot chop. What do you think about CXN now?

Cameron: ah, yeah, I don’t know. It’s a lit­tle bit, uh, a lit­tle bit iffy, right?

Tony Kynas­ton: I think so.

Cameron: Yeah, a lit­tle bit iffy. Uh, okay.

Tony Kynas­ton: Might be all fine, but, um, the com­pa­ny needs to come out and talk about the GM con­tract when it can.

Cameron: Hmm. Yes. Yes. Alright, tk. Well I think that’s, is that it for the main part of the show?

Tony Kynas­ton: Yep.

Cameron: take bread out­ta the oven in 10 min­utes. So, uh, let’s do after hours. What have you got?

Tony Kynas­ton: Well, the impor­tant thing is my Mel­bourne Cup tips.

Cameron: Ah, because you have such a great track record of those over the years. Yeah,

Tony Kynas­ton: Well, the way I look at it is I’ve had, what, five or six years of tips, which haven’t got­ten up, so I just need one tip to get up at sev­en to one and I’m, I’m even for, for tip­ping. Yeah.

Cameron: yeah. Who are your [00:59:00] tips?

Tony Kynas­ton: So I’m, I’m going to con­tin­ue with my lik­ing of 3‑year-old North­ern Hemi­sphere hors­es in the Mel­bourne Cup. get a clear weight advan­tage. Which is always impor­tant in a two mile race hand­i­cap. Uh, so I’m gonna tip fur­ther, which is spelled F‑U-R-T-H-U‑R. Uh, it’s about $34 in the mar­ket now. Um, it’s one thing which caught my eye is it’s, uh, part owned by Lizzie Gel, who’s a very good judge of, horse flesh.

So, um, that’s, that’s a pos­i­tive for it. It’s been over­looked as in the mar­ket, uh, in favor of some of the more favorite ones, and you can’t real­ly go past some of the, the favorites. Half yours I think is a very strong chance it’ll run, if not favorite than close to it. as, as Will al Rfra and Valiant King. So there’s prob­a­bly, you know, three or four to put into your tri­fec­tas and, but I do like fur­ther, uh, it, it is. What hap­pens in the hand­i­cap [01:00:00] races is that often get based on the weight for age, scale and being a north­ern hemi­sphere, 3‑year-old at six months out, um, when it comes to Aus­tralia. So it does put a bit of a wrin­kle in that sort of hand­i­cap­ping sys­tem and it gets a bit of an advan­tage.

So we’ve had win­ners in the Mel­bourne Cup before who have been three year olds, north­ern hemi­sphere hors­es, and I might, there might be anoth­er one. The oth­er thing to note is it’s gonna rain. It’s been rain­ing here, um, pret­ty heav­i­ly at Cape S Schanck. I guess it has been in Mel­bourne, so it’ll be a wet Mel­bourne cup. Um, in which case I’m gonna let peo­ple know about Parch­ment P, which, uh, loves the wet and is, he’s also long odds. It’s about 70 to one, so prob­a­bly my best each way. Roughy is that tip, but half yours the favorite also likes the wet, so I would­n’t be sur­prised if, um, if half yours wins. So that’s my cup tips.

Cameron: Uh, can you, can I call you, uh, uh, like when the race hap­pens? I just want you to do like a, like a blow by blow. I just wan­na hear you like, call, call. [01:01:00] The race fur­thers up and, uh, half yours is com­ing around the bend and up the, I think you missed your call­ing. You should have been a race announc­er.

Tony Kynas­ton: Yeah. Well we should, we should put togeth­er a QAV punt­ing club or some­thing and, and swap tips on the What­sApp group or what­ev­er. Yeah.

Cameron: Uh, how, how your hors­es been doing. Whoop.

Tony Kynas­ton: Qua­lo Doto runs tomor­row at

Cameron: Yeah.

Tony Kynas­ton: in Mel­bourne at the Mel­bourne Cup. So she’s raced or he’s raced two, uh, I don’t think I’ll be going up. It’s gonna be a wet day and it’s two hour dri­ve through heavy traf­fic. to go and see it run­ning and it’s prob­a­bly gonna run last. So, you know, it’s, it’s, nor­mal­ly it would be fun.

Nor­mal­ly I’d be up there hav­ing, you know, at a, hav­ing a lunch with some­one. It’s always fun to go down to the mount­ing yard on cup day because, you know, it’s always packed and huge crowds and the focus of atten­tion and there’s, you know, um, famous peo­ple in the mount­ing yard, rub­bing shoul­ders with you and all that kind of stuff.

But, um, [01:02:00] yeah, I think I’ll give it a pass. This year, Rod­dy and I are going up on Sat­ur­day, which is actu­al­ly real­ly good day’s rac­ing steak day. It’s now called Cham­pi­ons Day. And, uh, go to the mem­ber’s din­ing room and pay about half what we’d pay today same sort of food and wine ser­vice and watch a good days rac­ing in, um, in a lot less crowd­ed, uh, atmos­phere. We’re

Cameron: Nice. Yes.

Tony Kynas­ton: need to go and jos­tle the crowds any­more.

Cameron: No, and you can still wear your top hat and tails.

Tony Kynas­ton: I’ve nev­er worn a top hat, nev­er worn tails. Like, and I, I real­ly dis­like wear­ing my suit, to be hon­est. But you have to when you go to the races.

Cameron: Yeah. Well, good luck with your horse, with Curled RA and with your, with your punt­ing. I will not be punt­ing. I can’t afford to punt. Uh,

Tony Kynas­ton: hap­pened to me? So, um, watched a lot of the World Series this year. You’re a base­ball fan camp?

Cameron: I’m not, no,

Tony Kynas­ton: Well, our, our beloved Toron­to Blue Jays made it to the, uh, world [01:03:00] Series, made it all the way through sev­en games, and then come the 11th innings of the sev­enth game. So two extra innings they lost by a run.

So it was heart­break­ing last night when we watched

Cameron: you did­n’t live in Toron­to long enough to have a beloved sport­ing team.

Tony Kynas­ton: Yeah. I

Cameron: Yeah, it’s, that’s not long enough.

Tony Kynas­ton: jer­sey. I

Cameron: Oh my God.

Tony Kynas­ton: I used to go with Jay David Markham, some­times to the

Cameron: Oh,

Tony Kynas­ton: blue scapes.

Cameron: wow. Okay.

Tony Kynas­ton: Yeah.

Cameron: Yeah. Right.

Tony Kynas­ton: It was actu­al­ly a real­ly good day out going to the base­ball, go,

Cameron: Yeah.

Tony Kynas­ton: go and have a foot long hot dog or a bag of peanuts, um, sit in the sun. It was love­ly.

Cameron: I’ve been to the base­ball in the US once, and that was on our last trip to Ari­zona. And I sat next to my broth­er-in-law and then about 15 min­utes into it, he said, so this QAV thing you’re doing, is it real? Is this Tony Con­non guy for real? And I spent the rest of the time talk­ing about QAV and

Tony Kynas­ton: Right.

Cameron: did­n’t watch real­ly any of the base­ball.

Tony Kynas­ton: it’s, it’s a good net­work­ing oppor­tu­ni­ty too. Baseball.[01:04:00]

Cameron: Uh, yeah, yeah, yeah. But it was fun. Fun being like being in the envi­ron­ment and all that kind of stuff. Yeah.

Tony Kynas­ton: It’s good. And the only thing I’ve sort of out­side of that, that I can report, I dun­no if you’ve heard of them, have you heard of the mor­phine band? I think they were

Cameron: Uh, just

Tony Kynas­ton: the nineties.

Cameron: mor­phine. Yeah.

Tony Kynas­ton: Yeah.

Cameron: I know. More mor­phine. Yeah.

Tony Kynas­ton: No, I just came across them recent­ly,

Cameron: Oh yeah.

Tony Kynas­ton: enjoy­ing their music and, and their style.

The three piece with a sax guy play­ing two sax­es and the bass gui­tarist

Cameron: Yeah.

Tony Kynas­ton: strings on his bass. It’s very out there. Very inter­est­ing. Very funky. It’s good.

Cameron: Well, I’ve been lis­ten­ing to, uh, the Vase­line’s. Do you know the Vase­line’s also a nineties band? It was still around, but they’re from Scot­land formed in the late eight­ies, actu­al­ly, prob­a­bly best known because Nir­vana cov­ered them. Kurt Cobain was a huge fan

Tony Kynas­ton: Okay.

Cameron: he did a cov­er of a cou­ple of their songs.

But I think the most famous is Jesus Does­n’t Want Me For a Sun­beam.

Tony Kynas­ton: Oh,

Cameron: He did, did [01:05:00] on the Unplugged MTV Unplugged album. But I start­ed lis­ten­ing to them and uh, they’ve got a cou­ple of more recent albums that they put out in like the 22 thou­sands, 2000 and tens. Good sort of a, you know, indie gr, not grunge, but sort of, I dun­no what you’d call it, raw sort of indie sound.

Tony Kynas­ton: Mm-hmm.

Cameron: of good guy and a girl are the two main, um, mem­bers of the band with a cou­ple of back­ups on drums and what­ev­er. But yeah, and I’ve been read­ing, Hmm.

Tony Kynas­ton: I was just, you just remind­ed me then. Speak­ing of girls and bands that Beaver Keeps, keeps com­ing up on my feeds and they um, I think they must have sup­port­ed Oasis some­where. ’cause they had, they had their first are­na show, which was huge for them, was love­ly to watch.

Cameron: Beaver.

Tony Kynas­ton: You know, A to Otta boat, beaver, the Japan­ese all girl band.

Cameron: Oh, yeah, yeah, yeah, yeah, yeah. Oh yeah. That’s great. [01:06:00] I’ve been read­ing a Robert Hein Lean book, glo­ry Road.

Tony Kynas­ton: Good

Cameron: You ever read that one?

Tony Kynas­ton: have Love it. And so is

Cameron: It’s, oh, yeah.

Tony Kynas­ton: into it

Cameron: It’s, it’s fun. It’s kind of bonkers.

Tony Kynas­ton: it is, isn’t it?

Cameron: Yeah.

Tony Kynas­ton: Mm.

Cameron: uh, it’s very light

Tony Kynas­ton: Yeah.

Cameron: sort of sil­ly

Tony Kynas­ton: Yeah.

Cameron: fun. Yeah.

Tony Kynas­ton: And so was, um, time enough for love and, uh, what was the oth­er

Cameron: Yep.

Tony Kynas­ton: Yeah, the

Cameron: Yeah.

Tony Kynas­ton: Mm.

Cameron: Yeah. I remem­ber. Um, I, Alex put me on a num­ber of his.

Tony Kynas­ton: Yeah.

Cameron: Right.

Tony Kynas­ton: Evil and Time enough for Love. The Lazarus Long series. They’re great.

Cameron: Yeah. Well,

Tony Kynas­ton: Glo­ry

Cameron: okay.

Tony Kynas­ton: be a Lazarus Long. I’m not sure.

Cameron: No,

Tony Kynas­ton: Okay.

Cameron: no. Main guy in that is called Oscar.

Tony Kynas­ton: Okay.

Cameron: Um, alright. I have to go get bread out of the oven, Tony.

Tony Kynas­ton: all right?

Cameron: That’s, that’s it for this week. Quite. Have a good week. Good luck with [01:07:00] the hors­es and I’ll talk to you next week. Quite. Have a good week every­one.

Tony Kynas­ton: All right. Hap­py ASX.

Bernard: Q A V is a check­list-based sys­tem of val­ue invest­ing devel­oped by Tony  Khyne­ston. 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. 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 [01:08:00] 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.

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 [01:09:00] 2).
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