Double the Market, Half the Drama: QAV AU #934

QAV AU 944

[00:00:00]

Cameron: Wel­come back to QAV. This is episode 944. No guest. First time in a cou­ple of weeks we’ve had no guest. Just us, just us to talk your ears off for an hour or more. How’s your week been, TK? You said it’s been busy

Tony Kynas­ton: Yep, busy. It’s end, it’s end of finan­cial year audits at Climb, so that knocked over and try­ing to find a prop­er­ty to in Mel­bourne. So it– I, I think I was telling you off air, it’s the mar­ket’s flipped from being a sell­er’s mar­ket to a buy­er’s mar­ket. So the last time I bought in Mel­bourne, which was a while ago, decade or more, um, nev­er heard from a real estate agent.

You just turned up at the auc­tion and made a bid kept going until you bought some­thing. Now it’s like I’m get­ting six calls from agents say­ing, uh, “Have you seen this? Try this.” Yeah, so they’re all over me at the moment. So the phone’s ring­ing hot. [00:01:00] Oppor­tu­ni­ties. Buy­er’s mar­ket. Love it. Hmm.

Cameron: Buy two. Buy three while you’re there

Well, it’s, uh, been a ho-hum week in the mar­ket, Tony. Sort of a bit chop­py. Noth­ing much is going on around the world. There’s no news

Tony Kynas­ton: and report­ing sea­son in Aus­tralia

Cameron: Almost over report­ing sea­son, uh, which meant there was a cou­ple of stocks on our buy list this week that were pos­si­bil­i­ties, but hon­est­ly, not a lot. I had a look today to see if I could add some­thing else for our light mem­bers, and I was look­ing for a, a large cap stock, ’cause I could­n’t find a large cap stock on Mon­day.

And the only one that was a pos­si­bil­i­ty today was Heal­ius, but the share price was down today, so it’s hav­ing a down day. [00:02:00] So that was off. The only oth­er large cap stock was Woo Media, but it’s being tak­en over, so,

Tony Kynas­ton: yeah.

Cameron: hmm. So, a, a cou­ple more, like, small­er cap options this week, but, uh, still noth­ing real­ly. But the mar­ket’s, uh, sort of all over the place real­ly.

BHP at an all-time high I saw this week. PLS, lithi­um pro­duc­er, jumped rough­ly 7% as annu­al rev­enue was up more than 150% from a dol­lar to a dol­lar 50. Uh, no, kid­ding. Up to $1.9 bil­lion. Lithi­um’s back, back, uh, as a buy. Gold is back up. Uh, appar­ent­ly peo­ple aren’t that con­fi­dent about the future of the econ­o­my again.

Gold was down, now it’s back up. [00:03:00] Uh, about 4,617 US dol­lars an ounce, rough­ly 6,400 Aus­tralian dol­lars. CBA fell 1%, its low­est since May, drag­ging the banks down. Ampol was up 3.9% on a near five­fold jump in inter­im prof­it. San­tos and Wood­side both fell with oil prices back down a lit­tle bit. I have to say, though, that oil is still a buy, which is impor­tant when we get to our Amer­i­can show today, because it’s an oil stock with a very inter­est­ing, uh, own­er­ship struc­ture.

Did you have a look at. You have time to look at CRGY?

Tony Kynas­ton: Yes, KKR.

Cameron: KK and KKR, yeah, it’s inter­est­ing. KKR own 1,000 pref­er­en­tial shares, which means they get to appoint the board and the exec­u­tive man­age­ment. And every, every time the, [00:04:00] uh, amount of shares issued goes up, they make more mon­ey in sev­er­al ways, and the com­pa­ny keeps issu­ing more shares because they keep acquir­ing com­pa­nies by issu­ing more shares.

And every time they issue more shares, KKR gets more mon­ey. Any­way, we’ll get to that in the Amer­i­can show. Very inter­est­ing.

Tony Kynas­ton: Hmm.

Cameron: Um, Bessant is buy­ing bonds, Tony. Big news this week. Um, the, accord­ing to Chan­ti­cleer, “The White House­’s stun­ning inter­ven­tion in bond mar­kets on Wednes­day night will have big ram­i­fi­ca­tions for investors around the world, includ­ing in Aus­tralia.

Mark this one down on your cal­en­dar. We’ve just seen an extra­or­di­nary his­to­ry mak­ing moment on mar­kets.”

Tony Kynas­ton: The Big

Cameron: Then, yeah.

Tony Kynas­ton: Wow

Cameron: Then he goes, does one of my tricks and he gets side­tracked talk­ing about Mod­er­na and, uh, mRNA skin can­cer treat­ment, which is inter­est­ing. It’s, it could be. Um, you know, I, I ran [00:05:00] it through my bull­shit detec­tor and it said, “Hmm, you know, uh, it’s not, not as big a deal as the mar­ket’s mak­ing out it is,” but it could be good.

Um, we’ll see how it goes in its phase three tri­als, but it’s promis­ing. But the, uh, the whole idea of AI and mRNA, you know, uh, appli­ca­tions, find­ing mRNA appli­ca­tions, I think is the, the big sto­ry. Whether or not it’s this or the next thing, but, you know

Tony Kynas­ton: as a, as some­body who’s had melanomas cut out, it, I was excit­ed to see the result, and so were share­hold­ers. I mean, the stock jumped, was it

Cameron: Yeah

Tony Kynas­ton: on the news? Yeah

Cameron: Thank you, smooth­ie lady. Just got my smooth­ie deliv­ery. Um, yeah, the share price jumped. What also jumped is the US fed­er­al gov­ern­ment debt. So, uh, back to Chan­ti­cleer. Wednes­day night marked a grim mile­stone for glob­al cap­i­tal mar­kets as the US debt ticked above 40 tril­lion [00:06:00] US dol­lars, 56 tril­lion Aussie, pro­vid­ing a giant flash­ing reminder of the glob­al chal­lenge of surg­ing gov­ern­ment debts and widen­ing deficits.

Now, this can’t pos­si­bly be, be true, Tony, because when Don­ald Trump was elect­ed the first time, he said he was gonna com­plete­ly wipe out Amer­i­ca’s $19 tril­lion deficit, uh, debt in, um, uh, eight years. It would all be gone. But if this is true, it’s actu­al­ly gone up by $21 tril­lion. So-

Tony Kynas­ton: Yeah, he’s gonna build a wall and he’s gonna have no over­seas wars, so, um, yeah. He’s, uh, he’s in a reverse uni­verse. What­ev­er he says is the oppo­site of what hap­pens

Cameron: I think he’s wiped out his per­son­al debt because he’s been mak­ing mon­ey while he’s in the big chair. Any­way, Chan­ti­cleer goes on, “It real­ly [00:07:00] is a glob­al prob­lem. Aus­trali­a’s debt will briefly bob over $1 tril­lion for the first time this week, and while our debt-to-GDP ratio of 34% looks mild com­pared to Amer­i­ca’s ratio of 123%, the under­ly­ing sto­ry is the same.

Short term, increas­ing­ly pop­ulist gov­ern­ments have zero stom­ach for the spend­ing cuts or tax increas­es required to reduce debt lev­els.” But remark­ably, nei­ther of those was even a chal­lenger for the biggest event on a crazy night. That title went to a dra­ma cre­at­ed by Scott Bessent, the US Trea­sury Sec­re­tary, who likes to describe him­self as a glo­ri­fied sales­man of US gov­ern­ment bonds to the world.

Just before trade offi­cial­ly opened on Wall Street, the US Trea­sury announced it would increase by at least dou­ble the size of what are called liq­uid­i­ty sup­port buy­back oper­a­tions for longer-dat­ed US gov­ern­ment bonds from the 10-year to the 30-year. But that sto­ry of try­ing to main­tain or improve liq­uid­i­ty in the US gov­ern­ment bond mar­ket did­n’t con­vince investors, [00:08:00] giv­en the US 30-year Trea­sury yield hit a 19-year high of 5.3% just days ago amid a glob­al surge in long-dat­ed bond yields.

These new buy­backs, announced out of nowhere, have been read as a way for Bessent to try to force US bond yields low­er and bring down bor­row­ing costs for the US econ­o­my. But inter­ven­ing in bond mar­kets in this way comes at a cost for Bessent and the US gov­ern­ment, for mar­kets, for investors, and for savers.

Any­way, um, we talked, I think, last week or the week before about Bessent step­ping in to stop the Japan­ese from sell­ing US bonds. Now they’ve had to step it up again to say they’re gonna buy US bonds to try and keep the rates down. What does it all mean, Tony?

Tony Kynas­ton: well, this reminds me of the lit­tle boy who put his fin­ger in the dyke, real­ly. The, um, it’s.

Cameron: did the dyke have to say about that? Was she hap­py about it or did she say, “Hey, leave me alone. You’re not my ki- you’re not my [00:09:00] type”?

Tony Kynas­ton: She said, ” Now I know why I don’t like lit­tle boys. I’m a dyke.” Um, no, I think, um, it’s, it’s almost. I was gonna say it’s all for show, but it’s not. There’s some impact. Um, but it’s, it’s almost like Don­ald Trump is telling all his lieu­tenants to go out and do what­ev­er they can to keep inter­est rates down, and they don’t have many ways to do that.

But, um, the inter­est­ing thing was that Bessent is going to s- I guess it’s called the twist. He’s gonna buy bonds, so he’s going to. Now I’ve got to get this right. Buy back long-dat­ed and sell issue short-dat­ed, I think it is. Which puts, uh, pres­sure on the yields in the long-dat­eds, means they go down and then the short-dat­eds go up. which has had some effect. I mean, the long-dat­ed bonds in the US were, um, at a, a high, at least in the recent years any­way. so they’ve come off a lit­tle bit, but only [00:10:00] so much that, um, he can do that will keep bonds drop­ping. and then I think they’ll go back up again. So that.

The oth­er inter­est­ing thing is that he’s using the, um, oh, it’s, it’s often referred to as the US gov­ern­ment check­ing account. So there’s a, an account, um, which is a. sits at around. It’s actu­al­ly a rea­son­able amount of mon­ey. I think it might even be as high as a tril­lion dol­lars, but it’s what the gov­ern­ment pays its bills out of, i- from an oper­a­tional point of view. like their cash flow account. He’s gonna start using that to buy bonds. But when the debt equals 40 tril­lion and he’s play­ing with less than a tril­lion, he’s not gonna be able to affect the mar­ket that much. So there’s a lot of stuff going on around the edges to keep inter­est rates low, ’cause that’s what Don­ald Trump wants.

It’s prob­a­bly what every leader wants, real­ly. Uh, but they can’t, you know, they can’t do that for­ev­er, and they can’t do it in a mate­ri­al­ly enough way to keep inter­est rates down for longer. [00:11:00] Um, even­tu­al­ly bond buy­ers are gonna go back to pric­ing in risk based on the lev­el of US debt and based on the lev­el of the US dol­lar. and what­ev­er they do is going to just play around the edges with both of those, I think

Cameron: And are the long-term bonds a reflec­tion on the con­fi­dence of the future of the US econ­o­my?

Tony Kynas­ton: Yeah, you could say, you could say that. It, um, as we’ve talked about before with, um, uh, yield curves and yield curve inver­sions. Yeah, it’s, uh, it’s, um. Well, first of all, you should be paid more to, to tie your mon­ey up for a longer peri­od, so longer term bonds should have a high­er yield than short­er term bonds. That makes sense. But it’s also, if, if the yield goes up dra­mat­i­cal­ly, then it’s, it’s, uh, say­ing that peo­ple, the bond pur­chasers think that there’s a real risk the US gov­ern­ment is gonna have prob­lems down the track. [00:12:00] So but whether– I mean, they’re right- They’re prob­a­bly a lit­tle bit, just a lit­tle bit over 5% now, so it’s not, not too bad. Um, it’s not like ten per­cent like it was, you know, back in the, the, um, Banana Repub­lic days of the, uh, w- the, you know, when Keat­ing was in pow­er. So, um, it’s been much high­er, but it’s also been much low­er ’cause of Covid and because of the GFC too. Uh, but, um, you know, the im- the impact for us as stock investors flows into our IV cal­cu­la­tions, which are based on, um, the, the cash rate that we put into our cal­cu­la­tions.

So that’s a, that’s a math­e­mat­i­cal way of say­ing that yields get high and they’re backed by the US gov­ern­ment or they’re, they’re backed by, you know, Google, who are, who’s rais­ing a lot of mon­ey by issu­ing bonds at the moment, for exam­ple, um, peo­ple are gonna say, “Well, why, why take the risk of invest­ing in a stock, um, when I com­pare the div­i­dend yield on the stock to a risk-free 5% or 5.3% from the [00:13:00] gov­ern­ment?”

Cameron: Yeah

Tony Kynas­ton: starts to depress stock prices until come down and their yields go up com­pared to bonds and as the cycle revers­es. So

Cameron: Yeah

Tony Kynas­ton: that’s being played out now.

Cameron: Right

Tony Kynas­ton: Hmm

Cameron: Oh, very inter­est­ing.

Tony Kynas­ton: It

Cameron: Well

Tony Kynas­ton: The bond, the b- bond mar­ket. What, what did, uh, Carville say, the, the US polit­i­cal oper­a­tive? He said, he was asked if he died, what– who, who would he wan­na come back as? And he said the US bond mar­ket, because no one stands up to it.

Cameron: Yeah. Yeah, yeah. Uh, the oth­er sto­ry I’ve got from The Fin that I thought was inter­est­ing this week, glob­al firms feast on under­val­ued ASX com­pa­nies. Cor­po­rate lead­ers lament a cul­ture of short, short-ter­mism on the ASX as cashed up glob­al asset man­agers qui­et­ly scoop up under­val­ued indus­tri­al giants. In the past four months, a tor­rent of takeover bids worth a [00:14:00] com­bined $25 bil­lion tar­get­ed more than a dozen Aus­tralian pub­licly list­ed com­pa­nies.

Over half of the bids have been made by cash rich pri­vate equi­ty groups or sov­er­eign wealth funds that are rolling in cash and are hunt­ing unloved com­pa­nies such as Clean­away, Aus­trali­a’s largest rub­bish col­lec­tion busi­ness, which is the sub­ject of an oppor­tunis­tic $9.4 bil­lion bid. This year was sup­posed to be one where more pri­vate com­pa­nies sought list­ings on the ASX.

Instead, the reverse is hap­pen­ing. More pub­lic com­pa­nies are going pri­vate, con­tin­u­ing the hol­low­ing out of Aus­trali­a’s pub­lic equi­ty mar­ket. In the past five years, the num­ber of list­ed com­pa­nies on the ASX has fall­en by 8% to 2,045. This trend is adding to the woes already fac­ing the stock exchange oper­a­tor, the Aus­tralian Secu­ri­ties Exchange, which has been under scruti­ny for its tech­nol­o­gy and man­age­ment fail­ures.

So I don’t know if this is a good thing or a bad thing for us. Like, uh, it’s often a good [00:15:00] thing for us if one of the stocks that we own gets tak­en over.

Tony Kynas­ton: Yep

Cameron: But the flip side is there are less com­pa­nies for us to play with, um, on the mar­ket. So what do you think? Is it a good thing or a bad thing or a neu­tral thing?

Tony Kynas­ton: Neu­tral to bad, I think. As you say, it’s good if you, you own shares in the com­pa­ny that’s been tak­en over, which has hap­pened to us before, um, ’cause peo­ple see– um, large instos see val­ue in the same stocks we see val­ue in. but there’s less com­pa­nies on the ASX, um, s- and Steven Mayne’s been talk­ing about that for a year or two now, point­ing out that the ASX is drop­ping. there’s a cou­ple of rea­sons for that. Uh, if, if I can sum­ma­rize them as three maybe. one is that, um, at, the small end of the mar­ket, it just becomes a bur­den being a pub­licly list­ed com­pa­ny in Aus­tralia at the moment because so much reg­u­la­tion and costs and risk for being list­ed. Um- [00:16:00] Com­pared to, you know, the ben­e­fits of being able to raise cap­i­tal quick­ly, um, which has its own reg­u­la­tions as well that you, you often­times are bet­ter off not being list­ed. the pri­vate equi­ty side of things is inter­est­ing because you know, um, they’ll, they’ll buy com­pa­nies which have big asset bases and mak­ing a lot of cash so that they can gear them up and, um, uh, hol­low out their costs and then even­tu­al­ly in sort of a three to five-year timetable per­haps list them back on, onto the share mar­ket. And, uh, I, I don’t think I’ve ever invest­ed in one of those and you, you should be very care­ful about invest­ing in those because usu­al­ly tend to be high­ly geared and, and, um, if they have a bad year they can come a crop­per as the way Dick Smith did a num­ber of years ago, when it was relist­ed or, uh, or the, the. Yeah. Any­way, Dick Smith’s prob­a­bly the, the prime exam­ple. So that’s one thing to be care­ful of. Um, and then the [00:17:00] third one is that, uh, when, when list­ed assets have, uh, a fair­ly reg­u­lar income stream when they’re, they’re almost like a bond proxy, maybe they’re in the reg­u­lat­ed mar­ket and I’m think­ing air­ports for exam­ple, they often get tak­en out by super­an­nu­a­tion funds and oth­er big insti­tu­tions like your Black­Rocks, et cetera, who prize that secure, um, cash­flow year in, year out um, for, that that com­pa­ny offers and, um, take them off mar­ket and then they’ve got a kind of cor­ner­stone asset for a new fund or for their own exist­ing funds which just keeps churn­ing out cash.

Does­n’t pro­vide much growth but at least, um, is a sta­ble part of a port­fo­lio for them. So there’s three rea­sons I guess that, that line up against, um, the share mar­ket grow­ing. Like, I guess the fourth rea­son is a lot of growth com­pa­nies can go over­seas and list in, in [00:18:00] Amer­i­ca like your Atlas­sians for exam­ple and don’t list on the ASX too.

So, um, you know, if they are a true big growth com­pa­ny they might find list­ing on the NASDAQ is more, bet­ter for them and their share­hold­ers than list­ing on the ASX that tends not to pay much of a pre­mi­um for a growth stock as, as hap­pens in the US.

Cameron: Mm.

Tony Kynas­ton: After­pays that get tak­en over and tak­en to the US for a sim­i­lar sort of rea­son

Cameron: Well, we’ll see how it plays out.

Tony Kynas­ton: Yeah, I mean, it does­n’t change what we do.

Cameron: no

Tony Kynas­ton: we still find com­pa­nies to invest in

Cameron: Che

Tony Kynas­ton: you know, hope­ful­ly pri­vate equi­ty buys them out quick­ly and we make a, a prof­it

Cameron: Well, the last note I’ve got is just a, I guess, a port­fo­lio update. I’m look­ing at our port­fo­lio charts here. The mod­el port­fo­lio incep­tion date Sep­tem­ber 2019, cur­rent­ly track­ing at 16.6% per [00:19:00] annum ver­sus the index at 8.2% per annum, so exact­ly dou­ble mar­ket. And the light port­fo­lio incep­tion date Feb­ru­ary 2022, cur­rent­ly track­ing at 21.3% per annum ver­sus the S&P/ASX 200 at 10.8% per annum.

Exact­ly dou­ble mar­ket. Um, gee, I don’t know. What can I say?

Tony Kynas­ton: Hmm.

Cameron: Dou­ble mar­ket. Both port­fo­lios straight on dou­ble mar­ket

Tony Kynas­ton: No, it’s great to see

Cameron: It’s almost like the sys­tem works. Who would’ve, who would’ve guessed? I’m writ­ing, um, as you know, I’m, I’m sort of wr- hav­ing anoth­er crack at writ­ing the QAV book

Tony Kynas­ton: Mm-hmm.

Cameron: with a dif­fer­ent angle to it this time, and it’s, it’s going well.

I’m hap­py with it. We’ll see what you think when I send it to you. But, um, I was review­ing the lat­est draft of the first chap­ter last night [00:20:00] and, um, you know, sort of talk­ing about the, the basic the­sis of QAV, which is, the index is made up of a whole bunch of com­pa­nies, good com­pa­nies, bad com­pa­nies, aver­age com­pa­nies.

If you take out the bad ones, what’s left should do bet­ter than the index. And when I– every time I read that as the cen­tral the­sis, you know, and I’ve, uh, you know, it’s just this, the thing that I tell new mem­bers if I get on a phone call with them or what­ev­er. But as a premise, it’s remark­ably sim­ple and con­cise and very hard to argue with.

If you take out the bad apples, what’s left must be not nec­es­sar­i­ly 100% good apples, but you’d expect to have a high­er per­cent­age of good apples than you would from the entire mar­ket, and it should out­per­form.

Tony Kynas­ton: Yeah

Cameron: why it out­per­forms at dou­ble mar­ket, I don’t know, but, uh, [00:21:00] that’s what it tends to do

Tony Kynas­ton: Well, there is some research around that too, about it’s very dif­fi­cult in any mar­ket. You know, if you’re a bank in a mort­gage mar­ket, it’s dif­fi­cult to grow at more than dou­ble mar­ket just because of the con­straints of the maths of being in a mar­ket. Um, yeah. Um, there’s been books writ­ten about that. So yep, I, I, I get that.

Um, yeah, I mean it– and if you sort of say you’re not just tak­ing out the bad ones, but if you define bad a bit broad­er and say you’re tak­ing out the over­val­ued ones, they’re bad from a val­u­a­tion point of view.

Cameron: Hmm.

Tony Kynas­ton: Yeah. Makes even

Cameron: Hmm. Well, you know, I think in the book I say there’s a, there’s bad means l- you know, over­priced, um, perf- you know, they can be good busi­ness­es, but, uh, yeah, yeah, poor qual­i­ty, you know, over. Good qual­i­ty but over­priced. L- lots of dif­fer­ent things go into that. But, um, there you go

Tony Kynas­ton: basic retail­ing, isn’t it? [00:22:00] And the green­gro­cer beside the super­mar­ket said, “How do you charge more? Well, you take out all the bad apples, and you can charge more for the rest.” Hmm

Cameron: Yeah. Okay. Inter­est­ing. I was think­ing, uh, you were going with a Vaclav Hav­el green­gro­cer anal­o­gy there. Vaclav or Vaclav Hav­el. Why does the green­gro­cer put the sign, “Work­ers of the world unite,” in his win­dow every morn­ing? No? Pow­er to the Pow­er­less? Okay. I just did a, did c- cou­ple of episodes of that on the Bull­shit Fil­ter.

Well, uh, you know, uh, Vaclav Hav­el, um, was a, um, play­wright in Czecho­slo­va­kia who was, um, part of the, end­ed up becom­ing part of the, the anti-com­mu­nist activist move­ment, and he wrote a, a pam­phlet in the late ’70s, uh, called Pow­er to the Pow­er­less. [00:23:00] But he asked the ques­tion, why does the green­gro­cer put a sign in his win­dow every morn­ing, P- you know, “Work­ers of the world unite”?

He does­n’t real­ly believe it. He’s nev­er real­ly thought deeply about it. He just does it because that’s what you do. You, you, you d- you say these things, you do these things because if you don’t, peo­ple start to ask ques­tions why you don’t have the sign in your win­dow, and then peo­ple, you know, start to look at you a bit askew, and it can cause you prob­lems.

So you do things, you, you play, you play the game y- to get along, even though if you don’t believe it, it just caus­es less trou­ble if you just play the game and look the part, do the things. But he said, what if every­one stopped and actu­al­ly asked the ques­tion, “Well, do I real­ly believe in this? Do I real­ly believe that we’re, this is a good socioe­co­nom­ic sys­tem?

Is it work­ing well for us?” And that the pow­er­less, if they actu­al­ly orga­nized, could take back con­trol. Any­way, after the fall of com­mu­nism, he ends up becom­ing the [00:24:00] pres­i­dent, and, uh, yeah, so

Tony Kynas­ton: did he out­law the signs?

Cameron: No, they had to put in dif­fer­ent signs that said, “All pow­er to Vaclav Hav­el.” No, no

Tony Kynas­ton: is up 10%? Yeah.

Cameron: Any­way, um, green­gro­cer sto­ry. Um, what do you got on your list of, uh, talk­ing points today, TK?

Tony Kynas­ton: Well, one, uh, that caught my eye recent­ly was Cas­cale, which I did the Pulled Pork on a lit­tle while ago as a request. Um, but I think it’s been– It’s might even be on our buy list now. on it recent­ly any­way. Uh, and, um, If you have a look at their graph, if you call it up in the bread­loader, it’s, it’s going well. So their net prof­it jumped forty-nine per­cent for the full year. they acquired a cou­ple of com­pa­nies recent­ly, which has con­tributed to earn­ings. Uh, EPS rose forty-three per­cent, rose fif­teen per­cent. [00:25:00] Um, so yeah, it’s, um, it’s, uh, the sun is shin­ing on Cas­cale at the moment

Cameron: What’s their, uh, tick­er code?

Tony Kynas­ton: L

Cameron: What?

CCL, sor­ry.

Tony Kynas­ton: CCL. Yeah, C‑CCL. said C‑CCL.

Cameron: CCL. I’ll see CCL. I’ll see what you have done. Yeah. Oh my God, look at that. That looks, uh, very excit­ed. I’m just try­ing to see if we hold CCL in any­thing. Doop, do-doop, doop do. We do! Oh. Oh. Yeah, okay. It’s up 16, 17% since I added it in June, late June. That’s all right. Not bad. Thank you, CCL. Good job

Tony Kynas­ton: So that was good. Um, I liked your email that goes out to mem­bers this week. I think it was an arti­cle on that called Works Both Ways, uh, which was about the [00:26:00] impor­tance of sen­ti­ment, both for sell­ing and for buy­ing on both sides of the coin.

Cameron: Hmm.

Tony Kynas­ton: and that got me think­ing, uh, ’cause I think, you know, we had a.

I did a Pulled Pork on Alliance Avi­a­tion recent­ly, where our lis­ten­ers, um, a fair bit of analy­sis on the com­pa­ny, and even though sen­ti­ment was against it, the QAV score was good, and he thought it might be worth look­ing at. I actu­al­ly, um, was prompt­ed to go back and test that the­o­ry on stocks.

I went back to Jan­u­ary to have a look at some of the stocks that were, high-scor­ing QAV stocks but had neg­a­tive sen­ti­ment, and I think almost every one of them was low­er today than what they were in Jan­u­ary. So a few exam­ples in my notes here. K- KMD, is Kath­man­du, has a Q– had a QAV score of.38 in, um, Jan­u­ary. price of $3.87. Today, it’s $1.45. Uh, Air New Zealand, same time peri­od, QAV score [00:27:00].27, neg­a­tive sen­ti­ment in Jan­u­ary. Today, 35 cents. sor­ry, was 50 cents in Jan­u­ary, down to 35 cents today. G8 Edu­ca­tion, same thing,.18 QAV score in Jan­u­ary. Six­ty-eight cents was the stock price and down to 14 cents today.

So I, I still think sen­ti­ment plays such an impor­tant part, um, in our process, and I guess that’s for a cou­ple of rea­sons. Um, you know, one of the, you. some of the stocks with good QAV scores will inevitably rebound even if they have neg­a­tive sen­ti­ment. Um, the ques­tion is when, and the only real answer to that is when we see it.

So that’s what

Cameron: Mm.

Tony Kynas­ton: Um, but the odds of them rebound­ing when they’re going down and us buy­ing in at a low price, um, until they start to go up, very stacked against us. And one of the rea­sons for this, I think, is that the QAV scores, um, are based on their most recent results, and that could [00:28:00] be five or six months old, and if some­thing hap­pens after those results which affect what’s gonna hap­pen in the future, then that’s when you need to look at sen­ti­ment because that’s what’s being fac­tored into the share price.

Um,

Cameron: Mm.

Tony Kynas­ton: we don’t, we don’t tend to look much at, at what peo­ple think will hap­pen, what, what man­age­men­t’s guid­ing or what­ev­er. but you know, you take a stock like G8 Edu­ca­tion, where unfor­tu­nate­ly there was a case of, um, one of the staff, um, uh, and alleged child abuse, um, that hap­pened after the results, even though the num­bers were good, um, the stock­’s tak­en a beat­ing, and that’s because peo­ple weren’t. were pulling their kids out of child­care. So yeah, I think it’s. I think sen­ti­ment still plays a large part in it. And get­ting back to the Alliance Avi­a­tion side of things, which is also what prompt­ed me to have a look at, um, past results. they’ve had a bit of a rocky ride recent­ly, so they did bounce, um, thir­ty odd per­cent, I think. Be- [00:29:00] uh, because if you recall, Alliance Avi­a­tion were in a bit of trou­ble with their Fokkers and, um, they’re a fly-in fly-out con­tract, uh, ser­vice provider, and they also pro­vide air­craft and crew to uh, I think, and Vir­gin, but main­ly Qan­tas, um, for Qan­tasLink, uh, region­al type routes. Uh, and Qan­tas tried to buy them out a cou­ple of years ago, and the ACCC said, no, that was mar­ket con­cen­tra­tion, uh, was, was too much, and so you can’t do that. Um, the, uh, they appoint­ed the new CEO, a guy called Scali, I think, from mem­o­ry, um, rene­go­ti­at­ed the, uh, the, uh, Qan­tas deal, and that caused the share price to go up some thir­ty per­cent. And that hap­pened in maybe a week or two after I did the Pulled Pork. but then I noticed, uh, just recent­ly that, uh, there’s a trad­ing halt for the com­pa­ny, and are [00:30:00] con­sid­er­ing a cap­i­tal raise because their debt stands at four hun­dred and thir­ty-three mil­lion dol­lars.

Um, that, that’s a Decem­ber num­ber, it may have changed a lit­tle bit since then, but, um, it’s, it’s pret­ty high. they’re mak­ing thir­ty-five to forty mil­lion, um, under­ly­ing prof­it, which means they don’t have much room to ser­vice, uh, debt if inter­est rates go up, for exam­ple. Uh, so they’re, they’re think­ing about recap­i­tal­iz­ing. that’s the risk in these kind of sit­u­a­tions too. Not only need to get things work­ing from an oper­a­tional point of view, if they have lots of debt, they need to recap­i­tal­ize and pay that down too. So, uh, we’ll see what hap­pens when, when they come out of the trad­ing halt

Cameron: Yeah, that, um, arti­cle came out of re-look­ing at Mor­gan House­l’s 100 Lit­tle Ideas blog post that I think Steven Mabb put me onto a few years ago. And we were. I, I looked at a cou­ple of them. We did some, we [00:31:00] had some chats on some ear­li­er episodes. But this whole idea of one of them, and I think in num­ber 52 on his list, is feed­back loops.

Falling stock prices scare peo­ple, which cause them to sell, which makes the prices fall, which scares more peo­ple, which caus­es more peo­ple to sell, and so on, works both ways.

Tony Kynas­ton: Yeah

Cameron: And just read­ing that and think­ing about our tre- our three-point trend lines and sen­ti­ment chart­ing and, uh, you know, I know that it’s, it’s a very, um, con­trar­i­an point of view in val­ue invest­ing, I, I think that.

You know, most val­ue investors I see in forums and Red­dit talk­ing about it is, “No, no, you just buy some­thing regard­less, and you just stick with it and ride it all the way if you. And if you don’t, then you’re moral­ly, uh, uh, uh, fail­ing as a val­ue investor.”

Tony Kynas­ton: Well, it’s often even more– I was gonna say worse than that, but even more extreme [00:32:00] than that because they often say if you buy some­thing and it goes down, you should dou­ble

Cameron: Buy more. Yeah. Buy more.

Tony Kynas­ton: Hmm

Cameron: Or else you don’t have con­vic­tion, you’re not a hero. And I like the f- I like the fact that, uh, there’s no hero­ics

Tony Kynas­ton: No,

Cameron: It’s

Tony Kynas­ton: ball pilots. Yep.

Cameron: That’s right.

Tony Kynas­ton: Yeah

Cameron: we think some­thing’s good but the mar­ket’s dump­ing it, then we’re like, “Yeah, okay.” You know, we don’t have to, don’t have to ride it all the way into the grave

Tony Kynas­ton: Yeah, And it’s, it’s a mar­riage though as well because y- you know, I think if you just use the three-point trend line sen­ti­ment on oth­er stocks, um, with­out the qual­i­ty and val­ue checks, then they might go up for a while. But as we’ve seen with lots of growth stocks, um, they can come crash­ing down very quick­ly.

Cameron: Hmm.

Tony Kynas­ton: which is still hap­pens with the stocks that we invest in. We’ve seen it hap­pen, but, but you tend to get stead­ier growth out of a val­ue stock that’s on the rise [00:33:00] the

Cameron: Well, we–

Tony Kynas­ton: comes into it

Cameron: Yeah, well, we, we like to see momen­tum, but we wan­na see momen­tum for the right rea­sons,

Tony Kynas­ton: Yeah

Cameron: not for because it’s hyped. Hmm.

Tony Kynas­ton: Yeah, cor­rect. Yeah, there’s a lot less risk in buy­ing a stock at a low PE than a stock at a high PE

Cameron: Yes. Does­n’t mean they can’t screw it up or some­thing can’t go wrong, but prob­a­bil­i­ty gets back to the bad apples thing. The, you know, if it’s a, if it’s a well, seems to be a well-run busi­ness that is under­val­ued and it has momen­tum, then the odds are it’ll prob­a­bly have a hap­pi­er end­ing than one where those things aren’t all true.

Tony Kynas­ton: Cor­rect. Yep.

Cameron: Hmm. Hmm.

Tony Kynas­ton: We play the odds

Cameron: Hmm. Hmm. Yeah. All right. What else you got?

Tony Kynas­ton: I’ve got a Pulled Pork, which I’ve been sit­ting on for a cou­ple of weeks since the 11th, actu­al­ly.

Cameron: Hmm. That should [00:34:00] be nice and warm and toasty if you’ve been sit­ting on it for a cou­ple of weeks. Is it ready to hatch, Tony?

Tony Kynas­ton: I’m gonna hatch a Pulled Pork, uh, on Gen­e­sis Ener­gy.

Cameron: Oh, with that visu­al in mind, you go

Tony Kynas­ton: Uh, so Gen­e­sis Ener­gy is, it’s a small ADT stock, um, so it won’t suit, all the peo­ple lis­ten­ing to the show. But, um, it’s only small because it’s dual list­ed, so it’s, uh, it’s a New Zealand ener­gy com­pa­ny and it’s one of the largest ener­gy com­pa­nies in New Zealand. Um, it’s an elec­tric­i­ty gen­er­a­tor, but also a retail sup­pli­er elec­tric­i­ty and nat­ur­al gas and LPG in the, um, the, uh, New Zealand econ­o­my. So it, it does have a big­ger ADT if you look at New Zealand. I guess you have the option of buy­ing, um, buy­ing it on the New Zealand exchange if you’re look­ing for a big­ger expo­sure, but I’m just look­ing at the Aus­tralian one at the moment. [00:35:00] it’s still Slight­ly, well, it’s still major­i­ty owned by the New Zealand gov­ern­ment, so they own 51%, uh, but they did decide to spin off, um, the oth­er 49%, uh, few years ago. and, uh. may-maybe I’ll go through the his­to­ry. I’m get­ting ahead of myself here. So, um, before 1999, the New Zealand pow­er grid was large­ly con­trolled by the Elec­tric­i­ty Cor­po­ra­tion of New Zealand, the ECNZ, which was, um, com­plete­ly owned by the gov­ern­ment. But in 1998, Gen­e­sis Pow­er, which is, um, the com­pa­ny we’re talk­ing about, which is now called Gen­e­sis Ener­gy, it was incor­po­rat­ed, and that was, um, as a lead-up to, um, uh, a float­ing of, uh, or sell down of pa-of part of the ECNZ, NZ, [00:36:00] um, And so, 1st of April 1999, uh, Gen­e­sis, um, took over, uh, part of the ECNZ oper­a­tions, most notably, um, the mas­sive Hunt­ly Pow­er Sta­tion. So I think it might be the biggest in New Zealand, but cer­tain­ly a big, um, gas-fired pow­er sta­tion. I, I think it was or- orig­i­nal­ly coal pow­ered, but it’s, it’s now gas. Uh, and they also then start­ed acquir­ing, um, cus­tomers from local pow­er boards across the, uh, the North Island in New Zealand. Um, through the 2000s, they expand­ed, um, uh, they expand­ed Hunt­ly, and they also bought into a gas field, a north­ern gas field called Kupe. It’s K‑U-P‑E. It might be pro­nounced Koop. I think it might be pro­nounced or Kupe, um, in New Zealand. And that start­ed sup­ply­ing the gas that they need­ed, um, both to retail cus­tomers but also to pow­er the Hunt­ly Pow­er Sta­tion.

So, [00:37:00] that was, um, the f‑the first stage of how they expand­ed. uh, list­ed on the NZX in 2014, and then also, as I said before, on the ASX. the gov­ern­ment sold, uh, 49% and kept 51%. since then, Gen­e­sis went out, uh, and made some acqui­si­tions. They bought a, a com­pa­ny called Nova Gas, uh, and they launched, um, uh, a com­pa­ny called Frank Star Ener­gy, as in Frank aster­isk Ener­gy, or just Frank Ener­gy with an aster­isk in the mid­dle. so it was a dig­i­tal, um, retail offer­ing, so kind of ser­vice the bud­get-con­scious con­sumers in New Zealand. A cou­ple of, uh, things have hap­pened since then. Most recent­ly was a, a, a rights issue, uh, ear­li­er on this year for four hun­dred mil­lion dol­lars to raise equi­ty, and that was because, um, of [00:38:00] a pro­gram which Gen­e­sis has launched called the Gen35 launch, which is, um, aimed at rais­ing, uh, mon­ey and then putting it to work to, uh, move away from coal and gas and more towards solar farms, indus­tri­al-sized bat­tery stor­age, and, uh, the phased with­draw­al from ther­mal coal.

So New Zealan­ders, um, have always prid­ed them­selves on being, uh, eco-friend­ly, and when we lived over there, um, oh, gee, quite a while ago now, um, two thou­sand and ten-ish, the, the actu­al mar­ket­ing strat­e­gy for New Zealand was called 100% Pure. That was their tagline, we used to call– kind of laugh at and say 100% bull­shit because, um, you know, the biggest indus­try in New Zealand is cows, and they, they burp and fart, which does lot more for cl- against cli­mate change than a lot of oth­er things that, that they do

Cameron: But it’s, [00:39:00] it’s pure burp­ing and fart­ing though, Tony. It’s

Tony Kynas­ton: But any­way, I mean, we– New Zealand does have some very good green cre­den­tials, and now this elec­tric­i­ty gen­er­a­tor, the largest, is get­ting, um, in, i‑into that in a big­ger way, which is a good thing. So, um, uh, that was basi­cal­ly caused by a bit of a man­age­ment changeover in twen­ty twen­ty-three. Chap called Mal­colm Johns took over, he’s, uh, spent time reshap­ing the exec­u­tive line­up, um, uh, kind of mod­ern­ize it a bit too, um, flat­ten the cor­po­rate hier­ar­chy, et cetera, but most notably to piv­ot towards this, um, Gen35 strat­e­gy.

But it also includes, uh, a change to the pro­file of the busi­ness. So uh, had two bud­get, uh, online busi­ness­es, which I spoke about, one about before, Frank Ener­gy. They also had one called Ecotric­i­ty, they’ve, um, [00:40:00] pushed those togeth­er to form one brand. Um, and that’s actu­al­ly, even though it’s meant some cus­tomer num­bers have reduced, the, the mar­gins have improved for the busi­ness, which is a good thing. com-com­pa­ny, uh, Zealand has a lot of hydro pow­er, so, uh, the Gen35 strat­e­gy was help­ing to expand that, but also to future-proof it. So, um, they’re improv­ing the hydro inflows, uh, and lake stor­age lev­els, um, so they, they can pro­duce uh, cheap­er, high­ly prof­itable renew­able pow­er, Um, are also putting a big bat­tery where the Hunt­ly Pow­er Sta­tion is, so they’re, they’re basi­cal­ly, um, wean­ing them­selves off gas and coal-fired pow­er, get­ting more into hydro, solar, and bat­ter­ies. Um, so that’s the, the com­pa­ny in a nut­shell and what they’ve been doing late­ly. Lat­est [00:41:00] results were good. and bear in mind, too, that I’m gonna talk about the Feb­ru­ary twen­ty twen­ty-six num­bers. They do report, uh, the June Full year num­bers in a cou­ple of days. Uh, twen­ty-sev­enth of August is when they’re to be released.

Um, so you like this maybe, and you hear this, it might be, might have already dropped, but, um, cer­tain­ly check out their new num­bers. But in Feb­ru­ary, for the half, net prof­it was up thir­ty-six per­cent, free cash flow was up near­ly three hun­dred per­cent. gross mar­gins to them improved by twen­ty-sev­en per­cent. um, so even though rev­enue was down thir­teen per­cent, earn­ings per share were up thir­ty-two per­cent, and they were mak­ing a lot of progress on, uh, installing new solar and wind farms and also get­ting into bio­mass. So, um, burn­ing waste to pro­duce elec­tric­i­ty as well. So, uh, a lot of good things to like about the com­pa­ny and, uh, they’re start­ing to get some trac­tion on [00:42:00] the busi­ness side of things too. From a QAV point of view, the stock price was two dol­lar sev­en­teen when I the analy­sis, which is a cou­ple of weeks old now. I think it may have gone up a lit­tle bit since then. Uh, no con­sen­sus tar­get in Aus­tralia, so, um, we don’t, uh, can’t score a cou­ple of things in the check­list. Uh, mar­ket cap over­all is two point eight bil­lion, even though there’s only nine­teen thou­sand free float. Of course, half of the mar­ket cap is the NZ-NZ gov­ern­ment, and it’s thin­ly trad­ed in, in Aus­tralia com­pared to New Zealand. And one thing I should flag as well is because, um, uh, it’s a New Zealand com­pa­ny trad­ing in Aus­tralia, we don’t get frank­ing cred­its on div­i­dends. So just be aware of that if that’s impor­tant f‑to you. Hav­ing said that, the yield­’s quite high. It’s five point six four per­cent unfranked, so it’s rea­son­ably high. Uh, Stock Doc­tor finan­cial health and trend is strong and steady. Stock­o­pe­dia give it, uh, an over­all rank­ing of eighty-sev­en. enough, Stock­o­pe­dia have dif­fer­ent rank­ings for the Aus­tralian list­ing [00:43:00] ver­sus the New Zealand list­ing, the New Zealand list­ing ranks at nine­ty-one And, uh, when I drilled into that, it’s, it’s, it’s large­ly because, uh, Stock­o­pe­dia are rank­ing stocks and there’s dif­fer­ent, um, n‑numbers of stocks in New Zealand over­all com­pared to Aus­tralia.

So this com­pa­ny is a, is a big­ger fish in a small­er pond in New Zealand. Stock­o­pe­dia qual­i­ty rank is six­ty-three, is eighty-one. F score is six out of nine, which isn’t too bad. PE is high, um, twen­ty-five point three times, and it’s the high­est in three years, so we give it a neg­a­tive one for that. But even though the PE is high, the Pr/OpCaf is, um, six point two times, which is still pret­ty good and below sev­en times, which is what we like to see. Uh, IV1 is forty-four cents. We don’t have an IV2, so can’t score it for being, um, for stock price being less than IV. net equi­ty per share is, uh, two dol­lars thir­ty-one, so like­wise, we can’t buy it for book or book pl-book plus, [00:44:00] plus thir­ty per­cent. No EPS fore­cast, no own­er founder because it’s come out of a gov­ern­ment, uh, own­er­ship. and I can also say equi­ty is not con­sis­tent­ly increas­ing. is, how­ev­er, a new three-point trend line upturn, which we can score it for. Over­all qual­i­ty score is six­ty-two per­cent, eight out of thir­teen, and the QAV score is right on the thresh­old of point one. So, that may change with the stock price increas­ing.

It may change when new num­bers come out. So do your own research, um, if you’re inter­est­ed in buy­ing into, uh, an ener­gy com­pa­ny that’s, um, becom­ing more and more green, as it goes on. Um, I guess the risks and oppor­tu­ni­ties, um You could list the green piv­ot as both. It, uh, decreas­es reli­a­bil­i­ty on coal and gas, but it does face, um, some large scale con­struc­tion risks and as we know, infla­tion is putting up the cost of build­ing so that, that could some prob­lems because they’re invest­ing in some mas­sive [00:45:00] projects on– in a New Zealand sense any­way. Obvi­ous­ly, it’s a risk that, that there’s low liq­uid­i­ty in ASX. Um, and, and we have seen with, uh, one of the oth­er com­pa­nies that was on our buy list before that some­times the New Zealand com­pa­nies may choose to delist on the ASX and go back to their, their home mar­ket only. and you just got­ta be aware of that, uh, and decide whether you wan­na go across to a New Zealand list­ing or to sell out before­hand. There’s no talk of that hap­pen­ing in this case, but, um, it– I guess it’s, um, the poten­tial for it to hap­pen is always there. Um, oth­er risks, I think gov­ern­ment con­trol is good and bad again. They, um, they may exert pol­i­cy influ­ence in the future and that may be pos­i­tive for the broad­er soci­ety, but neg­a­tive for the busi­ness.

For exam­ple, they might decide to cap ener­gy prices or they might decide to, um, exit, uh, a– the coal-fired pow­er sta­tion com­plete­ly, or they may decide to get back into coal-fired pow­er sta­tions, um, and [00:46:00] reverse the deci­sions that are going on now. So, uh, there are some risks with the gov­ern­ment own­er­ship.

On the pos­i­tive side, it’s fair­ly sta– it’s a very sta­ble own­er­ship, um, uh, and the go-the gov­ern­ment did, uh, uh, par­take in the four hun­dred– their share of the four hun­dred mil­lion dol­lars cap­i­tal rais­ing so, that will, that will be the case going for­ward, that if this com­pa­ny needs more mon­ey and they can con­vince the gov­ern­ment to open their purse, then, um, the cash will flow.

So, so that’s Gen­e­sis. Um, have a look if you’re inter­est­ed in a, um, ener­gy com­pa­ny, even though it’s list­ed in New Zealand. Uh, you could buy it in New Zealand, I guess. It’ll have sim­i­lar num­bers over there, or you can buy it in Aus­tralia, even though the ADT is small

Cameron: And I was just try­ing to fig­ure out why it was­n’t on my buy list this week. My score was slight­ly less than 0.1. It was 0.096. So if peo­ple are won­der­ing why it was­n’t on the buy list I put out, that is why. [00:47:00] And I don’t– They haven’t come out with their end of finan­cial year report yet, have they, Tony?

Tony Kynas­ton: No, it’s due in two days, 27th of August.

Cameron: Yeah, right.

Tony Kynas­ton: Yep

Cameron: So you wan­na wait till that comes out too

Tony Kynas­ton: Yeah, uh, ’cause

Cameron: and have a look at it.

Tony Kynas­ton: Yep

Cameron: Yeah. Okay. Um, my favorite, uh, sto­ry about Gen­e­sis, Tony, you know, the, the Bible, first book of the Old Tes­ta­ment.

Tony Kynas­ton: band.

Cameron: Well, I, I have a favorite sto­ry about that too, but that’s anoth­er, that’s anoth­er issue. I got a Lou Reed-relat­ed sto­ry for that.

But, um, uh, in, in– if you get a Bible, a, a Chris­t­ian Bible, the first book of the Bible is called the Book of Gen­e­sis, but that’s not what it’s called in Hebrew. Do you know what that book is called in Hebrew, what the Hebrew title of that book [00:48:00] is?

Tony Kynas­ton: No, I don’t

Cameron: It’s bear shit

Tony Kynas­ton: Uh, well, I hope the Gen­e­sis Pow­er peo­ple don’t, or Gen­e­sis Ener­gy peo­ple don’t hear about that.

Cameron: There was a, they were, they brought in Bar­ry and Stan to rebrand that at some point. They were like, “Real­ly? Can we get.” It’s actu­al­ly, I think in Hebrew it’s pro­nounced Bere- Bereshit.

Tony Kynas­ton: Right

Cameron: Um, but you know, too many peo­ple were going, “Is this com­plete bear shit or what?” And they go, “Lis­ten, I think, I think we need to change,

Tony Kynas­ton: Yeah.

Cameron: we need to change the name.”

Bere- Bereshit in Hebrew means in the begin­ning, which is the first three words of the first line. Um, yeah, but at some point they went, “Yeah, it’s, it’s, this isn’t gonna fly. We need a, we need a new name.” Can sell the Book of Gen­e­sis, that sounds awe­some

Tony Kynas­ton: It do- Gen­e­sis, it does have that kind of, um, Heal­ius, you know, Inge­nia, th- that kind of, uh, Bar­ry and [00:49:00] Stan rebrand­ing of an old com­pa­ny, does­n’t it?

Cameron: Yeah, it’s good stuff. Mm. All right. Thank you for that, Tony. Tony. Thank you, Tony. Thank you, Tony. After Hours, do you wan­na kick it off or should I?

Tony Kynas­ton: Oh, I, I’m hap­py to. I don’t have much. Um, still enjoy­ing the Mar­garet Olley bio, which I’d rec­om­mend, um, More Than a Still Life. It’s, it’s not, not a recent one, but it’s a great read. I’m real­ly enjoy­ing it.

Cameron: Hmm.

Tony Kynas­ton: your music rec­om­men­da­tions, the Walk­er Broth­ers and the lat­est Pub­lic Image album.

Cameron: Real­ly?

Tony Kynas­ton: I’ve got one of my own to r- to rec­om­mend.

Cameron: Hmm?

Tony Kynas­ton: think it only just came out recent- very recent­ly.

Cameron: Hmm.

Tony Kynas­ton: Antho­ny Hop­kins was a clas­si­cal com­pos­er?

Cameron: I did, and I’ve lis­tened to it

Tony Kynas­ton: Ah, what do you think? It’s great, isn’t it?

Cameron: Yeah, it’s okay. Yeah, it’s, it’s all right. He’s got Dudamel,

Tony Kynas­ton: Yeah

Cameron: con­duct­ing, Gus­ta­vo Dudamel, who I’ve seen per­form. We saw him, um, con­duct [00:50:00] the LA Phil at the Hol­ly­wood Bowl the last time we were there doing the, um, uh, uh. Jesus, what’s the, what’s the

Uh, the, the, the, the, the Bern­stein musi­cal. I keep think­ing Wall Street, but it’s not Wall Street. Where’s Chris­sy when I need her? The famous musi­cal from the ’50s. Gut- the Cats, the, the, the Gut­ter Cats ver­sus the Snipes. No, the Sharks ver­sus the Jets.

Tony Kynas­ton: yeah.

Cameron: What’s that called? I could Google it, but I can’t be both­ered.

Tony Kynas­ton: Yeah, no, they can’t lie.

Cameron: yeah, yeah. I, it was okay. It was all right. Like, I, I don’t think it’s Shostakovich, but, uh, hey, any­one who can write an hour’s worth of clas­si­cal music, uh, deserves cred­it

Tony Kynas­ton: It remind­ed me a bit of Mor­ri­cone, Ennio Mor­ri­cone. It was, um, to

Cameron: Hmm. [00:51:00] Mm-hmm

Tony Kynas­ton: It– So it was, um, sort of a rous­ing orches­tra­tion, but it was, it was, uh, nice. I,

Cameron: Atmos­pher­ic. Hmm

Tony Kynas­ton: enjoyed hav­ing it on. Yeah, I’ve enjoyed hav­ing it on while I’ve been work­ing this week. It’s been good

Cameron: Hmm. Yes. Um, well, uh, my musi­cal rec­om­men­da­tion for this week is William Shat­ner’s new album

Tony Kynas­ton: What’s that called? Beam me up?

Cameron: No. Uh, what is it called? I d- I did­n’t, uh, write down the title of it. Um, but it’s, uh, like, uh, it’s great if you like Sha- Oh, if you like Shat­ner. Yeah,

Tony Kynas­ton: Is it spo­ken

Cameron: yeah.

Tony Kynas­ton: Yeah.

Cameron: Well, yeah, yeah, yeah

Tony Kynas­ton: Who’s he

Cameron: no.

Tony Kynas­ton: No?

Cameron: It’s, it’s, um. Well, there’s a guy called, ah, what is his name? Um,

Tony Kynas­ton: Peo­ple

Cameron: no, no, it’s not Ben Folds, but it’s a [00:52:00] guy who’s like a coun­try.

Ah, hold on. Let me just open Spo­ti­fy. It’s a guy who I looked up. He’s like a coun­try music dude. Um, so there’s a bit of a coun­try thing in there, but, um, it’s not all. It’s sort of pop coun­try, that kind of stuff. Let me see. It’s called Love And Oth­er Mys­ter­ies. His col­lab­o­ra­tor’s a guy called Brad Pais­ley

Tony Kynas­ton: Right.

Cameron: But no, me either.

Sounds vague­ly famil­iar, but I, I could­n’t place him

Tony Kynas­ton: do like a good, pais­ley though.

Cameron: But if you, if you drill down into Brad Pais­ley’s Spo­ti­fy, it’s all coun­try music stuff, right? So he’s a, he’s, he’s, he’s a coun­try guy. But no, this is great. Like, uh, there’s a track called, um, “Masks” which, um, you know, it’s, it, it, it’s got a lot of ref­er­ences to, um, [00:53:00] his, uh, roles. I’m look­ing to see if I can bring up the lyrics to it.

Um, no, no lyrics. Um, but he, he talks about, you know, being the cap­tain of a star­ship and being a cop and all these dif­fer­ent masks that he’s worn and all this kind of stuff. But you know, it’s all, it’s him doing his thing, and he’s talk­ing the words and, and, and he. And as he’s– Like, he’s 95 or some­thing now.

As he gets old­er, he, you know, his voice is grav­el­ly and, uh, it’s more deep­er and huski­er, a bit like l- as Leonard Cohen got old­er, his reg­is­ter went down and down and down. But I just find it amus­ing as hell, and I love it. I love it. I love the fact that he’s work­ing and he’s still doing stuff, and he’s on tour.

I looked it up. He’s still on tour. still work­ing his ass off. You know, luck, good luck to him.

Tony Kynas­ton: Yeah. Well, that’s

Cameron: Should

Tony Kynas­ton: Thank you

Cameron: sh- wish we [00:54:00] all could have careers into our mid-90s, still being cre­ative and enter­tain­ing peo­ple and doing stuff

Tony Kynas­ton: Well, like Antho­ny Hop­kins com­pos­ing

Cameron: Absolute­ly. Or Dick Van Dyke, still work­ing. He’s like 100, still going.

Tony Kynas­ton: Wow.

Cameron: Um,

Tony Kynas­ton: West Side Sto­ry was the Bern­stein

Cameron: thank you, West Side Sto­ry

Tony Kynas­ton: I want to live in Amer­i­ca

Cameron: Yeah, we went to, we went to the Hol­ly­wood Bowl and we saw the Spiel­berg ver­sion. They, they played it on the big screen. But, but Dudamel and the LA Phil played the score live over the top of it, and it was great

Tony Kynas­ton: So fill me in. Who’s Dudamel? I don’t– I’m not famil­iar with him

Cameron: Oh, the dude. So he came out of Venezuela. He was a hot­shot young con­duc­tor. I think he was in his ear­ly 20s when he got picked to be the con­duc­tor of the LA Phil. And it was big at the time. Like, uh, he was, um, like a hot­shot super­star, [00:55:00] came up from Venezuela and, um, just brought a lot of Latin ener­gy, uh, to it.

And he famous­ly, um, still I think to this day in Venezuela, um, well, I don’t know, maybe Trump’s tak­en it over now, but he had the Venezue­lan Youth Orches­tra, and they. That he sort of con­duct­ed and, and man­aged, and where all the kids would get up and sort of dance while they played, and they’d sit down, and it was all very, very sort of ener­getic and enter­tain­ment-based and Lati­no.

And did you ever watch, um, Mozart in the Jun­gle TV show?

Tony Kynas­ton: No

Cameron: Oh, great TV show. Um, was it, ran on, I don’t know, Ama­zon or some­thing for a few years. Starred, um, Gael Gar­cia Bernal as this Latin Amer­i­can con­duc­tor who was brought into New York, I think, to con­duct [00:56:00] the New York Phil­har­mon­ic Orches­tra. And it’s all, it’s sort of based on Dudamel, but he was brought in and he plays with the blood, and, uh, he’s all about try­ing to.

All these stuffy white clas­si­cal musi­cians, and he’s try­ing to bring this Lati­no, “You have to play with the blood. You have to bring all of this ener­gy to it.” Any­way, um, that’s Dudamel. He’s old now. He’s like, you know, in his 40s or 50 or what­ev­er now, but he’s b- you know, he’s been sort of the hot­shot for c- 20 years.

You ever read, uh, Nabokov’s Pale Fire?

Tony Kynas­ton: No. I’ve read Loli­ta. I haven’t read Pale Fire

Cameron: I’d read “Loli­ta” too, and it was the only Nabokov I’d read, and then I was lis­ten­ing to some­thing a cou­ple of weeks ago. It might’ve been Michael Pal­in’s mem­oirs actu­al­ly. Uh, some­body any­way I was lis­ten­ing to was rav­ing about Nabokov and the rest, and I was like, “I have to check out the rest of his stuff,” ’cause I loved “Loli­ta”, I thought it was great.

So, um, appar­ent­ly his, um, opus [00:57:00] mag­nus is called “Pale Fire”, and I picked it up and I’ve near­ly fin­ished read­ing it, and it’s tremen­dous.

Tony Kynas­ton: good. Okay

Cameron: High­ly rec­om­mend it if you like “Loli­ta”. It’s, it’s trip­py and, um, the large chunk of it is a 999-word poem writ­ten in iambic pen­tame­ter, um, that’s bril­liant. Um, but any­way, that’s all I’ll say.

It got me writ­ing poet­ry though. You know, I, I have this rou­tine where I get up in the morn­ing, and I’ve been doing this for a while now. Before I touch a com­put­er in the morn­ing, I get up, I sit out­side on the deck with my cof­fee, and I just write to try and let my sub­con­scious flow about the day and the life and the thing, and get some sun­shine, but also just try and, before I get trapped in AI and [00:58:00] scripts and spread­sheets and check­lists and all that kind of non­sense, emails, I just try and let, let stuff flow freely.

And I’ve had this urge since read­ing this book to write poet­ry, so I sat down this morn­ing and I was like, “Ah, I’ve just got­ta do it to get it out of my sys­tem,” so I start­ed to write an epic poem

Tony Kynas­ton: Have you got one you can read to us?

Cameron: I wrote four lines. That’s,

Tony Kynas­ton: Nan­tuck­et

Cameron: yeah, yeah, that’s pret­ty much it. One day, one day I will, uh, I will reveal it to you maybe, if it lasts more than a week.

You know, I do these things just to get it out of my sys­tem some­times.

Tony Kynas­ton: Okay

Cameron: But it was bug­ging me, like, can I do this? How do you do it, is more the. How do you write in iambic pen­tame­ter? Like, how do you get that flow going, da-dum, da-dum, da-dum, da-dum, da-dum, in your head? Any­way, high­ly rec­om­mend it. Real­ly enjoy it.

And I watched a film that I’ve been mean­ing to watch for decades, John­ny Dan­ger­ous, this week. Have you ever seen that?

Tony Kynas­ton: Rings a bell. Who’s in that?

Cameron: Mick­ey Rourke. Actu­al­ly, it’s got a s- [00:59:00] it’s got a great cast.

Tony Kynas­ton: Hmm

Cameron: it’s a Wal­ter Hill film,

Tony Kynas­ton: Mm-hmm

Cameron: and, uh, actu­al­ly it’s, yeah, John­ny. No, not John­ny Dan­ger­ous, John­ny Hand­some. I wrote John­ny Dan­ger­ous in my notes.

Sor­ry, John­ny Hand­some.

Tony Kynas­ton: Right,

Cameron: seen that?

Tony Kynas­ton: No. I may have. It does ring a bell, but is it, it must be fair­ly old.

Cameron: Yeah, ’89.

Tony Kynas­ton: Yeah. right

Cameron: Mick­ey Rourke, Ellen Barkin, Eliz­a­beth McGov­ern, For­est Whitak­er, Lance Hen­rik­sen, and Mor­gan Free­man.

Tony Kynas­ton: Hmm

Cameron: Music by Ry Cood­er, uh, and direct­ed by Wal­ter Hill.

Tony Kynas­ton: Mm-hmm

Cameron: not great. Um, over-the-top per­for­mances from every­body, but I tell you why it’s inter­est­ing. Um, yeah, it’s Wal­ter Hill, great direc­tor, big fan of Wal­ter Hill’s stuff, but, this not, not one of his best works.

But, you know, The War­riors, 48 Hrs., Streets of Fire, wrote the screen­play for The [01:00:00] Get­away. You know, he had a great career. Pro­duced

Tony Kynas­ton: um,

Cameron: Dead­wood, Alien. Oh yeah, a recent one

Tony Kynas­ton: Hard Times. No, it’s an old one,

Cameron: Oh, yeah

Tony Kynas­ton: which was, um, which was inter­est­ing.

Cameron: Hard Times, yeah. Who was in that?

Tony Kynas­ton: the– Oh, who’s the

Cameron: Charles Bron­son?

Tony Kynas­ton: Bron­son, yeah, play the

Cameron: Yeah. Yeah

Tony Kynas­ton: almost like a, a West­ern, sort of High Plains Drifter. The man with no name drifts into town and fights peo­ple for mon­ey and takes down the bad guys and drifts out again

Cameron: Wow, that’s my dream life. Um

Tony Kynas­ton: was fan­tas­tic in it. real­ly

Cameron: James Coburn. Yeah, I watched, what did I. Oh, um, it was that thing you told me about. Um, was­n’t it, No

Tony Kynas­ton: thing about like watch­ing a 1975 ver­sion of James Coburn is he’s, he’s young, he’s fit,

Cameron: Yeah

Tony Kynas­ton: up on the balls of his feet. He’s huge smile, [01:01:00] grifter, talk his way out of every cor­ner. Yeah, real­ly impres­sive

Cameron: I’m try­ing to remem­ber some­thing of his I watched recent­ly which was good, but I can’t remem­ber what it was. Any­way, back to this, um, this thing. Um, so the inter­est­ing thing about this is the plot is Mick­ey Rourke is a small-time crim in New Orleans who has these mas­sive facial defor­mi­ties. He looks like The Ele­phant Man when the film starts.

And he gets arrest­ed, his, his, uh, crew betray him and, uh, he gets, he gets sent away. And For­est Whitak­er’s this plas­tic sur­geon who has this the­o­ry that he only fell into a life of crime because of the way he looks, and if he fixed the way he looks, he would, you know, be reha­bil­i­tat­ed. So he does this amaz­ing plas­tic surgery and makes him look like peak, uh, Mick­ey Rourke.

So he goes from being The Ele­phant Man to Mick­ey Rourke. And then of [01:02:00] course, won’t spoil it, but, you know, one thing leads to anoth­er and he goes on a revenge killing spree and all this kind of stuff. But of course, the irony is in real life, Mick­ey Rourke looked like Mick­ey Rourke

Tony Kynas­ton: had a lot of plas­tic surgery

Cameron: and now he looks like The Ele­phant Man.

So he did the reverse of this film and it was bizarre. I was like, “Oh my God,” like he, he lived the oppo­site of this. Maybe he thought, “Maybe my life is only so good because I’m so hand­some. What if I, uh, looked like The Ele­phant Man? I won­der h- what my life would be like then.” Any­way, but yeah, the, the, the per­for­mances are over the top.

I mean, I love Ellen Barkin and Lance Hen­rik­sen, even For­est Whitak­er’s per­for­mance is over the top. The only guy who real­ly gets away w- is Mor­gan Free­man. He’s doing Mor­gan Free­man and Mor­gan Free­man doing Mor­gan Free­man is, “Well there, boy,” uh, you know, “Ah,” you know, [01:03:00] he’s doing the whole thing. Any­way, yeah

Tony Kynas­ton: Wal- the Wal­ter Hill movie I saw, Hard Times, was also set in New Orleans. Must

Cameron: Oh, you must love New Orleans. Oh, speak­ing of New Orleans, Chris­sy and I fin­ished Big Shark, Tom­my Wiseau’s last film about a big shark that attacks New Orleans. And when I say a big shark, it’s the size of a, you know, a, a dou­ble-deck­er bus big shark, and it was, it was bonkers. Absolute­ly cra­zi­est thing I’ve ever seen, this film.

Had us in hys­ter­ics the whole thing. It was fan­tas­tic. High­ly rec­om­mend it, if you like Tom­my Wiseau, which most peo­ple don’t. But it was, yeah, just. The script made no sense, spe­cial effects were ter­ri­ble, act­ing was ter­ri­ble. No con­sis­ten­cy from one scene to anoth­er. You’re like, “What? They were just. They were in one car, now they’re in a dif­fer­ent car.

Their cos­tumes have changed. [01:04:00] about the fact they just got attacked by a giant shark, and they’re going to a pub and drink­ing beer. Like, what, what, what’s, what’s hap­pen­ing right now? Hon­est” Yeah, but it’s great. Any­who, that’s it. That’s all I got for you

Tony Kynas­ton: Good. done.

Cameron: All right. Go talk about Amer­i­ca.

Tony Kynas­ton: Yeah

Cameron: All right. Thank you, TK. Hap­py hunt­ing, every­one