Squiggles Within Ranges: QAV AU #955

QAV AU 955

Cameron: [00:00:00] Wel­come back to QAV Aus­tralia. This is, um. God, I don’t even know. Hold on. I don’t even have my notes in front of

Tony Kynas­ton: It’s the 10th of Novem­ber.

Cameron: that’s not

Tony Kynas­ton: 10th of Novem­ber 2026. That’s all you need to know

Cameron: Yeah. Uh, uh, no, it’s not QAV Amer­i­ca

Tony Kynas­ton: 1:04,

Cameron: Aus­tralia nine-

Tony Kynas­ton: PM

Cameron: five How did the cup go, Tony, for

Tony Kynas­ton: Good. Yeah, good day. Um, well, my, one of my tips got up at $7, so that was fine. Points of– point of order. That pays for the last six years of bad tips.

Cameron: Did­n’t you say in your, uh, uh, con­vers- in your email or what­ev­er, your post about it, that it was the sort of every­one’s tip?

Tony Kynas­ton: That was the mar­ket favorite. It, it– I think it may have start­ed sec­ond or third favorite. Um, but yeah, it was one of the favorites. Yeah

Cameron: And you had a good

Tony Kynas­ton: I did. Yeah, we’ve had a busy week. We’ve had, um, [00:01:00] guests stay­ing with us. Um, back, back and for­ward to Mel­bourne a few times. Went out to the track on Sat­ur­day to the mem­bers’ din­ing room, which was love­ly.

Um, yeah, had var­i­ous oth­er things hap­pen­ing.

Cameron: in

Tony Kynas­ton: I was, yeah, I dri­ve. Yeah.

Cameron: The only sober,

Tony Kynas­ton: Well, the inter­est­ing thing was, so the last Sat­ur­day is, is get­ting to be a bet­ter race day, prob­a­bly the best race day of the week and if you, if you wan­na see good hors­es run. Like Cup Day, the Mel­bourne Cup itself is good, but the under­cards, like a mid­week meet­ing, it’s not that great.

Um, Der­by Day used to be the pre­mier rac­ing day, and it pos­si­bly still is, but, um, the Sat­ur­day now has a few bet­ter races in it, so it’s real­ly good. But, um, tra­di­tion­al­ly it’s, it’s prob­a­bly been the low­est atten­dance at the track. It’s used to be called Fam­i­ly Day, so peo­ple would sort of unwind and bring their kids along and pic­nic rug and stuff like that, and they’d get about 30,000 peo­ple.

But now the rac­ing’s improv­ing. They had a big­ger crowd, and they [00:02:00] had some­one I’d nev­er heard of before called Fish­er, who’s a DJ. And after the races, we were sort of stand­ing around talk­ing, and we looked out the win­dow. There must have been tens of thou­sands of young peo­ple walk­ing to the end of the track to see Fish­er play.

So the crowd was big, big­ger, much big­ger than usu­al, and then all these young peo­ple stayed on to par­ty on after­wards. It was real­ly good to see, actu­al­ly.

Cameron: Yeah, it’s

Tony Kynas­ton: Hmm

Cameron: DJs

Tony Kynas­ton: Yeah. I was gonna say it was live music, and I guess it was played live, but I, I was jok­ing I’ll go and plug my iPhone in and they, they can. It’s the same thing

Cameron: so a, a, a pri­ma­ry school friend of Hunter and Tay­lor’s came over for din­ner here a week or two ago with Hunter. Um, and I’ve caught up with him a cou­ple of times recent­ly. Uh, Hunter’s invit­ed me out for drinks with this guy. Cool guy. But, um, he’s, he’s a p- DJ, part-time DJ. Um, I, I, [00:03:00] I said, “I’ve always want­ed to ask this ques­tion, like, how much of what DJs do.”

‘Cause, like, we watch YouTubes of DJs

Tony Kynas­ton: Mm-hmm.

Cameron: They, they, they seem to do very

Tony Kynas­ton: Mm-hmm.

Cameron: much of y- what you’re doing is just for show,

Tony Kynas­ton: It’s a, it’s a bit of this and a bit of this, and

Cameron: yeah.

Tony Kynas­ton: it. Arms in the air, that’s about it. Yeah

Cameron: said, “No, the cut­ting, the tran­si­tions between tracks is real because you wan­na the vibe of the audi­ence and see what they’re lik­ing and not lik­ing, and you wan­na adjust it accord­ing­ly.” I was like, “Yeah, but do you, though? Could­n’t you just, like, say to AI, just trans, you know,

Tony Kynas­ton: Yeah

Cameron: play?” He goes, “Yeah, but it’s.” He said, “Peo­ple wan­na look at some­thing.” So I think a large part of it is the guy or the girl up the

Tony Kynas­ton: Hmm

Cameron: and a weird hair­cut

Tony Kynas­ton: And tats.

Cameron: on.

Yeah, that’s what for, is to look at

Tony Kynas­ton: a buck­et hat.

Cameron: A buck­et

Tony Kynas­ton: Yeah, you got­ta have a buck­et hat if you’re a DJ.

Cameron: Re-

Tony Kynas­ton: Yeah. It used to be that way, Cam. I mean, like, you go back to the ear­ly days of rap and they had the two dif­fer­ent [00:04:00] turnta­bles going, and they had to match the speeds on the vinyl and

Cameron: Have

Tony Kynas­ton: right track. Mm, nah

Cameron: The Get Down? High­ly rec­om­mend it. I’m sure we’ve talked about it before. Baz Luhrmann put it

Tony Kynas­ton: All right

Cameron: ago. It’s based on. It’s, it’s a fic­tion­al hip hop boys band in the Bronx or some­thing like that. But it’s also got Grand­mas­ter Flash and peo­ple like that in, or char­ac­ters

Tony Kynas­ton: yeah

Cameron: But it’s set in New York in the late ’70s. It’s the rise of DJing, and he explains, “Well, we put the chalk on the thing so I know

Tony Kynas­ton: Yeah

Cameron: and he’s explain­ing the whole thing to him. So it’s kind of like a doc­u­men­tary on scratch­ing and hip hop and DJing with a dra­mat­ic sto­ry­line that goes along with it.

It’s real­ly, real­ly fun, real­ly good.

Tony Kynas­ton: Nika

Cameron: We real­ly enjoyed it. It was only, like, one, one, maybe two sea­sons he did. I don’t know. One or two. So my oth­er ques­tion for you, Tony, is, um, have you, uh, slept with any Chi­nese spies late­ly? Because I [00:05:00] just wa- Like, it seems like a pret­ty obvi­ous thing not to do. But appar­ent­ly rich guys, uh, can’t say no to attrac­tive Chi­nese spies.

So

Tony Kynas­ton: I won­der if he dou­ble-dat­ed with Trump and Putin.

Cameron: Or Rupert Mur­doch and Wen­di

Tony Kynas­ton: Oh, did you see him.

Cameron: of mar­riages

Tony Kynas­ton: Did you see, uh, Rupert Mur­doch? He was tak­en to some, I think it was the Amer­i­can Aus­tralian Asso­ci­a­tion din­ner or some­thing. Um, they just. Look it up, Google it. There’s, um, he’s, he’s helped out of the car by some­one. He’s got his wife, hold­ing him up on one side and a, like a bounc­er hold­ing him up on the oth­er side.

He can bare­ly move his feet,

Cameron: Hmm

Tony Kynas­ton: the, um, into the audi­to­ri­um.

Cameron: Hmm.

Tony Kynas­ton: fine. He’s like, he’s get­ting very old.

Cameron: prophets.

Tony Kynas­ton: Mm.

Cameron: Yeah. Well, well, well, well, well. So no to, no to the affairs with Russ­ian– with Chi­nese

Tony Kynas­ton: Hmm. No, I haven’t had any affairs [00:06:00] with with Chi­nese or oth­er­wise.

Cameron: What a, what a rook­ie, what a rook­ie mis­take

Tony Kynas­ton: it? Yeah.

Cameron: pay for. Hmm. I’m sure. Well, any­way, uh, I’ve got lots of mar­ket news. You haven’t been around for a cou­ple of weeks.

Uh, there’s been a lot hap­pen. Um, before I get into com­pa­ny news, though, I want­ed to talk to you about the biggest bank heist in his­to­ry.

Tony Kynas­ton: Mm-hmm

Cameron: Um, I want­ed to talk about that last week, but you weren’t here. North Kor- this is a cou­ple of weeks old now. Uh, The Guardian, Sat­ur­day, 31st of Octo­ber. North Korea is like­ly cul­prit behind $6.3 bil­lion cryp­to hack, the largest heist in his­to­ry. Exchange says it will cov­er cus­tomer loss­es as it scram­bles to freeze affect­ed assets with about $3 bil­lion locat­ed so far. Uh, cryp­to, it’s the future, Tony. It’s the future [00:07:00] of some­thing. Um, I don’t know. The biggest, the biggest heist in his­to­ry. Um, I like how they just go, “Oh, it’s prob­a­bly North Korea.” Like, I saw the, the, all the fridges in France and oth­er parts of Europe that got hacked last week. Now they’re say- Paris are say­ing, “Oh, it’s, it was Iran. They think it was Iran.” Got any evi­dence? Ah, no, but, you know, uh, one sto­ry’s as good as anoth­er. Um, what do you think about cryp­to hacks? Did you get some amuse­ment out of that?

Tony Kynas­ton: I did, yeah. Um, from what I read, like I think they’ve– Yeah, it’s the future of mon­ey, yeah.

Cameron: Yeah

Tony Kynas­ton: what I read, they, they stopped half of it before it left the wal­lets or some­thing, or left the exchange, but there’s still half out there. So yeah. You think it’s safe, it’s not

Cameron: And this– And the, the, the guy who ran Binance was in jail in the US. I think Trump gave him a par­don, uh, at some point. I can’t remem­ber if it was the first term or the sec­ond term, but, uh, [00:08:00] he got out to be the vic­tim of the largest heist in his­to­ry

Tony Kynas­ton: Well, yeah. A‑and, uh, you know, Bit­coin is down since the Blue Nami last week in the US.

Cameron: The Blue Nami.

Tony Kynas­ton: Haven’t heard that one, the Blue Nami? Okay. And, um, you know, uh, it’ll be inter­est­ing to see what the tech bros do to get in good with the Repub­li­can Con­gress– uh, sor­ry, a Demo­c­rat Con­gress after they cozied up to Trump and, and, uh,

Cameron: Well, they’re going back to call­ing it AI instead

Tony Kynas­ton: SOI.

Cameron: now. They, uh, chang­ing their names back again

Tony Kynas­ton: Yeah, right. Uh

Cameron: I don’t know that they’re gonna have to wor­ry about it. I think now that Stephen Miller’s, uh, Trump’s chief of staff, we, we may see the games afoot in the next cou­ple of months before they actu­al­ly take, take office.

We’ll see what

Tony Kynas­ton: Mm-hmm

Cameron: But yes, that was, uh, that was some­thing that we did­n’t get to talk about last week. So we had to deal with the Brazil­ian elec­tion fall­out port­fo­lio. Now we’re [00:09:00] deal­ing with the Blue Nami elec­tion result in the US port­fo­lio. There’s been a lot of retreats. Plus, you know, uh, Jensen Huang’s, uh, dal­liance and the impacts of that.

Uh, chip stocks are down. They’ve rebound­ed a lit­tle bit, but they’re still most­ly down. So it’s pret­ty tur­bu­lent times

Tony Kynas­ton: is

Cameron: noth­ing going on in the Strait of Hor­muz worth talk­ing about or

Tony Kynas­ton: Oil price is down

Cameron: It is, but why? There’s like, noth­ing’s hap­pen­ing. There’s no, no deals, there’s no, you know, re- resump­tion of hos­til­i­ties real­ly to speak of.

A cou­ple of minor attacks

Tony Kynas­ton: well s-

Cameron: Island

Tony Kynas­ton: some­thing is hap­pen­ing because I read today in, I think it was in The Wall Street Jour­nal, that, um, the sup­ply short­falls that were caused by the clo­sure of the Straits have all been plugged and, uh, they’re start­ing to be a build-up of reserves again, which is one of the [00:10:00] rea­sons why the oil price is down.

‘Cause don’t for­get the oil price is a futures price. It’s not the last trad­ed price for a bar­rel of oil. It’s a futures price. Um, so it’s, it’s get­ting ahead of the curve. Uh, and part of that was the Blue Nami that, um. I, I don’t know if that’s, if this is an accu­rate fore­cast, but I don’t know if Con­gress will be able to rein Trump in when he’s on for­eign pol­i­cy.

But, um, mar­kets seem to think that a Demo­c­ra­t­ic Con­gress would try and resolve the Iran war faster than. I know. That’s what I’m think­ing too.

Cameron: How?

Tony Kynas­ton: I, I,

Cameron: be

Tony Kynas­ton: I, I. You’re ask­ing the wrong per­son, but the. Go and talk to the futures traders in the oil mar­ket, ’cause I think it’s gonna hap­pen. I, I had a good laugh when,

Cameron: yeah

Tony Kynas­ton: 3% up when the elec­tion results came out, and the next day it went down 3% when peo­ple real­ized the Democ­rats had won.

Cameron: Oh, well. Fun­ny times. Fun­ny times. [00:11:00] Um, all right, so I’ve got a whole bunch of news sto­ries that I’ll run through pret­ty quick­ly. Um, so our mar­ket has actu­al­ly been doing rel­a­tive­ly okay, uh, in the last few days. Um, if I look over the course of the last week, we’re up. Uh, a week ago, 4th of Novem­ber, we were, like, just below 9,000.

Today, at the time of record­ing, we’re at 9,270, the All Ords. So it’s, uh, sort of shrugged off the, uh, US elec­tion. Did­n’t seem to wor­ry about it too much at all. The S&P 500, on the oth­er hand, uh, uh, well, a week ago it was, um, th- which was the day before the elec­tion, it was around about 7,567. Um, jumped up, then again crashed back down.

Now it’s back up to around 7,555 so it’s about where it was a week ago. It’s sort of recov­ered, uh, from its p- [00:12:00] and crash

Tony Kynas­ton: It’s like noth­ing hap­pened.

Cameron: Yeah. not, not too, uh, dif­fer­ent actu­al­ly. Gold is up in the last week. Um, the Bit­coin is down

Tony Kynas­ton: And miss­ing.

Cameron: the

Tony Kynas­ton: And miss­ing.

Cameron: Yeah.

Tony Kynas­ton: Down and out.

Cameron: Yeah, yeah, yeah. Um, ANZ report­ed, uh, $7.6 bil­lion in cash prof­it and sub­se­quent­ly fell 3.2%. said the prof­it was up 31%. Also took a $582 mil­lion charge for loans it expects to lose mon­ey on, which is up 141 mil­lion.

Final div­i­dend was 83%. We hold ANZ as a dis­clo­sure in a num­ber of our port­fo­lios. Uh, at least I do. I’m not sure if you

Tony Kynas­ton: I do. I own ANZ. I’ll declare that too. Yeah

Cameron: What do you think about their [00:13:00] result and the share price, uh, sub­se­quent­ly?

Tony Kynas­ton: Yeah, so the, I think the main thing. Well, there’s a cou­ple of minor issues. The, I think they missed guid­ance on a cou­ple of, of the num­bers, but not by much. Uh, but the main thing I think, which has dri­ven the sell-off, uh, of 3%, um, is, uh, the increase in cred­it pro­vi­sions. So these are. This is mon­ey held for bad and doubt­ful debts on mort­gages, uh, pre­dom­i­nant­ly.

Uh, and it’s tra­di­tion­al­ly a good time to buy banks when they’re reduc­ing those pro­vi­sions and, and a bad time to buy banks when they’re increas­ing them. So they’ve just start­ed increas­ing them. Um, and so that’s, that’s why I think the mar­ket has, has sold off a lit­tle bit. It, um, I, I’m not sell­ing. I’m gonna use my nor­mal sell sig­nals for this stock.

On the flip side, um, I looked at the result a lit­tle bit today, and they’ve, uh, Mr. Matos, Nuno Matos, the [00:14:00] CEO, has now com- pret­ty much com­plete his cost-cut­ting exer­cise. Some­thing like three and a half thou­sand peo­ple were cut from the staff at ANZ, and he’s now gonna focus on going for growth. And he is hint­ing, and he.

In fact, I think he said that he’s look­ing at a re-entry back into the wealth busi­ness, the wealth man­age­ment busi­ness, which the banks all got o‑out of after the Hayne Roy­al Com­mis­sion. Um, he was rea­son­ably coy about say­ing what that would look like, and they’re still inves­ti­gat­ing it and research­ing it, um, I guess to see what they can do to, um, get back into the mar­ket with­out, um, caus­ing any of the infrac­tions that the Hayne Roy­al Com­mis­sion uncov­ered.

And the, the biggest one was ver­ti­cal sell­ing. So, um, the, the bank would gen­er­ate a prod­uct and then give it to a sales force to go and sell, and when cus­tomers thought they were get­ting inde­pen­dent advice or ad- uh, uh, gen­er­al advice, they were get­ting, uh, sold an ANZ prod­uct. It. And I should­n’t, I should­n’t say an ANZ prod­uct, a prod­uct of the man­u­fac­tur­er.

[00:15:00] So it was­n’t just ANZ that was, um, falling foul of those rules, it was all of the large insti­tu­tions. And I, I can’t even recall with- whether ANZ was called out in the Hayne Roy­al Com­mis­sion. But as a gen­er­al rule, the banks were mak­ing their own prod­ucts and then sell­ing them to cus­tomers. Um, and that may not have been in the best inter­est of cus­tomers because that prod­uct may not have been the best prod­uct for them.

That’s kind of my sum­ma­ry of, of why banks got out of wealth man­age­ment. Uh, so he’s try­ing to find a way back into it, and that may be a growth engine for them. So I, I think the sell-off was in rela­tion to the cred­it pro­vi­sion­ing, but it has­n’t, it has­n’t gone much fur­ther than that, uh, than the ini­tial response, um, as peo­ple wait to see what he does to, uh, to grow the busi­ness

Cameron: ANZ faced strong crit­i­cism dur­ing the hear­ings for fail­ing to hand over crit­i­cal inter­nal emails to the Roy­al Com­mis­sion in a time­ly man­ner. Com­mis­sion­er Hayne raised seri­ous con­cerns regard­ing ANZ’s co- ANZ’s con­duct and poten­tial breach­es of the law relat­ing to con­sumer cred­it and funer­al insur­ance prod­ucts mar­ket­ed to [00:16:00] indige­nous com­mu­ni­ties. The inquiry high­light­ed sys­temic issues around orga­ni­za­tion­al com­plex­i­ty, prod­uct intri­ca­cy, and poor finan­cial advice through sub­sidiaries such as RI Advice Group, which lat­er faced enforce­ment action and penal­ties. So yeah, they, uh, were named and shamed

Tony Kynas­ton: Okay.

Cameron: whole

Tony Kynas­ton: As they, as all the big banks were pret­ty much. Yeah

Cameron: Well, um, yeah, I was just look­ing at their port­fo­lios.

I hold them in a bunch of live in the mod­el port­fo­lio. In some cas­es, I’ve held them since Octo­ber twen­ty twen­ty-three. They’re up about fifty-three, fifty-four per­cent since then. Um, sort of sur­pris­es me a lit­tle bit to have held, you know, one of those blue-chip stocks that long.

Tony Kynas­ton: Mm-hmm. And plus they’ve been pay­ing a decent div­i­dend as well

Cameron: yeah, so there you go.

I mean, even those can per­form very well. I mean, you would think ANZ, it’s not gonna go up by fifty per­cent [00:17:00] uh, a few years, but there you go. Some­times we get it. Well, what was going on in Octo­ber twen­ty twen­ty-three when they were– made them so cheap?

Tony Kynas­ton: Uh, from mem­o­ry, there was a cou­ple of things. So it was get­ting towards the end of the last CEO’s, uh, tenure, and they were. Yep, and they were buy­ing, uh, Sun­corp Bank, and so some peo­ple did­n’t like that and were sell­ing the stock off and thought it was too high a price. And then there was all the, um, issues around, uh, what was it called?

ANZ1, I think it was called, the IT, um, project that was going to put bank­ing on your phone and just kept push­ing out deliv­er­ables. So, uh, even­tu­al­ly, uh, you know, not just for those rea­sons, but he’d been there for four or five years. The CEO was replaced, um, and the shares have been going up since then pret­ty much.

Cameron: We bought it cheap.

Tony Kynas­ton: Hmm. Which, which we like to do.

Cameron: ANZ,

Tony Kynas­ton: of the game

Cameron: RBA raised rates by a quar­ter of a [00:18:00] per­cent­age point

Tony Kynas­ton: Hmm.

Cameron: Annu­al infla­tion hit 4.3% in Sep­tem­ber. RBA says it expects infla­tion to get back to the mid­dle of its tar­get range around mid-2028. Uh, good luck with that.

Tony Kynas­ton: Well, a lo- a lot’s kin­da, a lot’s dri­ven by oil, so if your price is off some­thing like 16%, it’d be inter­est­ing to see what that means for infla­tion in the next quar­ter, if it stays down low or goes low­er. You know

Cameron: Well, I would­n’t say it’s low right now, but it’s low­er.

Tony Kynas­ton: cor­rect

Cameron: Yeah, it seems like a lot of stuff is out of their hands, as we’ve talked about before, right?

Tony Kynas­ton: Yeah. And I guess the oth­er, the oth­er point about infla­tion is it’s a com­par­i­son of cost this year to last year. So even when infla­tion comes back to their range of s- like around 2.5%, it’s costs may still have gone up 50% over the last three or four years.

Cameron: Yeah.

Tony Kynas­ton: Yeah. So it,

Cameron: Mm.

Tony Kynas­ton: mm, it does­n’t nec­es­sar­i­ly re- im-improve cost of liv­ing, it [00:19:00] just stops it from get­ting worse, if that makes sense.

Yeah.

Cameron: So some news from some of the stocks that, uh, we tend to fol­low. Ser­vice Stream, SSM, says they’re gonna buy a com­pa­ny called Pro­grammed $975 mil­lion. Pro­grammed main­tains build­ings and indus­tri­al sites and sup­plies staff across Aus­tralia and New Zealand. Stream says they’re gonna bor­row, uh, and raise, uh, 475 mil­lion at $2.03 a share.

They closed at $2.20 last Fri­day. about 38% more shares on issue. Uh, what do you think about that, Tony? Uh, SSM, we don’t hold SSM f- uh, at the moment, appar­ent­ly

Tony Kynas­ton: Well, that’s good because it just became a sell.

Cameron: Oh, good

Tony Kynas­ton: Yeah, so it’s, it. I don’t think the mar­ket’s lik­ing the, the deal. It’s, so it’s been sold off.

Cameron: Right

Tony Kynas­ton: And Pro­grammed’s, um, an inter­est­ing com­pa­ny. [00:20:00] It, it was list­ed many years ago. Um, I don’t know if the busi­ness mod­el has changed, but it was an inter­est­ing busi­ness mod­el which I had used in past cor­po­rate life, where you pay, like, an annu­al fee to Pro­grammed, and then they, um, do what­ev­er main­te­nance is in the plan.

You, like, you agree at, like, a five-year plan that includes we’re gonna paint the build­ing in year four, or we’re gonna recar­pet in year two, or we’re going to, you know, blah, blah, blah. Um, so it allows you to, uh, keep your costs con­stant whilst get­ting all the CapEx work done. So I thought that was always an inter­est­ing, uh, prod­uct that they sold and was kind of unique.

Um, but they’ve, they’ve had a bit of a rocky time over the years. They were list­ed, they were delist­ed. Um, I don’t know if the busi­ness has changed since it’s been delist­ed, um, but looks like Ser­vice Stream’s pick­ing it up

Cameron: I just looked at our his­to­ry with SSM. I actu­al­ly sold it in March of this year when it breached a three-point sell line for us. E- But it was up 108%, uh, when we [00:21:00] sold it, since we’d bought it in late 2023. It sub­se­quent­ly went up to $2.68. We sold it at, um, Went up to $2.68, but has then come back and is now trad­ing about $2.09. So yeah, we left mon­ey on the table with that one, but, uh, that’s how, that’s how it works some­times

Tony Kynas­ton: We would have bought some­thing else and hope­ful­ly it’s gone up the same or more. Yep

Cameron: Anoth­er good old QAV stock is SXE, South­ern Cross Elec­tri­cal Engi­neer­ing. They’ve bought a busi­ness called Entire. Entire installs and ser­vices fire pro­tec­tion, heat­ing, and air con­di­tion­ing sys­tems. They paid $70 mil­lion in cash up front. Um, appar­ent­ly it could go up to 112 mil­lion if Entire hits its prof­it tar­gets. SXE, I think we still hold [00:22:00] those. Let me see

Tony Kynas­ton: So that’s– So the share price has come off a lit­tle bit, but I’m, I’m won­der­ing whether that’s not just because of this acqui­si­tion, but, um, SXE has done real­ly, real­ly well in the last few years because it’s been pro­vid­ing ser­vices to data cen­ter con­struc­tions. And of course, that’s one of the issues that, um, one of the things which Amer­i­cans are say­ing or the Democ­rats in Amer­i­ca are say­ing they want to cur­tail is, is data cen­ters.

So, um, there’s been a cou­ple of issues in Aus­tralia mir­ror­ing that, that peo­ple don’t want data cen­ters near­by. So, um, I think that’s one of the rea­sons why the SXE share price has, has come off a lit­tle bit recent­ly.

Cameron: Well, it’s actu­al­ly up 7% today. We’ve got it in two live port­fo­lios, have held it since Octo­ber 23 and Novem­ber 23. Uh, the Octo­ber 23 one is up 396%, and the Novem­ber 23 one is up 372%. Cur­rent share price is $3.87. Our [00:23:00] three-point sell price on it is 88 cents.

Tony Kynas­ton: That one’s gonna ride for a while.

Cameron: back.

Yeah.

Tony Kynas­ton: Hmm

Cameron: it does­n’t go all the way back down to that. Uh, so good job, SXE. I mean, uh, that’s. I, I know when­ev­er they come up, it’s just an exam­ple to me of one of these busi­ness­es that just seems to con­tin­ue to do well. they, they know their busi­ness, they do a good job, and we just keep, rid­ing it up,

Tony Kynas­ton: Yeah. Cheer­ing them on

Cameron: Yeah, that’s one of those exam­ples that, um, you know, we talk about from time to time where, um, we don’t sell our win­ners. We don’t rebal­ance, you know, because a well-run busi­ness could keep being well-run and keep per­form­ing well.

Tony Kynas­ton: Cor­rect.

Cameron: Karoon Ener­gy is also in the news. Looks like I don’t own any Karoon Ener­gy at the moment, but they’ve put their Brazil­ian oil project into a design. The first stage of Neon is now esti­mat­ed at [00:24:00] 800 to 950 mil­lion US dol­lars, down from 900 mil­lion to 1.2 bil­lion. for the first stage. They’re look­ing for a part­ner to take 30 to 50% before they com­mit to build­ing. Uh, and Brazil has appar­ent­ly extend­ed its tem­po­rary 12% tax on crude oil exports through Decem­ber. you know, we all own a num­ber of Brazil­ian busi­ness­es in our US port­fo­lio, and some of them are doing okay after the elec­tion, some not so much. Uh, so it’s inter­est­ing to see any­one that’s per­sist­ing with, uh,

Tony Kynas­ton: Mm-hmm.

Cameron: right now

Tony Kynas­ton: Um, they’re also a sell too if, uh, you have a look, so that’s prob­a­bly why we don’t own them. Um, and sp- and they’re spend­ing mon­ey on this project, uh, to get it to at least the next stage. It’ll be inter­est­ing to see if they can find a part­ner going for­ward to actu­al­ly build it

Cameron: Look­ing at some of the, uh, stocks that we’ve talked about in [00:25:00] Brazil, not that we necess- own nec­es­sar­i­ly, but, uh, PagSe­guro Dig­i­tal down twen­ty-six per­cent since we talked about them in April, and Ban­co Brade­sco, BBDO, is down twen­ty-nine per­cent since we talked about them in August. They’ve been hit real­ly bad­ly after the elec­tion.

They were both doing okay before the elec­tion. Petro­bras is still up, though, two per­cent, the oil com­pa­ny. Uh, Reg­is Resources, a con­trac­tor died on Fri­day at the Duke­ton South gold oper­a­tion in WA. That’s, uh, unfor­tu­nate. They’ve had to shut the pro­cess­ing plant dur­ing the inves­ti­ga­tion. Um, I don’t think, uh, it’s impact­ed the share price a great deal.

We do own a cou­ple. We own RRL in a num­ber of port­fo­lios. One we’ve owned since March twen­ty twen­ty-five. It’s up a hun­dred and [00:26:00] fif­teen per­cent, one of the live port­fo­lios. But, uh, I did look to see if that was gonna have a big impact on the share price. I don’t think it has so, but that’s, uh, still very unfor­tu­nate when those sorts of things

Tony Kynas­ton: It is

Cameron: busi­ness

Tony Kynas­ton: It is unfor­tu­nate, I agree

Cameron: Uh, what else we got? Qan­tas put its first half fuel bill at 3.75 bil­lion, which is up from 3.6 bil­lion. It still expects to earn 8 to 10% more per seat kilo­me­ter across its domes­tic and inter­na­tion­al busi­ness­es. Uh, Tay­lor back from LA, uh, in Decem­ber for a week, and he told me about what the air­fares are like.

Uh, fly­ing from LA to Bris­bane is rel­a­tive­ly inex­pen­sive. Get­ting back

Tony Kynas­ton: Oh, real­ly? Wow

Cameron: Flights out of Aus­tralia to the US are insane­ly expen­sive, so

Tony Kynas­ton: I won­der why that is

Cameron: Oh, I imag­ine it’s a [00:27:00] com­bi­na­tion of petrol and, uh, what­ev­er. Yeah. I think, I think it’s also a bad time, peo­ple fly­ing back, fly­ing to the US for, you know, Christ­mas, those sorts of

Tony Kynas­ton: Right. Okay

Cameron: Sort of peak trav­el. I thought that most, a lot of Aus­tralians weren’t going to the

Tony Kynas­ton: Yeah, that’s what I was, that’s what I was think­ing too. I won­der why it was dear­er. That would nor­mal­ly mean that lots of peo­ple are going to the US.

Cameron: Hmm. Yeah, well, the prices are hell­ish­ly expen­sive, he said

Tony Kynas­ton: Wow. Does that mean you’ll stay over here? Stay in Bris­bane? No, he’s going back

Cameron: no. He’s bring­ing his Amer­i­can girl­friend

Tony Kynas­ton: Yeah.

Cameron: for the week.

Tony Kynas­ton: Nice

Cameron: Yeah. Uh, McMa­hon, MAH, closed its pur­chase of WA engi­neer­ing and main­te­nance con­trac­tor Aspect. The price was 75 mil­lion, which was about five times Aspec­t’s unau­dit­ed annu­al prof­it before inter­est and tax. 30 mil­lion due up front with the rest tied to retain­ing staff and meet­ing prof­it tar­gets. MAH is [00:28:00] a com­pa­ny that’s on and off our buy list a lot. We do hold them in a port­fo­lio. Uh, have held them since Dec- uh, Novem­ber 25. About a year, and it’s up rough­ly 100% since then. So good job, McMa­hon

Tony Kynas­ton: Yeah.

Cameron: That’s it?

Tony Kynas­ton: That’s it? Got noth­ing, no?

Cameron: it?

Tony Kynas­ton: No. Good on them. That’s pret­ty good.

Cameron: that I

Tony Kynas­ton: Yeah

Cameron: Yeah. KMD, you talked about KMD not that long ago. Did a bit of a Pulled Pork on them,

Tony Kynas­ton: Hmm. I did

Cameron: They, they got some news. They gave the US group BlueS­tar Alliance an exclu­sive look at the books for a poten­tial pur­chase of the whole Kath­man­du and Rip Curl busi­ness. Pre­lim­i­nary talks. BlueS­tar Alliance sounds like, uh, an air­line

Tony Kynas­ton: Sounds like at the Wall Street, Anna Cott Steel.

Cameron: yeah. Uh, they’re a glob­al brand man­age­ment [00:29:00] firm that builds and grows icon­ic con­sumer brands across fash­ion, lifestyle, and enter­tain­ment accord­ing to Google. Um, you did talk about some of the prob­lems

Tony Kynas­ton: Yeah.

Cameron: hav­ing. Is this sur­pris­ing?

Tony Kynas­ton: Not at all. No, I, I think it was, um– I think they were even ear­li­er on in the process, they tried to sell their Rip Curl brand and it had fall­en through. So it’s not sur­pris­ing they’ve– they’re try­ing to sell the whole busi­ness, I guess, or some of the brands still.

Cameron: Hmm. Hmm. So I guess we hold them, as I said, and we’ll just wait to see how that, uh, plays

Tony Kynas­ton: Yeah, it seems like ear­ly days at the moment

Cameron: Mm. Share price is up 3% today, so some­thing’s still hap­pen­ing there. They’re up about 18% since I bought them just a cou­ple of months ago in Sep­tem­ber, so they’ve done okay for

Tony Kynas­ton: Hmm

Cameron: anoth­er one of your favorites, Auto Sports Group, ASG, has agreed to buy three new New South Wales deal­er­ships.

They’re wait­ing on approval from the ACCC. [00:30:00] Do you hold ASG? Are they

Tony Kynas­ton: I don’t. No. No, no, not at all. Um, and they’re. Well, they’ve, they’re a Schrödinger, one of the rare ones which is both a buy and a sell.

Cameron: Oh,

Tony Kynas­ton: On the three-point trend lines, yeah.

Cameron: Hmm.

Tony Kynas­ton: below its sell price.

Cameron: either.

Tony Kynas­ton: it’s below its sell price. There was an arti­cle, inter­est­ing arti­cle in the paper last week about how car deal­er­ships were doing it tough because of all the Chi­nese cheap, uh, car, car types.

Cameron: Yeah

Tony Kynas­ton: mak­ers com­ing into Aus­tralia. I don’t know how it works in Chi­na, whether they’re all sub-brands of the one big one or what, but there’s lots of dif­fer­ent brands com­ing into Aus­tralia

Cameron: Well, I don’t, I don’t pay a lot of atten­tion to these things, but I did, um, Chris­sy and I went out for a date on Sun­day lunchtime, and our car, over­heat­ed. Like, I got the lit­tle light flash­ing on and I was like, “Uh-oh.” Pulled it over, and the hose that goes to the radi­a­tor had popped off and coolant [00:31:00] had sprayed every­where.

Tony Kynas­ton: Hmm.

Cameron: I called, uh, road­side assist and

Tony Kynas­ton: did­n’t, did­n’t call Nat Rad?

Cameron: Nat Rad. No, I did­n’t call Nat Rad. I called Youi

Tony Kynas­ton: Mm-hmm.

Cameron: uh, you

Tony Kynas­ton: Mm-hmm.

Cameron: a car insur­ance com­pa­ny on our Amer­i­can show today. uh, uh, shout out to Youi. Um, I haven’t had good expe­ri­ence with them in the past, but this time they did a good job, and a tow truck came out.

And so any­way, bot­tom line is the, uh, tow truck tak­ing me to a mechan­ic’s, uh, work­shop to drop it off, and I was dri­ving through Gympie Road where there are tons of

Tony Kynas­ton: Mm-hmm

Cameron: Um, and I don’t go down there very often, I was just shocked at all of these, uh, car brands that I’ve nev­er heard of before.

There, there just seemed to be tons of them. All of these, I assume, Chi­nese EVs that, uh,

Tony Kynas­ton: Yeah.

Cameron: new to me

Tony Kynas­ton: And very cheap too. That’s– I think that’s the prob­lem the deal­ers are fac­ing is that, [00:32:00] you know, you sell a, a, a ch- a cheap Chi­nese car and you, you still make what­ev­er their mar­gin is 10%, but it’s on a small­er sales, uh, dock­et. So you’re mak­ing less mon­ey doing the same work. Yeah.

Cameron: Well, you know, that’s all I’ve got in my list of news things. Tony, what have you got?

Tony Kynas­ton: I had a cou­ple of things. We’ve, we’ve cer­tain­ly cov­ered a cou­ple of them. Um, the oil price, uh, ANZ. One thing I did wan­na just spend a minute on was, uh, it’s inter­est­ing that a lot of retail­ers are back on our buy list, so it’s no, prob­a­bly no news to any lis­ten­er that retail com­pa­nies are doing it tough at the moment.

Um, there’s been a lot of head­lines about stocks like, uh, Nick Scali, um, expe­ri­enc­ing down­turns in their busi­ness­es, but, um, might be a good time to have a look at some of these. But, uh, this week I noticed that SUL, which is Super Retail Group, Dusk, DSK, Kath­man­du, [00:33:00] which you spoke about before, and Myer are all back on our, on our buy list, although I think Myer might be still in a sell sit­u­a­tion in terms of its sen­ti­ment.

But the oth- but Super Retail, for exam­ple, is, is, um, a buy from a sen­ti­ment point of view and a QAV score point of view. So not re- rec­om­mend­ing any­thing, but we’ve often seen this before, that indus­tries, um, or sec­tors have their time on our buy list, and it looks like retail might be in that s- uh, time now

Cameron: Of course, some­thing that should have been on my list of things to talk about but isn’t for some rea­son is David Jones gone into, I don’t know, receiver­ship or liq­ui­da­tion

Tony Kynas­ton: yeah.

Cameron: Admin­is­tra­tion?

Tony Kynas­ton: Hmm

Cameron: obvi­ous­ly those sorts of retail­ers are doing it tough. I haven’t real­ly drilled into that to find out what hap­pened

Tony Kynas­ton: Uh, so it’s. From what I can tell, and I’m, I’m, maybe I’m wrong here, but it’s almost like a bit of a Chap­ter 11 in the, in Amer­i­ca. So they’re try­ing to, uh, get out of some of their store leas­es, um, and rene­go­ti­ate [00:34:00] terms. So that’s always been the prob­lems with both Myer and David Jones, is they’ve had too many stores on, um.

Back in the hey­day of depart­ment stores, and even then some­times they could­n’t afford to expand the way they did. Um, they took on too many leas­es. Too, the leas­es were too big and too expen­sive and, um, and they’re locked in for 15 years. So, uh, that’s one way to, to solve that prob­lem, is to go into admin­is­tra­tion and then, you know, play hard­ball with the land­lords and either rene­go­ti­ate or hand back the keys.

Um, so that’s prob­a­bly the biggest prob­lem. Uh, but, you know, it’s. If David Jones is in that sit­u­a­tion, then it’s, it’s, you know, they’re gonna shrink their way to great­ness. You know, how do you, how do you grow the busi­ness if you’ve got less stores and, um, you’re hand­ing back keys to land­lords? It’s, it’s, it’s gonna be a.

If it does sur­vive admin­is­tra­tion, it’ll be a much small­er busi­ness than it was going in.

Cameron: Right. if there’s a chance they might just come out of it

Tony Kynas­ton: [00:35:00] Pos­si­bly. Um, it also often, um, results in a sales sit­u­a­tion that peo­ple who are inter­est­ed in buy­ing some­thing of David Jones, what­ev­er it is, um, will start to make offers and engage with the admin­is­tra­tors as well.

Cameron: Yeah, right What else you got?

Tony Kynas­ton: I think that’s it. Just the pulled pork, which was a request, uh, on COG, COG Finan­cial

Cameron: Excel­lent.

Tony Kynas­ton: Yes. So inter­est­ing, uh, inter­est­ing request. Thanks. Uh, so, uh, that was from Peter, I think Have I got that right? Philip. Philip, sor­ry. Thank you, Philip. So he’s request­ed I do Wag­n­ers as well, both of which I’ve done in the last cou­ple of years, but, uh, hap­py to go back and have a look at this one.

So COG, strange name, COG Finan­cial Ser­vices, but COG is an acronym for Con­sol­i­dat­ed Oper­a­tions Group. Um, and that’s because they basi­cal­ly oper­ate as a con­sol­ida­tor or an aggre­ga­tor of com­mer­cial finance bro­kers around Aus­tralia. [00:36:00] And, um, so they do all these deals, uh, cre­ate like a por­tal for, uh, com­mer­cial finance, uh, bro­kers to.

These are peo­ple who basi­cal­ly go out and arrange leas­ing for small busi­ness­es. You know, you wan­na buy a trac­tor if you’re a farmer, you wan­na buy a fleet of cars if you’re a clean­ing busi­ness or what­ev­er. You can go and do a deal with a, a bro­ker who’ll, um, who sh- who’ll shop around and get you the best deal with, uh, the provider of that, uh, of that lease or, or, um, what- what­ev­er, you know, sort of struc­ture you take in terms of financ­ing your equip­ment.

Uh, and COG is the kind of engine behind all that. It, it aggre­gates all of the demand from all the bro­kers that are part of the ser­vice and then goes and nego­ti­ates with the finan­cial com­pa­nies who pro­vide the, uh, the, um, leas­es or, uh, loans or what­ev­er it is, um, and gets the best deal, uh, as a group buy­er of those things.

Um, so that’s what COG is. Don’t con­fuse them with anoth­er com­pa­ny called Cogstate, which is, like, the code is CGS. Cogstate [00:37:00] con­ducts clin­i­cal tri­als for new, for new drugs, uh, when phar­ma­cy com­pa­nies need, um, to, uh, to test, uh, um, new drugs as part of, uh, going to, uh, get approvals and then going to mar­ket.

Um, that’s a sep­a­rate com­pa­ny. So COG, C‑O-G, is the code that we’re talk­ing about. I’ve actu­al­ly, I looked back to, uh, in my notes, and I’ve actu­al­ly ana­lyzed COG Finan­cial Ser­vices twice before, uh, the last time being sev­en­teenth of June, twen­ty twen­ty-five. And back then, the stock price was a dol­lar fifty-three.

Today, it’s a dol­lar six­ty. So, uh, it’s kind of about where it was two and a bit. Well, one and a bit years ago, 18 months ago or so. Uh, it did go all the way up to two dol­lars thir­ty-two in Octo­ber 2025 and then down to a dol­lar thir­ty-one in July of this year. Uh, and it looks like it did cross, uh, the three-point trend­line sell line then, so it was a s- a sell from a sen­ti­ment point of view.

Uh, today it’s a hold, um, and it is trend­ing down a lit­tle bit, so it’s a [00:38:00] Josephine. It’s below its buy price and, um, uh, the sell price is a dol­lar forty-four. Uh, so it’s a lit­tle bit fur­ther to go for if it’s gonna be a sell, but it’s, um, it’s cur­rent­ly trend­ing down. Uh, in twen­ty twen­ty-five when I did the analy­sis, the COG busi­ness was described as Aus­trali­a’s lead­ing finance bro­ker aggre­ga­tor and equip­ment leas­ing busi­ness for small to medi­um sized enter­pris­es.

That came off the COG web­site. Uh, they describe what they do as being the roll up, a roll up part­ner with asset finance bro­kers by offer­ing the fol­low­ing ben­e­fits. They put togeth­er a large lender pan­el of over fifty asset lenders, which saves bro­kers need­ing accred­i­ta­tion with each indi­vid­ual lender and pro­vides bulk nego­ti­at­ed rates.

They pro­vide com­mer­cial loans for equip­ment pur­chas­es, every­thing from cof­fee machines to dump trucks. They also, uh, pro­vide per­son­al loans for cars, ren­o­va­tions, trav­el, et cetera. [00:39:00] Uh, they, uh, offer a car buy­ing ser­vice, which, um, offers fleet prices for, for bulk pur­chas­es. Uh, they’re in the busi­ness of, uh, financ­ing SMEs, th- for exam­ple, over­drafts or work­ing cap­i­tal loans, et cetera.

Um, they, et cetera, et cetera. They do train­ing, they do cross-busi­ness, uh, access for the, for the bro­kers. Um, but one area which was, uh, s- a part of all that, but a small part of all that, um, in twen­ty twen­ty-five is novat­ed leas­ing. And since the last analy­sis of the com­pa­ny, the busi­ness has invest­ed very heav­i­ly into this sec­tion, novat­ed leas­ing, and in par­tic­u­lar into the novat­ed leas­ing and salary sac- salary sac­ri­fice pack­ag­ing of elec­tric vehi­cles.

It’s so fun­ny, we just talked about EVs and car yards, but it’s been a bit of a boom in Aus­tralia and, uh, peo­ple w‑will, [00:40:00] will prob­a­bly have expe­ri­enced it them­selves, but if you haven’t, um, in the past, if a, or and cur­rent­ly, if a busi­ness grants an employ­ee a perk in lieu of a salary, the gov­ern­ment levies a fringe ben­e­fits tax on the perk, and a car, of course, is, is a tra­di­tion­al man­age­ment perk and attracts fringe ben­e­fits tax.

How­ev­er, in twen­ty twen­ty-two, the fed­er­al gov­ern­ment removed the FBT on EVs, and that allowed an employ­ee to lease and oper­ate an EV with pre-tax income via their, a salary, uh, s- pack­age, uh, which was a clear ben­e­fit to employ­ees and a strong incen­tive to use EVs, so it was kind of a win-win, uh, for both sides of that trans­ac­tion.

What it meant was that novat­ed leas­ing explod­ed and, uh, eighty per­cent of new leased vehi­cles are now EVs. So, uh, the, the pol­i­cy worked and a lot of peo­ple are using salary sac­ri­fice and salary pack­ag­ing, uh, to, uh, to lease an EV and take advan­tage of the fact that they can pay for it with pre, uh, tax dol­lars.

[00:41:00] Um, COG saw that that was hap­pen­ing and they, uh, acquired a com­pa­ny called EasyFleet, and they also took a nine­ty-two per­cent stake in, in anoth­er one called Fleet Net­work and, uh, cap­tured a lot of mar­ket share in the small end of the, of the mar­ket, in the SME mar­ket. And that allowed this year the, uh, com­pa­ny to post an eighty-eight per­cent surge in, um, uh, EBIT to thir­ty-one mil­lion dol­lars and the cus­tomer base dou­bled to twen­ty-two thou­sand.

So it’s real­ly been a big dri­ver of their, um, of their busi­ness. How­ev­er, all good things come to an end and the pol­i­cy was too suc­cess­ful and strained the fed­er­al bud­get, so the gov­ern­ment announced a phased reduc­tion to the exemp­tion to make the tax treat­ment fis­cal­ly sus­tain­able, in the words of Trea­sury.

God knows why they’ve launched a, launched a pol­i­cy that was­n’t fis­cal­ly sus­tain­able, but now it’s gonna be fis­cal­ly sus­tain­able. So there’s a ph- there’s a [00:42:00] phased roll­out, um, and there’s a cou­ple of dif­fer­ent lev­els to this. So in, until the thir­ty-first of March twen­ty twen­ty-sev­en, the exemp­tion con­tin­ues for all eli­gi­ble EVs which are less than the lux­u­ry car tax thresh­old, which kicks in at about sev­en­ty-five thou­sand dol­lars.

Uh, so take out a lease, salary sac­ri­fice. If the car’s less than the lux­u­ry car tax thresh­old, you still receive 100% FBT exemp­tion. Uh, from the 1st of April 2027 for two years, the exemp­tion only remains for EVs val­ued at $75,000 or less. Cars over $75,000 lose the exemp­tion, and they drop to a, a s, they don’t pay the full FBT, but they still get a dis­count of 25%.

And then from, from 2029 onwards, um, the 100% exemp­tion ends entire­ly for new leas­es, and [00:43:00] all EVs revert to a per­ma­nent flat 25% FBT dis­count. So it’s a phase-out of the cur­rent, um, free-for-all, and it, it, it will get phased out based on whether the car’s worth more or less than $75,000. But then in two years’ time, it, uh, it drops back to a 25% FBT dis­count.

That’s for new leas­es. Any­one that signed up on a lease before, uh, these cut­off dates are still ful­ly grand­fa­thered, and they can keep the 100% exemp­tion. So that’s one of the rea­sons why the busi­ness is expe­ri­enc­ing an imme­di­ate rush of demand right now. Um, and con­sumers are scram­bling to lock in the 100% tax-free EV lease before the rules tight­en, uh, which is good, but it’ll have the kind of reverse effect going for­ward so that we won’t get the growth in COG because of these, uh, the phas­ing out of the FBT exemp­tion for new leas­es.

The oth­er thing I, I looked into when I was doing this analy­sis is that we have had, um, [00:44:00] these novat­ed lease com­pa­nies on the buy list before, and there’s three big ones that we’ve talked about over the last five to six years. Fleet Part­ners is one, Smart Group is one, and McMil­lan Shake­speare is the third.

They’re kind of the big three in novat­ed leas­ing and salary pack­ag­ing. Um, and I won­dered whether the fact that, uh, COG was a late entrant into this mar­ket, whether that would, um, they, they would face com­pet­i­tive pres­sures. But my analy­sis sort of thinks that no, because they’re oper­at­ing in the SME mar­ket, um, and they’ve been under­ser­viced all the way along by the big three.

So the big three are, are much larg­er than COG is in this mar­ket. Um, even though COG is, is a rea­son­ably sized busi­ness with 22,000 active cus­tomers, Smart Group, for exam­ple, has 600,000. Um, MMS has 400,000 salary pack­ag­ing cus­tomers. So they are orders of mag­ni­tude big­ger, and there­fore they tend to focus on state gov­ern­ments, large cor­po­ra­tions, Wool­worths, [00:45:00] Coles, peo­ple like that, uh, will use the big three and, but it’s left a, a vac­u­um in the mar­ket where they’ve expand­ed into.

Um, they were, were also find­ing that, um, they had a, a, a bit of an edge on the big three as well because every time a busi­ness bro­ker wrote a com­mer­cial equip­ment loan for a small busi­ness own­er, they would just ask, sim­ply ask the ques­tion, you know, “Do you need novat­ed leas­ing solu­tions?” And, uh, that could often lead to, um, a pack­age being sold by Pay­wise or EasyFleet under the COG, uh, brand.

So the big three, um, the Smart Groups of the world did not, uh, have that abil­i­ty of cross-sell­ing into the SME mar­ket. So that got me think­ing, does this mean that COG might be a takeover tar­get for one of the big three? Like a s- like, uh, I, I know cur­rent­ly that, uh, pri­vate equi­ty are buy­ing into Smart Group, so that will exit the ASX boards at some stage.

So I did [00:46:00] won­der whether one of the big three might decide that, um, that, uh, COG was now on their radar giv­en that they were soak­ing up the SME mar­ket. Uh, it’s. I don’t think I’m alone in that analy­sis because the AGM for COG was held last week, 5th of Novem­ber, where share­hold­ers approved a cou­ple of takeover pro­tec­tion pro­vi­sions, um, pro­tect­ing the com­pa­ny from a poten­tial raider.

So, uh, the two pro­vi­sions that were approved was one which is called the pro­por­tion­al takeover pro­vi­sion, and that requires that any par­tial takeover bid, so for exam­ple, if a raider buys a con­trol­ling stake at twen­ty per­cent and then tries to creep up the reg­is­ter, um, that, that bid must be vot­ed on and approved by a major­i­ty of inde­pen­dent, unaf­fect­ed share­hold­ers before it can pro­ceed.

So that’s a fair­ly unusu­al part of the con­sti­tu­tion now for this, for this com­pa­ny. Um, and the same, uh, with, uh, creep­ing up the reg­is­ter as well. It, it has to be approved by, uh, share­hold­ers, uh, before that can hap­pen too. [00:47:00] And, um, they’ve also, uh, allowed the com­pa­ny to increase the, uh, share issuance cap. So most com­pa­nies will go to their AGMs and put the, ask for a cap to be able to issue new shares with­out hav­ing to come back to share­hold­ers, uh, and that cap is usu­al­ly around ten per­cent.

Uh, but, um, the, the share­hold­ers in this case have giv­en a tem­po­rary increase, um, cap to the board so that if some­one does launch a takeover, uh, bid, they can start to, um, issue shares, par­tic­u­lar­ly if they can find some­one who’ll take a cor­ner­stone inter­est in the com­pa­ny to defend them against the takeover.

So a cou­ple of inter­est­ing devel­op­ments on the, um, takeover pro­tec­tion front from this busi­ness as well. Uh, but I also kind of thought if McMil­lan Shake­speare or, uh, Fleet Part­ners or Smart Group were inter­est­ed in the SME mar­ket, then they could [00:48:00] eas­i­ly have picked up Pay­wise or EasyFleet, uh, before COG did.

So I, I think it’s, um, I, if there’s a takeover com­ing for this com­pa­ny, it’s prob­a­bly not com­ing from one of the novat­ed lease com­pa­nies. Um, they would have expand­ed into that low­er end of the mar­ket before­hand if they’d want­ed to. And I think also, too, COG, because it’s, um, only part­ly a novat­ed lease com­pa­ny, it’s also still the tra­di­tion­al, uh, bro­ker finance busi­ness, um, then that’s, that’s kind of a side of the busi­ness that if, uh, Smart Group or some­one who does­n’t oper­ate in, in that area would prob­a­bly have to divest, um, or it, it’d be too much headache to wor­ry about if they acquired it.

So, uh, I don’t think if an acqui­si­tion is com­ing, it’s com­ing from the oth­er novat­ed lease com­pa­nies. Uh, I did out­line the his­to­ry of the com­pa­ny in the past analy­sis, I’m not gonna do it now because it’s been done before, but, um, suf­fice to say that it’s been around for, uh, twen­ty, twen­ty-one years, and it’s been oper­at­ing in the equip­ment [00:49:00] leas­ing and bro­ker aggre­gat­ing mod­el all through that peri­od.

And now it’s big time into the, uh, salary sac­ri­fic­ing, uh, SME busi­ness as well. Lat­est results, as I said, um, had boomed because of the salary pack­ag­ing part of the busi­ness. Um, how­ev­er, the tra­di­tion­al side of the busi­ness, the broking and aggre­ga­tion arm, was flat, and the lend­ing divi­sion of the busi­ness actu­al­ly dropped thir­ty-sev­en per­cent due to a mar­gin squeeze.

So it’s prob­a­bly a good thing they got into salary pack­ag­ing when they did because the tra­di­tion­al part of the busi­ness, um, has, uh, not been per­form­ing as well. Uh, their over­all results were good. Rev­enue was up nine per­cent, net prof­it was up twen­ty-nine per­cent, earn­ings per share was up twen­ty-sev­en per­cent, and their net, uh, assets finance was up to eight per­cent to a record nine bil­lion dol­lars.

Um, their div­i­dend was also increased by sev­en­teen per­cent. So, uh, that was large­ly dri­ven by the [00:50:00] novat­ed leas­ing side of things, which was up eighty-eight per­cent. Broking, um, aggre­ga­tion was, uh, the same as it was last year, flat, and the lend­ing and asset man­age­ment busi­ness was down quite sub­stan­tial­ly.

But, but the dri­ver of the busi­ness, um, is salary, uh, and novat­ed lease pack­ag­ing that made some, um, thir­ty-one mil­lion dol­lars. I’ve only got EBITDA num­ber here, so I apol­o­gize for that, but thir­ty-one mil­lion dol­lars was EBITDA and, uh, the broking aggre­ga­tion busi­ness is twen­ty-four mil­lion dol­lars. So not quite fifty-fifty, but they’re the two big dri­vers, and the lend­ing part of the busi­ness was only one point two mil­lion, so it was­n’t a big part of the busi­ness any­way, uh, but it did drop.

Uh, the CEO said that, that giv­en that EV leas­ing was chang­ing and the FBT dead­lines were immi­nent, um, the busi­ness would­n’t grow as strong­ly, but he still called out that he thought it would grow by ten per­cent in FY twen­ty-sev­en. Uh, so [00:51:00] that’s, um, that’s a sum­ma­ry of the results. Ana­lysts are ques­tion­ing what hap­pens when the EV FBT relief ful­ly phas­es out.

Um, so that will mute the growth engine, but it has. You know, whether that means peo­ple will stop leas­ing EVs, I’m not so sure. I think it just means that the busi­ness won’t grow as fast, uh, in the future. Uh, from the QAV point of view, stock price I used for the analy­sis was a dol­lar six­ty, which is greater than IV1 of six­ty-two cents, but less than IV2 of a dol­lar six­ty-five, and it’s about thir­ty per­cent less than the con­sen­sus fore­cast.

ADT is two hun­dred and six­ty-six thou­sand dol­lars, so, uh, it’s not gonna suit big port­fo­lios, but will suit port­fo­lios up to around sort of a mil­lion dol­lar mark. Yield is four point three eight per­cent. Stock Doc­tor finan­cial health and trend is strong and steady. Last time it was recov­er­ing, so, uh, it’s, it’s improved its finan­cial posi­tion accord­ing to Stock Doc­tor.

All these indi­vid­ual scores have gone up, um, and I’ll get, when I get to the sum­ma­ry at the end, I’ll, I’ll give an over­all [00:52:00] com­par­i­son, but, um, a lot of these are bet­ter than they were in twen­ty twen­ty-five. Stock­o­pe­dia cer­tain­ly is. The qual­i­ty rank is eighty-four. F score is sev­en out of nine. I think last time it was about five, so that’s improved.

Over­all stock rank is nine­ty-four, which is about where it was last time. PE ratio is thir­teen times, which is nei­ther high­est nor low­est, so we can’t score it for that. PROPCAF is four point one four times. Uh, net equi­ty per share is nine­ty-sev­en cents. Book plus thir­ty is there­fore a dol­lar twen­ty-six, so we can’t buy it for book or book plus thir­ty.

I, I do call out that, uh, net tan­gi­ble assets is actu­al­ly neg­a­tive four cents, so it has acquired a cou­ple of busi­ness­es recent­ly, and that’s weigh­ing down on the NTA. Fore­cast earn­ings per share growth, um. Now, this is inter­est­ing because Stock Doc­tor’s call­ing it out at forty-five per­cent, so growth over PE is three point three times, and we score it a two for that.

Um, but the CEO called out, uh, guid­ance, uh, of ten per­cent growth, so I’m not sure what’s going on there. But, [00:53:00] um, it’s not gonna make a mate­r­i­al dif­fer­ence to the score, uh, whether we give it a two or not for that. Uh, there was an own­er founder, and last time I spoke about him in twen­ty twen­ty-five, Cameron McCul­loch.

He’d been around for a long time in the busi­ness and had a decent stake of the shares. How­ev­er, he resigned. Actu­al­ly, it took effect yes­ter­day, um, and has left the board. Uh, he did sell some shares, but he still retains three per­cent of the com­pa­ny. Uh, when I looked into it, that was part of an order­ly han­dover, so it did­n’t real­ly raise any red flags for me that he was leav­ing.

Um, and it was also called out in twen­ty twen­ty-five that a, a new chair, Tony Robin­son, was, uh, was tak­ing over, um, chair­man­ship and I guess run­ning of the, the com­pa­ny, and he thanked McCul­loch for his ser­vice and, and they both high­light­ed the fact that was. this, this was all planned, that McCul­loch would leave.

So that was, um, uh, uh, we could­n’t score it for own­er, uh, founder, but it was­n’t real­ly a red flag either. It’s not a recent three-point trend­line buy, can’t score it for [00:54:00] that. Does­n’t have con­sis­tent­ly increas­ing equi­ty, can’t score it for that. So over­all, scores sev­en out of fif­teen or forty-sev­en per­cent for qual­i­ty and just sneaks in with a QAV score of point one one.

Uh, so inter­est­ing­ly, last time it scored bet­ter on qual­i­ty, uh, and, uh, its, its PROPCAF was just below sev­en times, I think it was about six point nine times. It’s now down to four point one four times. So we can buy this com­pa­ny cheap­er, uh, but there is, has been a lit­tle bit of a dete­ri­o­ra­tion in the qual­i­ty score as well, at least from our score point, point of view.

Um, Stock­o­pe­dia thinks it’s gone up and Stock Doc­tor thinks it’s gone up, so, um, it’s prob­a­bly a wash. Uh, risks and pos­i­tives. Well, clear­ly the risks are that the asset-backed finance busi­ness was flat, so the tra­di­tion­al part of this busi­ness was flat. And we, we, you know, even the RBA said we’re, we’re going into reces­sion-like [00:55:00] times in the econ­o­my, even though it’s not a tra­di­tion­al, um, def­i­n­i­tion of a reces­sion.

So I can see why the asset-backed finance busi­ness and the broking busi­ness were flat. Uh, it’s also gonna face head­winds in the EV leas­ing side of the busi­ness when the FBT breaks trail off. Um, how­ev­er, I, I think, um, it’s a, it’s a pos­i­tive that Tony Robin­son is now chair­ing the com­pa­ny, and that’s been proven by the fact that they, they got into, they piv­ot­ed into EV leas­ing at the right time and made a lot of mon­ey out of that.

Um, and he, he comes out of, uh, kind of an adja­cent indus­try or a sim­i­lar indus­try. So, uh, this com­pa­ny uses, um, or aggre­gates finance bro­kers. Uh, he came out of a com­pa­ny called PSSC Insur­ance, which in, which, uh, aggre­gat­ed, um, insur­ance bro­kers. So a sim­i­lar sort of mod­el, but dif­fer­ent, dif­fer­ent indus­tries I guess, or dif­fer­ent, uh, busi­ness­es, but sim­i­lar sort of struc­ture.

And he took PSSC, um, and ran it well and even­tu­al­ly sold it off for two point two bil­lion dol­lars. So, uh, if he can repeat that again with COG, [00:56:00] it’ll be, um, a nice neat end to his career. So that’s, uh, that’s the Pulled Pork request, COG Finan­cial Ser­vices.

Cameron: Thank you, Tony. I do note that we hold them in. Well, we don’t actu­al­ly hold them in a port­fo­lio, but I did have them as a pos­si­ble buy for QAV Light back in Sep­tem­ber. They’re cur­rent­ly down 13%, and they’re, uh, yeah, the three-point sell line, as you said, is like, uh, well, I don’t know if you said this, but they’re 138.

They’re a Josephine at the moment. But

Tony Kynas­ton: Yeah. Yep

Cameron: then. I did want to, uh, also flag, uh, which we did talk about a cou­ple of weeks ago, and I’ve had a cou­ple of emails about the bread lat­er. There are some issues with the bread lat­er. I’ve flagged it with Brett. He’s had a look at it. He’s not sure what’s going on either.

There’s some­thing miss­ing, um, some prob­lems. we will address those with Brett, um, some point soon and get those [00:57:00] fixed. But it’s also raised some that we’ve had about how we cal­cu­late three-point lines and we should cal­cu­late them, and we’re gonna have to do. I’m gonna do some, um, back test­ing on that.

So if you are con­fused about some of the lines that you see in the bread lat­er, um, you’re not the only ones. But as I keep telling peo­ple who send me emails, “Look, draw your own damn three-point trend lines.” I mean, we we’ve, we’ve taught you the the­o­ry, um, and, and some of it’s up to inter­pre­ta­tion, like how, how you wan­na pick your troughs and how you wan­na pick your peaks, whether or not you want to use shoul­ders, whether or not you want to, you know, use flat lines, all of that kind of stuff.

We have. Tony has his inter­pre­ta­tion. Come up with your own inter­pre­ta­tion. What­ev­er makes sense to you, draw your line. I mean, the lines are. Tell me if you dis­agree, but when I think about the lines, it’s our attempt to gauge the over­all sen­ti­ment of the mar­ket with regards to [00:58:00] the stock. we’re not

Because there are times when things look great on paper to us, but the mar­ket’s dump­ing it for some rea­son, and we don’t wan­na fight the herd

Tony Kynas­ton: Mm-hmm.

Cameron: or the horde of herds or what­ev­er you wan­na call it. We don’t, don’t, we don’t wan­na be the right per- the, the right per­son in the ceme­tery

Tony Kynas­ton: Well, that’s a good, that’s a good say­ing. Yeah, that’s exact­ly right. So I, I think one of the pit­falls of tra­di­tion­al val­ue invest­ing is you find some­thing which you think is, is real- is a scream­ing buy, so you buy it and you wait for it to re-rate. And it’s that wait­ing peri­od which I think kills results.

So I would rather, you know, wait f- Say it’s on my watch­list or my buy list, and then when it starts to go up again because peo­ple are also see­ing val­ue, then I’d buy it. So I’m, I’m elim­i­nat­ing the hold­ing peri­od while it goes through the trough, is what I’m try­ing to do. Um, so as you say, I mean, the the­o­ry is that stocks, um, well, they’re lines on the graph and they squig­gle up and down, but they tend to stay with­in ranges.

[00:59:00] So, um, if, if a stock is going up, it won’t go up in a straight line. It’ll zigzag, but it won’t zigzag, you know, orders of mag­ni­tudes dif­fer­ent away from what its trend line is. So, um, gen­er­al­ly that sort of, that sort of, um, order of mag­ni­tude change or a big mag­ni­tude change or a swing indi­cates, um, an oppor­tu­ni­ty to buy or sell that, that sen­ti­men­t’s chang­ing.

So we’re just try­ing to put some math around it, I guess, or some guide­lines around that. I think, I think over the last five or six years, we’ve tried to code a lot of edge cas­es into the, into the bread lat­er and into the, uh, our three-point trend lines, and that’s prob­a­bly con­fus­ing things. So, um, you know, I, I’m won­der­ing whether we just go back to very sim­ply tak­ing the, the high­est peak and the sec­ond high­est peak and draw­ing a, a, a buy break­out and the low­est peak and the bot­tom.

and the sec­ond low­est peak and draw­ing a line and call­ing it a sell break­through. Um, and then we just deal with the edge cas­es, as you say, as look at [01:00:00] them and, and make our own assess­ment real­ly.

Cameron: Mm-hmm. Mm-hmm. Fudge where we believe a fudge is required.

Tony Kynas­ton: Yeah

Cameron: All right. Well, thank you, TK. Thank you for who­ev­er request­ed COG, Phil, Peter, what­ev­er you wan­na be known as this week. Phil.

Tony Kynas­ton: Yeah

Cameron: Um, that’s that. Now we’re into After

Tony Kynas­ton: Hmm.

Cameron: I’ve got some cork­er things to

Tony Kynas­ton: Hmm. Please do.

Cameron: don’t take up all the time

Tony Kynas­ton: Well, I’ve just been busy, you know, with Cup Week and guests and golf and back and for­wards to lunch­es and things, so it’s been fun. While try­ing to move house at the same time, so it’s been busy. Um, and oth­er.

Cameron: going?

Tony Kynas­ton: Yeah, Jen­ny’s up there today. She’s tak­ing up the reins today while I’m record­ing this, and then tomor­row I go up ear­ly and have, hope­ful­ly our fur­ni­ture’s ar- well, it should arrive tomor­row from Syd­ney.

It’s been in stor­age for a while. So, um, yeah, we’re just slow­ly get­ting estab­lished. Um, it’s been, but it’s tak­en a while. And I’ve been doing trips back and for­wards, tak­ing stuff up from Cape Schanck as well. It is excit­ing. [01:01:00] Yeah, it’s good. Great.

Cameron: How well do you know the area? Like, uh, have you s- lived in or around there before? Do you know cafes, restau­rants, uh, that sort of stuff?

Tony Kynas­ton: yes and no. We’ve, we lived in, on the edge of Toorak before we went over­seas, but that’s, you know, going back 15 years I guess, I go, sup­pose so.

Cameron: it’s prob­a­bly all

Tony Kynas­ton: Some, some of the names are still the same, but it’s changed a lit­tle bit. Yeah. Yeah. But no, it’s all good. Look­ing, look­ing for­ward to it, and it’s great to be able to.

Like, Cape Schanck­’s been great, but you can’t just sort of walk out and go to a cof­fee shop very eas­i­ly. But,

Cameron: Yeah

Tony Kynas­ton: know, Wool­worths is sort of five min­utes walk up the street from where we are now, and so is the tram, and the train’s about 10 min­utes walk. So it’s, uh, it’s gonna be good. Hmm.

Cameron: Yeah, it’s

Tony Kynas­ton: Yeah. I’ve start­ed watch­ing, in terms of what I’ve watched, only got to it last night and then did­n’t fin­ish it, was, um, 70 Up.

You know the Sev­en Up series?

Cameron: I’ve

Tony Kynas­ton: Mm-mm.

Cameron: Is it on SBS

Tony Kynas­ton: is on SBS, [01:02:00] yeah. Start­ed watch­ing it last night. It’s great. Oh, real­ly?

Cameron: I haven’t watched one since the, maybe the ’80s. But, uh, yeah.

Tony Kynas­ton: No, great series. And, and it’s, um, it’s because it’s the whole life now, at least the s- the first bit I watched last night’s real­ly good. And just the mas­ter of edit­ing too, to, you know, put all these lives togeth­er and groups and dif­fer­ent s- life stages and pull out the inter­est­ing bits. Real­ly good

Cameron: So for peo­ple that haven’t heard of it, um, so I think they did the first one when the kids were sev­en

Tony Kynas­ton: Cor­rect. Yes.

Cameron: sev­en

Tony Kynas­ton: Yeah. So there’s been, you know-

Cameron: uh, uh, se- I

Tony Kynas­ton: Yeah, cov­er­ing the whole lifes­pan now of those peo­ple. Yeah. In fact,

Cameron: doc­u­men­tary

Tony Kynas­ton: it is. Yeah, Michael Apt­ed, Apt­ed did it. Um, and, uh, I think a lot, prob­a­bly the major­i­ty of the peo­ple have stayed with it. Some peo­ple dropped out, did­n’t wan­na do it any­more, um, did­n’t want their inva­sion of their pri­va­cy and that kind of thing, so that makes sense.

[01:03:00] But a great cross-sec­tion. I mean, you had, um, upper-class kids from pri­vate schools, you had work­ing-class kids from pub­lic schools, you had north­ern­ers, peo­ple from Lon­don. It was a great mix of soci­ety and, and their views and how things have turned out. Very inter­est­ing.

Cameron: huh?

Tony Kynas­ton: Mm.

Cameron: now

Tony Kynas­ton: Oh, well, maybe the last one’s been put togeth­er by some­one else, but he did the ear­li­er ones for sure

Cameron: Hmm. Yeah. It says his, uh, health start­ed to decline short­ly after the com­ple­tion of “63 Up”, he died at his home in Los Ange­les, 7th of Jan­u­ary 2021 at the age of 79. In “70 Up”, series pro­duc­er Clea Lewis revealed that Apt­ed had been suf­fer­ing from ear­ly onset demen­tia at the time of mak­ing “63 Up”, which was aggra­vat­ed by a sub­se­quent fall. But, uh, you know, what a great career he had out­side of that, like Coal Min­er’s Daugh­ter, Gorky Park, Goril­las in the Mist, uh, Thun­der­heart, Nell, The World is Not [01:04:00] Enough, Chron­i­cles of Nar­nia. Not to men­tion in TV. Made a lot of good stuff in TV too. So Yeah, what a great, um,

Tony Kynas­ton: Hmm

Cameron: I would sit down and watch those, I think, one day. Well, I’ve, I’ve had a lot of watch­ing since I got over, fin­ished Game of Thrones.

Tony Kynas­ton: Mhm.

Cameron: I to you since

Tony Kynas­ton: Nein

Cameron: I fin­ished Game of Thrones again, my rewatch, after absolute­ly being furi­ous at the pro­duc­ers of that for the last 10 years.

Tony Kynas­ton: You have been

Cameron: and I went, “It’s actu­al­ly pret­ty good.

Tony Kynas­ton: Yeah.

Cameron: angry about

Tony Kynas­ton: Yeah.

Oh, I’m gonna play this back next time you get furi­ous at some­thing. Yeah.

Cameron: white hot anger

Tony Kynas­ton: Mm.

Cameron: and I, I fi- I fin­ished it and I went, “Actu­al­ly, I got­ta hand it to you. That’s.” Like it’s not a hap­py end­ing, [01:05:00] uh, prob­a­bly pret­ty real­is­tic. She goes bat­shit crazy like her blood­line made her, and Jon has to kill her. He does­n’t have a hap­py end­ing.

Tony Kynas­ton: Mm-hmm.

Cameron: Wall and then march­es north with the wildlings. And Tyri­on’s left behind to pick up the pieces of h- the mis­takes that he made. And Bran, you know. And, and I remem­ber go- being angry that Bran was mak­ing. Like, Bran’s had noth­ing to do.

Tony Kynas­ton: Yeah

Cameron: says, Tyri­on goes, “If we, if we offer it to you, will you accept it?”

He goes, “Why do you think I came all the way

Tony Kynas­ton: Yeah.

Cameron: Like, he knew

Tony Kynas­ton: Mm-hmm.

Cameron: basic job, is just to sur­vive and be

Tony Kynas­ton: Mm-hmm.

Cameron: sen­si­ble king, you know?

Tony Kynas­ton: Yeah

Cameron: the point of his whole sto­ry, was that he did noth­ing. He just sur­vived and became the Three-Eyed Raven

Tony Kynas­ton: yeah. Well, there were, and there were, you know, two char­ac­ters around Bran which had that kind of fore­shad­ow­ing. There was the Hodor who, uh,

Cameron: yeah.

Tony Kynas­ton: know, could say one thing and that’s, he had [01:06:00] one job. A bit like Bran, yeah.

Cameron: Yeah. Yeah, so I have to, uh, apol­o­gize for the rest of my life to the guys behind that series for them for the last 10 years. there you go. Uh, so any­way, then I got over that. Um, I’ve been just spi­ral­ing out of con­trol on SBS. Um, so it kind of start­ed with, uh, Hal­loween.

We were look­ing for some­thing to watch, and I watched Nos­fer­atu, the orig­i­nal F.W. Mur­nau 1922 black and white silent movie ver­sion. loved it. it was an absolute banger mas­ter­piece. have you ever seen

Tony Kynas­ton: I haven’t, no. That was remade, was remade recent­ly, was­n’t it?

Cameron: Yeah, and I haven’t seen that

Tony Kynas­ton: Okay

Cameron: then I next watched Wern­er Her­zog’s 1979

Tony Kynas­ton: Oh

Cameron: which is almost shot for shot. bit dif­fer­ent, but it’s, um, [01:07:00] yeah, it’s, it’s sort of a fair­ly faith­ful remake. But his remake stars Klaus Kin­s­ki

Tony Kynas­ton: Natasha’s father.

Cameron: char­ac­ter.

Tony Kynas­ton: Hmm

Cameron: I just watched Paris, Texas again a

Tony Kynas­ton: Hmm

Cameron: I’m going through this Ger­man movie bent, thanks large­ly to SBS putting them in front of me. Um, it also stars Isabelle Adjani as the femme fatale in and Bruno Ganz

Tony Kynas­ton: Front­line. The Front­line pro­duc­er

Cameron: N- no.

Tony Kynas­ton: Yes

Cameron: His name was Bruno some­thing. It was­n’t Bruno Ganz. This is a Ger­man

Tony Kynas­ton: it? Okay.

Cameron: Yeah,

Tony Kynas­ton: it up while you’re talk­ing

Cameron: yeah. what was his name? Bruno some­thing, yeah. This is a Ger­man film from the ’70s, man. Why would an Aus­tralian actor be

Tony Kynas­ton: Well, he was a Kiwi, I think.

Cameron: know.

Tony Kynas­ton: Yeah. Yeah

Cameron: He was great. I know who you’re talk­ing

Tony Kynas­ton: Yeah

Cameron: Any­way, no, Bruno Ganz, the inter­net knows as Hitler in the bunker

Tony Kynas­ton: [01:08:00] Right

Cameron: Down­fall that gets pulled out as GIFs every time, where he’s kick­ing all of his gen­er­als out of the bunker and then starts scream­ing at them while his hand is going

Tony Kynas­ton: Mm-hmm.

Cameron: Parkinson’s‑y. Bruno Ganz was a great, beloved, uh, Ger­man actor who looked a lot like George Clooney. And, um, the, the Hitler film was one of his lat­er things, but he’d been around for decades. So he was in the remake as, as in, uh. Sor­ry, the remake of Nos­fer­atu, and he was great. Um, then I watched the next Wern­er Her­zog film with Klaus Kin­s­ki. No, the first one he made in m- ’75, Aguirre. the

Tony Kynas­ton: Wrath of God. Mm-hmm.

Cameron: You ever seen

Tony Kynas­ton: I have.

Cameron: Oh, my God,

Tony Kynas­ton: out, yeah.

Cameron: when it came

Tony Kynas­ton: Mm. Well, the, well, maybe it was a re-show­ing, but it used to be at the Chau­v­el The­ater. Must’ve been a re-show­ing in the ’80s, [01:09:00] yeah

Cameron: Absolute. I mean, I’ve want­ed to see it for decades. It’s always one of those, “Oh yeah, I’m gonna sit down and watch that one day.” I final­ly did. Absolute banger

Tony Kynas­ton: Oh, I mean, those, those Ger­man movies from the ’70s, they are just the best

Cameron: So for peo­ple who don’t know it, um, it’s, it’s basi­cal­ly loose­ly based on a true sto­ry. Span­ish con­quis­ta­dors in Peru, you know, they’re, they’re look­ing for El S- El Dora­do, which the

Tony Kynas­ton: Mm-hmm

Cameron: we get rid of these guys? I know, we’ll tell them there’s a city made of gold. Just go that way. Yeah, it’ll be great.

You can’t, you can’t

Tony Kynas­ton: Just up the Ama­zon Riv­er a bit, over the moun­tains.

Cameron: So Wern­er Her­zog, uh, low, no bud­get, um, he just decides he’s gonna take his entire cast and

Tony Kynas­ton: Hmm.

Cameron: through the bloody moun­tains and build­ing rafts, uh, uh, and sail­ing down the Ama­zon Riv­er. And you feel

Tony Kynas­ton: guer­ril­la style, isn’t it?

Cameron: It is, and appar­ent­ly was a big inspi­ra­tion to Cop­po­la when he [01:10:00] made

Tony Kynas­ton: Ah.

Cameron: three, four years lat­er.

This was one of his in- Yeah, oh, yeah, it looks like a fun way to make a movie. Let’s go out into the mid­dle of a jun­gle and just with, you know, mos­qui­toes and tribes and, and, you know. Any­way.

Tony Kynas­ton: And did it again. And, uh, Kin­s­ki and Her­zog did it again 10 years lat­er, rough­ly.

Cameron: What did they do

Tony Kynas­ton: Fitz­car­ral­do took a.

Cameron: I haven’t seen that yet.

Tony Kynas­ton: Ah,

Cameron: watch. But appar­ent­ly, about this, they, um, had this very tur­bu­lent rela­tion­ship. And appar­ent­ly, dur­ing the mak­ing of Aguirre, Kin­s­ki, um, was so bat­shit crazy, he actu­al­ly — there was a bunch of extras mak­ing too much noise in a tent one night.

He fired a gun into the tent, blew the fin­gers off one of the

Tony Kynas­ton: Oh

Cameron: It got to a point where Her­zog point, put two bul­lets in a gun and said he was gonna kill Kin­s­ki with one of them and then shoot him­self with the oth­er. [01:11:00] mean, it was. And Kin­s­ki appar­ent­ly in real life was a com­plete mad­man. think a cou­ple of his daugh­ters accused him of sex­u­al­ly abus­ing them through­out their lives and all this kind of stuff. Any­way, but I love the film. Like, his pres­ence in the film, like, he just looks like absolute the dev­il through the

Tony Kynas­ton: Oh, yeah

Cameron: con­quis­ta­dors who decides to over­throw the entire

Tony Kynas­ton: Yeah.

Cameron: and

Tony Kynas­ton: And,

Cameron: and

Tony Kynas­ton: and has that real, it’s almost a Nazi sort of Ger­man, you know, “I am the Super­man,” who’s like the, the Niet­zsche sort of, “I am the Super­man, and the birds won’t sing in the trees ’cause I com­mand it,” and all that kind of stuff. Yeah.

Cameron: Oh,

Tony Kynas­ton: Mm-hmm

Cameron: he’s good in Nos­fer­atu as well, but it’s more of a sym­pa­thet­ic, uh, depic­tion of Nos­fer­atu. Um, b‑by the way, the sto­ry of Nos­fer­atu, the, the 1922 ver­sion is great. You’ll love this. So again, it was a low-bud­get film, a new pro­duc­tion com­pa­ny that decid­ed to make [01:12:00] hor­ror films. They invent­ed the hor­ror film.

Nos­fer­atu is as the first hor­ror film. they c- did­n’t both­er to get the rights to Bram Stok­er’s book. They just– But they– So they changed all the

Tony Kynas­ton: Right.

Cameron: just change the names and no one will know.” Even though they said Nos­fer­atu loose­ly based on the book Drac­u­la by Bram Stok­er. Bram Stok­er’s wid­ow sued them. They lost in a Ger­man court, and the judge said they had to destroy all copies

Tony Kynas­ton: Oh, wow

Cameron: which they did, and the pro­duc­tion com­pa­ny went out of busi­ness. But there were some copies that had already been sent out into the wild, and they sur­vived. Now it’s con­sid­ered one of the great mas­ter­pieces of ear­ly 20th cen­tu­ry cin­e­ma, Ger­man cin­e­ma, et cetera.

And the, the very first hor­ror movie, and the– Michael Jack­son ripped

Tony Kynas­ton: Mm-hmm

Cameron: for the Thriller film clip and the whole thing. Any­way, so then we watched Wings of Desire.

Tony Kynas­ton: Ah, one of my [01:13:00] favorites.

Cameron: Yeah.

Tony Kynas­ton: Peter,

Cameron: Texas

Tony Kynas­ton: is bril­liant in that

Cameron: Oh my God, so great.

Tony Kynas­ton: I, I know you’re there. I, I can’t real­ly see you.

Cameron: I t- I, I, I said to Hunter, “You got­ta watch Wings of Desire,” but I had­n’t seen it for 20 I did watch it a- I’d seen it before, but I– she and I watched it again sort of 20 years ago. could­n’t real­ly remem­ber it, so we watched it again. Again, Bruno Ganz is the– he’s the lead

Tony Kynas­ton: Hmm.

Cameron: and then Peter Falk’s in it

Tony Kynas­ton: I was think­ing of Bruno Lawrence, by the way. Sor­ry.

Cameron: Bruno

Tony Kynas­ton: Yeah

Cameron: right. So Bruno Ganz is in this one as well, and fan- just great, beau­ti­ful, orig­i­nal film. Now, I know there was. And I remem­ber I watched the sequel years ago, Far Away So Close, which I wan­na watch. And

Tony Kynas­ton: Mm-hmm

Cameron: then there was a Hol­ly­wood remake of it with Nico­las

Tony Kynas­ton: Mm-hmm.

Cameron: which I

Tony Kynas­ton: Ter­ri­ble.

Cameron: saw. Yeah,

Tony Kynas­ton: I tried to show that to Alex and it was, it was bad. We stopped watch­ing it.

Cameron: Right. but [01:14:00] the orig­i­nal,

Tony Kynas­ton: great, yeah

Cameron: And Peter Falk appar­ent­ly ad-libbed most of his stuff, and, uh, they, you know, brought him in at the

Tony Kynas­ton: Ooh.

Cameron: And, uh, he was­n’t in the orig­i­nal script. They’d already start­ed shoot­ing,

Tony Kynas­ton: right.

Cameron: Wim Wen­ders had this idea that he want­ed a famous politi­cian or some­body to play an angel who’d already made the tran­si­tion, and then his pro­duc­er said, “What about Colum­bo?”

And they called him up, and he was like, “Ah, get on the plane.” He got on the plane, he went to Berlin. Appar­ent­ly, he dis­ap­peared one day, and they had to send the cops out look­ing for him. They thought he’d been kid­napped. He was just walk­ing around West Berlin for five hours, got lost. He

Tony Kynas­ton: Mm-hmm.

Cameron: tremen­dous. They’re a great film. So yeah, now Fitz­car­ral­do I got­ta watch.

Tony Kynas­ton: I, actu­al­ly, I think it, I think it was when Fitz­car­ral­do was released. That must’ve been a dou­ble fea­ture at the Chau­v­el.

Cameron: Ah,

Tony Kynas­ton: and Aguirre. Yeah

Cameron: Ne- nev­er seen that, so I’m real­ly, real­ly dig­ging. Now, I kin­da know Wern­er Her­zog more from doc­u­men­taries like Griz­zly Man [01:15:00] and, and his act­ing per­for­mances, but I ha- haven’t seen his ear­ly cat­a­log, so I’m lov­ing

Tony Kynas­ton: Well, I haven’t been able to track down. He did make a doc­u­men­tary about his rela­tion­ship with Klaus Kin­s­ki.

Cameron: I, I’ve heard about

Tony Kynas­ton: Hmm.

Cameron: wan­na

Tony Kynas­ton: Yeah. Came out about 10 years ago, but I haven’t seen it.

Cameron: Yeah. me

Tony Kynas­ton: I think it’s just called My Friend or some­thing like that, or Close Friend or some­thing. Yeah.

Cameron: Yeah,

Tony Kynas­ton: Hmm

Cameron: That I threat­ened to

Tony Kynas­ton: Yeah. But

Cameron: 120 Days of Sodom by the

Tony Kynas­ton: Okay. Mm-hmm

Cameron: Wow. Are you, do you know, have you ever read it?

Tony Kynas­ton: No.

Cameron: know much about the sto­ry of

Tony Kynas­ton: No

Cameron: So I did­n’t either. Um Basi­cal­ly, he was impris­oned the 1780s for uh, you know, sex crimes basi­cal­ly. Um, and he was in the Bastille, and he start­ed writ­ing, and he wrote [01:16:00] “120 Days of Sodom” and his notes for it any­way, and he was scrolling it up on lit­tle pieces of paper and hid­ing it in a hol­low brick. then the rev­o­lu­tion hap­pened, and he got moved out of the Bastille, did­n’t have a chance to take it, um, and thought it was lost for­ev­er. And then it– But it had been found by anoth­er pris­on­er, and then was passed down from fam­i­ly to fam­i­ly to fam­i­ly for gen­er­a­tions until it final­ly got pub­lished, um, uh, after the Mar­quis de Sade died, by one of his, um, you know, one of the ances­tors of the peo­ple that owned it. But he had­n’t, had­n’t fin­ished it. He’d, he’d. It, it was just notes, and so some­body tried to fin­ish it and that kind of stuff. he end­ed up going to prison again in Napoleon’s con­sulate and, uh, end­ed up dying. But this book, it like shush. It’s basi­cal­ly about four rich guys who are basi­cal­ly all [01:17:00] sex­u­al deviants, and they, they plan this whole, you know, fes­ti­val of, of r‑raping young chil­dren and them­selves being sodom­ized by well-hung guys.

And they go on this whole– It’s, it’s basi­cal­ly Epstein’s Island, but com­plete­ly mapped out and fig­ured out, and it is absolute­ly shock­ing to read today, like abhor­rent­ly shock­ing. Imag­ine, you know, read­ing it in– when it was writ­ten in like 1789 or some­thing like that. But, um, fas­ci­nat­ing, like real­ly, real­ly fas­ci­nat­ing, uh, depic­tion.

And he was this guy, like it’s large­ly believed by schol­ars that he is one of the char­ac­ters that he’s writ­ing about, but he’s not sym­pa­thet­ic to the char­ac­ters either. He’s kind of talk­ing about them as being, um, bru­tal and venal and hor­ri­ble and, uh, abu­sive. So it’s fas­ci­nat­ing to try and fig­ure out what’s going on in his head as

Tony Kynas­ton: Right[01:18:00]

Cameron: but yeah, an amaz­ing piece of his­tor­i­cal lit­er­a­ture that’s not for the faint of heart, but, um, know, from a lit­er­ary per­spec­tive and an his­tor­i­cal per­spec­tive, absolute­ly fas­ci­nat­ing. then Fri­day night we went to the Diwali fes­ti­val with some Indi­an friends. So I’ve been Ger­man, Ger­man film, sodomy, Indi­an, uh, fes­ti­val of light, um, cel­e­brat­ing the vic­to­ry of light over dark­ness.

Lots of Bol­ly­wood danc­ing. One of our friends was on stage doing some

Tony Kynas­ton: All right. Nice

Cameron: it’s been a, it’s been a very, uh, mul­ti­cul­tur­al. And I’m lis­ten­ing to Shostakovich’s, uh, Thir­teenth Sym­pho­ny this week, so Russ­ian Russ­ian sym­pho­ny about, uh, anti­semitism by, and Nazis killing Jews is what that one’s about. Any­way, yeah, that’s me. It’s been a very, very artis­tic, uh, cou­ple of weeks since you’ve been gone

Tony Kynas­ton: Very good. Uh, I, hard- I’ve hard­ly [01:19:00] touched a book in the last cou­ple of weeks.

Cameron: Now read The Mar­quis de Sade. That’ll put some hairs on your chest. Um, let’s go talk about Amer­i­ca.

Tony Kynas­ton: All right. Yeah. Thanks.

Cameron: Wel­come back

Tony Kynas­ton: Thanks