Transcript #608

QAV 608 CLUB

Cameron 00:06
Wel­come back to QAV, TK. This is episode 608. We’re record­ing on the 21st of Feb­ru­ary 2023. It’s a love­ly Tues­day in Bris­bane, a lit­tle bit grey in the skies, a lit­tle bit cool­er than it has been of late. How’s the weath­er down at Cape Schanck, TK?

Tony 00:23
Love­ly. No, the weath­er is great. It’s cooled off a lit­tle bit. It’s sun­ny now, a lit­tle bit windy. But, yeah, just lov­ing it at Cape Schanck. It’s low 20’s and sun­ny.

Cameron 00:34
And your health is on the mend.

Tony 00:37
Yeah, thank you. I real­ly think long COVID’s a thing, but I’m get­ting bet­ter every day. Went for a walk today, played golf in the cart yes­ter­day. So, yeah. It’s kind of like the vol­ume’s been dialled up each day as every­thing returns to nor­mal. Thank you. Yes, on the mend.

Cameron 00:55
That’s good. Well, I wish I could say the same thing about the mar­ket, Tony. It’s, suf­fer­ing from long COVID, I think. It’s been a chop­py week. Took a big hit this morn­ing, when the mar­ket opened. It’s recov­ered a lit­tle bit since then. It closed yes­ter­day at around about 7552, dropped down to 7511 this morn­ing, and then has recov­ered to 7554; still down from yes­ter­day. I know in Aus­tralia in the last week, we’ve had a lot of rather dis­ap­point­ing earn­ings state­ments, results, com­ing out from a range of com­pa­nies. The mar­ket does­n’t seem to be very hap­py with a lot of the earn­ings that are com­ing out. Some sur­pris­es in there that I know you might want to talk about a bit lat­er.

Tony 01:44
Yeah. I haven’t got the stats in front of me, but they do keep stats on how many com­pa­nies beat their earn­ings. Even though it’s more than half this report­ing peri­od I think it’s low­er than what it nor­mal­ly is. I for­get the num­ber now; say 70% of com­pa­nies nor­mal­ly beat their con­sen­sus esti­mate, and it’s now less than that. So, that’s one of the things which I think is weigh­ing heav­i­ly on the mar­ket. Some com­pa­nies aren’t giv­ing out­looks, which is also weigh­ing heav­i­ly on the mar­ket. Like, if you’ve always giv­en an out­look and you don’t give one, the mar­ket thinks, well, you’re expect­ing bad news, or you just don’t know. It’s too up in the air. The oth­er thing I’ll say is, there’s just been anoth­er horse sale in Syd­ney, and I’ve been offered lots of cheap hors­es to buy. I was just speak­ing with one of the studs on the phone before we start­ed record­ing, and he was say­ing that he feels the sales have dropped 20% just in the last month. So, that’s not a great indi­ca­tor for where the econ­o­my’s going usu­al­ly.

Cameron 02:44
Yeah, well, let’s look at the port­fo­lio updates: dum­my port­fo­lio since incep­tion — which for new lis­ten­ers is the sec­ond of Sep­tem­ber 2019 — accord­ing to Navexa is up 15.7% CAGR per annum over that peri­od, down from where we’ve been of late which is more like 18% CAGR. And ver­sus the bench­mark, the STW, which is up 7.41% per annum over the same peri­od of time. So, we’re still doing dou­ble mar­ket even though we’ve come back a lit­tle bit. Got quite a few div­i­dends that are in the wings as well that will kick in if we don’t sell those stocks over the next, sort of, month or so they go ex. But FBU, your pulled pork last week, Tony, con­tin­ued the trend of the pulled pork kibosh: it crashed through — it did­n’t crash — it slid gen­tly below its three-point trend­line sell this morn­ing. We hold it in the light port­fo­lio, and I haven’t sold it yet today because it’s just been hov­er­ing around its three-point trend­line sell mark­er and it looks like it’s going to come back over it, but then it does­n’t. Eleven o’clock this morn­ing Syd­ney time, I thought — it was like one cent or two cents off it, below — and I was like, I’ll just hold on until I get back from Kung Fu. I got back from Kung Fu, and it was anoth­er cent down. I’m like, ah, I’ll just wait until I do the pod­cast.

Tony 04:25
Wait till tomor­row, see how it resolves. In my defence, I did­n’t selec­tive FBU, some­one request­ed it. So, I’m just a mouth­piece. Not sure if it’s my kibosh.

Cameron 04:35
It is. It’s when you talk about these things that you put the kibosh on. So, apolo­gies to Fletcher’s Build­ing Group there for Tony crash­ing the share price. Mon­e­tary tight­en­ing in the US has appar­ent­ly been send­ing Wall Street low­er, accord­ing to the Fin Review, and ASX tech­nol­o­gy stocks have been affect­ed by that. I don’t real­ly know why ASX tech stocks are affect­ed by US mon­e­tary tight­en­ing, I assume it’s got some­thing to do with invest­ment com­pa­nies in the US that are invest­ing in Aus­tralian stocks that are pulling their belts in or some­thing. How are those two things con­nect­ed, Tony?

Tony 05:21
Well, when they say mon­e­tary pol­i­cy in the US, they’re talk­ing about inter­est rates. And so, inter­est rates are still ris­ing. I did speak last week about the fact that the mar­ket kind of gets ahead of itself and thinks that the inter­est rate ris­es are either com­ing to an end, or poten­tial­ly will be fol­lowed by inter­est rate cuts lat­er on this year or next year. And so that gets peo­ple excit­ed again to invest in tech stocks and high growth stocks, because they think inter­est rates com­ing down will improve their dis­count­ed cash flows for those com­pa­nies and their val­u­a­tions for those com­pa­nies and it’s gonna be free and easy mon­ey again, so you may as well take the risk. But the mar­ket keeps get­ting a bit of a dose of real­i­ty with all this stuff. And what­ev­er hap­pens in the US with the NASDAQ is going to impact on Aus­tralian tech stocks as well.

Tony 06:12
But why?

Cameron 06:13
A lot of these stocks are what they call “rel­a­tive­ly priced”. So, it’s a bit like the hous­ing mar­ket. We know what it costs to build a house, but the hous­es that we buy sell for a lot more than that. Which is the land val­ue, I guess, but how do you val­ue the cost of the land, because if you put a house on and it gets a 3% yield, you would­n’t pay as much for it if you’re just buy­ing it for busi­ness rea­sons because you can get more than 3% yield in the bank by putting your mon­ey in the bank these days. So, why just, you know, lay­out a whole heap for a house and then rent it out for 3%. And what real estate agents will argue if you ask them to val­ue your house, is they will go and pull up all the com­par­a­tive sales in the mar­ket recent­ly. You know, “this house down the street sold for this price, and this one’s also got three bed­rooms, it’s the same size as yours on the same block of land in the same sub­urb.” So, there’s a lot of rel­a­tive pric­ing going on. And that’s the same thing, par­tic­u­lar­ly with tech stocks, because how do you val­ue them? No assets, and all the prof­its are in the future. How long in the future, who knows? So, you val­ue them on rel­a­tive met­rics. You know, “we’ve got this many cus­tomers ver­sus this com­pa­ny, tech stock, in the States which has this many cus­tomers, and there­fore, on a rev­enue per cus­tomer basis, it’s worth x times.” So, that tends to be how they get val­ued.

Cameron 07:35
Right. So, it’s just a lit­tle bit of fudgery-wudgery.

Tony 07:42
Yeah, and all this stuff is just clas­sic noise. Just don’t lis­ten to the short-term noise and what the mar­ket did yes­ter­day and all that stuff. It’s just so not impor­tant. Real­ly. I mean, yeah, there are big things afoot. I’m not say­ing that there aren’t trends afoot that are gonna, you know, make it eas­i­er or hard­er for us to invest, like inter­est rates ris­ing. But to look at what the mar­ket thinks inter­est rates are gonna do today ver­sus yes­ter­day, it’s just gonna turn you in knots.

Cameron 08:08
Well, that’s the thing that always makes me scratch my head, is the mar­ket seems to be buoy­ant one day and then depressed the next day. Like, real­ly? What changed? Like, did some­body die overnight? What’s so dif­fer­ent today as of yes­ter­day? It’s not like you did­n’t know that the econ­o­my was tough, or this was hap­pen­ing or that was hap­pen­ing. What’s the big news that hap­pened overnight that made you go from buoy­ant to depressed, and I can nev­er work it out.

Tony 08:36
And that’s Mr Mar­ket as Ben Gra­ham said over a hun­dred years ago: the man­ic-depres­sive neigh­bour who comes to your house every day and offers you a dif­fer­ent price for the same asset. Noth­ing’s changed. And what tends to dri­ve the mar­ket if you want an answer to those short-term gyra­tions, is it tends to be what­ev­er data set just gets released. So, there are stats com­ing out all the time, par­tic­u­lar­ly in the US about arcane things like non-farm pay­rolls. You know, how many steel work­ers are employed, all that kind of thing. And then econ­o­mists will hyper­ven­ti­late and extrap­o­late, blow a lot of hot air about what that means for the future of the civilised world, and the mar­ket will adjust. And it’s real­ly, it’s real­ly not that impor­tant.

Cameron 09:18
Well, on our buy list this week we know that iron ore is a buy again, but on the same day, there was a filthy arti­cle in rear win­dow about Andrew For­rest, the, well, he’s not the CEO, the Exec­u­tive Chair­man of For­est Met­als Group, writ­ten by Joe Aston.

Tony 09:38
Fortes­cue Met­als Group.

Cameron 09:39
Isn’t that what I said?

Tony 09:40
No, you said For­rest Met­als Group. He’d love it to be called For­est Met­als Group, I’m sure, but it’s called Fortes­cue.

Cameron 09:46
Fortes­cue Met­als Group, my apolo­gies… Writ­ten by Joe Aston in the Finan­cial Review enti­tled “Andrew For­rest, Insane in the Mem­brane” where he was just basi­cal­ly talk­ing about an earn­ings call that they had. “Exec­u­tive Chair­man Andrew For­rest exhibits all the signs of a man hang­ing onto real­i­ty by a very thin thread. He began by assur­ing par­tic­i­pants, ‘I’ll be glad­ly hand­ing over to [CEO Mark Hutchin­son of FFI, the Fortes­cue Future Indus­tries] and [FMG CO] Fiona Hick, so you won’t hear much from me,’ before com­plete­ly dom­i­nat­ing pro­ceed­ings. His home­spun over famil­iar­i­ty, the fake report, the sim­u­lat­ed affec­tion, the ran­dom and inap­pro­pri­ate love bomb­ing of peo­ple was laid on thick­er than ever.” And then he goes on with some quotes. “Much like the nan­otube and Eliz­a­beth Holmes mag­i­cal blood machines, the mem­brane will change the world.” He was talk­ing about some mag­i­cal mem­brane that they’ve got, appar­ent­ly For­rest said, talk­ing about some break­through that they’ve made in Fortes­cue Future Indus­tries which will be able to pro­duce “size­able vol­umes of green metallics out of our own iron ore with­out pro­duc­ing CO2. ‘Let me just say,’” For­rest teased, “to give a clue to all our com­peti­tors out there, it uses a mem­brane and they’re going to have to come and talk to us if they want to bor­row the mem­brane.’” And Aston writes, “there you have it, ladies and gen­tle­men, much like the nan­otube and Eliz­a­beth Holmes mag­i­cal blood machines, the mem­brane will change the world. Though were that the case, the last thing you’d do is talk about it. I have the mem­brane, just qui­et­ly, and I’m also flag­ging to my com­peti­tors that I have the mem­brane. The mem­brane is Forest’s secret sauce, like Hamish Dou­glass’ down­side pro­tec­tion™. More like­ly, For­rest is insane in the mem­brane.” What did you think of all of that, Tony?

Tony 11:40
Well, first of all, it’s alleged that all those things hap­pened, so we’ve got to be care­ful about what we say. But Joe Aston is huge­ly enter­tain­ing, and often­times the only per­son that talks truth to pow­er in the busi­ness press. So, I think broad­ly he’s basi­cal­ly say­ing that Andrew For­rest is a ter­rif­ic sales­per­son, han­dling the media and hand­ing out the love to all the peo­ple that are lis­ten­ing. I think Joe Aston’s kind of right when he says that Twig­gy For­rest has giv­en some indi­ca­tion that they’ve dis­cov­ered some sort of par­ti­cle or process that can make iron ore green­er, but he’s not giv­ing out many details at the moment. So, you should be scep­ti­cal, and I think that’s fair enough. Hope­ful­ly Tig­gy For­rest has dis­cov­ered some way of trad­ing iron ore in an envi­ron­men­tal­ly bet­ter process than what’s been done in the past. But like all these claims, we’ll wait and see. Let’s see it.

Cameron 12:35
Astons got a bunch of alleged quotes from Andrew For­rest dur­ing the call. This quotes to jour­nal­ists, he’s writ­ten, “ ‘All of you can con­tact me any time you like. Look, I think you’re an excel­lent jour­nal­ist and they’re great ques­tions. Typ­i­cal­ly, excel­lent ques­tion, mate, you’re damn right. If you want a ride, mate, it’ll be a great voy­age. All these ques­tions, they’re show­ing a lot of vision, they’re show­ing a lot of fore­sight. Great ques­tion, Lach­lan. Look, excel­lent ques­tion, Melanie. Nick, a great ques­tion mate, and you’re over­due to shout me a beer.’” I read all that and I thought, sounds like a great bloke.

Tony 13:03
Great sales­per­son, and he’s spent his whole career doing that. And to give him his due, I mean, he could be on the wrong train with the FFI, and he’s been try­ing to pro­mote green hydro­gen. I don’t even know if that’s going to work. And he’s been going around the world sign­ing up lots of second/third world coun­tries to pro­vide dif­fer­ent things to them. I sus­pect he’s a bit like some of the Mid­dle East­ern coun­tries at the moment; he can see that iron ore is not going to for­ev­er be in a boom that it has been in. Chi­na’s not for­ev­er going to expand and grow, which is basi­cal­ly where the iron ore has been going from Aus­tralia. And so, he’s diver­si­fy­ing away. Just like, you know, Sau­di Ara­bi­a’s try­ing to do away from oil. Same sort of process whether it’s green, and who knows, he’s cer­tain­ly going that way. What­ev­er it is, it’s in its infan­cy. He’s see­ing a long run­way for these things, and he’s got a his­to­ry of see­ing far into the future. I mean, he took on the might of BHP and RIO and became the third pow­er­house in iron ore in Aus­tralia. To put that in per­spec­tive, that’s like start­ing a super­mar­ket and tak­ing huge mar­ket share away from Coles and Wool­lies, or start­ing a bank from scratch and, you know, tak­ing on Comm­Bank and NAB and West­pac and becom­ing a major force in the bank­ing sec­tor. That achieve­ment is so rare in Aus­tralia where we tend to have duop­o­lies and oli­gop­o­lies that he has a lot of track record and a lot of cred­i­bil­i­ty. So, apart from the fact that Joe Aston’s point­ing out that he’s a good sales­man and we should be scep­ti­cal about some of his claims, he may well be onto some­thing. But who knows?

Cameron 14:48
I love Joe Aston’s con­clu­sion: “what he ulti­mate­ly wants is for every­one to love him. Not every­one will love Andrew For­rest for being a very suc­cess­ful busi­ness­man who dug shit out of the ground and sold it to the Chi­nese to make steel. That will mere­ly get him a who’s who entry as anoth­er mer­can­tilist. That’s not what Twig­gy wants. He wants stat­ues. He wants glob­al acclaim. He wants world peace. He wants the lot because he’s eff­ing mad. So, he’s end­ing slav­ery, sav­ing the ocean, build­ing hap­py abat­toirs, being the King of Davos. There is no lane left for him to stay in. There is none because he’s swerv­ing all over the eff­ing road. Is it any won­der Guy Debelle crashed his bike just to get the hell out of there? Join­ing the oth­ers tear­ing their ham­strings down the exit ramp…

Tony 15:30
Well, that’s cer­tain­ly true. And we’ve spo­ken about that in the past. There’s been some, I mean, the CFO resigned just before the results were announced, and Guy Debelle who was a senior banker at the RBA joined FFI and then quit soon after­wards. So, there’s some­thing going on there, Joe Aston’s right to point out.

Cameron 15:48
So, I guess my ques­tion is: iron ore’s a buy again, FMG’s on the buy list, right down the bot­tom this week, but it’s on the buy list. Adding those two things togeth­er plus Joe Aston’s arti­cle, would you buy FMG?

Tony 16:02
I’m not going to add Joe Aston’s arti­cle into my con­sid­er­a­tions because he’s writ­ing for enter­tain­ment. But I am cau­tious because of Guy Debelle’s and the CFO’s res­ig­na­tions. I think they’re red flags. So, if it was my last dol­lar, maybe, but I’m hop­ing to find some­thing on the buy list a bit high­er up to buy first.

Cameron 16:20
All right, let me move along to Char­lie Munger. Char­lie Munger.

Tony 16:28
All hail Char­lie Munger.

Cameron 16:31
Wow, this guy, super impres­sive. As most peo­ple lis­ten­ing to this prob­a­bly know, Char­lie Munger not only has a big stake and is one of the co-what­ev­ers of Berk­shire Hath­away, but he also owns a big chunk of a news­pa­per called Dai­ly Jour­nal which has been tran­si­tion­ing from being a news­pa­per to a tech­nol­o­gy com­pa­ny. And he, with the inter­im CEO of Dai­ly Jour­nal, did a live Q&A for their annu­al gen­er­al meet­ing this week. And Char­lie as always is being inter­viewed by Becky Quick from CNN. She’s pass­ing through the ques­tions, facil­i­tat­ing it. Char­lie is nine­ty-nine years old, and he looks it, but he is so sharp when he’s answer­ing these ques­tions. I’ve only watched about thir­ty-forty min­utes of it so far, but I just want to play a lit­tle bit of it. There was a ques­tion pre­ced­ing the one I’m about to play where he was asked what he thought about AI and chat GPT, and he gave a fair­ly cau­tious response. I don’t know what you’re gonna ask a nine­ty-nine-year-old guy about AI for, but he said, look, I think there’s a lot of pos­si­bil­i­ties for AI, I think it’s gonna it’s got a big future ahead of it. He said that he does­n’t think that it’s real­ly some­thing to wor­ry about right now. He talks about how the tech­nol­o­gy busi­ness destroyed the news­pa­per busi­ness, the Dai­ly Jour­nal’s busi­ness, and they’ve had to piv­ot and it’s a long, hard slog. But then the inter­im CEO of Dai­ly Jour­nal piped up and said he actu­al­ly thinks that chat GPT and tools like that are going to have a huge impact on jour­nal­ism, and they’ve already been using it in their news­pa­per, exper­i­ment­ing with how to use it to write arti­cles and things like that, which is inter­est­ing. But then the next ques­tion Becky came up with was appar­ent­ly writ­ten by chat GPT, some­body sub­mit­ted a ques­tion that they used chat GPT to write, and it’s about cog­ni­tive bias­es. So, let me see if I can make the tech­nol­o­gy work here, and I’ll play the ques­tion and Char­lie’s answer.

Becky Quick 18:41
“In your expe­ri­ence, what’s the most chal­leng­ing bias to over­come, and how do you per­son­al­ly guard against it? So, I’d ask for an answer to that ques­tion and then what do you think of the ques­tion that GPT chat wrote for you?”

Char­lie Munger 18:53
Well, if I had to name one fac­tor that dom­i­nates ill and bad deci­sions, it would be what I call denial. If the truth is unpleas­ant enough, peo­ple, their mind plays tricks on them, and they think, ‘is this real­ly hap­pen­ing?” And of course, that caus­es enor­mous destruc­tion of busi­ness when peo­ple go out throw­ing mon­ey into the way they usu­al­ly do things, oh, you know, it isn’t gonna work at all well in the way the world is now hav­ing changed. And if you want an exam­ple of how denial has affect­ed things, take the world of invest­ment man­age­ment. How many man­agers are going to beat the index­es, all costs con­sid­ered? I would say, maybe 5% con­sis­tent­ly beat the aver­age. Every­body else is liv­ing in a state of extreme denial. They’re used to charg­ing big fees and so forth for stuff that isn’t doing their clients any good. It’s a deep moral deprav­i­ty. If some wid­ow comes to you with five hun­dred thou­sand dol­lars and you charge her one point a year, you could put her in the index­es. But you need the the one point. So, peo­ple just charge a con­sid­er­able fee for worth­less advice, and all pro­fes­sions fall into that kind of denial. It’s every­where. So, I had to say, I always quote Demos­thenes — a long time ago, Demos­thenes, that’s more than two thou­sand years ago — and he said, “what peo­ple wish is what they believe.” Think of how much of that goes on. And so, of course, is huge­ly impor­tant. And you can just see it. I would say the agency costs and mon­ey man­age­ment, they’re just so many bil­lions it’s uncount­able. And nobody can face it. Who wants to keep your kids in school? You’ll quit, you need the fees, you need bro­ker choic­es, so you do what’s good for you and bad for them. Now, I don’t think Berk­shire does that, and I don’t think we Dar­ren and I did it at the Dai­ly Jour­nal. Dar­ren and I nev­er took a dime on salary or direc­tors fees or any­thing. If I have busi­ness, I talk out of my phone or use my car, I don’t charge it to the Dai­ly Jour­nal. That’s unheard of. It should­n’t be unheard of, and it goes on at Berk­shire, it goes on at the Dai­ly Jour­nal. But we have an incen­tive plan now in this Jour­nal tech­nolo­gies, and it has a mil­lion dol­lars for the Dai­ly Jour­nal stock. That did not come from the com­pa­ny issu­ing those shares, I gave those shares to the com­pa­ny to use in com­pen­sat­ing employ­ees. And I learned that trick, so to speak, from BYD, which is one of the secu­ri­ties we hold in our secu­ri­ties port­fo­lio. And BYD at one time in its his­to­ry, the founder-chair­man, he did­n’t use the com­pa­ny’s stock to reward the exec­u­tives, he used his own stock. That was a big reward, too. Well last year, what hap­pened? BYD last year made more than $2 bil­lion after tax­es in the auto busi­ness in Chi­na. Who in the hell makes $2 bil­lion as a brand-new auto busi­ness for all prac­ti­cal pur­pos­es. It’s incred­i­ble what’s hap­pened. And so, there is some of this old-fash­ioned cap­i­tal­ist virtue left in the Dai­ly Jour­nal, there’s some left in Berk­shire Hath­away, and there’s some left at BYD. But most places, every­body’s try­ing to take what they need and just ratio­nal­is­ing whether it’s deserved or not.

Cameron 22:45
So, that’s a small taste of Char­lie at nine­ty-nine. Isn’t he great?

Tony 22:51
He is good. You know, we should reach out to Char­lie and try and get him on the pod­cast for an inter­view. That’d be fan­tas­tic.

Cameron 22:57
Well, you’re gonna be over there in a month. I’ll try and line it up.

Tony 23:02
He’s bril­liant. I mean, apart from the fact that he’s nine­ty-nine and still going strong, he’s just as clear as a bell. And just think­ing so clear­ly about every­thing, isn’t he? Just point­ing out where all the prob­lems are in the indus­try and cap­i­tal­ism and in busi­ness­es, list­ed busi­ness­es gen­er­al­ly, it’s just incred­i­ble.

Cameron 23:23
Quot­ing Demos­thenes.

Tony 23:27
I mean, his breadth and depth of knowl­edge is just incred­i­ble. And he’s very rarely wrong. I can’t think of a time when I’ve thought that Char­lie was wrong or that he came out and apol­o­gised for mak­ing a mis­take. You know, if he says 5% of fund man­agers beat the mar­ket, that’s prob­a­bly about the right num­ber. And if he thinks that they’re over­charg­ing in fees, then they prob­a­bly are.

Cameron 23:52
Demos­thenes, on the oth­er hand, was very wrong.

Tony 23:54
Why’s that?

Cameron 23:55
Oh, he roused Athens to fight against Philip of Mace­don and Phillip’s son Alexan­der the Great. They were pret­ty sure that they could beat these puny Mace­do­nians and Athens got crushed and stayed under the heel of the Mace­do­nians then for a cou­ple of hun­dred years until the Romans took over and crushed the Mace­don­ian. So, any­way, Demos­thenes was a bit of a mad­man.

Tony 24:18
When we get Char­lie on for an inter­view, you can talk ancient Greek his­to­ry with him.

Cameron 24:22
I will. I will. I will talk about the Demos­thenes. My last point for the news sec­tion this week is, as you know, I’ve been build­ing this Guru­Fo­cus check­list pre­dom­i­nant­ly for our Amer­i­can sub­scribers, but I’ve been test­ing it against Aus­tralian stocks and com­par­ing it to the Stock Doc­tor check­list. Now two things I’ve dis­cov­ered through this process: num­ber one, I’m not as good at Excel as I thought I was. Num­ber two, actu­al­ly, Chat GPT has helped me a lot in solv­ing Excel for­mu­la prob­lems.

Tony 24:55
Wow.

Cameron 24:56
Yeah, I just throw a for­mu­la into Chat GPT and go, “can you fix this?” And it goes, “yes, I can” and it tells me how to fix it, it’s fan­tas­tic. Works more often than it does­n’t work. Third­ly, what I’ve picked up is there have been some dis­crep­an­cies between GuruFocus’s data and Stock Doc­tor’s data. In the cou­ple of instances that I’ve come through, and I’ve only looked at a cou­ple of stocks this week, and there was prob­lems in both of them. It turns out it was Stock Doc­tor, I’m pret­ty sure, that had the data prob­lem just in case any­one’s inter­est­ed in these par­tic­u­lar stocks. One is IMA, which has been at the top of our buy list for­ev­er. Stock Doc­tor is show­ing a 90% reduc­tion in its mar­ket cap start­ing in 2022, which the ASX and IMA’s own web­site does­n’t show, and Guru­Fo­cus did­n’t have. They went from, like, I don’t know, I think it was 150 mil­lion shares on issue down to, like, 12 mil­lion shares on issue, which is going to have an impact on its score in our buy list, right, you know, when we’re look­ing at things like equi­ty per share and stuff like that. So, I flagged that with Stock Doc­tor, Vic­tor Di Pas­cuale, and he’s look­ing into that. And the oth­er one I picked up is N1H, which is also up at the top of our buy list. Stock Doc­tor shows a drop in their shares on issue from 86.5 mil­lion down to 25 mil­lion, but the ASX has them at 88 mil­lion, as does Guru­Fo­cus. So, I think Stock Doc­tor’s got some data integri­ty issues. I might be wrong, I’ll wait to Vic­tor comes back to me, but that may change some things.

Tony 26:39
I had a sim­i­lar prob­lem last year. Remem­ber, I bought News Corp because they came on to the buy list, and it turned out they had the wrong num­ber of shares in Stock Doc­tor. So, looked they’re not immune, and I imag­ine there are errors in Guru­Fo­cus, too. I’m not that famil­iar with it. But yeah, if some­thing looks strange, it’s worth check­ing out. Were there any shared con­sol­i­da­tions or buy­backs for those two stocks you men­tioned?

Cameron 26:59
Not that I could see. I went through the announce­ments on Stock Doc­tor. And again, I looked at the ASX and I looked at AMA’s web­site. I don’t think I looked at N1H’s, I just took the ASX num­ber. But yeah, Guru­Fo­cus tends to agree with the ASX on both those, and Stock Doc­tor’s in dis­agree­ment.

Tony 27:16
Wow, okay. Yeah, well that’s not good. Hope­ful­ly, Stock Doc­tor can fix it. We can talk about this lat­er, but I’d be inter­est­ed to know what you’re doing for Finan­cial Health in Guru­Fo­cus, because I had a look at it last year and could­n’t come to a con­clu­sion that got me close to the Stock Doc­tor finan­cial health rat­ings.

Cameron 27:34
Well, they have their own rat­ings for those sorts of things, and I’m test­ing those out. My the­sis at the moment is that it does­n’t real­ly mat­ter if their scor­ing is dif­fer­ent to Stock Doc­tors if the stack rank­ing of those scores is sim­i­lar. So, if they give it a strong or weak or sta­ble and I can score them on that, as long as, you know, at the end of the day it’s giv­ing it a sim­i­lar sort of score — because that’s what we care about, right? If it’s improv­ing, declin­ing, strong, weak, those sorts of things. Guru­Fo­cus have their own met­rics that they’re mea­sur­ing, I can’t remem­ber what they’re called.

Tony 28:20
Yeah, it had Z scores and dif­fer­ent ver­sions of that. Or “zee scores” as they call it. But yeah, when I ran my tests it was com­ing out with dif­fer­ent results com­pared to Stock Doc­tor, and that’s where I put it aside. I haven’t test­ed it much fur­ther than that.

Cameron 28:37
I’m work­ing my way through that. And, you know, at the end of the day if I can get a sim­i­lar sort of list as an out­put to our list, I think, then I’m on the right track. Any­way. But some of these things are real­ly throw­ing me. Like, the dif­fer­ences in mar­ket caps and the dif­fer­ences in shares on issue has been throw­ing me for a bit of a loop this week.

Tony 28:56
Maybe we should sug­gest to Stock Doc­tor that they insti­tute some kind of qual­i­ty con­trol. They might be able to run a down­load from the ASX and com­pare it to their data provider. Because I’d be fair­ly sure that the error is with who­ev­er pro­vides their data, prob­a­bly, more than what they’ve done to the data when it arrives at Stock Doc­tor. But who knows?

Cameron 29:17
Yeah, you would think. All right, what else have you got in the news of the week, TK?

Tony 29:22
Well, it’s been an up and down report­ing sea­son, as we talked about before. In terms of my own port­fo­lio, AMP results came in and that was just ter­ri­ble. Sur­prised on the down­side, and I can’t under­stand why AMP did­n’t come out dur­ing con­fes­sion sea­son and start to reveal some of the prob­lems it revealed when it actu­al­ly came out with its results announce­ment. So, I don’t know what’s going on there. I don’t know what the reg­u­la­tor’s doing, they should have jumped all over AMP and said, “hey, you must have known about the reduc­tion in the funds under man­age­ment and the oth­er issues you were fac­ing at least weeks before the results came out.” So, the reg­u­lar has done noth­ing.

Cameron 30:02
Well, look, AMP’s had such a clean record for man­age­ment and qual­i­ty con­trol over the last few years, Tony, I think they prob­a­bly just trust­ed that they knew what they were doing down there.

Tony 30:15
Yeah, or that they did­n’t work out the num­bers until the night before they released them, and there­fore it was con­tin­u­ous guid­ance. So, I don’t know. But yeah, it’s not good. I did­n’t treat it as a red flag, but only because AMP has now fall­en back almost to its sell line.

Cameron 30:32
It was one cent above it when I checked an hour ago.

Cameron 1:07:18
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