QAV #647 — The BRHG

QAV 647 THE BRHG

[00:00:00] Cameron: Well, well, well, well, wel­come back to QAV. This episode is now, it was gonna be enti­tled Whiplash ’cause that’s what my week has been like, but I’ve just changed it to the BRHG.

[00:00:13] Cameron: That’s the, uh, , that’s the title for this episode, but it’ll remain, remain our Secret. No one will

[00:00:20] Cameron: know what the BRHG stands for.

[00:00:23] Tony: ha. Ha,

[00:00:25] Tony: except for

[00:00:25] Tony: a cou­ple of guys from Bris­bane and me.

[00:00:26] Cameron: how’s your week been,

[00:00:27] Cameron: Tony?

[00:00:28] Tony: Yeah.

[00:00:28] Tony: busy. Busy,

[00:00:29] Tony: busy. Well, com­ing into Christ­mas

[00:00:31] Tony: and, you know, we’re going up to Bris­bane on the week­end for a

[00:00:34] Tony: par­ty and

[00:00:35] Tony: then I’m head­ing off to Mel­bourne

[00:00:36] Tony: after that.

[00:00:37] Tony: So, try­ing to get all the loose

[00:00:39] Tony: ends

[00:00:39] Tony: tied up in between.

[00:00:40] Cameron: Well, it has been a

[00:00:42] Cameron: crazy week, Tony, on the, uh, in the stock mar­kets here and in the US. We’ll talk a lit­tle bit about that in after hours, what’s hap­pened over there the last few days. But I want­ed to start off with a sto­ry I read in the ABC this morn­ing. I don’t know if you saw this. It was­n’t in my notes to you because I read it after­wards by

[00:00:58] Cameron: Ian [00:01:00] Ver­ren­der.

[00:01:00] Cameron: The Uncom­fort­able Truth

[00:01:01] Cameron: About Record High Immi­gra­tion Lev­els, Rants, Rents, Not Rants, Rents and

[00:01:07] Cameron: Infla­tion. Did you see

[00:01:08] Cameron: this

[00:01:08] Cameron: arti­cle?

[00:01:09] Tony: I, I haven’t, but I can pret­ty much guess what it’s

[00:01:11] Tony: gonna say.

[00:01:14] Cameron: Well, let me read the begin­ning of it. You could call them the four

[00:01:17] Cameron: eyes of the econ­o­my. And they’ve now col­lid­ed in spec­tac­u­lar fash­ion. Almost all of us have been obsessed by just two. Infla­tion and its impact on inter­est rates. But there are anoth­er two that need to be brought into the equa­tion, immi­gra­tion and the need for infra­struc­ture.

[00:01:35] Cameron: Every econ­o­mist from Reserve Bank Gov­er­nor Michelle Bul­lock Down admits that inter­est rates are a blunt weapon that dis­pro­por­tion­ate­ly affects

[00:01:42] Cameron: dif­fer­ent seg­ments of Aus­tralian soci­ety, par­tic­u­lar­ly younger Aus­tralians who bought real

[00:01:47] Cameron: estate in the past three years. What about the

[00:01:49] Cameron: younger Aus­tralians

[00:01:50] Cameron: who can’t afford to buy

[00:01:51] Cameron: real estate?

[00:01:51] Cameron: That’s what I want to know. Or even the

[00:01:53] Cameron: Old­er

[00:01:53] Tony: Old­er Aus­tralians.

[00:01:54] Cameron: 50s, they can’t afford to buy any­thing. But for a larg­er num­ber of, a large

[00:01:59] Cameron: num­ber of [00:02:00] econ­o­mists, it is the only weapon. Many refuse to even con­sid­er

[00:02:02] Cameron: alter­na­tives, pri­mar­i­ly because they shy away from a

[00:02:06] Cameron: debate that has become social­ly and occa­sion­al­ly racial­ly

[00:02:09] Cameron: charged. And yet they’re

[00:02:11] Cameron: often more than hap­py to con­tin­ue to push for ever high­er inter­est rates. In the past fort­night,

[00:02:16] Cameron: infla­tion pres­sures eased sub­stan­tial­ly in both the Unit­ed States

[00:02:20] Cameron: and the Unit­ed King­dom. While it is

[00:02:22] Cameron: declin­ing here, it is at a much slow­er pace than the RBA would

[00:02:26] Cameron: like, which forced it to raise rates on Mel­bourne Cup Day. That’s pro­vid­ed ammo to the Hawks, who have bol­stered their calls for even more rate hikes. And last week the fed­er­al gov­ern­ment announced it would take a scythe to infra­struc­ture spend­ing in a bid to relieve infla­tion pres­sures fol­low­ing prompts from the Inter­na­tion­al Mon­e­tary Fund.

[00:02:46] Cameron: And then he goes on to roast the IMF.

[00:02:49] Cameron: Um, and, uh, yeah, and yet, despite the over­whelm­ing evi­dence, few appear will­ing to con­front one of the key

[00:02:56] Cameron: forces dri­ving infla­tion. Rather than

[00:02:58] Cameron: whack every­one with high­er [00:03:00] inter­est rates

[00:03:00] Cameron: because rents are going crazy, would­n’t it make more sense to sim­ply

[00:03:04] Cameron: scale back the lev­el of

[00:03:05] Cameron: immi­gra­tion, even tem­porar­i­ly, to take the pres­sure off rents and help low­er

[00:03:10] Cameron: infla­tion?

[00:03:11] Cameron: He was talk­ing about… 000 peo­ple

[00:03:14] Cameron: arriv­ing in Aus­tralia and

[00:03:16] Cameron: every cou­ple of

[00:03:17] Cameron: years that’s the pop­u­la­tion of Bris­bane and they all need a place to live, etc, etc.

[00:03:22] Cameron: Any­way, I thought, uh, Ian’s been lis­ten­ing to the show,

[00:03:25] Cameron: he’s join­ing your rant against the

[00:03:27] Cameron: RBA.

[00:03:29] Tony: Well,

[00:03:30] Cameron: your thoughts on,

[00:03:31] Tony: fis­cal

[00:03:31] Tony: pol­i­cy as well. It’s like, we spoke about this at length last time. Um, yeah. Immi­gra­tion is def­i­nite­ly infla­tion­ary under its cur­rent set­ting. It’s, um, you know, to be fair to the gov­ern­ment, it’s a bit of a catch up peri­od because COVID years and. Busi­ness­es were cry­ing out for more

[00:03:49] Tony: staff and immi­gra­tion was seen to be defla­tion­ary.

[00:03:55] Tony: Going into this peri­od, because, um, if you have more, [00:04:00]

[00:04:00] Tony: a big­ger

[00:04:00] Tony: pool of back­pack­ers and over­seas stu­dents, et cetera, doing jobs and your cafe stays open and the wages are low­er and all the rest of it. So um, it just has­n’t turned out that way because

[00:04:10] Tony: those. Per­haps they brought in too many, but those five or six hun­dred thou­sand

[00:04:15] Tony: peo­ple this year are look­ing for places to rent or buy.

[00:04:18] Tony: Um, and you know, they’re com­ing in with mon­ey in their pock­ets and they’re buy­ing up. So it is, has been infla­tion­ary. But again, it’s this whole thing about the left hand and the right hand don’t have a, some­thing in between to, to, to bal­ance this idea of I’ve got to whack infla­tion with inter­est rates.

[00:04:37] Tony: And I’ve got to do some­thing about var­i­ous prob­lems in the econ­o­my by immi­gra­tion or what­ev­er else, build­ing, uh, invest­ing more in infra­struc­ture and, which is infla­tion­ary. So it’s like this vicious cycle that fis­cal and mon­e­tary pol­i­cy are danc­ing to at the moment and just need some­one to stop it real­ly. Should be the trea­sur­er. Um, I think he’s now cot­ton­ing on,

[00:04:59] Tony: [00:05:00] hope­ful­ly,

[00:05:00] Tony: we’ll see.

[00:05:02] Cameron: well, speak­ing about,

[00:05:04] Cameron: uh, dis­as­ters, Tony,

[00:05:08] Cameron: Karoon Ener­gy.

[00:05:10] Tony: Yeah.

[00:05:11] Cameron: my god, I mean,

[00:05:15] Tony: By the way, I don’t think it’ll

[00:05:16] Tony: be a

[00:05:16] Tony: dis­as­ter. It’s it’s. It’s gone down because of a

[00:05:19] Tony: cap­i­tal

[00:05:19] Tony: raise, but maybe, sor­ry, I should­n’t

[00:05:21] Tony: inter­rupt, you out­line why you think it’s a

[00:05:22] Tony: dis­as­ter.

[00:05:24] Cameron: that was a dis­as­ter for those of us that held the

[00:05:26] Cameron: shares, uh, when it col­lapsed last week. So, for those peo­ple who did­n’t hold KAR on the 15th of Novem­ber, you know, some point in the mid­dle of last week, the share price sud­den­ly dropped by 20%. In the morn­ing, and, uh, we went, oh my god, went to sell it. There was no news, noth­ing, just dropped, 3 mil­lion shares, uh, trad­ed hands, or 3 mil­lion dol­lars worth of shares, I can’t remem­ber which, in the morn­ing.

[00:05:58] Cameron: And then, but, we all put in our [00:06:00] sell orders and then found out that there was a trad­ing halt. I think it was like 9. 30 in the morn­ing, there was a trad­ing halt placed. Uh, well, 9. 30 my time, so I guess 10. 30 Syd­ney time. And so we, our sell orders expired, cause there were, you know, mar­ket day trades. Uh, lat­er on in that day, we found out that they had announced, uh, cap­i­tal rais­ing.

[00:06:26] Cameron: But, uh, the shares had plum­met­ed before that announce­ment came out, and there was a trad­ing halt. So some­body knew what was com­ing. And the cap­i­tal rais­ing was at a much low­er price to where the shares were trad­ing at. So, some­body’s dumped 3 mil­lion shares.

[00:06:44] Cameron: in the morn­ing before the

[00:06:46] Cameron: trad­ing

[00:06:46] Cameron: halt was announced.

[00:06:47] Cameron: Now,

[00:06:49] Cameron: I

[00:06:49] Cameron: don’t know

[00:06:49] Cameron: how they get away with

[00:06:50] Cameron: that. What’s

[00:06:51] Cameron: going on

[00:06:51] Tony: I agree. Yeah, you think there’d be some, some kind of, um, review of that by the ASX and by per­haps oth­er reg­u­la­tors and [00:07:00] poten­tial class

[00:07:00] Tony: action activ­i­ty too.

[00:07:02] Cameron: you would hope So So any­way, then they came out of the trad­ing halt a cou­ple of days lat­er on Fri­day, the shares imme­di­ate­ly dropped anoth­er 4%. So by the time we got around to sell­ing our shares, we’d all lost 20, 25%,

[00:07:16] Cameron: depend­ing on where you bought in, I guess, where

[00:07:18] Cameron: you were at when you bought it. But it was A real one sell for me.

[00:07:22] Cameron: And

[00:07:22] Cameron: you know, I end­ed up sell­ing it for A lot

[00:07:24] Cameron: less than my 10%.

[00:07:26] Tony: Real­ly? Because the, because the

[00:07:27] Tony: graph you sent me shows it’s down 10%.

[00:07:31] Cameron: now, Yeah.

[00:07:33] Tony: Oh, so it’s, it’s gone up

[00:07:34] Tony: again. Has it since

[00:07:35] Cameron: it’s gone up a lit­tle

[00:07:36] Cameron: bit since, yeah, since it came out of the trad­ing hold, yeah. Um, so then on the, uh, yes­ter­day I got an email from Aus­tralian Super say­ing that I was eli­gi­ble to, uh, take place in this new cap­i­tal rais­ing. Share­hold­ers are to buy an addi­tion­al one shares for every 3. 75 held on.

[00:07:58] Cameron: Record date at a [00:08:00] price of 2. 05. The record date is the 20th of Novem­ber, but of course I’d already sold my shares by then. I was like, when I saw an email from them about it, I was like, Oh, they’re going to make it right. They’re going to go, look, sor­ry, sor­ry, we mis­han­dled this. And you know, the share price dropped before you had a chance to find out the news, let’s, let’s make it up to you.

[00:08:23] Cameron: We’ll just, we’ll, we’ll give you your mon­ey back. No, just, uh, drop­ping. It was like. Insult, adding insult to injury there. You can buy shares at a much low­er price of the com­pa­ny that where you just lost 20%. Dave from Newey emailed me yes­ter­day say­ing share­hold­ers can apply for a 1 per 3. 75 blah de blah.

[00:08:44] Cameron: If a hold­er assumes they get full allo­ca­tion and do the calcs, could or should they be work­ing with a new rule one price based on the new buy price post issu­ing the new shares? So assum­ing you did­n’t get out, I guess, last week.

[00:08:59] Cameron: [00:09:00] Um, do you re you would recal­cu­late your Rule 1 price based on

[00:09:03] Cameron: the aver­age price of the full par­cel if you took

[00:09:07] Cameron: if you par­tic­i­pat­ed in the the new

[00:09:09] Cameron: offer?

[00:09:09] Tony: Yeah,

[00:09:10] Tony: I would. Yeah,

[00:09:11] Cameron: tell them to

[00:09:11] Cameron: go screw them­selves, Dave, and just, uh,

[00:09:14] Cameron: after

[00:09:14] Cameron: that, deba­cle.

[00:09:15] Tony: real cow­boy action, isn’t it? That some­one’s found out about

[00:09:18] Tony: the rights issue before­hand and they’ve sold mas­sive amounts of shares on that, Whether there was a press release lying around some­where that some­one’s seen, I don’t know,

[00:09:26] Tony: but that’s bad.

[00:09:28] Cameron: Real­ly

[00:09:29] Tony: would have dropped, the share

[00:09:30] Tony: price would have dropped any­way to be, reflect the fact that there was a

[00:09:33] Tony: rights issue

[00:09:35] Cameron: Yeah. Yeah,

[00:09:38] Tony: Um,

[00:09:39] Cameron: I don’t know. I mean, that, but you know,

[00:09:41] Cameron: that’s not, that’s not nice to your share­hold­ers. Here we go. It

[00:09:45] Cameron: was 11 point

[00:09:48] Cameron: on, oh, that’s on the 17th. Yeah. On the 15th, 2 mil­lion shares trad­ed hands, 2 point some­thing. Um, no, 3. 4 mil­lion shares trad­ed hands on [00:10:00] the 15th before it went to the trad­ing hall.

[00:10:02] Cameron: And then when it came out of the trad­ing hall, um, 18 mil­lion shares,

[00:10:08] Cameron: uh, trad­ed hands. But I

[00:10:10] Cameron: like. Yeah, to, uh, to just take the share price like that

[00:10:14] Cameron: does­n’t give me a lot of faith in the

[00:10:16] Cameron: man­age­ment of the com­pa­ny.

[00:10:18] Tony: bad man­age­ment, isn’t it?

[00:10:20] Cameron: Wahoo!

[00:10:22] Tony: um, the gov­er­nance is very poor. I agree. Putting that aside, it looks like a good deal. I’ve got to say so.

[00:10:30] Tony: If you had­n’t sold your shares, if you had­n’t sold your shares, or if you were the com­pa­ny that sold, or some indi­vid­ual that sold that big par­cel before the announce­ment,

[00:10:39] Tony: you can buy back in cheap­er. But, um, yeah, so Karoon is, um, is rais­ing mon­ey to buy a US oil and gas field. And, um, a brief sum­ma­ry, it’s it’s, um, Pre­dict­ing that rev­enue will increase by 51%, that, uh, earn­ings [00:11:00] will, uh, increase by 80%, um, and the costs per bar­rel goes down from 15 U. S. to 13 U. S. Um, addi­tion­al­ly, it’s diver­si­fy­ing away from Brazil, so cur­rent­ly it’s, it only owns oil fields in Brazil, um, so it’s going to have 30 per­cent in the U.

[00:11:17] Tony: S. 70 per­cent in Brazil and the US acqui­si­tion also adds some gas to the prod­uct mix. So it’s not just going to be a straight oil com­pa­ny. Um, design the stan­dard, the rights are being offered at 2 and 5 cents a share and the share price is above that now. So if you do take up the offer at this stage, you’re mak­ing a prof­it, the

[00:11:37] Tony: basis of those

[00:11:38] Tony: shares.

[00:11:38] Tony: Awe­some.

[00:11:41] Cameron: So, okay, if,

[00:11:44] Cameron: um, you Karoon

[00:11:47] Cameron: Ener­gy shares and went through that, would you have sold them when

[00:11:52] Cameron: they came out of the…

[00:11:54] Tony: Pos­si­bly. I don’t know. I’d have to have a look. I don’t, I’m not famil­iar

[00:11:57] Tony: with Karoon to know

[00:11:59] Tony: when when,

[00:11:59] Tony: [00:12:00] they came out of the trad­ing halt, were you aware of the share place­ment at

[00:12:03] Tony: that stage? they would have prob­a­bly made an announce­ment about what they were doing

[00:12:08] Tony: and then take it, took it out of a trad­ing halt.

[00:12:10] Tony: Yeah. Or was, I

[00:12:11] Tony: don’t know what the sequence of

[00:12:12] Tony: events were.

[00:12:13] Cameron: Umm, not the offer. I got,

[00:12:16] Cameron: I got the email about

[00:12:17] Cameron: the

[00:12:18] Cameron: offer yes­ter­day. Trad­ing hulk came off

[00:12:20] Cameron: on

[00:12:20] Cameron: Fri­day.

[00:12:22] Tony: Okay. So then, yeah, I don’t know. Pos­si­bly. Yeah.

[00:12:28] Cameron: Well, I was not

[00:12:30] Cameron: hap­py about that whole

[00:12:31] Cameron: thing,

[00:12:31] Tony: No,

[00:12:32] Tony: I don’t blame you.

[00:12:33] Tony: That’s poor­ly man­aged.

[00:12:34] Cameron: you did a Paul Pork on them,

[00:12:36] Cameron: I

[00:12:36] Tony: I did. I did. So it was a car crash of a pulled pork. A K. A. R. crash of a

[00:12:45] Tony: pulled pork.

[00:12:48] Cameron: Yeah. Oh, well, there you go. It was­n’t, that was­n’t… speak­ing of unhap­py

[00:12:53] Cameron: events.. Nation­al Tire, NTD.

[00:12:57] Cameron: Like, I think the day after, or the same day, [00:13:00] well it was right about the same time, dropped 16 per­cent in a

[00:13:04] Cameron: day

[00:13:05] Cameron: after news came out that Goodyear was drop­ping Dun­lop, or was doing a strate­gic review of their own­er­ship of

[00:13:13] Cameron: Dun­lop,

[00:13:14] Cameron: which con­fused the hell out of me, because I thought Goodyear was

[00:13:17] Cameron: Dun­lop, and I’m like, what?

[00:13:19] Cameron: How can you do a strate­gic

[00:13:20] Cameron: review of your­self?

[00:13:22] Cameron: Um, but, uh, appar­ent­ly

[00:13:23] Tony: you

[00:13:24] Tony: can.

[00:13:25] Cameron: That’s true, I

[00:13:26] Cameron: guess,

[00:13:26] Cameron: yeah. Appar­ent­ly Goodyear

[00:13:29] Cameron: are gonna try and offload

[00:13:31] Cameron: Dun­lop and NTT.

[00:13:37] Cameron: Their whole busi­ness is based on sell­ing Goodyear and Dun­lop tyres by the

[00:13:41] Cameron: sounds of it. And their share price

[00:13:43] Cameron: tanked.

[00:13:44] Tony: I’m not sure it’s their, I’m not sure it’s their whole busi­ness,

[00:13:46] Tony: but cer­tain­ly a bit of it is, yeah.

[00:13:48] Cameron: Big chunk of their busi­ness. Yeah. Um, they, they’d all, their most recent sort of annu­al meet­ing, they said the dis­tri­b­u­tion of Dun­lop brand tires by NTD in New Zealand com­menced on [00:14:00] 1st of Novem­ber, 2023. Prepara­to­ry work for the com­mence­ment of NDT’s,

[00:14:04] Cameron: NTD’s dis­tri­b­u­tion of Dun­lop brand tires in Aus­tralia

[00:14:08] Cameron: from March, April 2024 is

[00:14:10] Cameron: con­tin­u­ing.

[00:14:12] Cameron: Uh, not any­more, it’s

[00:14:13] Cameron: not.

[00:14:15] Tony: Yeah, so that, so, um, what I found when I was dig­ging around

[00:14:18] Tony: was, as you say, Goodyear is

[00:14:20] Tony: the com­pa­ny, the US owned com­pa­ny, makes Goodyear tyres, but

[00:14:23] Tony: it also owns oth­er brands like Dun­lop, which is the brand of tyres it sells in Aus­tralia, and they’re putting that brand up for sale, and they’ve laid off 700 staff in Aus­tralia that man­u­fac­ture Dun­lop tyres here.

[00:14:36] Tony: Um, Goodyear’s on the ropes. The par­ent com­pa­ny and they’re try­ing to find two bil­lion dol­lars in cost sav­ings per per year. So it’s see­ing this as a way of help­ing to achieve that. Um, so it’s putting it up for sale. The this was from an arti­cle I read on The carsales. com web­site, inter­est­ing­ly enough. Um, but they’re, they’re sug­gest­ing that there are oth­er tyre man­u­fac­tur­ers look­ing at, uh, [00:15:00] poten­tial­ly buy­ing out the Dun­lop brand from Goodyear.

[00:15:03] Tony: But what’s hap­pened, um, as you said, was that, I guess, when Goodyear was, you know, try­ing to save costs, they, they ran a chain of tyre stores in Aus­tralia, which they were also offload­ing, so… Nation­al Tire NTD picked up some of those, um, which is what you were talk­ing about, prepar­ing to take over that out­let.

[00:15:23] Tony: Um, it’s unclear what, what that means, uh, both for those out­lets and for their tire sup­ply. Because the brand could be bought by any of the oth­er tire man­u­fac­tur­ers, includ­ing some from Chi­na, who may just not want to even sell in Aus­tralia going for­ward.

[00:15:38] Tony: So, or they might decide to hon­our the Goodyear deals.

[00:15:42] Tony: NTD just

[00:15:43] Tony: does­n’t know what’s going to hap­pen. So it’s, it’s uncer­tain­ty, which

[00:15:46] Tony: has dri­ven the share

[00:15:47] Tony: price down.

[00:15:49] Cameron: Well, we’re on real­ly good terms with Chi­na now,

[00:15:50] Cameron: Tony. I don’t know if you heard that, but, uh,

[00:15:52] Cameron: Albo went over, shook hands with

[00:15:55] Cameron: Xi. It’s all good. So, you know, all no harm, no

[00:15:59] Cameron: foul. [00:16:00] It’s all water under the bridge now. We’re all friends with the

[00:16:01] Cameron: Chi­nese again.

[00:16:03] Tony: What do they call him? A pret­ty lit­tle boy or

[00:16:04] Tony: some­thing, was­n’t it?

[00:16:06] Tony: Is that the

[00:16:06] Tony: head­line?

[00:16:08] Cameron: Some­thing

[00:16:08] Tony: When he wore his Matil­da’s

[00:16:09] Tony: out­fit?

[00:16:10] Tony: Any­way, you Shang­hai?

[00:16:11] Tony: Yeah.

[00:16:13] Cameron: I did some drilling down cause I know noth­ing about, sur­pris­ing­ly, uh, I know noth­ing about car tires. I, I,

[00:16:22] Cameron: changed one recent­ly. That’s about my full inter­ac­tion with car tires.

[00:16:28] Cameron: Did I tell you about that? We were going to Kung Fu one day. We’re head­ing off to Kung Fu and nar­row street at the front of our house and there was a car com­ing the oppo­site direc­tion and cars parked on the side­walk and up on the curb, you know, so I quick­ly sort of…

[00:16:43] Cameron: Pulled into the kerb in between two cars to let this oth­er car come past and hit a drain that was there that I did­n’t see. Popped my tire. So that’s what I get for being nice, try­ing to let the oth­er peo­ple through. So Goodyear, [00:17:00] Goodyear Rub­ber and Tire Com­pa­ny, found­ed in 1898 by Frank Siebel­ing. Named after Amer­i­can Charles Goodyear, 1800 1860, inven­tor of vul­can­ized rub­ber.

[00:17:18] Cameron: So Charles Goodyear did­n’t actu­al­ly start Goodyear. He was dead. He’d been dead for 38 years when this oth­er guy start­ed. So that’s the first. Inter­est­ing thing is that Goodyear had noth­ing to do with it. The guy him­self. Um, they start mak­ing bicy­cle tires, bicy­cle and car­riage tires orig­i­nal­ly, and pok­er chips.

[00:17:40] Cameron: And then, uh, 1901, they start­ed sup­ply­ing Hen­ry Ford with rac­ing tires

[00:17:46] Cameron: and it goes from there. Um,

[00:17:49] Cameron: 1924.

[00:17:53] Cameron: Won­der how that worked out. Uh,

[00:17:55] Cameron: Dun­lop

[00:17:56] Tony: Oh, the human­i­ty. [00:18:00]

[00:18:01] Cameron: Dun­lop

[00:18:02] Cameron: Tyres was found­ed by a Scots­man, John Boyd Dun­lop. He was actu­al­ly in Dublin at the time in 1888. But, um, inter­est­ing­ly enough, he was actu­al­ly a, he was a vet, a vet­eri­nary sur­geon,

[00:18:18] Tony: Ooh,

[00:18:19] Cameron: was famil­iar with mak­ing rub­ber

[00:18:20] Cameron: devices. And made some pneu­mat­ic tires for his child’s tri­cy­cle. And then went on from there to devel­op them for use in cycle rac­ing.

[00:18:32] Cameron: Formed a com­pa­ny with the pres­i­dent of the Irish Cyclists Asso­ci­a­tion, Har­vey de Croz, and then a cou­ple of years lat­er, he was like, eh, you know what? I’m going to go back to being a vet. Sold all of his shares in 1896.

[00:18:46] Tony: wow.

[00:18:47] Cameron: And, uh, lived until 1921, but yeah, had noth­ing to do with Dun­lop the com­pa­ny. After that,

[00:18:54] Cameron: he got out of it.

[00:18:55] Cameron: Ah, this tire

[00:18:56] Cameron: thing, bicy­cles,

[00:18:58] Cameron: tires, that’s nev­er going to go [00:19:00] any­where. He

[00:19:01] Cameron: got out of it, quit, pulled the pin.

[00:19:05] Tony: So both Dun­lop and Goodyear

[00:19:06] Tony: are named, are not named after their founders. They’re

[00:19:08] Tony: named after the

[00:19:09] Tony: inven­tors.

[00:19:11] Cameron: Yes. Well, Dun­lop was a founder, but he did­n’t, did­n’t stick around very long. Pulled out.

[00:19:17] Tony: Okay.

[00:19:18] Cameron: And then of course, Pacif­ic Dun­lop,

[00:19:21] Cameron: uh, which we remem­ber from the eight­ies,

[00:19:24] Cameron: who was the guy that took

[00:19:25] Cameron: over Pacif­ic

[00:19:26] Cameron: Dun­lop?

[00:19:27] Cameron: It was like

[00:19:28] Tony: I can’t recall his name. Oh, you mean

[00:19:30] Tony: Al Dun­lap?

[00:19:31] Cameron: no, Al Dun­lap didn’t go there. He

[00:19:34] Cameron: worked for Ker­ry, did­n’t he? When he

[00:19:35] Cameron: was

[00:19:35] Cameron: here.

[00:19:36] Tony: Oh Pack­er,

[00:19:36] Tony: that’s right. Yeah.

[00:19:38] Tony: You’re right.

[00:19:39] Cameron: There was some, one of the big

[00:19:40] Cameron: Aus­tralian per­son­al­i­ties in the eight­ies

[00:19:43] Cameron: was run­ning Pacif­ic Dun­lop for a while, I think. I can’t

[00:19:45] Cameron: remem­ber who it

[00:19:45] Cameron: is now,

[00:19:47] Tony: And it

[00:19:47] Cameron: of course they

[00:19:47] Cameron: were, yeah.

[00:19:49] Cameron: Bro­ken up,

[00:19:50] Cameron: uh, and they’ve been changed the name to

[00:19:52] Cameron: Ansell even­tu­al­ly, but they, Cochlear came out of Pacif­ic Dun­lop. I think, I remem­ber when I was at, [00:20:00] you know,

[00:20:00] Cameron: Microsoft, I think Pacif­ic Dun­lop was still around, was one of our clients back

[00:20:04] Cameron: then, but then they became Pacif­ic Brands at some stage.

[00:20:07] Cameron: I think

[00:20:07] Cameron: they had a cou­ple of trau­mat­ic years at

[00:20:10] Cameron: some

[00:20:11] Cameron: point, but

[00:20:11] Tony: One part of them would have, I don’t know if they did, prob­a­bly Pacif­ic Brands was the cloth­ing

[00:20:15] Tony: com­pa­ny.

[00:20:17] Cameron: right,

[00:20:17] Tony: That real­ly, real­ly was always up against it try­ing to man­u­fac­ture clothes in

[00:20:21] Tony: Aus­tralia.

[00:20:23] Cameron: right. Um, CEO, 1980s, here we go, who is the CEO, 1980s, Rod Chad­wick,

[00:20:31] Cameron: that was in the nineties. He’s not the guy I’m

[00:20:34] Cameron: think­ing of.

[00:20:36] Cameron: There was some big per­son­al­i­ty

[00:20:38] Cameron: dude in the 1980s. Phil Bross.

[00:20:42] Tony: That’s the per­son I was

[00:20:42] Tony: think­ing

[00:20:43] Tony: of.

[00:20:43] Cameron: Bill Brass, Yeah.

[00:20:46] Cameron: Any­way, there you go. So

[00:20:48] Cameron: Dun­lop,

[00:20:50] Cameron: not again, not good for the share­hold­ers. Had noth­ing to do with it.

[00:20:54] Cameron: Not out of NTD’s con­trol, I guess, but it dropped anoth­er 8 per­cent this [00:21:00] morn­ing. It has gone back up a lit­tle bit. I think it’s only down 3 per­cent as of the moment, but I got out last week when it dropped. So last week, out of the blue,

[00:21:10] Cameron: two of our shares dropped

[00:21:12] Cameron: by… Dou­ble dig­its in a mat­ter of hours. It was

[00:21:16] Cameron: kind of, kind of crazy,

[00:21:18] Cameron: man.

[00:21:20] Tony: And they were both pulled. No, NTD was­n’t a pulled

[00:21:22] Tony: pork, I don’t think.

[00:21:24] Cameron: No, no, yeah,

[00:21:26] Cameron: no, I looked it up. No, I

[00:21:28] Cameron: looked it up. I thought you would

[00:21:29] Cameron: have,

[00:21:29] Cameron: but you haven’t. Then oil became a sell also on Fri­day. Briefly, I had to sell

[00:21:34] Cameron: some oil stocks and then it turned around

[00:21:37] Cameron: the next day. I went back to being a

[00:21:39] Cameron: Josephine on Mon­day.

[00:21:43] Cameron: Uh.

[00:21:44] Cameron: Well, you

[00:21:45] Tony: I looked at it too. But, um, did­n’t look at it until

[00:21:48] Tony: Mon­day.

[00:21:48] Tony: when it was just touch­ing its sell line.

[00:21:51] Cameron: right. So it’s been

[00:21:54] Tony: think you’re

[00:21:54] Tony: jump­ing on these things too quick­ly? Do you think you’re jump­ing on these things too quick­ly? Do

[00:21:58] Tony: you want to, like, I nor­mal­ly wait [00:22:00] for end of day and look at

[00:22:00] Tony: it after hours and look at it next day,

[00:22:04] Tony: see

[00:22:04] Tony: if it turns around.

[00:22:06] Cameron: Well, yeah, but then they drop 25 per­cent in a day

[00:22:10] Cameron: some­times,

[00:22:11] Tony: they could. You’re right. Mm

[00:22:13] Cameron: know, I did my, I did my analy­sis. I think we talked about it last week. I did my

[00:22:17] Cameron: 18 month analy­sis on light and, you know, fig­ured out the cells.

[00:22:22] Cameron: Did­n’t gain me any­thing, but did­n’t cost me any­thing either. It was sort of a neu­tral

[00:22:26] Cameron: exer­cise.

[00:22:27] Tony: It’s insur­ance, isn’t it, that they don’t go down

[00:22:29] Tony: fur­ther?

[00:22:30] Cameron: Yeah. And look, my gen­er­al rule is I

[00:22:34] Cameron: just, I just fol­low the rules. I’m not, you know, I don’t, I don’t look at things all day. If I notice some­thing in the morn­ing, I eval­u­ate my, my

[00:22:42] Cameron: cell trig­gers in the morn­ing. Um, I’ll look, if I have to sell some­thing, I’ll sell it. If some­thing hap­pens lat­er on in the day, I nor­mal­ly won’t

[00:22:50] Cameron: wor­ry about it until

[00:22:51] Cameron: the next

[00:22:52] Cameron: morn­ing,

[00:22:53] Cameron: just because I’ve got oth­er

[00:22:54] Cameron: stuff I’m doing. I’m I’m not going to stop my work­flow to, you know,[00:23:00]

[00:23:00] Cameron: trig­ger

[00:23:00] Cameron: fin­ger,

[00:23:02] Cameron: trade some­thing,

[00:23:04] Tony: So sor­ry, so how do you, um, take oil, for

[00:23:07] Tony: exam­ple, how do you find out that

[00:23:09] Tony: oil

[00:23:09] Tony: becomes a

[00:23:09] Tony: sell?

[00:23:12] Cameron: looked at the oil chart. I had read in the morn­ing news that oil prices had come down overnight.

[00:23:18] Cameron: So I just thought I knew it was

[00:23:20] Cameron: close. Um, so I just pulled up the oil chart thought. Yeah, that’s def­i­nite­ly below the three point trend

[00:23:26] Cameron: line.

[00:23:27] Cameron: And so sold, um, hori­zon

[00:23:31] Cameron: and uh, what else was it? Hori­zon

[00:23:34] Cameron: and VEA

[00:23:36] Cameron: fever ener­gy.

[00:23:38] Tony: Mm hmm.

[00:23:39] Cameron: And then the bas­tard turned around the next day.

[00:23:40] Cameron: But you know how long it’ll stay?

[00:23:43] Cameron: Uh, not a cell. I don’t know. It could

[00:23:44] Cameron: be a cell again.

[00:23:46] Tony: Yep, absolute­ly. And I do it the same way,

[00:23:49] Tony: like I’ve had the same process,

[00:23:51] Tony: I heard that oil was drop­ping and I’ve checked

[00:23:53] Tony: it and I’ll, I just

[00:23:55] Tony: diarise it every day to check it now for a

[00:23:58] Tony: week until it

[00:23:58] Tony: goes one way or the

[00:23:59] Tony: other.[00:24:00]

[00:24:00] Cameron: Right. So I want­ed to ask you, there was a bit of a chat in the QAV forum

[00:24:05] Cameron: about Beach

[00:24:07] Cameron: BPT on the

[00:24:08] Cameron: day, on Fri­day. A few of us were going back­wards and for­wards try­ing to work out whether or not it should

[00:24:13] Cameron: be an oil sell, because its rev­enues are made up of oil and LPG or LNG. Um,

[00:24:20] Cameron: LNG is a

[00:24:21] Cameron: buy, oil was a

[00:24:23] Cameron: sell.

[00:24:24] Cameron: Had a look at their chart, as far as I could

[00:24:27] Cameron: tell, about 37%, which is what I had in

[00:24:30] Cameron: my,

[00:24:31] Cameron: Table. Any­way, it’s about 60, 40 LNG to oil. Is that how you read

[00:24:36] Cameron: that lit­tle

[00:24:36] Cameron: chart? I

[00:24:37] Cameron: pulled out of their review and you’re,

[00:24:40] Tony: I do read it that way. I think, um,

[00:24:42] Tony: it’s, you know, it depends how far you want to drill down on this, but it’s gas and there’s dif­fer­ent types of gas, I think, in this mix. Um, but I’m com­fort­able call­ing it 60 40 gas to oil. LNG to oil, even though it’s not all LNG to be fair,

[00:24:56] Tony: there’s LPG in there and there’s oth­er con­den­sates in

[00:24:59] Tony: [00:25:00] there as well.

[00:25:01] Cameron: I still, I don’t remem­ber the dif­fer­ence. What’s LPG ver­sus

[00:25:05] Cameron: LNG,

[00:25:05] Tony: Uh, as part of the dis­til­la­tion, from mem­o­ry,

[00:25:09] Tony: I don’t know if it’s dis­til­la­tion process, uh, pres­sur­iza­tion process for gas, there’s,

[00:25:14] Tony: um, LNG, You know, you, you cool and pres­sur­ize to a cer­tain lev­el and that gets used for cer­tain things, but there are oth­er con­den­sates that have dif­fer­ent, um, freez­ing points and, uh, you are used for dif­fer­ent things.

[00:25:31] Tony: So, um, LPG goes into your. Your gas bot­tles to pow­er your bar­be­cue, LNG pow­ers, um, elec­tric­i­ty gen­er­a­tors and, um, large sta­tions, uh, large, uh, elec­tric­i­ty gen­er­a­tors, for exam­ple. Um, and then you have oth­er con­den­sates, which are dif­fer­ent types of gas again, which have dif­fer­ent uses. So it’s, it’s a bit like, it’s not the same process, but it’s a bit like a

[00:25:56] Tony: bar­rel of oil where you

[00:25:56] Tony: have diesel and you have dif­fer­ent

[00:25:58] Tony: grades of fuel.

[00:25:59] Cameron: but [00:26:00] they’re all gas. We clas­si­fy them all

[00:26:02] Cameron: as

[00:26:03] Tony: I would, but, but they have dif­fer­ent

[00:26:05] Tony: prices and dif­fer­ent price charts.

[00:26:08] Tony: Yeah. and accord­ing to the chart you sent

[00:26:10] Tony: me, um, 25 per­cent of Beecher’s rev­enue is on fixed prices any­way, so it’s not going to relate to a chart, it’s just we’ve agreed to sell it for

[00:26:19] Tony: this

[00:26:19] Tony: price.

[00:26:21] Cameron: Yeah. Right. That’s the East Coast Gas.

[00:26:26] Tony: Mm hmm.

[00:26:27] Cameron: any­way, there, so I did­n’t sell BPT, which as it turns out was prob­a­bly a

[00:26:32] Cameron: good thing. So my oth­er big, not big dra­ma, but my oth­er sort of screw up dur­ing the week was buy­ing ABG, uh, Aba­cus Group. I think on Fri­day, I ran a buy list Thurs­day or Fri­day and a new buy list and Aba­cus came up and a num­ber of oth­er stocks came up and then, um, I looked at, uh, Alex’s buy list on Mon­day and [00:27:00] Aba­cus was­n’t on there and I was like, oh, what’s going on?

[00:27:02] Cameron: She had a down neg­a­tive for sen­ti­ment, I had a very pos­i­tive for sen­ti­ment. And then I looked and it’s one of these things where there’s a big dif­fer­ence between the Bread O Lat­er chart and the Stock Doc­tor chart. Uh, Google Finance has, uh,

[00:27:16] Cameron: got a dif­fer­ent, uh, sto­ry to tell here. Looks great in the Bread O Lat­er, does­n’t look so good in the Stock

[00:27:24] Cameron: Doc­tor chart. I looked it up and it said. Aba­cus had desta­pled ASK in

[00:27:32] Cameron: August. Um,

[00:27:36] Cameron: now, I, I don’t know what desta­pling is, but

[00:27:40] Cameron: uh, is this they spun off a

[00:27:42] Cameron: divi­sion, what’s, you ever heard of

[00:27:44] Cameron: desta­pling

[00:27:45] Cameron: before?

[00:27:45] Tony: Yes, um, sta­pled assets. I guess, par­tic­u­lar­ly in the finance space or the prop­er­ty space, um, from mem­o­ry, and I haven’t researched this recent­ly, but from mem­o­ry, it’s when the [00:28:00] own­er­ship struc­ture is a trust rather than a com­pa­ny. And if they merge, they get sta­pled togeth­er. It’s called sta­pling.

[00:28:06] Cameron: Right, So

[00:28:07] Tony: So it’s not like a com­pa­ny, when a com­pa­ny acquires anoth­er com­pa­ny, it’s a, it’s a trust that’s been oper­at­ing. Like a REIT, a Real Estate Invest­ment Trust.

[00:28:17] Tony: They have slight­ly

[00:28:18] Tony: dif­fer­ent laws.

[00:28:20] Tony: Um,

[00:28:21] Cameron: and

[00:28:21] Cameron: that’s what

[00:28:22] Tony: to com­pa­nies.

[00:28:23] Cameron: that’s what

[00:28:23] Cameron: ASK is. So I went back and looked at the press release back in Feb­ru­ary, it said Aba­cus Group announces its inten­tion to cre­ate a new ASX list­ed self stor­age REIT to be known as Aba­cus Stor­age King REIT, ASK. So they de sta­pled that and for some rea­son in the um, Breadala­tor, the share price goes up when that hap­pens, where­as in Stock Doc­tor, the share price went down and I only Men­tion it in the notes just to remind every­body and remind [00:29:00] myself, if you see some­thing, say some­thing.

[00:29:02] Cameron: If you see some­thing that looks weird in a chart, I was say­ing to Tony off air, I don’t know why this big spike did­n’t send off a red flag to me on Fri­day after­noon or wher­ev­er it was, I bought it

[00:29:14] Cameron: but I should have seen that and gone, Oh, hold on a minute, what’s

[00:29:17] Cameron: going on? But I did­n’t, I just went and bought it.

[00:29:20] Cameron: And,

[00:29:20] Cameron: uh, there you go.

[00:29:23] Cameron: So

[00:29:24] Tony: Yeah, it’s strange, isn’t it, Because the bread

[00:29:26] Tony: lat­er,

[00:29:27] Tony: which uses Google Finance And, Stock Doc­tor,

[00:29:30] Tony: which does, I think it use Reuters, they both have the same share

[00:29:33] Tony: price, and

[00:29:35] Cameron: Right.

[00:29:36] Tony: the, the bread lat­er goes up to get to that share price and stock doc­tor goes down to get to that share price. And if you go back from when the des sta­pling occurred pri­or to that, the graphs look the same.

[00:29:47] Cameron: Yeah,

[00:29:48] Tony: so there’s some­thing strange going on

[00:29:49] Tony: there with the

[00:29:49] Tony: data in, uh, prob­a­bly in,

[00:29:51] Tony: the

[00:29:51] Tony: ator.

[00:29:53] Cameron: so the share price has gone

[00:29:54] Cameron: down 4 per­cent since I bought it, so

[00:29:56] Cameron: that’s

[00:29:56] Cameron: great.

[00:29:57] Tony: Mm. Mmm hmm.

[00:29:59] Cameron: to [00:30:00] any light lis­ten­ers out there who, uh,

[00:30:01] Cameron: fol­lowed me on that one, I don’t know what

[00:30:03] Cameron: hap­pened.

[00:30:04] Cameron: Any­way, you know, I’ve made mis­takes before and, uh, they’ve turned out well, so, you know, SM, SMR,

[00:30:13] Cameron: I think was

[00:30:14] Tony: hmm.

[00:30:15] Cameron: of the famous ones, it’s up 80

[00:30:16] Cameron: per­cent since I made my mis­take on that Octo­ber last year, so you got­ta take

[00:30:20] Cameron: the good mis­takes with the bad mis­takes, you

[00:30:22] Cameron: know?

[00:30:23] Tony: I remem­ber the time that Stock Doc­tor said News Corp was a

[00:30:26] Tony: buy, and the fig­ures in Stock Doc­tor were wrong, and that flowed through into our buy list and I bought News Corp.

[00:30:32] Cameron: Oh, real­ly?

[00:30:33] Tony: prob­lem.

[00:30:34] Tony: So yeah, we all make

[00:30:35] Tony: mis­takes like that. It’s going

[00:30:36] Tony: to hap­pen.

[00:30:37] Cameron: Yeah, uh, what else? CVL, pulled pork curse. You did the CVL pulled pork last week,

[00:30:45] Cameron: and

[00:30:45] Cameron: uh,

[00:30:46] Tony: It’s

[00:30:46] Tony: gone down.

[00:30:48] Cameron: fell off the edge of the world, down anoth­er cou­ple of per­cent today.

[00:30:53] Cameron: What hap­pened to CVL, Tony, after

[00:30:55] Cameron: you pulled pork?

[00:30:56] Tony: I had a quick

[00:30:57] Tony: look before we came on. I could­n’t see a thing. There’s no

[00:30:59] Tony: [00:31:00] announce­ments in there

[00:31:00] Tony: about it. So it’s got­ta be down to me. I think it’s got­ta be some­one, some­one lis­ten­ing to the show and

[00:31:06] Tony: short­ing all the stocks

[00:31:07] Tony: that I do pull the porks on.

[00:31:09] Cameron: Yeah, that’s your, that’s one of your the­o­ries. Well, there is, there is some­thing like there’s a bunch of stuff that kicked in on Fri­day, min­utes of AGM 2023, con­ver­sion of vest­ed per­for­mance rights and appli­ca­tion for quo­ta­tion of secu­ri­ties.

[00:31:27] Cameron: Any of

[00:31:28] Cameron: those, uh, pro­vide a ratio­nal

[00:31:30] Cameron: expla­na­tion for why

[00:31:31] Cameron: it’s, uh, fall­en off the edge

[00:31:33] Cameron: of a

[00:31:33] Cameron: cliff?

[00:31:34] Tony: pos­si­bly I’d have to have a

[00:31:35] Tony: look in detail at what they’re doing. Let me just have a quick look. Uh, none of them are appear­ing as price sen­si­tive, which is why I did­n’t look at them in detail

[00:31:45] Cameron: right.

[00:31:46] Tony: Uh, appli­ca­tion of secu­ri­ties, let’s just see what that’s for.

[00:31:54] Tony: Yeah, it’s only 60, 000 secu­ri­ties, so I don’t think it’ll be many. It’s the Employ­ee [00:32:00] Incen­tive Scheme. So, it’s pos­si­ble that peo­ple have got­ten their, you know, the shares based on their employ­ee incen­tives, and they have then prompt­ly sold them, which some­times hap­pens. So, look, there’s 507, 000 shares. And anoth­er 3. 4 mil­lion rights that were issued, and that was recent­ly 17th of Novem­ber, which would have been Thurs­day or Fri­day of last week, Fri­day of last week.

[00:32:33] Tony: So that, if they were issued and then sold, that could be it, or even 3 point, what did I say it was, um, 500 and, no, that’s 507

[00:32:47] Tony: mil­lion shares,

[00:32:50] Cameron: Well, there’s only 149,

[00:32:51] Cameron: 000 shares changed

[00:32:54] Cameron: hands on Mon­day, which is when the

[00:32:56] Cameron: price dropped.

[00:32:58] Tony: no, sor­ry, it’s [00:33:00] 507, 000 shares accord­ing to this, is the issued

[00:33:02] Tony: shares. And then 3. 4 mil­lion were per­for­mance rights issued under the per­for­mance rights

[00:33:09] Tony: plan. So it’s not a

[00:33:11] Tony: huge

[00:33:11] Tony: per­cent­age, is it?

[00:33:13] Tony: Three on five hun­dred.

[00:33:14] Cameron: If I look at their…

[00:33:16] Cameron: Aver­age dai­ly trad­ing vol­ume, you know, in the days lead­ing up to that, it was sort of on the 14th, it was 56, 000, 15th, it was 41, 000, 16th, 20, 000, 17th, 23, 000, the 20th, 149, 000. So rough­ly

[00:33:35] Cameron: six, sev­en times the nor­mal

[00:33:37] Cameron: trad­ing vol­ume

[00:33:39] Cameron: hap­pened on that day and drove the price

[00:33:42] Cameron: down. So it’s weird, some­thing

[00:33:44] Cameron: hap­pened.

[00:33:46] Tony: I’m guess­ing it was the

[00:33:47] Tony: issue of per­for­mance shares and then they’ve just been

[00:33:49] Tony: sold off straight

[00:33:50] Tony: away.

[00:33:51] Cameron: Right, so,

[00:33:53] Cameron: employ­ees, most senior exec­u­tives, most­ly

[00:33:58] Cameron: just going, [00:34:00] screw the share­hold­ers, we’re going to dump our shares

[00:34:02] Cameron: and, uh,

[00:34:04] Cameron: you can all bite me,

[00:34:05] Cameron: basi­cal­ly.

[00:34:06] Tony: Well, pos­si­bly one

[00:34:07] Tony: of the, one of

[00:34:07] Tony: the tricks, one of the prob­lems with employ­ee share offers in

[00:34:11] Tony: Aus­tralia is

[00:34:11] Tony: that you’ve got to pay tax on them.

[00:34:13] Tony: So a lot of man­age­ment are forced to sell those shares if they have no oth­er way of

[00:34:18] Tony: cov­er­ing the tax bill. Well, they usu­al­ly sell half,

[00:34:21] Tony: um,

[00:34:22] Tony: rough­ly

[00:34:24] Cameron: They

[00:34:24] Tony: because they’re issued in their per­son­al

[00:34:25] Tony: names for a

[00:34:26] Tony: start.

[00:34:26] Tony: So They can’t,

[00:34:27] Tony: um, you know, they’re pay­ing

[00:34:29] Tony: full, full tax on

[00:34:31] Tony: them as

[00:34:31] Cameron: they could, they could have warned the share­hold­ers, hey, we’re about to dump a whole bunch of shares,

[00:34:37] Cameron: uh, if you, we’re going to dri­ve the share

[00:34:40] Cameron: price down, get out

[00:34:41] Cameron: now.

[00:34:42] Cameron: While you still

[00:34:43] Cameron: can,

[00:34:44] Tony: Yeah, well, maybe

[00:34:46] Cameron: maybe

[00:34:46] Cameron: I’m ask­ing too much.

[00:34:48] Tony: might not be

[00:34:49] Tony: the rea­son.

[00:34:50] Cameron: All right. Hel­lo,

[00:34:51] Cameron: Alex.

[00:34:52] Alex: Hel­lo?

[00:34:52] Tony: Hi darl..

[00:34:53] Alex: Hi.

[00:34:54] Cameron: How’s your, how’s your

[00:34:55] Cameron: COVID feel­ing?

[00:34:56] Alex: Uh, fine.

[00:34:59] Alex: I’ve lost [00:35:00] my

[00:35:00] Alex: taste like last time, so I don’t know. We’ll see. Just

[00:35:03] Alex: keep test­ing. Still neg­a­tive, so.

[00:35:07] Tony: That’s good.

 

[00:35:08] Cameron: That’s a love­ly, love­ly work behind you.

[00:35:12] Alex: Thank you.

[00:35:12] Alex: So com­mis­sion?

[00:35:14] Cameron: Hmm. Is it of a par­tic­u­lar spot?

[00:35:17] Alex: Yeah, it’s Tow­er Hill, which is an old vol­cano in, um,

[00:35:21] Alex: just up from the Great Ocean

[00:35:22] Alex: Road. that You can walk around. Lots of emus, lots of emu poop.

[00:35:28] Alex: but it’s still an

[00:35:29] Alex: upspot.

[00:35:30] Cameron: Are you, are you focus­ing in on that in the paint­ing? You got like big pile

[00:35:34] Cameron: of emu poop.

[00:35:37] Alex: I might paint it

[00:35:38] Alex: in and just

[00:35:39] Alex: paint over it and then I’ll

[00:35:41] Alex: know

[00:35:41] Alex: it’s there. That’s the great thing about paint­ing things is that you can just put what­ev­er you want as long as you cov­er up. At the end, you

[00:35:46] Alex: can have your own lit­tle East­er eggs in there.

[00:35:49] Cameron: Or you could go like full, I don’t know, what do they call it when you add stuff into your paint­ing? Like

[00:35:55] Cameron: White­ley used to stick stuff onto his paint­ings.

[00:35:58] Cameron: You

[00:35:58] Alex: Lit­tle

[00:35:59] Cameron: put some real,

[00:35:59] Alex: or[00:36:00]

[00:36:00] Tony: Appliqué, was­n’t it? Appliqué.

[00:36:02] Alex: col­lage.

[00:36:02] Cameron: yeah,

[00:36:03] Tony: yes, he’s actu­al­ly stuck things

[00:36:05] Tony: onto them.

[00:36:05] Alex: Ah, okay.

[00:36:06] Cameron: yeah, yeah. But

[00:36:07] Cameron: actu­al things like he’d

[00:36:08] Cameron: have like a real feath­er stuck onto it or some­thing like

[00:36:12] Cameron: that. You could

[00:36:12] Cameron: just stick a bit of emu poop on there. Scratch and sniff

[00:36:15] Cameron: paint­ing.

[00:36:16] Alex: Yep, for a com­mis­sion, that sounds great. Maybe for some pub­lic art or

[00:36:21] Tony: put it on Cam’s com­mis­sion, see how much he likes it,

[00:36:23] Tony: Al.

[00:36:24] Cameron: Hey, I did­n’t ask for a paint­ing

[00:36:25] Cameron: of a place

[00:36:26] Cameron: that is full of emu poop. Stinky cheese would

[00:36:30] Cameron: be all right from Ajac­cio.

[00:36:32] Tony: Yeah,

[00:36:32] Cameron: right.

[00:36:33] Cameron: Are you

[00:36:33] Cameron: still tak­ing com­mis­sions? Should we put in a plug for com­mis­sions on the show? Per­fect gift com­ing up

[00:36:39] Cameron: for Christ­mas. Rush job? No, maybe

[00:36:41] Alex: No pres­sure. Nah, this one behind me is the Christ­mas com­mis­sion. I um, just went and had my first, uh, I did my first pho­to shoot with a fam­i­ly who I don’t know per­son­al­ly, who found me through, um, my col­lege’s kind of alum­ni mag­a­zine that goes out every year. So they saw my stuff and… [00:37:00] Reached out and I have a lit­tle baby, so I got to go meet the baby.

[00:37:03] Alex: And then I got to try

[00:37:04] Alex: and paint the lit­tle,

[00:37:06] Alex: the lit­tle squidge ball.

[00:37:10] Alex: Yep. It’s actu­al­ly the younger you are, the hard­er you are to paint. Cause you’ve got

[00:37:14] Alex: less dis­tinc­tive

[00:37:14] Alex: dis­tinc­tive fea­tures. So a baby is just like a lit­tle

[00:37:19] Cameron: All right. You got a ques­tion

[00:37:20] Cameron: for us, Alex?

[00:37:22] Alex: Yep, I’ve got one from Adi. So Adi says, Hi Cam, ABB was recent­ly rec­om­mend­ed in a light port­fo­lio.

[00:37:28] Alex: They have now come up with the SPP, which I looked up should be Share Pur­chase Plan. Is that right?

[00:37:34] Alex: Yep. Um, so he says, what are TK’s

[00:37:36] Alex: thoughts on the SPP? Also, what is TK’s view on the

[00:37:40] Alex: reset­ting of the Aus

[00:37:41] Alex: Chi­na rela­tion­ship and the impact it may have on

[00:37:44] Alex: stocks such as A2M

[00:37:45] Alex: and Trea­sure Wine?

[00:37:46] Alex: Regards, Adi.

[00:37:48] Tony: Yeah, well, first things first, ABB I think looks like a good busi­ness, Aussie Broad­band. It was on the buy list and it’s now, um, the share price has risen, so it’s not quite on the [00:38:00] buy list. I think the QAB score’s about 0. 08 at the moment. Um, So the share pur­chase plan, I mean, this is, um, this is a com­pa­ny which has been grow­ing in the

[00:38:11] Tony: tel­co space.

[00:38:13] Tony: Uh, and part of that growth has to be

[00:38:16] Tony: by acqui­si­tion. Uh,

[00:38:18] Tony: so they are rais­ing mon­ey

[00:38:20] Tony: both for, uh, uh, acqui­si­tion they’ve already iden­ti­fied and to have a store for future

[00:38:25] Tony: ones. Um, it looks, looks good to me that… The way they’re going to run this is they’ve already issued, I

[00:38:32] Tony: think, 100 mil­lion worth of shares to

[00:38:34] Tony: insti­tu­tions. They’ve got a bet­ter deal, I’ve got to

[00:38:36] Tony: say, than the retail investors. The insid­ers got a 10 per­cent dis­count to the share

[00:38:40] Tony: price. The way the

[00:38:42] Tony: retail share pur­chase plan will work for anoth­er 20 mil­lion, or up to 20 mil­lion,

[00:38:47] Tony: is they’ll work out… Um, what’s, what’s called a V, uh, VWAP price and then offer a 5 per­cent dis­count to that.

[00:38:55] Tony: So the VWAP price is the aver­age price, vol­ume weight­ed aver­age price, um, [00:39:00] usu­al­ly for five days before the clos­ing of the, um, share pur­chase plan.

[00:39:05] Tony: Uh, so you get a lit­tle bit less of a dis­count, but, um, you are buy­ing, buy­ing shares in a com­pa­ny, which was on the buy list is not there now. Cause the share price has gone up, which

[00:39:14] Tony: I would think is prob­a­bly a good thing.

[00:39:16] Tony: Um, and you’re get­ting maybe up to 5

[00:39:17] Tony: per­cent dis­count. So. It’s not finan­cial advice and do your own research,

[00:39:22] Tony: but um, if I had the spare cash, I’d prob­a­bly put it into ABB.

[00:39:26] Tony: And then the sec­ond ques­tion is, uh, the reset­ting

[00:39:30] Tony: of the Aus­tralian Chi­na rela­tion­ship. Isn’t that a good term? The reset­ting of the Aus­tralian Chi­na rela­tion­ship.

[00:39:37] Cameron: Hmm.

[00:39:38] Tony: Yeah. And, and look,

[00:39:41] Tony: Accord­ing to the Prime Min­is­ter, there’s already been a 6 bil­lion ben­e­fit to trade because of the

[00:39:48] Tony: reduc­tion in tar­iffs since the last vis­it, which has got to be a good thing. So, you give it a tick for that. In terms of what hap­pens from here, I don’t know. [00:40:00] And in terms of what it means for these two stocks, again, I’m not They’re not two stocks I fol­low, and one of the rea­sons why I don’t fol­low Trea­sury, Wine, or A2M is that their QAV scores are right down the very bot­tom of our buy list, they’re like 0.

[00:40:15] Tony: 01 each, so they’re not stocks I fol­low. Um, hav­ing said that, the next thing I would do is then go and look at the… Bread lat­er for them. And both the stocks are below their sell lines. So again, sen­ti­ment isn’t with them. And I would have thought if peo­ple, if the, if the pros who are, um, ana­lyz­ing these shares in depth did think they were going to about to get a bump because of the reduc­tion in tar­iffs with Chi­na, that that would get backed into the share price pret­ty quick­ly.

[00:40:44] Tony: I’m not see­ing it. There has been a slide up tick­ing. A2M. So per­haps that’s, um, that’s the case there, but it’s been, it’s been down for a long time now. And Trea­sury, Trea­sury Wine is, has declined as well. Although they have recent­ly under­tak­ing a large [00:41:00] cap­i­tal raise them­selves, speak­ing of SPPs, um, to buy a Cal­i­forn­ian win­ery.

[00:41:05] Tony: So that, that’s prob­a­bly the biggest impact on their share price recent­ly. Um, eas­ing of Chi­na tar­iff should help, uh, with the wine busi­ness. I, I have read sto­ries say­ing that. The Chi, there are, there’s a large mar­ket now for Chi­nese knock­offs in of Grange and oth­er pre­mi­um brands brand­ed wines. So whether they can be dis­placed when the tar­iffs get reduced on the Aus­tralian wine site is some­thing that, you know, more expe­ri­enced play­ers in the space would, would know about the N Wood.

[00:41:34] Tony: And sim­i­lar­ly with the a AUM milk com­pa­ny who did have a large, um, chan­nel into of sell­ing milk into Chi­na through the DAU mar­kets, which, um. Uh, kind of shut down over time, both for, I guess, tar­iff rea­sons, but prob­a­bly COVID played a part in it as well. Um, whether that opens up again is pos­si­bly the case, but, um, whether their busi­ness has been replaced by oth­er sup­pli­ers is also, I guess, per­ti­nent [00:42:00] to it as well.

[00:42:00] Tony: So, I don’t fol­low either stock, um, I can’t real­ly com­ment on them. Um, the tar­iffs still haven’t been reduced on these two things, uh, so it’s a watch and see.

[00:42:09] Cameron: Hmm. Yeah. It’s kind of a lit­tle bit of pre­dic­tion to try and

[00:42:13] Cameron: work that out real­ly, isn’t it? Like the ben­e­fits

[00:42:15] Cameron: of those things.

[00:42:17] Tony: Well, it’s a lot of pre­dic­tion, and, um, like I said,

[00:42:20] Tony: You’d think that some­one would, would have been mak­ing calls on that pre­dic­tion by now and buy­ing up the shares if it was going to be a good

[00:42:26] Tony: thing, and I’m not see­ing that in either share price,

[00:42:28] Tony: real­ly.

[00:42:29] Cameron: Yeah. All right. Well, thank you for that ques­tion, Adi slash

[00:42:34] Cameron: Alex.

[00:42:35] Alex: No prob­lems.

[00:42:36] Cameron: Peo­ple, if peo­ple do want to com­mis­sion some work from you, Alex, for next Christ­mas,

[00:42:42] Cameron: uh, where do they find you?

[00:42:44] Alex: Um, well, my web­site is just www.

[00:42:48] Alex: alexky­nas­ton. com. Nice and sim­ple. Got to that first. Um, or just Gmail. That’s good too. Alex. Kynas­ton at gmail. com.

[00:42:56] Alex: Yeah.

[00:42:57] Cameron: Does your dad reg­is­ter that URL

[00:42:58] Cameron: for you when you were a [00:43:00] baby?

[00:43:01] Alex: No, actu­al­ly not that com­mon a name still, even though Alex is like half of my

[00:43:08] Alex: age

[00:43:08] Alex: group.

[00:43:12] Tony: No.

[00:43:12] Cameron: My, I think my boys are still cranky at me that I did­n’t reg­is­ter their name as URLs

[00:43:16] Cameron: when they were babies. Hunter is any­way, he’s

[00:43:19] Cameron: still

[00:43:19] Cameron: cranky at me.

[00:43:20] Tony: What, there’s some­one out there called Hunter­Raleigh.

[00:43:22] Tony: com.

[00:43:23] Cameron: Appar­ent­ly, yes. I know there’s a Tay­lor

[00:43:27] Cameron: Riley. com and she’s a YouTube, uh, influ­encer in the

[00:43:30] Cameron: US, but, uh, uh, and she’s a lit­tle per­son too, I

[00:43:34] Cameron: think. A lit­tle per­son, YouTube

[00:43:36] Cameron: influ­encer. Yeah. But

[00:43:38] Tony: Well, maybe Hunter could, or Tay­lor could

[00:43:39] Tony: do a deal with

[00:43:40] Tony: her

[00:43:40] Tony: and

[00:43:40] Cameron: That’s what I keep say­ing. Yeah. Yeah.

[00:43:42] Cameron: Yeah.

[00:43:43] Cameron: B.

[00:43:43] Tony: you just reg­is­ter Tay­lo­rAReil­ly or some­thing, what­ev­er his mid­dle ini­tial

[00:43:46] Tony: is, dot

[00:43:47] Tony: com. Yeah.

[00:43:51] Tony: Thanks,

[00:43:52] Tony: Al.

[00:43:52] Cameron: Get back to your paint­ings. Off you go.

[00:43:54] Cameron: Got my com­mis­sion to fin­ish. No time to waste.

[00:43:57] Alex: say Bye.

[00:43:58] Tony: Bye. All[00:44:00]

[00:44:00] Cameron: What have you got on

[00:44:01] Cameron: your, uh, to talk, things to talk about

[00:44:03] Cameron: list, Tony?

[00:44:04] Tony: Yeah, prob­a­bly just a

[00:44:06] Tony: cou­ple

[00:44:06] Tony: of things and not

[00:44:07] Tony: much. We talked about, I think you had a

[00:44:10] Tony: quote last week from an inter­view Char­lie Munger did say­ing you had to

[00:44:14] Tony: own one of

[00:44:14] Tony: the

[00:44:15] Tony: top sev­en

[00:44:17] Tony: large cap

[00:44:18] Tony: tech stocks in the U. S. And I’ve now been able to lis­ten to the whole inter­view on a pod­cast that he did, although he’s very old.

[00:44:28] Tony: It’s quite hard to hear him, it’s not great qual­i­ty.

[00:44:32] Tony: Any­way. Bye. But, uh, lat­er on in the inter­view, he did say that they bought Apple years ago when it was 10

[00:44:40] Tony: times earn­ings. Um, uh, I’m not sure why it was 10 times earn­ings at the time, but it was, you know, down. So, it’s not, it’s much more than 10 times earn­ings now.

[00:44:50] Tony: But I

[00:44:50] Tony: guess my point is that I scratched my head when I heard that they want­ed to buy Apple, which I think is now 30 times

[00:44:55] Tony: earn­ings. Well, he was rec­om­mend­ing it, but then… Lat­er on in the inter­view, he [00:45:00] said, Oh, we bought it 10 times, which makes a lot more sense to me. That’s more the way that Munger and Buf­fett oper­ate.

[00:45:06] Tony: So I just want­ed to, to, um, clar­i­fy that cause I was scratch­ing my head going, what, why are they pay­ing up for a com­pa­ny like Apple?

[00:45:12] Tony: Um,

[00:45:14] Tony: at 30 times earn­ings, even if they think it’s a good com­pa­ny. And, but if they bought it 10 times, that’s a good price. Uh, and I’ve got a pulled pork to do. So if you’re lis­ten­ing short sell­ers, I won’t men­tion the name.

[00:45:27] Tony: I’ll just talk about the

[00:45:29] Tony: com­pa­ny in gen­er­al, and I can try and work it out.

[00:45:32] Tony: No, I will

[00:45:32] Tony: men­tion the name.

[00:45:34] Cameron: By the way, sor­ry, before you move on to that,

[00:45:37] Cameron: I’m look­ing at, I’m look­ing at Berk­shire’s Apple pur­chas­es. They first bought ’em back in

[00:45:42] Cameron: 2016

[00:45:44] Tony: Mm

[00:45:44] Cameron: at an aver­age clos­ing price of $24 91.

[00:45:50] Cameron: Um, they bought more shares in 2016 at 24 85 than more at 28, 35. They’ve been buy­ing shares all along the way. The last. [00:46:00] Tronch that they did was in 2023 at 147.

[00:46:05] Cameron: 55. So they still buy, well they were buy­ing shares in Q1 of 2023, U. S. Q1.

[00:46:14] Cameron: So they keep adding shares. So, um,

[00:46:17] Cameron: yeah,

[00:46:18] Cameron: there might have been 10

[00:46:19] Cameron: times

[00:46:19] Cameron: earn­ings when they first bought in them in

[00:46:21] Tony: Oh, yeah. Yeah,

[00:46:23] Cameron: they’ve been

[00:46:24] Cameron: adding more and more, um,

[00:46:26] Cameron: over the years.

[00:46:30] Cameron: You know, I think they got the major­i­ty, well, the first trench was 39 mil­lion shares over the course of 2016, 2017, they bought, I don’t know, about 400

[00:46:43] Cameron: mil­lion shares by the looks of it.

[00:46:45] Cameron: Then anoth­er 300 mil­lion in

[00:46:46] Cameron: 2018. I think when­ev­er they sold some

[00:46:49] Cameron: along the way as well, but I think when­ev­er it has a dip.

[00:46:53] Cameron: For

[00:46:53] Cameron: what­ev­er rea­son they

[00:46:54] Cameron: swing in and they buy more.

[00:46:56] Cameron: Yeah,

[00:46:56] Tony: okay. Yeah, because Char­lie, I think Char­lie did

[00:46:58] Tony: men­tion [00:47:00] 2017 is when they bought it

[00:47:01] Tony: at 10 times earn­ings.

[00:47:02] Tony: Very

[00:47:05] Cameron: So now it’s trad­ing at, uh, what is it?

[00:47:08] Cameron: 191

[00:47:09] Cameron: today. So

[00:47:10] Tony: They are good investors. Much bet­ter than I am.

[00:47:13] Cameron: it’s had a good 10 year run.

[00:47:15] Tony: Has­n’t it?

[00:47:16] Tony: Yeah.

[00:47:17] Cameron: All right, off you

[00:47:18] Cameron: go.

[00:47:20] Tony: Yeah, pulled pork on DGL

[00:47:21] Tony: group, um, code DGL, I don’t know what DGL stands for,

[00:47:27] Cameron: ha!

[00:47:29] Tony: it is a spe­cial­ly chem­i­cals and dan­ger­ous goods busi­ness,

[00:47:33] Tony: um, start­ed off in New Zealand. They oper­ate, uh, in all the, um, dif­fer­ent parts of the chain, sup­ply chain for dan­ger­ous goods and chem­i­cals, from man­u­fac­tur­ing, stor­ing, dis­tri­b­u­tion, through to recy­cling.

[00:47:47] Tony: Uh, start­ed in New Zealand, as I said, but oper­ates in Aus­tralia as well, and list­ed here in 2022. I think it might have list­ed, I’m not sure if it’s a dual list­ing, but it may have been the New Zealand list­ing as well. But it’s been around for a [00:48:00] lot longer than that. Found­ed in 1999 by a chap called Simon Hen­ry, and he’s still the CEO, and uh, when I looked up their details in Stock Doc­tor, it lists him as Founder and CEO, so he obvi­ous­ly places an empha­sis on that, um, as I do.

[00:48:19] Tony: Uh, they oper­ate 26 sites. And, uh, main­ly for man­u­fac­tur­ing, stor­age dis­tri­b­u­tion, and waste pro­cess­ing. Their last num­bers were real­ly good, so they’ve been grow­ing by acqui­si­tion, and I guess organ­i­cal­ly as well. Um, the last num­bers show an increase of… In sales of 26%, 18% in the amount of chem­i­cals they store, the chem­i­cal ton­nage, and 78% in the amount of trucks, uh, tankers and, uh, trail­ers that they, uh, that they own 45% in.

[00:48:56] Tony: Um, increas­ing, uh, increased num­ber of [00:49:00] employ­ees and prof­it was up 25%. And when I say prof­it, I mean ebit and we’ll come to MPA in a sec­ond. Um. Yeah, I’ll come to it in a sec­ond. Uh, so all those num­bers are sug­gest­ing that they’re grow­ing um, by acqui­si­tion of the fact that there are 45 per­cent more employ­ees.

[00:49:16] Tony: Um, could hap­pen organ­i­cal­ly, but it’s more like­ly that they’ve been, uh, acquir­ing things. The com­pa­ny has no div­i­dend pay­outs and they, um, open­ly state that they’d rather put the mon­ey into grow­ing the com­pa­ny. So that’s a good thing. So it’s basi­cal­ly a growth com­pa­ny, uh, and grow­ing fast and the growth has been sim­i­lar.

[00:49:34] Tony: Um, sim­i­lar sorts of rates over the last three years. So it’s just, it’s not a flash in the pan. This is their busi­ness mod­el. Um, how­ev­er, the, the NPAT, um, uh, was down a lit­tle bit any­way. Um, and, uh, they said for finan­cial year 23, they said that was due to increas­ing debt and inter­est rates. So that could be an issue for them going for­ward.

[00:49:58] Tony: Uh, that if they are a bit [00:50:00] indebt­ed, they might slow down the rate of acqui­si­tion going for­ward. Um, And to give you a flavour of the kind of things they do, in 2024, they plan to open a new liq­uid waste treat­ment plant in a place called Unan­dera in New South Wales. And they’ve just opened a bat­tery recy­cling plant in Laver­ton, Vic­to­ria.

[00:50:22] Tony: So that’s the kind of busi­ness they are. And now for some con­tro­ver­sy. Con­tro­ver­sy cor­ner. Uh, when I was… Doing research onto this com­pa­ny, I came across a very inter­est­ing arti­cle in the Fin Review from last year, where an inter­view with Simon Hen­ry, the prin­ci­pal and founder of the com­pa­ny, was pub­lished after he did an inter­view with a New Zealand jour­nal.

[00:50:48] Tony: Uh, and he was boast­ing that the DGL float did bet­ter than anoth­er New Zealand com­pa­ny which is called MyFood­Bag. And I guess gen­er­al­ly he was try­ing to point out that they [00:51:00] raised mon­ey when they float­ed and put it all into the busi­ness. And this oth­er com­pa­ny, MyFood­Bag, raised mon­ey and gave it to the founders and pri­vate equi­ty back­ers.

[00:51:10] Tony: Um, That’s a good com­par­i­son and a good les­son to make when you’re invest­ing to watch out for that kind of thing. But this quote, and I’m going to read it all as quot­ed by the AFR, so don’t come after me if you don’t like what I say. But this is a quote giv­en by Simon Hen­ry about the, um, Com­par­i­son between the DGL float and the MyFood­back float.

[00:51:39] Tony: Quote, I can tell you, and you can quote me, when you’ve got nadia limb, when you’ve got a lit­tle bit of Eurasian fluff in the mid­dle of your prospec­tus with a Blau­zon but­ton show­ing some cleav­age,

[00:51:50] Tony: that’s what it takes to sell your script, then you know you’re in

[00:51:53] Tony: trou­ble.

[00:51:55] Cameron: He did­n’t!

[00:51:57] Tony: Quote, end quote.

[00:51:58] Cameron: Oh my

[00:51:59] Cameron: [00:52:00] god! Ha ha

[00:52:02] Tony: quote, he said, I don’t get it. Hen­ry con­tin­ued ask­ing why any­one who liked the com­pa­ny would sell their shares as my food back, my food bags ear­li­er back­ers had. I mean, I’m a sim­ple man with, it seems a sim­ple rule rule for board com­po­si­tion. The ugli­er the board, the more

[00:52:18] Tony: suc­cess­ful the com­pa­ny.

[00:52:19] Tony: quote.

[00:52:23] Cameron: Oh wow!

[00:52:25] Cameron: Wow!

[00:52:26] Tony: so I read those out, both for inter­est and

[00:52:29] Tony: full dis­clo­sure, and I guess, you

[00:52:31] Tony: know, the guys,

[00:52:32] Tony: um, it kind of, it cre­den­tials him as being from the truck­ing indus­try and waste man­age­ment indus­try

[00:52:38] Cameron: ha! Ha ha

[00:52:39] Tony: 30 years or

[00:52:40] Tony: what­ev­er, um, but, you know,

[00:52:43] Tony: buy­er beware, that’s what you’re buy­ing into with this com­pa­ny, he owns 54

[00:52:46] Tony: per­cent of it.

[00:52:47] Cameron: Wow!

[00:52:48] Tony: don’t think it worked out well for him that inter­view, because the share price has gone down. I think it was trad­ing at about 3. 90 around the time of the inter­view and it’s now 86 cents. So I’m not sure whether the inter­view sparked off that [00:53:00] sell off or oth­er things have sparked it off, but that’s what the share price has done in the mean­time.

[00:53:06] Tony: How­ev­er, it has come up onto our buy list, and again, peo­ple do your research if you have a look at this because it’s, uh, it’s right on its sell line. It’s been a falling knife since, um, around the time of that inter­view in the mid­dle of last year, May of last year. Uh, it has ticked up, so this is like a, an inverse Nike swoosh.

[00:53:25] Tony: It’s been going down and now it’s start­ing to tick up again, but, um, it’s just touch­ing on, it’s cross­ing its sell line at the moment, so it may change from day to day, this one. If I look at the num­bers, um, let’s just see, ADT, If I can find it, uh, ADT is 188, 000. So it’s not, um, not small, but not, not huge. Uh, but maybe of inter­est to peo­ple.

[00:53:55] Tony: Uh, and also too, I could­n’t work out whether it was, there was a dual list­ing or not, which might impact [00:54:00] the free flow over here, but cer­tain­ly there’s enough vol­ume there for some peo­ple who were inter­est­ed in, um, in small­er end of the mar­ket to buy some. I’m doing my analy­sis at 88 cents. Uh, it’s, it has been mov­ing around a bit, the price on this one, but 88 cents is less than con­sen­sus tar­get, but is above my IV one and IV two cal­cu­la­tion, so I can’t store score it for that, for that stock doc­tor Finan­cial health is strong and steady.

[00:54:27] Tony: The first thing that that. Uh, sort of, uh, tripped my inter­est was the low ROE in this com­pa­ny, and I don’t use ROE in a check­list, but at 7%, I thought that was inter­est­ing, and, um, giv­en that the num­bers were good, the head­line num­bers were good, as I read out before, ROE Um, the return side looked good, but the equi­ty side might be a prob­lem.

[00:54:49] Tony: And so the first thing I thought of was, let’s have a look at, um, the net tan­gi­ble assets ver­sus equi­ty. Uh, and there could be a bit of good­will because they’ve been acquir­ing com­pa­nies. And in fact, I think that [00:55:00] might be the case. So I’ll jump ahead here. Net equi­ty per share is 1. 17. How­ev­er, net tan­gi­ble assets is 66 cents as report­ed in Stock Doc­tor.

[00:55:10] Tony: So the dif­fer­ence is prob­a­bly good­will. Um, as they, as they acquire coun­tries, com­pa­nies, sor­ry, there could be some oth­er things in there, like it may be the treat­ment of their equip­ment leas­ing, because they’re, they’ve got a lot of trucks and trail­ers, as I high­light­ed before, which, which, um, may have some dif­fer­ent bal­ance sheet treat­ments in terms of being assets or not.

[00:55:29] Tony: Um, And that’s, that’s not nec­es­sar­i­ly a good or bad thing, um, we’ve talked about this before with oth­er com­pa­nies that make lots of acqui­si­tions. I recall doing a pulled pork on one of the car deal­er­ships and they have lots of good­will because they’re acquir­ing, uh, oth­er fran­chis­es, um, and deal­er­ships around the coun­try.

[00:55:47] Tony: Uh, and I’ll come back to, to good­will when I do the pros and cons at the end about the share. Uh, P for this com­pa­ny is 11 times, which is the low­est since list­ing, so it scores for that. Uh, [00:56:00] Share price is less than net equi­ty per share and book plus 30, so it is scor­ing for that, although some peo­ple might want to use net tan­gi­ble assets, which is the fire sale price of the equi­ty.

[00:56:15] Tony: Earn­ings per share growth fore­cast is only 3%, which I thought was inter­est­ing, uh, giv­en that, you know, The last three years of growth have been much high­er than that, um, but we’re talk­ing earn­ings per share here, so that could be the impact of the rais­ing inter­est rates, um, on their, on their debt lev­els.

[00:56:34] Tony: Uh, but it could also be that the com­pa­ny has­n’t called out yet what its growth plans are in 2024, and it prob­a­bly won’t if they want to inquire, acquire com­pa­nies. They won’t be telling you who they’re going to acquire until they lob their bid. Um, so that’s, um, That may change as well. Uh, as I said, it scores well for own­er founder with, uh, this fel­low hold­ing 54 per­cent and being there since the com­pa­ny start­ed.

[00:56:59] Tony: [00:57:00] So lots of expe­ri­ence. Um, it’s a new three point trend line increase, but you know, check it before you. Go much fur­ther because it’s just right on the sell line. There’s con­sis­tent­ly increas­ing equi­ty, which is good. Uh, all in all, the qual­i­ty score is 16 very high. And the QAV score is 0. 22 due to some good Prop­Caf.

[00:57:23] Tony: So pros and cons. Um, pros, uh, uh, there’s an own­er founder and high growth rates. The cons are it’s a roll up. So it’s, it’s, um. It’s grow­ing organ­i­cal­ly as well as through acqui­si­tion, but it is need­ing acqui­si­tions to fuel some of this growth. And the ques­tion I always have to ask when I talk about roll ups is what hap­pens when the acqui­si­tion is slow?

[00:57:44] Tony: I don’t know how many chem­i­cal trans­port and stor­age and man­u­fac­tur­ing and bat­tery recy­cling com­pa­nies there are out there. So It may be a small acqui­si­tions pool, but who knows, they may go off­shore as well. So that’s an issue. [00:58:00] Um, the inter­est­ing thing is, even though it’s a roll up, the P is low on this.

[00:58:04] Tony: It, uh, I think I said, um, it’s around 10 times earn­ings, uh, which is unusu­al for a high growth com­pa­ny. So you look at some of the oth­er roll ups on the, on the stock mar­ket, like say a WiseTech. Glob­al, um, which they argued anoth­er roll up, but I think they are, their PE is much high­er, uh, and usu­al­ly a com­pa­ny grow­ing at 20 or 30%, even if the sales line is going to have a high PE.

[00:58:29] Tony: So this one does­n’t. So I guess my point is when the acqui­si­tions start to slow down, the com­pa­ny has more of a buffer. It’s not going to drop as much as a high PE com­pa­ny would most like­ly. Uh, and then good­will is the oth­er thing I was in the cons col­umn and it’s, you know, it can be a good and bad thing.

[00:58:46] Tony: Um, the risk is that, is that if the com­pa­nies they have acquired, uh, don’t work out or hit some head­winds, then they’re going to have to take a write down on the, or an impair­ment charge on the good­will on their bal­ance sheet [00:59:00] for that acqui­si­tion, and, uh, that has to go through the The P& L, and so that would be an impact on prof­itabil­i­ty there and then that year, but also on the dis­count­ed cash flow mod­els going for­ward that that asset isn’t pro­duc­ing the sort of income that it was thought to have when it was acquired.

[00:59:18] Tony: So, uh, pos­si­ble impair­ments on Good­will is an issue. Um, It can work the oth­er way, of course, if some­thing works out real­ly well, like they can write the asset up or, or, um, slow­ly, um, write down the good­will over time. Um, and of course, if you, if they find there’s a buy­er for some­thing, they can sell it at more than the good­will in the books and then it’s booked as a prof­it.

[00:59:38] Tony: But too much good­will is seen some­times as being an issue for com­pa­nies. I think the oth­er poten­tial con on this one is they’ve called out the fact that rais­ing inter­est rates are reduc­ing prof­itabil­i­ty, so they’ve got to do some­thing about that, whether it’s the cap­i­tal rais­ing, sell­ing some­thing, or pay­ing off debt.

[00:59:56] Tony: But it’s fine to have growth at the top lev­el, they’ve got to get their [01:00:00] financ­ing sort­ed out as well. But on the Stock Doc­tor, Finan­cial met­rics, it’s still com­ing through as strong. So, um, I don’t

[01:00:06] Tony: think debt’s going to be a prob­lem for them

[01:00:08] Tony: going

[01:00:09] Tony: for­ward.

[01:00:12] Cameron: Only the founder, uh, mak­ing

[01:00:14] Cameron: quotes to the press.

[01:00:15] Tony: Yeah. I could­n’t find any more inter­views since May of

[01:00:18] Tony: last year. So he

[01:00:19] Tony: may have learned his les­son.

[01:00:21] Cameron: I found one from just today. No, this is a year ago. Novem­ber 22. Ref­er­enc­ing that quote about the lit­tle bit of Eurasian fluff says, The com­ments were prompt­ed by a pho­to­graph of Lim, and she’s a New Zealand celebri­ty chef, as you said, who was one of the founders of my food

[01:00:43] Cameron: bag. Pho­to­graph of Lim bar­be­cu­ing a chick­en while wear­ing jeans in a low

[01:00:47] Cameron: cut

[01:00:48] Cameron: top. Now, I’ve got a copy of the

[01:00:50] Cameron: pho­to here in

[01:00:51] Cameron: this arti­cle, it’s

[01:00:52] Cameron: like, there’s noth­ing racy

[01:00:53] Cameron: about it at

[01:00:55] Cameron: all.

[01:00:55] Tony: No,

[01:00:57] Cameron: And it says, in his first inter­view since his [01:01:00] out­burst, Hen­ry told the Her­ald on Sun­day he thought it was com­plete­ly fas­ci­nat­ing that a coun­try could stop and have a hissy fit about the orig­i­nal com­ments.

[01:01:08] Cameron: He said he regret­ted using race and gen­der in his ear­li­er com­ments. I got my words wrong. And I’ve apol­o­gized for that rea­son. I wish I’d drawn atten­tion to the mat­ter with­out men­tion­ing race or gen­der. I want­ed to make a point.

[01:01:20] Cameron: I’m not going to both­er with it again. Fast talk­ing Auck­lan­ders

[01:01:23] Cameron: can do what they like to

[01:01:24] Cameron: New Zealand investors. I had a go at it, but I’m

[01:01:26] Cameron: out.

[01:01:30] Tony: He made a good point. Yeah. When, when some­thing is being float­ed and being sold to the pub­lic, be care­ful where the

[01:01:36] Tony: mon­ey goes, where the pro­ceeds from those floats go. If it does­n’t go into

[01:01:40] Tony: the busi­ness, there’s, you’ve got to ask ques­tions about whether

[01:01:42] Tony: you

[01:01:42] Tony: should be buy­ing that

[01:01:43] Tony: com­pa­ny or not.

[01:01:45] Cameron: Did you have a look at the share price of my food

[01:01:47] Cameron: bag?

[01:01:48] Tony: No, I haven’t.

[01:01:50] Cameron: It, uh, yeah, not good.

[01:01:52] Cameron: It’s not good. It float­ed. Well, it opened at a, um, this is in 2021, it opened at a [01:02:00] 1. 74,

[01:02:01] Cameron: which I think was a bit of a dis­count to what they sold the shares at in the

[01:02:04] Cameron: float. Um, it’s cur­rent­ly at 13 cents.

[01:02:10] Cameron: Yeah.

[01:02:10] Cameron: Yeah.

[01:02:13] Tony: just, uh, cod­ed it in, um, emu

[01:02:16] Tony: drop­pings. No,

[01:02:22] Cameron: Yeah. Good, good stuff, Simon Hen­ry. All right. Well, thanks for that, Tony. I don’t own DGL, so I’m not wor­ried what hap­pens with this one. Good luck to any­body who does own it.

[01:02:36] Cameron: Well, that’s, uh, unless you’ve got any­thing else, that’s

[01:02:39] Tony: that’s

[01:02:39] Tony: all. I

[01:02:42] Cameron: for today’s show.

[01:02:43] Cameron: On to After Hours, Tony. You bet­ter start,

[01:02:47] Cameron: because once I start, it’s just gonna be a whole

[01:02:49] Cameron: oth­er hour.

[01:02:51] Tony: don’t have much. I have two things. One of

[01:02:53] Tony: the race­horse

[01:02:54] Tony: I nev­er dreamed is going to be spelling in the pad­dock for a while after two starts. So it was a bit dis­ap­point­ing she [01:03:00] did­n’t go on, but she’ll come back in the new year. And, um, I think we’ll prob­a­bly fol­low the cast, uh, Map and head towards the South Aus­tralian Car­ni­val, which is usu­al­ly around March or so.

[01:03:14] Tony: And then on Sat­ur­day night… Jen­ny and I were guests at the Char­i­ty Chal­lenge Ball again, which is the annu­al ball that, um, two of our golf­ing pro, ex golf­ing pro bud­dies have run for the last 20 years. It was the 20th edi­tion this year. They, I think they missed a cou­ple dur­ing COVID. Um, and they’ve raised a lot of mon­ey again for char­i­ty, um, all through hold­ing, uh, Golf Days, which I some­times par­tic­i­pate in and will in a cou­ple of weeks down again in Mel­bourne.

[01:03:42] Tony: So just a shout out to Smokey and Matt, you’ve done a great job, um, rais­ing so much mon­ey, hav­ing fun along the way and good events and

[01:03:49] Tony: things, but um, they real­ly have done, made a dif­fer­ence

[01:03:52] Tony: to a lot of peo­ple’s lives,

[01:03:53] Tony: so good on them.

[01:03:54] Cameron: That’s good. Did you win any oth­er old, uh, 80s rock band,

[01:03:58] Cameron: uh,

[01:03:59] Cameron: [01:04:00] per­for­mances?

[01:04:03] Tony: I do have to fol­low that one up and get, try and get them to play

[01:04:06] Tony: for us at some stage.

[01:04:09] Cameron: Try and get them

[01:04:09] Cameron: to play for us.

[01:04:11] Tony: Well, we bought the Brew­ster Broth­ers at one of these char­i­ty balls a cou­ple

[01:04:14] Tony: of years ago and we

[01:04:15] Tony: haven’t, um, haven’t

[01:04:16] Tony: held the con­cert yet.

[01:04:19] Cameron: Was­n’t that the

[01:04:19] Cameron: Angels con­cert?

[01:04:21] Tony: No, no, that was sep­a­rate. That’s the

[01:04:23] Tony: Angels. Brew­ster Broth­ers were just

[01:04:24] Tony: the Brew­ster Broth­ers. Two of them

[01:04:26] Cameron: Oh, real­ly?

[01:04:27] Tony: Yeah, who do a

[01:04:29] Tony: dif­fer­ent set. They play oth­er things

[01:04:30] Cameron: Oh,

[01:04:31] Cameron: real­ly? I

[01:04:31] Tony: they do

[01:04:32] Tony: do some Angels, but they play a lot of

[01:04:33] Tony: oth­er, um,

[01:04:34] Tony: their favorite

[01:04:34] Tony: songs.

[01:04:37] Cameron: good stuff.

[01:04:38] Tony: Yeah.

[01:04:40] Cameron: Um, well that’s good. Wow, Tony. Oh my god.

[01:04:45] Cameron: Did you

[01:04:45] Cameron: fol­low the Ope­nAI deba­cle over the

[01:04:47] Cameron: week­end?

[01:04:49] Tony: Oh, I

[01:04:49] Tony: just read the head­lines.

[01:04:50] Tony: I

[01:04:50] Tony: haven’t

[01:04:51] Tony: real­ly dived into

[01:04:52] Tony: it. Yeah.

[01:04:54] Cameron: it was, it’s still play­ing out. It’s like an episode of Suc­ces­sion, but you know, you watch those episodes of [01:05:00] Suc­ces­sion where, you know, there’s like, there’s a board spill and who’s on top and every­one’s bat­tling and Logan’s on top. And then the kids are on top and then one kid’s out and anoth­er kid’s in.

[01:05:11] Cameron: And you’re like, Oh, this had nev­er hap­pened in real life. It just hap­pened with Ope­nAI. And the fun­ny thing is, you know, on this show, I think a week ago. We were talk­ing about Microsoft and Ope­nAI and the invest­ment and on Futur­is­tic I said the same thing a cou­ple of weeks ago that we’ve seen star­tups crash and burn before, like you can beat the top of the hill.

[01:05:33] Cameron: And then Crash and Burn, well they just crashed and burned over the week­end. Ope­nAI, they were in the process of rais­ing, uh, get­ting ready to float the com­pa­ny with a 90 bil­lion val­u­a­tion so some of the founders and employ­ees could offload some of their shares.

[01:05:52] Cameron: Sam Alt­man, one of the founders and the CEO, was fly­ing around the world rais­ing bil­lions, not just for the com­pa­ny, but also he want­ed to start [01:06:00] his own mobile phone com­pa­ny with John­ny Ive.

[01:06:02] Cameron: He was gonna start up his own chip com­pa­ny to rival NVIDIA to pow­er AI. So for the peo­ple who haven’t fol­lowed it, um, on Fri­day, On Thurs­day or Fri­day last week, our time, Sam was sum­moned to a meet­ing by Ilya Sutskev­er, the chief sci­en­tist and also one of the founders and one of the board mem­bers. He said, Hey, can you, um, turn up to this?

[01:06:26] Cameron: Can you jump on a call? Sam jumped on the call. The full, all of the board, except the chair­man of the board were on the call. Um, they con­front­ed Sam with some­thing. We still don’t know what. The net result was the board fired Sam Alt­man, the CEO of Ope­nAI. Then they brought in Greg Brock­man, who was one of the founders, uh, chair­man of the board, fired him from his role.

[01:06:53] Cameron: He then sub­se­quent­ly resigned from the com­pa­ny. Then, uh, [01:07:00] no one knew what was going on. They, they… We appoint­ed the Chief Tech­nol­o­gy Offi­cer, Meera Murati, as Inter­im CEO, then the next day they announced that she was gone, Sam was back in nego­ti­a­tions with the board to bring him back as CEO, because appar­ent­ly, Satya Nadel­la, the CEO of Microsoft, found out one minute before they fired him that they fired him, and they’ve got a…

[01:07:26] Cameron: 10 bil­lion invest­ment in Ope­nAI looked like it was pres­sure from Satch­er to bring Sam back and the oth­er investors. Sam post­ed a pho­to on X, uh, for­mer­ly known as Twit­ter, uh, of him­self wear­ing a guest pass to Ope­nAI. He tweet­ed the first and only time I’m going to be wear­ing one of these. Every­one is like, Oh, Sam’s going to be back.

[01:07:49] Cameron: Then the announce­ment comes out that no, they did­n’t reach a deal. Sam’s out, out. Mir­rors out as inter­im CEO, they brought a guy called Emmett Sheer in as the new inter­im CEO, for­mer [01:08:00] CEO and founder, co founder of Twitch. Then an hour lat­er, Sachin Adela tweets that he’s just hired Sam Alt­man and Greg Brock­man to work at Microsoft with some of their col­leagues.

[01:08:14] Cameron: Then this morn­ing… An open let­ter, uh, to the board of Ope­nAI is writ­ten by the employ­ees, includ­ing all of the senior man­age­ment team, Myer, uh, et cetera, say­ing that 550 out of 700 of their employ­ees are ready to resign and go to Microsoft if the board don’t imme­di­ate­ly resign and bring back Sam and Greg. and Ilia was one of the sig­na­to­ries on the let­ter who every­one assumed was the guy behind the coup for the last co. He tweet­ed today that he’s deeply regret­ting his role in the par­tic­i­pa­tion of what hap­pened. So no one [01:09:00] knows what’s going on. When the board fired him, they put out a state­ment say­ing that he had­n’t been com­plete­ly can­did with him in his com­mu­ni­ca­tions and they could no longer trust him to run the com­pa­ny.

[01:09:12] Cameron: And for peo­ple who don’t know, the board of Ope­nAI, Ope­nAI was start­ed by Elon Musk and Sam as a not for prof­it. But then when they decid­ed they need­ed to raise bil­lions of dol­lars to fund the back end, they put a for prof­it, um, under the non prof­it. That’s when Elon left. He said, no, no, this was sup­posed to be a not for prof­it.

[01:09:33] Cameron: I’m out. Um, and it was the board of the not for prof­it that fined Sam, and every­one who was on Red­dit, etc., was assum­ing that it was out of safe­ty con­cerns, that Ilya was con­cerned that the AI was get­ting too pow­er­ful, and Sam was push­ing for com­mer­cial­iza­tion too quick­ly, and Ilya want­ed to pull back, but now Ilya’s on the side of the peo­ple that are walk­ing…

[01:09:59] Cameron: So Microsoft [01:10:00] basi­cal­ly has just picked up www. microsoft. com A, uh, Ope­nAI, a 90 bil­lion dol­lar com­pa­ny for no mon­ey down. They already have the rights to Ope­nAI as part of their deal. And now they’ve just, basi­cal­ly, looks like they’re gonna take, but here’s my thing, I think it’s all a ploy. I don’t think Sam and Greg are real­ly, Sam’s not gonna, Sam used to run Y Com­bi­na­tor and he’s not gonna go work for Microsoft.

[01:10:26] Cameron: He’s, I don’t see that as a seri­ous play. I see this as a tac­tic. To force

[01:10:32] Cameron: the board to resign and

[01:10:35] Cameron: he will be back. My, my call is he’ll be back at Ope­nAI

[01:10:39] Cameron: by the end of the week run­ning it.

[01:10:41] Cameron: Um, this

[01:10:42] Cameron: is all a

[01:10:43] Tony: Is this sort of nor­mal, is this sort of

[01:10:45] Tony: nor­mal pre IPO start­up pol­i­tics

[01:10:49] Tony: where, you know, if they’ve got pri­vate equi­ty and back­ers or hedge fund back­ers, they’re try­ing to get

[01:10:54] Tony: the lion’s share of the IPO and not

[01:10:56] Tony: pay

[01:10:56] Tony: Sam

[01:10:56] Tony: Alt­man out and all that

[01:10:57] Tony: kind of stuff.

[01:10:59] Cameron: It’s a [01:11:00] not for prof­it,

[01:11:01] Cameron: I can’t.

[01:11:03] Tony: float­ing then?

[01:11:04] Cameron: Well, the for prof­it, um, is I guess,

[01:11:08] Tony: So there’s big bucks

[01:11:09] Tony: involved and the back­ers are

[01:11:10] Tony: going to be try­ing to get the

[01:11:11] Tony: best deal.

[01:11:13] Cameron: well, I don’t, uh, yeah, but why would the, but Sam was the face of it. You would­n’t kick Sam out if you were try­ing to max­i­mize the val­ue of the shares. I mean, the whole thing has just made them look like a com­plete clus­ter­frack and, uh, run by a bunch of ama­teurs. I mean, it’s com­plete­ly. For the moment, uh, destroyed the com­pa­ny that on Fri­day was the lead­ing the world in AI, the biggest brand in AI ahead, ahead of every­one else in the space, the leader, 90 bil­lion val­u­a­tion, you know, just clean­ing up.

[01:11:54] Cameron: The whole thing, with­in two

[01:11:56] Cameron: days, just cred­i­bil­i­ty shot, [01:12:00] every­one’s gone, mass walk­outs. It, it’s been an absolute fas­ci­nat­ing shit

[01:12:07] Cameron: show. But that’s, that was my point over the last cou­ple of weeks as I’ve been around long enough to see these star­tups. Rise and fall, uh, nev­er quite this quick­ly. But, uh, yeah, that’s the speed of how things are mov­ing.

[01:12:24] Cameron: So any­way, that’s been absolute­ly fas­ci­nat­ing to watch. And I’ve been lis­ten­ing to live streams of Robert Scoble and all the peo­ple that are in the know, in the tech space over there on Twit­ter, um, try­ing to fig­ure it out. No one knows what’s going on. No one has a

[01:12:40] Cameron: clue.

[01:12:41] Cameron: Any­way, but, you know.

[01:12:43] Cameron: Well played to Satya Nadel­la.

[01:12:45] Cameron: I don’t know

[01:12:45] Cameron: how it’s gonna play out in

[01:12:47] Cameron: the end, but he just sat there

[01:12:49] Cameron: and just, you know, picked

[01:12:52] Cameron: up, by the looks of it, a 90 bil­lion dol­lar com­pa­ny for no mon­ey down. Like, um, [01:13:00] any­way, that’s been fun to

[01:13:01] Cameron: watch. Uh, you ever heard of the Berserk­er Hypoth­e­sis, Tony? Ever read Fred Saber­ha­gen’s

[01:13:07] Cameron: books?

[01:13:08] Tony: No.

[01:13:10] Cameron: So we’ve been talk­ing about the Dark For­est Hypoth­e­sis.

[01:13:14] Cameron: So in the 60s, this Amer­i­can sci­ence fic­tion author called Fred Saber­ha­gen wrote a series of short sto­ries for like sci­ence fic­tion mag­a­zines that got col­lat­ed into a series of books called the Berserk­er Books. And it led to some­thing called the Berserk­er Hypoth­e­sis. But basi­cal­ly these books just are about.

[01:13:38] Cameron: These mas­sive machines that are run by arti­fi­cial intel­li­gence that some alien civ­i­liza­tion built, and they just trav­el around the uni­verse, destroy­ing all life. That’s their one mis­sion, basi­cal­ly Daleks, right? Their mis­sion is to just, to destroy life. No expla­na­tion. At var­i­ous points in the [01:14:00] sto­ries, humans get to inter­view them and they say, well, we don’t know why we weren’t told why our instruc­tions are just to destroy life wher­ev­er we find it.

[01:14:07] Cameron: That’s it. And that’s what they do. These machines are like 40 miles across. They just appear out of nowhere, pum­mel a plan­et, destroy every­thing, and then just move on. And There’s this thing called the Hart Tipler con­jec­ture, which I’d nev­er heard of before, but appar­ent­ly it was one of the ear­ly respons­es to the Fer­mi Para­dox.

[01:14:34] Cameron: So the Hart Tipler con­jec­ture is that if intel­li­gent civ­i­liza­tions exist­ed, advanced intel­li­gent civ­i­liza­tions, the Neu­mann probes, basi­cal­ly self repli­cat­ing probes that would trav­el the uni­verse look­ing for signs of intel­li­gent life. And they should have been here by now. And appar­ent­ly the [01:15:00] orig­i­nal book of, um, 2001 and the orig­i­nal draft for the script for Kubrick­’s film, that’s what the mono­lith was on the moon.

[01:15:10] Cameron: It was a von Neu­mann probe that had dis­cov­ered earth. When it was, had some prim­i­tive life on it with the mon­keys, the chimps and what­ev­er. And it was just sit­ting and watch­ing, wait­ing for it to reach an advanced enough stage that it could, um, sig­nal or do some­thing when it got tak­en out of the film. So we don’t know, but any­way, that’s the idea of the von Neu­mann probes.

[01:15:35] Cameron: And the fact that we haven’t. seen any evi­dence of von Neu­mann probes vis­it­ing earth is evi­dence that there are no suf­fi­cient­ly advanced intel­li­gences in the uni­verse build­ing von Neu­mann probes to explore the uni­verse, that the uni­verse should be full of these things by now, self repli­cat­ing, all cor­ners of the uni­verse just look­ing for

[01:15:58] Cameron: evi­dence of intel­li­gent life, [01:16:00] either to destroy it

[01:16:01] Cameron: Or to make con­tact with it.

[01:16:04] Cameron: So I found all of that. That’s

[01:16:05] Cameron: been one of

[01:16:06] Cameron: my, this has been my night­time read­ing

[01:16:08] Cameron: is these Berserk­er books

[01:16:09] Cameron: over the

[01:16:10] Tony: Yeah, except that’s kind of the, that’s kind of the, reverse

[01:16:12] Tony: of the Dark

[01:16:13] Tony: For­est prob­lem, isn’t

[01:16:14] Tony: it?

[01:16:16] Cameron: it’s part,

[01:16:16] Cameron: well,

[01:16:16] Tony: want to be out

[01:16:17] Tony: there

[01:16:17] Tony: in case you’re dis­cov­ered. You don’t want to be

[01:16:19] Tony: out there telling

[01:16:19] Tony: civ­i­liza­tions, Hey, we’re here.

[01:16:21] Tony: Some­one

[01:16:22] Tony: built this probe.

[01:16:23] Tony: Yeah.

[01:16:24] Cameron: Yeah. So the, yeah, so the dark for­est hypoth­e­sis

[01:16:27] Cameron: is obvi­ous­ly anoth­er response to the Fer­mi para­dox, which is no, if you’re clever, you shut the hell up and

[01:16:33] Cameron: don’t let. Any­way, but if you sent out von Nor­man probes, you would­n’t have to, no one would have to know the ori­gin of them.

[01:16:38] Cameron: Like with the Berserk­er machines, no one knows the ori­gin of these things and no civ­i­liza­tion sur­vives long enough to find out about them either. You know, most civ­i­liza­tions the Berserk­er machines come across are just wiped out imme­di­ate­ly and that’s it. One minute there’s a Berserk­er

[01:16:53] Cameron: machine on your front doorstep, next minute you’re all dead.

[01:16:55] Cameron: So there’s

[01:16:56] Cameron: no risk of it blow­ing back onto the

[01:16:59] Cameron: [01:17:00] orig­i­na­tors of the

[01:17:00] Cameron: machines who may have been wiped out

[01:17:02] Cameron: mil­lions of

[01:17:02] Cameron: years ago

[01:17:03] Cameron: any­way.

[01:17:04] Tony: would­n’t the von

[01:17:04] Tony: Neu­mann probe though com­mu­ni­cate

[01:17:06] Tony: back to its home plan­et that

[01:17:08] Tony: it’s found some­thing?

[01:17:10] Cameron: Maybe. Maybe, yeah, if that’s

[01:17:12] Cameron: prac­ti­cal.

[01:17:13] Cameron: Maybe if it’s, you know, light

[01:17:15] Cameron: years away, it’s, it’s not even prac­ti­cal to

[01:17:17] Cameron: com­mu­ni­cate back.

[01:17:18] Tony: And what’s the use of the probe?

[01:17:21] Tony: Why have the probe?

[01:17:23] Cameron: Well, either, in a benign sense, to make con­tact with the civ­i­liza­tion and say, Hi, wel­come to the Galac­tic Fed­er­a­tion.

[01:17:30] Cameron: Um, please send an email to this

[01:17:33] Cameron: address and, you know, your, your sub­mis­sion for entrance will

[01:17:37] Cameron: be assessed. Or, to wipe us out!

[01:17:41] Cameron: To

[01:17:41] Cameron: go, oh, yeah, okay, let’s self

[01:17:43] Cameron: repli­cate. And build a mil­lion of these things

[01:17:46] Cameron: and

[01:17:46] Cameron: then we just pum­mel the

[01:17:47] Cameron: earth and wipe you out because you’re

[01:17:50] Cameron: poten­tial­ly a threat.

[01:17:53] Cameron: Any­way, I was

[01:17:54] Cameron: won­der­ing if you’d ever come across that in your read­ing.

[01:17:58] Tony: I think I may have read the Berserk­er book when [01:18:00] I was a kid. I’ve been around for a

[01:18:01] Tony: while. But I don’t

[01:18:03] Tony: recall it. I don’t have a point of view.

[01:18:06] Tony: I’ve heard var­i­ous peo­ple talk about this and they say You know, with an expand­ing uni­verse, it gets very hard for von Neu­mann probes to get any­where. Like, we look at the night sky and see lots of stars, but we’re see­ing a real­ly small part of the night sky, and they’re a real­ly long way away, and there’s huge gaps in between.

[01:18:24] Tony: So

[01:18:24] Tony: that, that in itself

[01:18:26] Tony: is an

[01:18:26] Tony: answer to the Fer­mi

[01:18:27] Tony: Para­dox.

[01:18:29] Cameron: Yeah.

[01:18:30] Cameron: Yeah. Yeah. It’s just the uni­verse is expand­ing. It’s

[01:18:33] Cameron: just imprac­ti­cal and improb­a­ble that

[01:18:35] Cameron: you can reach oth­er galax­ies and do

[01:18:38] Cameron: any­thing about it.

[01:18:39] Cameron: You

[01:18:39] Cameron: know?

[01:18:40] Tony: yeah,

[01:18:40] Tony: no, exact­ly.

[01:18:43] Cameron: Well, speak­ing of reach­ing,

[01:18:45] Tony: one last thing I

[01:18:46] Tony: should, I

[01:18:46] Tony: should have put in my list. Um, there’s Biskin

[01:18:49] Tony: book

[01:18:49] Tony: out, which I’m look­ing for­ward to

[01:18:51] Cameron: Oh, what’s this one

[01:18:52] Cameron: about?

[01:18:53] Tony: Uh, about the sort of gold­en

[01:18:55] Tony: age of tele­vi­sion

[01:18:56] Tony: this time.

[01:18:58] Cameron: When was that exact­ly? Is that

[01:18:59] Cameron: [01:19:00] now?

[01:19:00] Tony: Now,

[01:19:00] Tony: yeah, so

[01:19:01] Cameron: Oh,

[01:19:01] Tony: from, from, like the

[01:19:03] Tony: Sopra­nos

[01:19:04] Tony: and the Wire onwards

[01:19:05] Cameron: Can you call that the

[01:19:06] Cameron: gold­en age if it’s the

[01:19:07] Cameron: cur­rent

[01:19:08] Cameron: age?

[01:19:09] Cameron: This isn’t the gold­en age

[01:19:10] Cameron: and for

[01:19:11] Tony: like from when HBO

[01:19:12] Tony: start­ed.

[01:19:13] Cameron: Yeah, right. Yeah. That’d be good

[01:19:16] Cameron: to, yeah, that’d be good to read. It’s

[01:19:18] Cameron: been a, like, I like, I, you go back and watch shows from the 80s or the

[01:19:22] Cameron: 90s now, and you’re like, wow, real­ly?

[01:19:26] Cameron: Like, that’s, we set­tled for

[01:19:28] Cameron: that as TV

[01:19:29] Cameron: back then.

[01:19:31] Cameron: it’s

[01:19:32] Tony: yeah, absolute­ly.

[01:19:34] Cameron: it’s real­ly hard to

[01:19:36] Cameron: grok how we just, why TV was rel­a­tive­ly so

[01:19:41] Cameron: bad for so many

[01:19:43] Cameron: decades com­pared to where it’s at

[01:19:45] Cameron: today.

[01:19:47] Tony: Oh, but you know, maybe because of the

[01:19:50] Tony: writer’s strike, but I must spend half an hour every night going through each of the stream­ing ser­vices try­ing to find some­thing decent to watch. Actu­al­ly, I’ve even gone back and start­ed watch­ing old movies now. [01:20:00] Um, I watch Mon­ey­ball again,

[01:20:02] Tony: which I

[01:20:02] Tony: just love. I think that’s going to be my annu­al sort

[01:20:04] Tony: of thing.

[01:20:05] Tony: Oh, it’s bril­liant.

[01:20:07] Cameron: I’ve got to check that out. it’s

[01:20:08] Tony: Real­ly spoke to me because it’s all

[01:20:09] Tony: about data

[01:20:10] Tony: ana­lyt­ics, you

[01:20:10] Tony: know, and using it to

[01:20:12] Cameron: Right,

[01:20:13] Tony: Um, and, uh,

[01:20:15] Tony: then I watched the, uh, I think it’s called Leg­end,

[01:20:18] Tony: the sto­ry of the Krays, which came out

[01:20:21] Tony: about 10 years ago with, um, Tom Hardy

[01:20:24] Tony: play­ing both,

[01:20:25] Tony: both of the gang­ster

[01:20:27] Cameron: Oh, the Krays, the

[01:20:29] Cameron: Kray

[01:20:29] Cameron: broth­ers.

[01:20:31] Cameron: Oh, wow.

[01:20:32] Tony: Yeah,

[01:20:32] Tony: so I mean,

[01:20:34] Tony: not sort of, I start­ed watch­ing Ambruges again last night, so I’m just like, I’m giv­ing up on all this new stuff that’s out, it’s all crap, on

[01:20:41] Tony: Net­flix in par­tic­u­lar, I’m

[01:20:42] Tony: just

[01:20:43] Tony: try­ing to find good

[01:20:43] Tony: movies to re watch,

[01:20:45] Cameron: Have you seen his new one

[01:20:46] Cameron: yet? With the same cast, the

[01:20:50] Cameron: direc­tor of Imbruge,

[01:20:51] Tony: Yeah, The

[01:20:52] Tony: Ban­shees of

[01:20:53] Cameron: Yeah, have you seen

[01:20:54] Tony: that’s great, yeah,

[01:20:55] Cameron: I haven’t

[01:20:55] Cameron: seen it

[01:20:56] Cameron: yet. oh I’ve been dying to see it.

[01:20:57] Cameron: Yeah,

[01:20:58] Tony: yeah, [01:21:00]

[01:21:00] Cameron: I’m going to see

[01:21:01] Cameron: Napoleon with my boys

[01:21:03] Cameron: tomor­row night. And then Markham and I are going to do

[01:21:05] Cameron: a reunion Napoleon show to review it.

[01:21:10] Tony: fan­tas­tic.

[01:21:11] Cameron: he told me that, he told me in an email yes­ter­day that he

[01:21:14] Cameron: miss­es you and wish­es they’d nev­er let

[01:21:17] Cameron: you leave Toron­to.

[01:21:18] Tony: Oh, how

[01:21:19] Tony: nice. Well,

[01:21:19] Tony: men­tion, men­tion our love for him too,

[01:21:21] Cameron: That’s, uh, I

[01:21:22] Cameron: fig­ured that’s just because, you know, he

[01:21:24] Cameron: can’t invite him­self out

[01:21:25] Cameron: to expen­sive restau­rants

[01:21:27] Tony: Yeah,

[01:21:29] Tony: prob­a­bly,

[01:21:30] Cameron: won’t

[01:21:30] Cameron: have you pay for

[01:21:31] Cameron: it. Yeah.

[01:21:37] Tony: Going through a bot­tle of scotch and talk­ing

[01:21:39] Tony: pol­i­tics, and it’s good, good

[01:21:40] Tony: fun, and his­to­ry.

[01:21:42] Cameron: that’s the thing. I have to do a, an episode of Napoleon with David and not talk

[01:21:46] Cameron: about pol­i­tics for

[01:21:48] Cameron: a cou­ple of hours.

[01:21:49] Cameron: That’s

[01:21:49] Cameron: going to be

[01:21:50] Tony: Well, do an After Hours. Do the

[01:21:52] Tony: episode and then do After

[01:21:53] Tony: Hours on pol­i­tics. No?

[01:21:54] Cameron: Hey, you tried to

[01:21:55] Cameron: talk me into doing a cou­ple of pre. review episode so we could [01:22:00] catch up. Every­one could hear what he’s been up to for the last 10 years. But I just knew it was going to turn into pol­i­tics. And I was like, Oh, I just, I can’t,

[01:22:09] Cameron: you know, but yeah, maybe we’ll get the review out of the way.

[01:22:12] Cameron: Then we can do that. And you know, when he,

[01:22:15] Cameron: when he has a

[01:22:15] Cameron: melt­down, it’s does­n’t mat­ter. That’s too

[01:22:18] Tony: Yeah. Oh, and Miss Edna too. She was love­ly and real­ly smart. And, uh, you know, talk­ing with her about her busi­ness. I don’t know where that’s at now, but she was doing real­ly well with her

[01:22:28] Tony: geospa­tial tech­nol­o­gy busi­ness, real­ly inter­est­ing. Trav­el­ling the

[01:22:34] Tony: world to all

[01:22:35] Tony: sorts of dif­fer­ent loca­tions,

[01:22:36] Tony: sell­ing this tech­nol­o­gy.

[01:22:38] Cameron: Well, he told me they’re, uh, he’s going to D. C., they’re going to D. C. for Thanks­giv­ing and then they’re cel­e­brat­ing their anniver­sary ear­ly because she’s off to Sau­di Ara­bia.

[01:22:47] Cameron: So,

[01:22:47] Tony: Right.

[01:22:48] Cameron: yeah,

[01:22:49] Cameron: appar­ent­ly still doing well.

[01:22:50] Tony: Yeah.

[01:22:50] Cameron: Um, one, uh, the one last thing

[01:22:52] Cameron: just in After Hours I want to men­tion was Elon’s Star­ship.

[01:22:56] Cameron: Launch a cou­ple of days ago, the sec­ond

[01:22:58] Cameron: launch, did you see that? [01:23:00]

[01:23:00] Tony: What did they, I love the ter­mi­nol­o­gy. What did they

[01:23:02] Tony: call a Rapid A rapid dis­as­sem­bly.

[01:23:04] Tony: event or

[01:23:04] Cameron: Rapid unsched­uled dis­as­sem­bly. So for peo­ple who did­n’t see it, like, it’s, it’s insane, you got­ta watch

[01:23:14] Cameron: it. Um, it’s their sec­ond

[01:23:15] Cameron: launch attempt, the first one a few

[01:23:17] Cameron: months ago blew up after four min­utes. This one blew up

[01:23:21] Cameron: aft

[01:23:22] Tony: that was a suc­cess, by the way.

[01:23:24] Cameron: Well, yeah, it was a

[01:23:24] Cameron: suc­cess. This one was a

[01:23:25] Cameron: suc­cess as

[01:23:26] Cameron: well. Because, well, for a cou­ple of rea­sons. Num­ber one, I think the first time, sev­en out of the thir­ty three engines on it, uh, died dur­ing the take­off process.

[01:23:38] Cameron: This, this time, all 33 pow­ered up suc­cess­ful­ly, got them into the sep­a­ra­tion stage where the boost­er suc­cess­ful­ly sep­a­rat­ed from the main cap­sule. After track­ing at 5, 600 kilo­me­ters an hour, it was trav­el­ing at, the first one did­n’t even

[01:23:57] Cameron: reach, um, [01:24:00] uh, what do you call it? We did.

[01:24:02] Cameron: Escape Veloc­i­ty, thank you.

[01:24:04] Cameron: This one did,

[01:24:05] Cameron: but then when the boost­er

[01:24:06] Cameron: sep­a­rat­ed, it expe­ri­enced a rapid,

[01:24:10] Cameron: unsched­uled

[01:24:11] Cameron: dis­as­sem­bly.

[01:24:13] Tony: it

[01:24:13] Cameron: I. e. It blew up.

[01:24:15] Cameron: Mag­nif­i­cent­ly caught on cam­era too, it’s absolute­ly mag­nif­i­cent. But it has a self destruct mech­a­nism built into it to do

[01:24:23] Cameron: that.

[01:24:24] Cameron: So if some­thing goes wrong, they don’t want it falling back to earth, so it just blows

[01:24:28] Tony: Right, right.

[01:24:30] Cameron: and that’s their offi­cial mot­to at SpaceX is move fast and blow

[01:24:34] Cameron: shit

[01:24:35] Cameron: up. Um, that’s That’s the

[01:24:37] Cameron: mot­to. So.

[01:24:39] Tony: yeah, That’s

[01:24:39] Tony: good.

[01:24:40] Cameron: Yeah, yeah, yeah. But it’s like, uh, leav­ing aside what peo­ple think of Elon,

[01:24:44] Cameron: etc. Like, this is the largest rock­et that humans have ever built. It’s mas­sive, this thing. It’s

[01:24:51] Cameron: enor­mous. It’s designed to take humans to Mars, this thing.

[01:24:55] Cameron: And, um, like, it’s real­ly breath­tak­ing [01:25:00] as a… Space Junkie, Space Era Kid to see us final­ly build­ing these things.

[01:25:07] Cameron: It’s an

[01:25:08] Cameron: incred­i­ble moment in human,

[01:25:11] Cameron: uh,

[01:25:12] Cameron: progress, sci­en­tif­ic

[01:25:13] Cameron: progress. So, I get excit­ed.

[01:25:15] Cameron: I feel gid­dy watch­ing these

[01:25:17] Cameron: things,

[01:25:17] Cameron: man. It’s real­ly

[01:25:19] Tony: I do until they blow up and then I have a good

[01:25:21] Tony: chuck­le, but it’s not even that they blow up, right? Cause NASA would have blown up

[01:25:24] Tony: tons of rock­ets as well, but in the ear­ly

[01:25:27] Tony: days, but it’s when they start call­ing them rapid

[01:25:29] Tony: dis­as­sem­bly

[01:25:29] Tony: events,

[01:25:30] Tony: it’s just

[01:25:32] Cameron: That’s the com­e­dy in it, right?

[01:25:34] Tony: PR. Yeah. It is a com­e­dy.

[01:25:36] Tony: You reck­on it’s com­e­dy

[01:25:36] Tony: or

[01:25:37] Tony: it’s

[01:25:37] Tony: just PR?

[01:25:38] Cameron: no, it’s delib­er­ate. Yeah, this is Elon’s sense of humor. yeah, yeah.

[01:25:41] Cameron: yeah, yeah. Rapid unsched­uled dis­as­sem­bly. That’s

[01:25:44] Cameron: his, that’s his sense of humor. He’s mak­ing a joke out of the whole thing. He can afford to blow

[01:25:48] Cameron: shit up, you know, it’s

[01:25:49] Cameron: okay. But it did, like, it achieved escape veloc­i­ty, which was, I

[01:25:54] Cameron: believe,

[01:25:55] Cameron: the objec­tive

[01:25:56] Cameron: for this launch, was to see if they could suc­cess­ful­ly do that, and they did.[01:26:00]

[01:26:00] Cameron: The fact that it blew up on the way back is no big deal,

[01:26:02] Cameron: so. Any­way, that was excit­ing. It’s been a crazy week with Ope­nAI and Star­ship and

[01:26:09] Cameron: NTD and KAR and

[01:26:12] Cameron: OIL, and it’s been whiplash

[01:26:15] Cameron: all week. I mean, oh my god, what’s

[01:26:17] Cameron: next?

[01:26:18] Tony: Yeah, I think you should call this

[01:26:20] Tony: episode not

[01:26:20] Tony: BRHG, call

[01:26:21] Tony: it, was it Eurasian

[01:26:22] Tony: Fluff?

[01:26:27] Tony: A lit­tle bit of

[01:26:27] Tony: Eurasian Fluff.

[01:26:29] Cameron: Oh God, if only I could.

[01:26:33] Cameron: Thanks, Tony. Have a great

[01:26:34] Cameron: week.

[01:26:35] Cameron: We’ll see you on

[01:26:35] Cameron: Sat­ur­day.

[01:26:36] Tony: yep,

[01:26:36] Tony: look­ing for­ward to it. Thanks,

[01:26:37] Tony: mate.

[01:26:38] Cameron: Me too. Bye.