QAV 743 — The Throat Punch

QAV 743 Club

[00:00:00] CR: I think I’m record­ing. Give me a one, two, three.

[00:00:11] TK: one, two, three.

[00:00:12] CR: Wel­come back to QAVTK. Uh, we’re record­ing this on the 22nd of Octo­ber. Uh, how are you down in Cape Schanck?

[00:00:27] TK: Very well, thank you. Very well.

[00:00:30] CR: That’s good.

[00:00:31] CR: If I sound a lit­tle bit. If I sound a lit­tle bit smoky, uh, I haven’t been smok­ing lots of cig­a­rettes this week. I am recov­er­ing from get­ting punched in the throat on Fri­day night, which we can talk about in after hours. Um, mar­ket got punched in the throat today too, Tony. Um, it’s down a lit­tle bit,

[00:00:50] TK: Got­ta

[00:00:50] TK: get a, got­ta get a brown belt.

[00:00:53] CR: but yeah, it deserves a black belt.

[00:00:55] CR: not just a brown belt. I was look­ing at it this morn­ing before the mar­ket opened and in my notes, I just said, the mar­ket is nuts. I can remem­ber.

[00:01:02] TK: Mm hmm.

[00:01:02] CR: When it was not quite ready to go above

[00:01:05] CR: 8, 000, you know, begin­ning of the year, it’d touch 8, 000, then it’d pull back, and then it’d go over a bit, then it’d pull back, and it’s get­ting close to 9, 000.

[00:01:15] CR: It was up, like, you know, Near­ly 9, 700 when the mar­ket closed yes­ter­day. It’s dropped back a lit­tle bit. I think it’s like below 9, 500 today at the moment, but it’s nuts. It’s just like, every­thing is just bonkers out there at the moment. And I saw in the fin just before we went to air, let me get out of these pho­tos of Peter Lynch.

[00:01:40] CR: Um, Where is this? Uh, here we go. Finan­cial Review. Wall Street is fac­ing a lost decade. That’s bad news for your super. This is Chan­ti­cleer this morn­ing. A Gold­man Sachs fore­cast for the S& P 500 sug­gest­ed investors need to brace for low­er returns. Aus­trali­a’s super­an­nu­a­tion giant should take note. Oh. It’s doom and gloom.

[00:02:07] CR: Doom and gloom, Tony. With the S& P 500 hold­ing an impres­sive 23 per­cent gain for the year, a 93 per­cent rise over the past five years, and a near 200 per­cent return over the past decade, the chief invest­ment offi­cers at Aus­trali­a’s biggest super­an­nu­a­tion funds are head­ing into Christ­mas With a spring in their step, but then it goes on to say that Gold­man Sachs U.

[00:02:34] CR: S. equi­ty strate­gist David Kos­ton believes Wall Street may be fac­ing a lost decade with his mod­el fore­cast­ing an annu­al­ized total return over the next decade, includ­ing div­i­dends of just 3 per­cent over Or just 1 per­cent on an infla­tion adjust­ed basis. That’s a long way from the 13 per­cent annu­al­ized total the S& P 500 pro­duced in the la in the past decade.

[00:03:01] CR: That could have seri­ous impli­ca­tions for super­funds and pen­sion plans around the world whose long term returns fore­cast may turn out to be too opti­mistic. I like the next, Lying though, giv­en the dif­fi­cul­ty most of us have pre­dict­ing what’s going to hap­pen 10 weeks from now, Costin’s 10 year fore­cast should be tak­en with a grain of salt, but in his

[00:03:19] CR: defense, his first attempt to mod­el long range returns in 2012 was rea­son­ably suc­cess­ful.

[00:03:25] CR: His updat­ed mod­el pre­dict­ed a 14 per­cent annu­al­ized return for the decade just gone. He only updat­ed it last week, but you know, so it it’s still, you know, no.

[00:03:38] TK: Yeah, and you open a door at Gold­man Sachs and there’s 500 oth­er econ­o­mists who did­n’t get it right, but they pull out the guy who did.

[00:03:46] CR: Yeah, it’s, it’s the uh, field of a thou­sand flow­ers strat­e­gy, right? One of them’s got­ta get it

[00:03:51] TK: exact­ly. Yeah,

[00:03:53] TK: Yeah.

[00:03:53] CR: Well then we look like

[00:03:54] TK: so the head­line should, the head­line in Chan­ti­cleer should be Econ­o­mist Throws a Dart.

[00:04:02] CR: Uh, well, lis­ten. Y’know, I

[00:04:05] TK: Could be right. Who knows? Could be. Yeah, if he’s that good at pre­dict­ing the future 10 years out, and you think about what he just did, he pre­dict­ed not only the stock mar­ket but infla­tion.

[00:04:17] TK: Um, yeah, he should be very, very

[00:04:19] TK: rich

[00:04:20] CR: why’s he got a job? Why’s he work­ing for Gold­man Sachs? Well, a lot of peo­ple at Gold­man Sachs are rich, I guess, but from a salary, not from being investors.

[00:04:28] CR: Um,

[00:04:30] CR: you know, I, I, I don’t know what’s gonna hap­pen in the next ten years, uh, either, um, large­ly because of how AI is gonna impact economies and busi­ness­es and that kind of stuff, I think, but the big point is nobody knows and nobody ever knows, real­ly, do they?

[00:04:45] CR: So,

[00:04:46] TK: No. Yeah, I guess his mod­el’s play­ing some kind of regres­sion to the mean game. If he, if the mar­ket did aver­age 12 per­cent for the last, you What­ev­er it was, 14 years, uh, 12 years, and um, you know, long term aver­age is prob­a­bly more like 10. Yeah, it’s prob­a­bly going to be below aver­age for the next 10, but again, that’s, that’s not even how sta­tis­tics works, let alone

[00:05:10] TK: how fore­cast­ing works, so uh, who knows.

[00:05:13] CR: well, some of the oth­er things that have been bonkers in the last week, WGX and FND, both up 25%, well before today’s lit­tle drop any­way, both were up 25 per­cent in the last week, as of when I looked this morn­ing. Like, uh, now, now gold, WGX, West Gold Resources, I hold it in my super port­fo­lio and a few of the QAV port­fo­lios.

[00:05:39] CR: It’s um, had a great run recent­ly and I was look­ing at the gold price again this morn­ing. The gold price is just absolute­ly bonkers. I don’t know if you’ve looked at that late­ly, but it’s just nuts. It’s up over,

[00:05:55] TK: an arti­cle about that in the fin review today as well.

[00:05:57] CR: real­ly?

[00:05:58] CR: Yeah, it was down. Like, it’s up over like 4, 000 an ounce today, um, 4, 091. Like, go back to the begin­ning of the year, it was 3, 000.

[00:06:14] CR: It’s up 33 per­cent over the course of this year to

[00:06:18] TK: Yeah. But dur­ing the life of this pod­cast, it, it was, I think it got as low as about 1800 or 2000. Um, so it’s prob­a­bly dou­bled in the last five years, I’m guess­ing,

[00:06:28] CR: Oh, at least. Yeah. well,

[00:06:31] TK: evi­dence. Yeah.

[00:06:32] CR: well, if you go back to, uh, ear­ly 2020 or late 2019, when we start­ed this late 2019, right? So late 2019, it was around 2000. And, um, so it’s, and then it, it, you know, Went up in 2020, dropped back to 2, 200 in March of 21. And it’s been on a fair­ly steady rise since then, some peaks and troughs, but yeah, it’s dou­bled since 2021.

[00:07:00] TK: Great exer­cise in, in look­ing at the effect, you know, look­ing at what a good busi­ness is, because those gold min­ers, yeah, their costs have gone up over that same peri­od because of infla­tion, but you know, they haven’t dou­bled. And so that increase in gold price that you’ve just spo­ken about pret­ty much fall­en as prof­it to

[00:07:18] TK: their bot­tom lines.

[00:07:19] CR: Yeah, right. And I, I can’t see any­thing in WGX’s announce­ments that, you know, Uh, indi­cate any jus­ti­fi­ca­tion for their share price jump­ing up 25 per­cent in the last week. Um, but some­thing’s going on there. The oth­er one, FND, FINDY, our old friends at FINDY, CEO still has­n’t come on the show. But, uh, you talked about them.

[00:07:46] CR: A while ago. And, uh, they’ve gone up, I don’t know how much since then, but an absolute ton. They did have an announce­ment though on the 2nd of Octo­ber say­ing that they secured an addi­tion­al 638 ATMs with Cen­tral Bank of India. Share price shot up about 10 per­cent when that news broke. But, uh, it’s, it just keeps going up.

[00:08:12] CR: It keeps going up. They’ve had a, they’ve had a great year.

[00:08:17] TK: Yeah, and I think, um, even West African Resources have recov­ered on the ris­ing gold price, despite the con­cerns a cou­ple of weeks ago that we spoke about, when, um, the new head of state there was talk­ing about tak­ing some min­ing licens­es off unscrupu­lous oper­a­tors, and the share price tank that’s recov­ered, I think, pret­ty much all, if not more,

[00:08:40] TK: since then.

[00:08:43] CR: Well, I mean, those two have done well, but they haven’t done WLFC well. Um, Willis Lease Finance Corp, one of our US stocks. Um, I I’ll pref­ace this by say­ing, I’ve heard some mem­bers say they don’t want to hear our US con­tent in the Aus­tralian show. So we can talk about it more at the end of the Aus­tralian part of the show, I guess today, but suf­fice to say that one of the stocks in our US port­fo­lio, WLFC, Willis Lease, is up 300%.

[00:09:15] CR: Since I added it to the port­fo­lio, you did a pulled pork on it back in July, I think in our first U. S. or a sec­ond U. S. show. It was trad­ing at 70 back then. You want to guess what it is today?

[00:09:29] TK: 200?

[00:09:29] CR: 191

[00:09:32] TK: Yep.

[00:09:33] CR: from

[00:09:34] TK: Well, maybe the curse of

[00:09:34] TK: the pulled pork only works in Aus­tralia. It does­n’t, it’s not an inter­na­tion­al

[00:09:38] CR: you did FND too

[00:09:39] CR: and it’s done okay.

[00:09:40] CR: So Yeah.

[00:09:42] TK: Yeah. Well, that’s an oper­a­tion in India. So maybe

[00:09:45] CR: yeah,

[00:09:46] TK: look at over­seas pulled porks. Yeah.

[00:09:49] CR: So any­way, the U. S. port­fo­lio is up 90%.

[00:09:53] TK: Wow.

[00:09:54] CR: start­ed it as of today. Crazy over

[00:09:57] TK: What’s the US? Okay.

[00:10:00] TK: So that’s since, that’s since incep­tion, not the last 12 months.

[00:10:03] CR: Well, it was, it only

[00:10:04] CR: start­ed in Sep­tem­ber last year, so it’s a lit­tle bit over, it’s 13 months. Like, absolute­ly just going bonkers. Oh, speak­ing of, um, Stock­o­pe­dia, for those peo­ple who did­n’t see it in Face­book, I did last week get around to doing a Stock­o­pe­dia check­list tuto­r­i­al video.

[00:10:26] CR: So, for club mem­bers, you can find links to that in our Face­book page or in the, um, A club mem­ber resources page, you can down­load the Stock­o­pe­dia check­list and go through the video. And it’s, uh, it’s got some, um, finagling, um, about it, but, uh, you know, have a play with it, start a paper port­fo­lio, test it out and give me some feed­back and see how you go.

[00:10:54] CR: Uh, you’re wel­come, Tony. Um, that’s, uh.

[00:10:59] TK: the bread lat­er and you, you fixed Stock­o­pe­dia.

[00:11:03] CR: Yes. Tony broke the bread

[00:11:08] TK: Sor­ry about

[00:11:09] CR: That’s alright. Um,

[00:11:12] CR: uh, what else? That’s all I’ve got for my notes. Uh, what have you got in your notes? Any­thing?

[00:11:19] TK: Well, the only notes I’ve got is, apart from answer­ing the ques­tions, is to do a pulled pork and what’s

[00:11:25] TK: on, what works on Wall Street chap­ter.

[00:11:28] CR: Love­ly. Where do you want

[00:11:29] CR: to start?

[00:11:31] TK: Pulled pork. So this was actu­al­ly the first of the ques­tions from Phil. Phil asked for a pulled pork on Redox, R E D O X. The ASX code is RDX and, um, it’s a request. I’m not, I’m going to do it, but it’s, I just want to from the out­set say this is not a QAV stock and it’ll become fair­ly obvi­ous why as I go through.

[00:11:58] TK: Um, Thanks for the request, though. I always like requests to do pooled talks, and this was an inter­est­ing com­pa­ny. Um, had­n’t real­ly focused on it before. It launched on the ASX, I think, last year, 2023, so we only have a cou­ple of halves of data to do the analy­sis on. Uh, so it’s new and it’s ear­ly days for it.

[00:12:20] TK: It’s one of the rea­sons why I prob­a­bly haven’t focused on it. Com­pa­ny is, um, though it has been around for a long time. Um, it’s cel­e­brat­ing its 60th year in busi­ness, I think maybe in a cou­ple of months, um, but essen­tial­ly it’s, uh, the, the busi­ness itself is, um, they’re a importer and I guess sup­ply chain man­ag­er of chem­i­cals.

[00:12:42] TK: Um, chem­i­cals, ingre­di­ents, raw mate­ri­als, um, they dis­trib­ute over a thou­sand prod­ucts and each usu­al­ly has a niche cus­tomer base and they try and, uh, match that cus­tomer base with a niche sales team. Most of their prod­ucts are sourced from over­seas and the com­pa­ny is that it was start­ed, uh, by the grand­fa­ther of the cur­rent CEO and he would bring in chem­i­cals from East­ern Europe, which was­n’t a done thing 60 years ago.

[00:13:19] TK: In fact, held a license from the USSR to bring in chem­i­cals and so he devel­oped spe­cial­ty in the sup­ply chain, find­ing the right sup­pli­ers, Get­ting the right, nego­ti­at­ing the right price, doing all the paper­work, bring­ing it through cus­toms and then sell­ing it through a net­work in Aus­tralia as well. Inter­est­ing com­pa­ny if you look at what they do, the breadth of what they do, so just to pick a cou­ple of exam­ples, um, so they have dif­fer­ent cat­e­gories they oper­ate in. One is called Health and Nutri­tion, and they sup­ply dozens and dozens of prod­ucts such as bean pro­tein, inulin, p fibre, p pro­tein, antiox­i­dants, vit­a­mins.

[00:14:05] TK: Thick­en­ers like var­i­ous gums, aca­cia gum, agar, corn­starch. So it’s the type of input chem­i­cals that the food indus­try would require to man­u­fac­ture and pack­age food prod­ucts for retail con­sump­tion. But they also have oth­er cat­e­gories, the min­ing oil and gas space. They sup­ply things like acti­vat­ed car­bon, alu­mini­um sul­phate, all sorts of acids.

[00:14:28] TK: So they sup­ply these kind of niche raw ingre­di­ents across many indus­tries. Um, They cov­er tex­tiles, auto­mo­tive, deter­gents, ani­mal health, build­ing and con­struc­tion, and to quote from one of their sales brochures, Redox sup­plies more than a thou­sand dif­fer­ent chem­i­cals and ingre­di­ents to clients through­out Aus­tralia, Malaysia, New Zealand, and the U.

[00:14:51] TK: S. Our range is sourced from qual­i­ty raw mate­r­i­al man­u­fac­tur­ers through­out the world and sup­plied to clients in 140 unique indus­tries. Um, just going to jump down, sor­ry, through their, their, um, infor­ma­tion to focus on their IT. So over, over time, that’s, that fair­ly com­plex busi­ness of sourc­ing, nego­ti­at­ing, um, ware­hous­ing, logis­tics, et cetera, et cetera, has required, um, the build­ing up of their own in house IT. And again, to quote from, um, I think it’s their prospec­tus, the Redox busi­ness is under­pinned by its cus­tom built in house enter­prise resource plan­ning and cus­tomer rela­tion­ship man­age­ment sys­tem, which they call Ready­Biz, which took over 10 years to devel­op­ment and was launched in, to devel­op, sor­ry, and was launched in 2012.

[00:15:43] TK: Ready­Biz has cus­tom built func­tion­al­i­ty, includ­ing busi­ness intel­li­gence appli­ca­tions, which helps Redox man­age its com­plex suite of prod­ucts, sup­pli­ers, cus­tomers, and reg­u­la­to­ry require­ments, and also serves as a mar­ket knowl­edge data­base, enabling the sales force to iden­ti­fy and deliv­er new sales oppor­tu­ni­ties.

[00:16:02] TK: So it’s a fair­ly com­plex busi­ness and they’ve devel­oped their own spe­cial­i­ties in it. Com­pa­ny float­ed on the ASX in July of last year, but it was found­ed 60 years ago by Roland Coneliano. So I hope I pro­nounced that right. I’m guess­ing it’s Ital­ian, but I think it might also, it may be East­ern Euro­pean.

[00:16:22] TK: So Ronald’s, uh,

[00:16:24] CR: he escaped

[00:16:24] TK: sor­ry,

[00:16:25] CR: Egypt in 1965 and fled to Syd­ney.

[00:16:29] TK: thank you.

[00:16:30] TK: Okay. It’s okay. It does­n’t sound Egypt­ian, but that’s his name. His, his, yeah, his grand­son Ray­mond is the cur­rent MD and CEO, and there are oth­er fam­i­ly mem­bers on the board of direc­tors. So, the Coneliano fam­i­ly con­tain about 30 per­cent own­er­ship In Redox still, but, um, Stock Doc­tor lists 30 per­cent direct own­er­ship, but hints that there might be anoth­er up to 20%, um, by fam­i­ly con­trolled enti­ties.

[00:16:58] TK: So, quite a bit of the com­pa­ny is con­trolled by the own­er, founder, or their direc­tor. Descen­dants. Um, they’ve also been suc­cess­ful along the way in rolling up oth­er chem­i­cal sup­plies and recent­ly com­plet­ed the acqui­si­tion of a com­pa­ny called AusChem, one of the oth­er Aus­tralian chem­i­cal importers. Okay, so that’s the com­pa­ny.

[00:17:20] TK: Um, the QAV num­bers and the share price for this analy­sis was 3. 56 and that’s slight­ly above con­sen­sus tar­get. But more than dou­ble intrin­sic val­ue, so IV1 is 76. Like­wise, on a book val­ue basis, the com­pa­ny is way over the price that we would want to buy it for. Neps is 1. 01, book plus 30 is there­fore 1.

[00:17:46] TK: 32. Share price is 3. 56, so we can’t buy it. We can’t buy RDX for any­thing approach­ing book val­ue or intrin­sic val­ue. Stock doc­tor finan­cial health and trend is strong and steady and stock doc­tor rate redox as a star growth and income stock, and there­fore we score it well for this Stock­o­pe­dia rank Redox is a 93 for qual­i­ty and a 93 over­all.

[00:18:10] TK: But it los­es points to val­ue where it ranks at 58. And that’s prob­a­bly a fair sum­ma­ry of how QAV sees this com­pa­ny as well. It’s large­ly because it trades on a Prop­Caf of over 16 times. So it’s expen­sive in terms of being a val­ue stock. Uh, price to earn­ings ratio for the com­pa­ny is 19. 6 times. And giv­en that Prop­Caf is 16 times, it means a lot of cash is falling straight to the bot­tom line, which I like.

[00:18:39] TK: Uh, the cur­rent PE of 19. 6 times. is the low­est since list­ing but there is only two halves so that’s not say­ing much at the moment. Div­i­dend yield is 3. 5 per­cent which is sol­id but does­n’t meet our thresh­old for a score. If any­one’s inter­est­ed, ROE is 18. 6 per­cent which is strong. Stock Doc­tor don’t give this com­pa­ny an earn­ings per share fore­cast and that’s pos­si­bly because The com­pa­ny declined to pro­vide guid­ance, um, cit­ing sup­ply chain cost issues, which are fluc­tu­at­ing around at the moment as most lis­ten­ers would have writ­ten the paper due to prob­lems in the Suez Canal for one, uh, but also to, um, there are only two bro­kers cov­er­ing the stock.

[00:19:22] TK: So I think Stock Doc­tor rules say it needs three to form a con­sen­sus on earn­ings per share fore­cast. Uh, so we can’t score, uh, Redox on growth over PE. Um, the stock price has gone through a strong upturn, and so it scores on the momen­tum, momen­tum side of the three PTL graph. There is increas­ing equi­ty, but again, only two halves, but we’ll still give it a score for that.

[00:19:46] TK: So all in all, for the things we can score, redox score 70% on qual­i­ty, which is good, but it fails, uh, on prop cap, which gives you the QAV score of 0.04. So, uh, it’s not a. Not a val­ue stock does­n’t mean it’s not worth buy­ing. So do your own research and have a look. There’s cer­tain­ly a lot to like about the com­pa­ny.

[00:20:06] TK: It’s, um, the fam­i­ly own­er­ship is, uh, is a good thing, I think. Um, and I think one of the things about that is that it’s been going for 60 years. And if you think about, you know, what that means, it’s a fair­ly robust busi­ness mod­el and they’re doing a good job because, uh, you know, not many com­pa­nies sur­vive for decades and decades and decades, um, and that’s What are the risks?

[00:20:29] TK: Well, it’s above mar­ket PE. So it’s on a val­ue side of things. It’s not, it’s not cheap. And if there are any issues that it does face, then I’d expect to see a price pull­back and that might be the time to look to buy it from a QAV point of view. Uh, it’s, it’s not cheap. It’s oper­at­ing using inter­na­tion­al sup­ply chains, so it’s real­ly hostage to those sup­ply chains.

[00:20:51] TK: And if any­thing hap­pens, like a block­age in the Suez Canal, it adds to their costs, or if there’s any sort of inter­na­tion­al inci­dent which dis­rupts the sup­ply chains, as they were dur­ing COVID, then that’s an issue for them. But they have sur­vived all those things, but it The share price may not sur­vive those kinds of short term issues.

[00:21:12] TK: It’s now num­ber one in its mar­ket in Aus­tralia, so that says to me it needs to look to over­seas for expan­sion, and it’s doing that both in New Zealand, Malaysia, and North Amer­i­ca. It ranks 34th inter­na­tion­al­ly, so there­fore it has plen­ty of oppor­tu­ni­ty, but as we know, over­seas growth is hard to do from Aus­tralia, and just on that, there was an arti­cle in today’s Fin Review by Nick Scali.

[00:21:39] TK: Came out and announced that they were hav­ing dif­fi­cul­ties import­ing fur­ni­ture into the UK after expand­ing there recent­ly. Um, the last point I’ll make is that RDX is essen­tial­ly a cot­tage indus­try and I’ve seen before busi­ness­es where they scale up to a cer­tain size and then Big­ger is dif­fi­cult. Um, they’ve done real­ly well so far.

[00:22:01] TK: Uh, but even­tu­al­ly, their growth is going to have to butt up against the big play­ers in the chem­i­cal mar­kets. The DuPonts, the Dows, and even Shell. We used to sell chem­i­cals through, um, Shell when I was work­ing there. Um, and, you know, that’s a, uh, large inter­na­tion­al play­er with a very con­crete sup­ply chain.

[00:22:19] TK: So I under­stand how, um, some­one can grow to fill the mar­ket gap beneath those big play­ers. The ques­tion is, how do they do that when they get so large that they start to com­pete with those big play­ers? Um, so I mean, it’s, it’s had good growth. If you look at the sales CAGR over the last 25 years, it’s real­ly, Between 9 and 10%.

[00:22:42] TK: So that’s pret­ty good. Um, so I guess that’s why it’s trad­ing on the high PE. Um, but it’s also tak­en them 60 years to get to num­ber one in Aus­tralia. So that kind of sales growth may not con­tin­ue. And if it does, it’s going to be fac­ing over­seas com­pe­ti­tion, which I think will be stiffer. And I guess it’s also pos­si­ble that they lose some of their.

[00:23:05] TK: their com­pet­i­tive edge because their whole busi­ness is around sourc­ing chem­i­cals in places very remote from their cus­tomers in Aus­tralia and they’re man­ag­ing that com­plex­i­ty but if they expand and get clos­er to the source of the chem­i­cals you think that they’ve already com­pa­nies in those areas who’ve got those mar­kets tied up because they’re much sim­pler to oper­ate in so any­way I haven’t done deep analy­sis on this but that would be a ques­tion I have about the com­pa­ny going for­ward but cer­tain­ly, um, It’s worked well for 60 years and it’s, um, it’s a, it’s a good com­pa­ny.

[00:23:37] TK: It’s just, I think it’s priced

[00:23:38] TK: to per­fec­tion at the moment.

[00:23:40] CR: Yeah, I found an arti­cle that Alan Kohler wrote 10 years ago, almost to the day, 2nd of Octo­ber 2014. He said, one of Aus­trali­a’s largest, excuse me, most suc­cess­ful fam­i­ly busi­ness­es is almost entire­ly unknown out­side of its indus­try. But there are three very unusu­al things about the Coneliano fam­i­ly’s Redox Group, a Syd­ney based importer and dis­trib­u­tor of chem­i­cals and a top 100 pri­vate com­pa­ny.

[00:24:09] CR: One, the fam­i­ly loves pay­ing tax. Redox pays the full 30 per­cent and a bit more. Two, they pub­lish a full set of accounts every year, like a list­ed com­pa­ny. And three, their cap­i­tal struc­ture and suc­ces­sion solu­tion is total­ly unique and ele­gance itself. And he goes on to say, Man­ag­ing Direc­tor Robert Coneliano says he and the fam­i­ly pay no atten­tion to net prof­it.

[00:24:33] CR: They only watch gross prof­it because, quote, we love pay­ing tax. We think it’s the most patri­ot­ic thing you can do. Take note, Google. Pay atten­tion, Apple. Not to men­tion all the fam­i­ly busi­ness­es in Aus­tralia that shel­ter their cash from the tax­man. The Conelianos use no trusts or off­shore tax havens, and they bare­ly even use any deduc­tions.

[00:24:55] CR: Crazy, I hear you say. But their 10 mil­lion annu­al div­i­dend isn’t crazy, and nor is the con­stant stream of inter­na­tion­al chem­i­cal busi­ness­es troop­ing through their offices try­ing to pay them hun­dreds of mil­lions of dol­lars to buy the busi­ness. They all get knocked back. The founder of Redox, Roland Coneliano, 86, one legged and hear­ing impaired, still con­trols 100 per­cent of the votes and comes into the office four days a week doing deals by email.

[00:25:22] CR: He’s not for sell­ing and the 35 oth­er fam­i­ly share­hold­ers are fine with that. Why do they pub­lish accounts? To show sup­pli­ers and cus­tomers how sound the busi­ness is, so they’ll increase pay­ment terms. So here’s the unique cap­i­tal struc­ture as laid out in the 2014 accounts. There are three class­es of shares.

[00:25:41] CR: 20, 000 A class, 20, 000 B class, and 2, 285, 909 C class. Basi­cal­ly, he goes on to say the A class titles Shares are enti­tled to hold it to vote, receive div­i­dends, and par­tic­i­pate in cap­i­tal under­wind­ing, under­wind­ing up. B class shares allow you to vote when A class shares are no longer in exis­tence to receive div­i­dends as declared.

[00:26:10] CR: By the Board of Direc­tors and par­tic­i­pat­ing cap­i­tal and wind­ing up, C class shares enti­tle the hold­er to vote when both A and B class shares are no longer in exis­tence, and to receive div­i­dends, etc, etc. All of the A class shares are owned by Roland. All of the B class shares are owned by his eldest son, Robert, who is now Man­ag­ing Direc­tor.

[00:26:29] CR: The C class shares are dis­trib­uted among the rest of the fam­i­ly, and the allo­ca­tions were decid­ed by Roland. But, uh, I love the back­sto­ry. Um, it says, uh, Roland Coneliano start­ed the busi­ness in 1964 with a part­ner named Krikor Kriko­ri­an, yes, an Armen­ian, and they called it C& K Traders. They’d been in busi­ness togeth­er in Cairo, where they’d both been born, and they emi­grat­ed togeth­er to Aus­tralia in the 1960s.

[00:27:00] CR: Their busi­ness involved sell­ing East Ger­man machine parts to Egypt­ian busi­ness­es. It was easy and they made plen­ty of mon­ey because Egypt was aligned with Moscow and Egypt­ian man­u­fac­tur­ers had no oth­er source for parts. But after Gam­mel Nass­er came to pow­er in 1956, things start­ed to get dif­fi­cult for Euro­peans in Egypt.

[00:27:17] CR: So in 1960, Roland, then 32, and Krikor decid­ed they had to get out. So, uh, then they did, tried to set up the same busi­ness, but found it was too dif­fi­cult here. And, uh, so then the sto­ry goes on, they moved to chem­i­cals, but yes, uh, they’re called Coneliano’s Ital­ian Greek immi­grants, but, uh, to Egypt and he was born in Egypt.

[00:27:41] CR: So that’s why he’s got an Ital­ian sound­ing name, but is Egypt­ian.

[00:27:46] TK: Yeah. Right. Well, thank

[00:27:47] TK: you.

[00:27:49] CR: Good sto­ry. Great sto­ry. I love those

[00:27:51] TK: back­sto­ry.

[00:27:52] CR: Yeah.

[00:27:52] TK: Yeah. No, great his­to­ry. Thank you. Yeah. Um, a few things strike, strike me from that sto­ry. One is they keep knock­ing. Buy­backs, um, lock­ing, sor­ry, sales for the com­pa­ny. So offers, yep, that, that may change. Um, but, um, but you know, the, if, if they’re pay­ing all the tax they should, and that’s real­ly good, hats off to them.

[00:28:17] TK: They might get a knock on the door from Gold­man Sachs with a few restruc­tur­ing deals as well to try and improve the prof­its of the com­pa­ny. Um, so hope­ful­ly they knock those back as well, but

[00:28:27] TK: we’ll see.

[00:28:28] CR: Sure, they’ve prob­a­bly had those already. Yeah, well, thank you for the sug­ges­tion, Phil. And, uh, obvi­ous­ly, like, a real­ly inter­est­ing and impres­sive busi­ness, but, um, over­priced from our per­spec­tive.

[00:28:40] TK: Well, it may not, it might be fair­ly priced if it’s grow­ing. Um, but yeah, from. From a val­ue investor

[00:28:46] TK: point of view, over­priced for sure.

[00:28:49] CR: All right. Trent sent us some ques­tions last week, Tony, and we kept a cou­ple over. Um, pull one of those out now. Comm sells and buys. He’s ask­ing about com­mod­i­ty sells and buys. Trent says, these make a lot of sense to me when it is a pro­duc­er of a prod­uct and sell­ing on mar­ket, i. e. I for­got you want­ed to do a WWOWS thing.

[00:29:12] CR: We’ll save that after this. You do, don’t, don’t let me for­get. You’re going

[00:29:15] TK: Okay. Yeah, that’s fine. All right.

[00:29:16] CR: thought we, yeah, we jumped

[00:29:18] CR: into the ques­tions. All right.

[00:29:19] CR: WWOWS lat­er. Uh, makes sense to me when it’s a pro­duc­er of a prod­uct and sell­ing on mar­ket, i. e. Karoon. Um, or a gold com­pa­ny with gold, Kroon with oil and a gold com­pa­ny with gold.

[00:29:30] CR: It seems a lit­tle grey­er to me in oth­er sit­u­a­tions where the com­pa­ny is exposed as a mid­dle­man, as exam­ples, Grain­Corp with wheat, Capral with alu­mini­um, Viva and oil. Not sure if I have a ques­tion here, just more of a com­ment. As sur­prised to hear you sold out of GNC on this one, con­sid­er­ing stock graph looks fair­ly good.

[00:29:50] CR: In fair­ness, there is a cor­re­la­tion when you over­lay wheat to GNC, so it may seem very wise in com­ing months. I note it made me review my hold­ing, but instead of sell­ing, I’ve just tight­ened up my 3PTL. So, um, this ques­tion has been asked pre­vi­ous­ly and it seemed to agi­tate him a lit­tle, so a good one if you think he needs a bit of a prod, he adds.

[00:30:15] CR: I’m not sure if that’s this one or the next one, if it’s the one about the Bible and the size of our port­fo­lios, but I think it’s that one. Look, we talk about this all the time. Like we, we’ve talked about Capral and alu­mini­um a hand­ful of times, Grain­Corp and wheat we’ve talked about a num­ber of times.

[00:30:32] CR: Yeah, look, we agree, I think, with you, Trent. Like they’re not, you know, like the, the, When you look at the way that the busi­ness makes mon­ey, it’s not obvi­ous­ly direct­ly relat­ed to the actu­al price of the under­ly­ing com­mod­i­ty. And I think what we usu­al­ly do is look at cor­re­la­tions, his­tor­i­cal cor­re­la­tions, don’t we?

[00:30:59] CR: We do the over­lay and go, well, how does it usu­al­ly play out?

[00:31:02] TK: yeah, cor­rect. So that’s what we’ve done. I think there is, I mean, there’s, there’s Prob­a­bly a weak­er cor­re­la­tion in the case of those mid­dle­man type com­pa­nies like Capral and Grain­Corp, but there is a cor­re­la­tion. You can see it in the five year month­ly graphs if you com­pare the com­mod­i­ty to the busi­ness, but it’s prob­a­bly some­thing as sim­ple as More wheat shift­ed when the price is high, because Grain­Corp is get­ting fees for mar­ket­ing, um, grain over­seas and stor­ing it along the way.

[00:31:35] TK: Um, I guess some of those fees are also per­cent­age based, so if the price is high, they make more mon­ey. It’s prob­a­bly some­thing as sim­ple as that, and I think the same thing would prob­a­bly apply to Capral. Uh, the case of Viva’s a bit dif­fer­ent because, uh, Viva oper­ate refiner­ies, so they are, uh, I would­n’t say they’re man­u­fac­tur­ing oil, but they’re tak­ing crude oil and turn­ing it into petro­le­um and sell­ing it through a retail net­work.

[00:32:02] TK: So it’s kind of like being a man­u­fac­tur­er or a whole­saler. So they do move up and down with the price of oil because they buy it inter­na­tion­al­ly and then sell it inter­na­tion­al­ly. Local­ly, um, it’s very, it’s most of these indus­tries, most com­mod­i­ty indus­tries, cer­tain­ly the Viva exam­ple, they’re price tak­ers, they’re not price mak­ers.

[00:32:19] TK: So, you know, what that means is if the price of oil is low, Viva can’t go into the mar­ket and charge a lot for the, at the bows­er for fuel, um, because, uh, unless there’s col­lu­sion in the indus­try, it’ll get the, that mar­gin will get com­pet­ed away by, um, com­pe­ti­tion in the indus­try. So, um, yeah, they, they large­ly.

[00:32:41] TK: fluc­tu­ate up and down with the price of oil. You can pret­ty much see that your­self if you check the price and where it’s been and where it’s going, or where it’s been, and then look at what’s hap­pen­ing in the retail, on the retail pump. You’ll see it, you know, at the moment it’s, I think I paid about 1. 80 a litre last night for fuel, um, but a year ago I was pay­ing 2.

[00:33:02] TK: 40. Um, and if you look at the price of oil on a graph, Brent Crude is what we nor­mal­ly look at. Um, the price is down, it’s below 100 a bar­rel again. So, yeah, these, all of these com­mod­i­ty com­pa­nies, whether they are direct­ly, you know, like a gold­mine, where they’re pulling it out of the ground and sell­ing it, or whether they’re kind of an inter­me­di­ary, they are still at least some­what teth­ered to that

[00:33:25] TK: com­mod­i­ty price.

[00:33:26] CR: Yeah, I’m look­ing at when I last sold GNC, I sold it for about 7. 80. Um, I don’t know when that was, I did­n’t make it when wheat became a sell, I think it was a cou­ple of months ago. It’s now trad­ing about nine bucks. So, yeah, it kept going up. But,

[00:33:44] TK: Mm hmm.

[00:33:44] CR: that’s just the way things play out.

[00:33:47] TK: Mm

[00:33:48] CR: we’re try­ing

[00:33:48] TK: Yeah, because I mean the com­mod­i­ty, the com­mod­i­ty price isn’t the only thing in, in, in that kind of com­pa­ny. There’s, there’ll be all sorts of oth­er busi­ness issues going on in that busi­ness too, but the main the­mat­ic is the com­mod­i­ty price and the

[00:34:00] TK: grain that they’re, they’re mov­ing.

[00:34:02] CR: Yeah. But, good ques­tion, Trent, like, uh, we keep an eye on it, and it’s always good to be, um, chal­lenged or ques­tioned or, or prod­ded about these things, cause it forces us to take anoth­er look at it. Uh, his

[00:34:18] TK: And I think the good thing too is Bren­t’s found his own solu­tion to it. He’s going to con­trol it the way he wants to con­trol it and look at the Grain­Corp graph and decide to sell based on that and that’s entire­ly

[00:34:29] TK: fine. At least he’s pay­ing atten­tion.

[00:34:31] CR: yes. You do you Brent, uh,

[00:34:33] CR: Trent. Um, his last ques­tion says the Bible indi­cates an approach of hold­ing 50 to 20 stocks, but both of you seem to be hold­ing less than this. Any reflec­tions on this approach? And if you think this is help­ing returns slash sim­plic­i­ty, espe­cial­ly if any insights when over­lay­ing some of the recent read­ing from O’Shaugh­nessy book.

[00:34:54] CR: Well. I can tell you that in my super port­fo­lio at the moment, I hold 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, and I think you hold a bit less all up.

[00:35:06] TK: I’m less than that. Yeah, I think I’m about eight, eight or nine.

[00:35:09] CR: Now my rea­son is, uh, I hold dou­ble posi­tions in a few of those and it’s just his­tor­i­cal. It’s because when times were tough and there was­n’t much to buy and lim­it­ed, being lim­it­ed to ASX 300 com­pa­nies as I am through my super fund. Uh, I had to dou­ble up posi­tions a cou­ple of times and just. Do you know the sit­u­a­tion?

[00:35:31] CR: I haven’t sold any­thing out of it for a long time in order to bal­ance it up. So I have put more mon­ey into my super though. So I might be able to add some, start adding some stocks to it, but it has­n’t been delib­er­ate from my, um, per­spec­tive. It’s just been the way it played out over the last cou­ple of years.

[00:35:49] CR: What about with you?

[00:35:51] TK: Yeah. So that’s fair­ly sim­i­lar to me. It was cer­tain­ly because of COVID that we were sell­ing things and then rebuy­ing them and buy­ing dou­ble posi­tions. But I was also, I guess, active­ly, not nec­es­sar­i­ly try­ing to diver­si­fy. So I prob­a­bly have trad­ed enough to have expand­ed the port­fo­lio again, fol­low­ing that dou­ble buy­ing peri­od.

[00:36:10] TK: But, um, I’ve cho­sen not to as a bit of a test. Um, and I’ve been influ­enced by, um, Char­lie Munger’s, you know, words of wis­dom where he says that the best port­fo­lio holds four stocks, and he held four stocks. And I guess, you know, and Munger, you know, said that, that will make you more volatile, but will give you bet­ter returns in the long term.

[00:36:34] TK: So that’s, that was what I’ve been try­ing to achieve. I’ve cer­tain­ly had the more volatile part. I’ve yet to show the, um, out­sized per­for­mance. So, um, I haven’t been keen to rec­om­mend con­cen­tra­tion of the port­fo­lio to our lis­ten­ers, and I won’t do it until I have com­pelling evi­dence for it. But yeah, I was, I was also, um, you know, always tak­en by, um, Michael Gold­stein’s, you know, point of view where, you know, he’s, he’s repeat­ed­ly said, why are you invest­ing in more than your best idea?

[00:37:03] TK: So in oth­er words, con­cen­trate things down as much as

[00:37:06] CR: Gold­berg, I think you’re talk­ing

[00:37:08] TK: Gold­berg, sor­ry, thank you from Collins Street Val­ue. Um, yeah, so, um, so those two things have, had, had been, um, you know, guid­ing me. to try and not nec­es­sar­i­ly expand the port­fo­lio. I mean, there’s, you know, times when I could have divid­ed a hold­ing when I sold it and bought two new ones to replace it.

[00:37:28] TK: But I’ve just been try­ing this kind of idea of a con­cen­trat­ed port­fo­lio. Don’t have any find­ings yet. Seems to be per­form­ing as the old sort Port­fo­lio of 15 stocks was, um, but well, it has­n’t, it’s only been a cou­ple of years now, so it has­n’t been a great time peri­od to, to look at, uh, yeah, so that’s, that’s, um, my think­ing.

[00:37:49] TK: Um, the gen­er­al prin­ci­ple that the research shows is the big­ger port­fo­lio, the big­ger the port­fo­lio, the more index like the returns will be and the small­er the port­fo­lio. Bet­ter the out­per­for­mance will be if you pick the right stocks. So yeah, you know, if you con­cen­trate and you pick the right stocks, you’ll out­per­form even more, but it will be

[00:38:08] TK: volatile along the way.

[00:38:09] TK: Yeah.

[00:38:11] CR: Uh, my super port­fo­lio’s doing okay for this finan­cial year, um, com­pared to the last cou­ple of years when it was com­plete­ly in the dol­drums, um, with all of the rule one-ing that we went through and it real­ly strug­gled, uh, for a while there. Uh, this finan­cial year, which we’re like, what, how many months are we into it?

[00:38:30] CR: Two or three? Not much. But it’s up about two. 9% this finan­cial year, which, ’cause it’s been bonkers the last few months. Over the course of the last one year, it’s up about 11%, which is, uh, the, the STW is up about 24% over the same peri­od of time. So it’s doing half instead of dou­ble. But again, it, it ha like bef, I know the pre­vi­ous finan­cial year it was like.

[00:38:58] CR: Bare­ly broke even. I think 1 per­cent I was up the last finan­cial year. It was a ter­ri­ble, ter­ri­ble year for it. So I’m hap­py

[00:39:07] TK: Yeah. And I’m cer­tain­ly com­ing up a cou­ple of, cou­ple of under­per­form­ing years. Um, this year is doing much bet­ter. I think for the cal­en­dar year from mem­o­ry, I’m up about 16%.

[00:39:16] CR: Right.

[00:39:17] TK: um, I think. Uh, if I’ve got the fig­ures right in my mind, Share­Site was hav­ing me out­per­form­ing the mar­ket, but cer­tain­ly not dou­ble, maybe by a cou­ple of per­cent this cal­en­dar year, so, um, yeah, I’m hap­py with where it’s going, um, but yeah, I’ve got to recov­er the last cou­ple of years, which have been, as you’re say­ing, the

[00:39:33] TK: dol­drums.

[00:39:34] TK: For my port­fo­lio any­way.

[00:39:35] CR: Oh, well this cal­en­dar year I’m up 10. 5 per­cent ver­sus the STW up about 12%. So not quite neck and neck with the STW, but again, being up 10 per­cent for the cal­en­dar year com­pared to pre­vi­ous years, I’m quite hap­py with, um, we know how it Tends to work. We track along and then we have a real­ly good year or so and, uh, blow the lights out and then go back to aver­age to good returns, uh, mov­ing for the next few years.

[00:40:05] CR: So I’m just wait­ing for the good

[00:40:06] TK: you men­tion the, did you men­tion the port­fo­lio per­for­mance? Because I saw your

[00:40:11] TK: fig­ures on the dum­my port­fo­lio, which were quite good.

[00:40:14] CR: Uh, yeah, no, I, I haven’t, but the dum­my port­fo­lio is, yeah, what it always does, real­ly. I mean, it’s, uh, you’re talk­ing about the Stock Doc­tor one or the Stock­o­pe­dia one. They’re both doing

[00:40:27] TK: I was talk­ing about the Stock Doc­tor one. Yeah. The one that’s been going for five plus

[00:40:31] TK: years, yeah. It was dou­ble mar­ket just about.

[00:40:33] CR: Yeah, I mean, it’s sort of always around dou­ble mar­ket. It was a lit­tle bit, some­times it’s a lit­tle bit above dou­ble mar­ket.

[00:40:40] CR: Some­times it’s a lit­tle bit below, I think it’s up about 16. 7 per­cent per annum CAGR over the five years ver­sus about 9. 4 for the STW. Over the same peri­od of time, the Stock­o­pe­dia, the Aus­tralian stock­o­pe­dia port­fo­lio, which has an incep­tion date of July 23 is up 22 per­cent since incep­tion ver­sus the index up 20%.

[00:41:03] CR: So it’s doing bet­ter, but not dou­ble yet, but still in the last, what­ev­er that is, near­ly a year and a half, that’s pret­ty good. Not as good as the U. S. up, as I said, like 90%, but you know. We don’t have the Mag 7 and the froth­i­ness. It’s inter­est­ing, I was read­ing Alan Kohler’s Mon­ey Café arti­cle for last week, him and James Thomp­son from the Finan­cial Review, and you know, just they were com­par­ing the US mar­ket to the Aus­tralian mar­ket.

[00:41:38] CR: Uh, Alan says, uh, uh, la la la, the ASX 200 ver­sus the S& P 500 over the last two years. The S& P 500 was up 63 per­cent and the ASX was up 23%. And James says, yeah, tough. There aren’t no NVIDIAs or Microsofts here. That makes it a bit tougher, I think. Real­ly, it basi­cal­ly comes down to that. So few com­pa­nies pow­er the index in Amer­i­ca.

[00:42:05] CR: And then Alan says, Mind you, the com­pound return over two years from the ASX is not too shab­by. Tak­ing in div­i­dends, total return I cal­cu­lat­ed to be between 15 per­cent and 16 per­cent per annum. So that’s a lot. So yeah. It’s been a strong cou­ple of years for the index here, which, um, Antho­ny Albanese is obvi­ous­ly tak­ing good advan­tage of because he’s run­ning around, uh, doing his bit to help the real estate mar­ket in Aus­tralia.

[00:42:34] TK: Yes.

[00:42:35] TK: And he was also on

[00:42:36] TK: Specs and Specs on Sun­day night. Jen­ny and I watched it.

[00:42:39] CR: And then hang­ing out with King Charles, I assume, uh, in the mean­time?

[00:42:43] TK: He’s, he’s liv­ing his best life, Ken. He’s my age, comes from a hous­ing

[00:42:49] TK: com­mis­sion flats with a sin­gle mum.

[00:42:52] CR: Now he’s hang­ing out with the King and, uh,

[00:42:54] CR: buy­ing a 4 mil­lion

[00:42:56] TK: he’s liv­ing his best life.

[00:42:58] TK: Yep.

[00:42:59] CR: Good for him. Uh, you want to do your WWOWS quote?

[00:43:04] TK: I do. Yeah. So, con­tin­u­ing on with what works on Wall Street, and we come now to Chap­ter 12. And I think it was Dave from UWE who put us on to Chap­ter 12 and asked the ques­tion whether, asked the ques­tions whether buy­backs should be in the check­list or not. So thanks to Dave for that, because I’d love It made me go back and go down the rab­bit hole with all the data and what works on Wall Street, which has been real­ly pro­duc­tive.

[00:43:31] TK: So Chap­ter 12 is called Buy Back Yield. And last week we con­sid­ered div­i­dend yield, some­thing favoured by Aus­tralians because of the frank­ing cred­its. And I’ve got a bit of this. frank­ing cred­its were not tak­en into account in O’Shaugh­nessy’s analy­sis because his analy­sis is based on US stocks that don’t have them.

[00:43:52] TK: Um, I was­n’t too fussed on this because O’Shaugh­nessy’s excel­lent analy­sis showed that it’s the change in div­i­dend yield that’s more impor­tant, not nec­es­sar­i­ly just the div­i­dend yield, even though that did pro­duce div­i­dends. Bet­ter Than Index Returns, um, it was the change, whether it was being cut or whether it was being increased that was, um, impor­tant.

[00:44:12] TK: Any­way, this, this week I’ll com­pare div­i­dend yield to buy­back yield, and O’Shaugh­nessy defines buy­back yield as, uh, or by con­trast­ing shares out­stand­ing today with those out­stand­ing a year ear­li­er. If a stock has 90 shares out­stand­ing today and had 100 out­stand­ing a year ear­li­er, it would have a buy­back yield of 10%.

[00:44:33] TK: which you derive by divid­ing the 10 few­er shares by the 100 from a year ear­li­er. Con­verse­ly, if a stock has 100 shares out­stand­ing today, while it had 90 shares out­stand­ing one year ear­li­er, it has a buy­back yield of minus 11%, indi­cat­ing that the com­pa­ny has issued addi­tion­al shares. The the­o­ry is that if a com­pa­ny is buy­ing back its shares, the com­pa­ny’s man­age­ment must believe that those shares are under­val­ued.

[00:44:57] TK: And so man­agers are there­fore avail­ing them­selves of the oppor­tu­ni­ty to pur­chase their shares at a dis­count. It is also anoth­er way for the com­pa­ny to sup­port the share price for share­hold­ers. It there­fore can be seen as the com­pa­ny mak­ing a pay­ment to share­hold­ers in place of a cash div­i­dend. Uh, some, uh, O’Shaugh­nessy goes on to, to cite some aca­d­e­m­ic.

[00:45:20] TK: Analy­sis about the ratio of buy­backs to cash div­i­dends between 87 and 2006 and dur­ing that peri­od the ratio of buy­backs to div­i­dends in the U. S. dou­bled. So it’s cer­tain­ly becom­ing some­thing more preva­lent in the U. S. O’Shaugh­nessy’s analy­sis shows the decile of stocks from 1926 to end 2009 grew at a CAGR of 13.

[00:45:46] TK: 69%. for your time. ver­sus 10. 46 for his index. So that’s the decile of stocks con­duct­ing the most buy­backs. Decile with the high­est buy­back ratio. Uh, this com­pares, um, bet­ter to the high­est div­i­dend pay­ers which returned 11. 7%. So he’s show­ing rough­ly 4 per­cent out­per­for­mance of buy­back com­pa­nies ver­sus com­pa­nies pay­ing a high div­i­dend over the same peri­od.

[00:46:13] TK: So it’s not QAV like dou­ble mar­ket returns, but it’s some­thing which I think we should add to the check­list as a pos­i­tive mark­er of out­per­for­mance. And I’m still try­ing to find out how to do this. Because I haven’t found an easy source of data yet. Um, anoth­er point worth focus­ing on that O’Shaugh­nessy, um, analysed is the per­for­mance of com­pa­nies issu­ing shares.

[00:46:36] TK: So as I said before, their buy­back. Yield is neg­a­tive. Um, and when he does a decile of the buy­back yield com­pa­nies, um, the low­est decile is by def­i­n­i­tion com­pa­nies issu­ing the most shares. O’Shaugh­nessy char­ac­ter­izes that decile, decile 10, as one where man­age­ment thinks the mar­ket has priced its stock too high and is tak­ing advan­tage of these val­u­a­tions by issu­ing addi­tion­al shares.

[00:47:04] TK: He goes on to say these stocks do not make good invest­ments and they pro­vide an aver­age annu­al com­pound return of 5. 9 per­cent com­pared to his index of 10. 4 or those under­tak­ing buy­backs of 13. 7. So stay away from com­pa­nies issu­ing shares I guess is the corol­lary. For his analy­sis. A few thoughts on, of mine on the analy­sis.

[00:47:29] TK: Um, you know, Sean isn’t here to debate them, so I’ll just air my issues. Uh, the first one is that stocks are not con­tin­u­al­ly buy­ing back shares or issu­ing shares, so they tend to be oppor­tunis­tic in both of those, um, areas. occur­rences, which may mean that oth­er char­ac­ter­is­tics help or hin­der their per­for­mance.

[00:47:49] TK: So they’re in a 10 for a peri­od of time and then rotate out and he’s track­ing their long term per­for­mance. So that may or may not be total­ly down to what they’re doing with their buy­backs. Um, but what I think he, his analy­sis is show­ing is that when they are buy­ing back or issu­ing, um, their, their, They out­per­form or under­per­form.

[00:48:11] TK: So his, his analy­sis was a, uh, a rota­tion­al one. So he was tak­ing a decile over a 12 month peri­od and then rotat­ing stocks in and out as they fell in and out of that, that range. And it’s the per­for­mance of those deciles, which he’s talk­ing about. Um, I also think that, uh, the size of the pur­chase. Um, or the issue and the dis­count involved to the under­ly­ing val­ue of the shares or either for buy­back pur­pos­es or issuance pur­pos­es would be a fac­tor.

[00:48:43] TK: And he has­n’t dis­cussed or analysed that in what works on Wall Street. So there could be some fur­ther analy­sis to do on. on buy­backs and share issuance. But I think his analy­sis is sound and it’s cer­tain­ly infor­ma­tive. Um, and I think, uh, as soon as I can work out how to, I’m going to put that into the check­list, um, as a, as an addi­tion­al item.

[00:49:03] CR: Oh, very cool. I should stop try­ing to code the check­list until you do that. No, no, I got to keep going. I’ll just add it in lat­er.

[00:49:13] TK: Yeah.

[00:49:14] CR: Thank you for that. Um, I just noticed. As I was look­ing at my spread­sheet that, um, look­ing at the top per­form­ers in my dai­ly report card today, we were talk­ing about WGX and FND up 25 per­cent over the last week.

[00:49:29] CR: MME, Mon­ey Me, is up 28 per­cent today!

[00:49:35] TK: Oh, so did you release the pulled pork I did on that last week? Today?

[00:49:40] CR: Uh,

[00:49:42] TK: Oh no, I did pep­per mon­ey last week, did­n’t

[00:49:44] CR: yeah, I?

[00:49:45] CR: don’t think

[00:49:46] TK: I did mon­ey me ages ago.

[00:49:48] CR: Did we? Hmm.

[00:49:49] TK: I think so. I cer­tain­ly remem­ber doing it.

[00:49:52] CR: I searched through my notes

[00:49:54] CR: for a men­tion of it.

[00:49:55] CR: and could­n’t find one, but yeah, I

[00:49:57] TK: Oh, okay. Hmm.

[00:50:00] CR: when­ev­er you did your, uh, pulled pork on it, and not the fact that it announced today that it has secured a 500 mil­lion asset backed secu­ri­ty deal. Uh, with Deutsche Bank and West­pac, um, basi­cal­ly they’ve raised $500 mil­lion for auto loan receiv­ables, so $500 mil­lion of fresh cap­i­tal that they can use to issue more loans.

[00:50:34] CR: The share price jumped from 11 cents up to 14 cents on that announce­ment today.

[00:50:41] TK: Very good.

[00:50:42] CR: So I do hold them in, uh, the Wikipedia Aus­tralia port­fo­lio. So they’re up about 30% now. They were just. Bundling along, but there you go. So that’s good for any­one who holds MME. Um, I’m look­ing through

[00:50:58] TK: ADT from mem­o­ry though,

[00:50:59] TK: I think, was­n’t it?

[00:51:01] CR: would be, yeah. Yes, you did do it, Paul Pork. Back in Feb­ru­ary, episode, uh, 727, I think. Three Men and a Tiger was the title of that episode. No, no, 707. 707. I have no idea what it was called, Three Men and a Tiger, but, uh, must’ve been some­thing. That made me laugh at the time. Three men, Oh, three men make a tiger. Do you know what that was? Refers to an, Oh, I think I was doing the, um, the book of proverbs, some­body’s list of proverbs or, yeah, I was read­ing things out of a book. Three men make a tiger is it? Yes, is a Chi­nese proverb, refers to an indi­vid­u­al’s ten­den­cy to accept absurd infor­ma­tion as long as it is repeat­ed by enough peo­ple.

[00:52:00] TK: Mm-Hmm.

[00:52:01] CR: three peo­ple say they saw a tiger, there must be a tiger.

[00:52:04] TK: That, that’s what that means. Got it. Okay.

[00:52:07] CR: The proverb comes from a sto­ry of an alleged speech by Pang Kong, an offi­cial of the state of Huay. In the War­ring States peri­od, 475 BCE to 221 BCE in Chi­nese his­to­ry. Accord­ing to the War­ring States records, before he left on a trip to the state of Zhao, Pang Kong asked the King of Wei whether he would hypo­thet­i­cal­ly believe one civil­ian’s report that a tiger was roam­ing the mar­kets in the cap­i­tal city, to which the King replied no.

[00:52:33] CR: Pang Kong asked what the King thought if two peo­ple report­ed the same thing. The King said he would begin to won­der. Pang Kong then asked what if three peo­ple? All claimed to have seen a tiger. The king replied that he would then believe it. Pang Kong remind­ed the king that the notion of a live tiger in a crowd­ed mar­ket was absurd, yet when repeat­ed by numer­ous peo­ple, it seemed real.

[00:52:56] CR: Since Pang Kong is

[00:52:57] TK: the king

[00:52:58] TK: just say Stop wast­ing my time after the sec­ond ques­tion.

[00:53:01] CR: real things to wor­ry about.

[00:53:03] CR: What’s it got to do with me?

[00:53:05] TK: You still here? Yeah. Uh, I see.

[00:53:23] CR: Talk took place. When Pang Cong returned away, the King indeed stopped see­ing him. But not because peo­ple have been talk­ing shit about him, just because he was bloody annoy­ing.

[00:53:34] TK: Yeah, stop wast­ing my time.

[00:53:41] CR: Like peo­ple who ask about the cor­re­la­tion between under­ly­ing com­mod­i­ty prices and

[00:53:47] TK: No, no, it’s fine. It’s only the,

[00:53:49] CR: I’m kid­ding.

[00:53:50] TK: been asked.

[00:53:52] CR: you’ve been asked. way

[00:53:54] TK: If you ask it the third time, then we have to say there’s no

[00:53:57] TK: cor­re­la­tion between it.

[00:53:59] CR: Yeah. All right. That’s the, uh, that’s the main part of the show. I would, I will briefly talk about Willis Lease Finance. So Andy, you can turn off now. I know Andy does­n’t want to hear about US stocks. I’m kid­ding, Andy, but any­one who does­n’t want to hear this, then you won’t get to hear after hours.

[00:54:17] CR: Maybe just skip. Um, I did look into Willis Lease Finance’s per­for­mance this morn­ing, try­ing to work out why they’re up 300%. Um, and I could­n’t find any­thing apart from the fact that they’re doing well. In August, so you did a pull poll in July, as I said they were at 70, now they’re at 191. In August, they announced record results.

[00:54:42] CR: Sec­ond quar­ter pre tax income of 57. 9 mil­lion. Declared their first reg­u­lar quar­ter­ly div­i­dend of 25 cents a share. They’re the, uh, they lease, do leas­es for air­craft and stuff like that,

[00:54:58] TK: Yep.

[00:55:00] CR: I just think all these peo­ple mak­ing mon­ey out of Mag 7 shares are buy­ing air­craft and, um, they’re all

[00:55:06] TK: Oh, yeah. Good point.

[00:55:10] CR: I don’t know. It’s just bonkers over there. So, um, but they’re doing real­ly, real­ly well. So, yeah, that’s it. That’s all I’ve got on that. They’re just doing well. After Hours, TK! What have you been up to?

[00:55:26] TK: Grav­el­ing. A lot. So, um, but it’s been fun. Had, uh, met Cape Schanck for a few weeks now for the spring car­ni­val. Uh, dou­ble the mar­ket. The horse Steve Mabb and I own is either run­ning at Bal­larat on Thurs­day or per­haps even at Moonee Val­ley on Sat­ur­day, which is Cox Plate day. Uh, Rud­dy came down last week with me.

[00:55:49] TK: Poi­fect was due to run at Caulfield but got scratched because it was a heavy track. Lots of rain around before the race, so we, it does­n’t do, she does­n’t do well in the rain, so we, um, we scratched her. She’ll race on Thurs­day. Prob­a­bly on Cup Day, but

[00:56:02] TK: some­time dur­ing Cup Week. There’s a few options for

[00:56:05] CR: So what hap­pens to peo­ple, sor­ry, what hap­pens to peo­ple that have

[00:56:07] CR: put bets on the horse and then the horse gets scratched? Do they just get the mon­ey back?

[00:56:11] TK: No, they’re refund­ed. Yeah,

[00:56:14] CR: Is there any penal­ties for you if you pull a horse out of a race for being too

[00:56:19] TK: Um, we would have, we would have lost our nom­i­na­tion fee, which is Usu­al­ly fair­ly minor.

[00:56:25] CR: So no, no major penal­ties to pull it out.

[00:56:28] TK: No major penal­ty. No, you don’t want to do it too often though.

[00:56:30] CR: admin­is­tra­tion fees.

[00:56:32] TK: Yeah. Um, yeah, so that’s the horse side of things. Uh, what else? Yeah, just basi­cal­ly trav­el­ing. I’ve been read­ing, um, just start­ed read­ing Nate Sil­ver’s new book called On The Edge.

[00:56:45] TK: I don’t know if

[00:56:45] TK: you’ve read it. Seen

[00:56:47] CR: No, did­n’t know he was writ­ing

[00:56:49] TK: Sil­ver. Yeah, this is his sec­ond book. But it’s basi­cal­ly around stats and prob­a­bil­i­ties and all the things we’ve talked about before. The Kel­ly Cri­te­ri­on, sig­nal and noise, sports bet­ting, pok­er play­ing, which I love. It won’t appeal to every­one, but I love all that kind of stuff.

[00:57:09] TK: So I’m read­ing that, which is very good. Yeah, oth­er­wise going back up and down the high­way to. Mel­bourne to see Alex and Jen­ny’s been down here with me and she’s up there at the moment doing meet­ings and we’ll fly back to Syd­ney and come back down again in a week’s time. So she’s up and down as work per­mits.

[00:57:29] TK: And yeah, um, I feel like I’ve just been, uh, dri­ving a lot over the last For a 5k since we last spoke,

[00:57:37] TK: basi­cal­ly.

[00:57:38] CR: Yeah, right. Well, that’s nice. I know you like to dri­ve. You like, you like your road

[00:57:43] TK: I do. Much pre­fer it to fly­ing. Um, and the real­i­ty is like, it just suits me because I can go to Wag­ga and pick up Rud­dy or we can, I went to Wag­ga and played golf with Rud­dy on Thurs­day and then we jumped in the car on Fri­day and drove down here. Um, so it just works for me. It’s not, if, if you drove from Syd­ney to Mel­bourne, it’s prob­a­bly works out maybe a cou­ple of hours longer than tak­ing a plane, by the time you cab it to the air­port or Uber it to the air­port, wait in the ter­mi­nal, if there’s any delays that, that mar­gin gets eat­en into, um, get, get out at the oth­er end, wait for your lug­gage and catch a cab, it’s, you don’t save much on a short leg like that, so, um, and I have the ben­e­fit of hav­ing a car down here and I can come down to Cape Schanck and then dri­ve

[00:58:29] TK: around.

[00:58:30] TK: Just good.

[00:58:32] CR: Nice. And you don’t need to sit next to annoy­ing mem­bers of the pub­lic who say, aren’t you Tony Kynas­ton?

[00:58:39] TK: Just rud­dy.

[00:58:43] CR: Well, yeah.

[00:58:44] TK: I could­n’t give a shit who I am, real­ly.

[00:58:49] CR: Oh, that’s good. Well, I had my Kung Fu grad­ing

[00:58:54] TK: you? Why’s your,

[00:58:55] CR: yeah, I had my

[00:58:56] TK: going to ask you? Why’s

[00:58:57] TK: your throat husky?

[00:58:57] CR: had my grad­ing on Fri­day night and it’s

[00:58:59] CR: fun­ny,

[00:59:00] CR: like I was, Um, yeah, well, we, we sur­vived it, but, um, it’s fun­ny. We were depressed. We were both at home lat­er that night and Chris­sy and I, I was telling her, I said, do you feel kind of like depressed?

[00:59:12] CR: And she’s like, yeah, I’m so glad you said that. I do. It was like a real, um, I don’t know, bum­mer of a feel­ing after­wards. Um, we did okay, but, you know, you nev­er do as well as you want to do with these things, and par­tic­u­lar­ly for me, so the first hour of it, there was only a cou­ple of us doing it, so there’s a bunch of peo­ple watch­ing us, which is fine, I don’t have any prob­lem with that, the first hour of it is we’re demon­strat­ing, All of our forms and our sets and our tech­niques and our under­stand­ing of the basic fun­da­men­tals.

[00:59:50] CR: And we have to, you know, do it on com­mand and he’s pulling stuff out, show me this, show me that, show me this oth­er thing. And you’re doing it, some of it in the air and some of it on a wood­en dum­my and some of it on peo­ple. And all of that sort of stuff was fine. I think I did pret­ty good job of all of that kind of stuff.

[01:00:06] CR: The last Half an hour to 40 min­utes was spar­ring. And the way it works is they have a bunch of black belts lined up against the wall. And then they come at you one at a time for a minute, they go pret­ty hard and then they rotate off and the next one comes on and you don’t get a break. So it was 32 degrees, did­n’t get a drink for the entire time we were doing it.

[01:00:29] CR: I took an Esky full of ice with drinks in it. Did­n’t get to touch it once. Uh, And I end­ed up, I got

[01:00:38] TK: Which is fair enough. I mean, if you’re in a, if you’re in a bar room where all you can’t say, Oh, I’m a bit parched. Can you just hold on fel­las?

[01:00:43] CR: 90 min­utes. Yeah. Um, like I’m Jason Statham tak­ing off a bunch of Chi­nese gang. Um, yeah, I got, I got punched in the nose real­ly hard at one point. Um, which hurt, but I, I was okay. But then I got punched a bunch of times and I kicked a bunch of peo­ple in the nuts and I did all sorts of things.

[01:01:08] CR: Grabbed some guys in the nuts ear­li­er on in the night, which was fun. But, uh, one guy I was, I was telling Tony off here. There’s this guy who’s a love­ly fel­la. He’s a black belt and he’s about 6’6 huge beard, ZZ top beard, and he’s cov­ered in tats, built like a brick chook house. Uh, brick chook house? Brick shit house, chook, chook, shit, some­thing like, any­way.

[01:01:35] CR: And he was my last round of spar­ring and my brain had gone, had flat­lined at this point. I had noth­ing left, like just bare­ly stand­ing. After half an hour, you know, you’ve seen box­ers do a three minute round, like, now we’re not, you know, try­ing to knock each oth­er to the ground either, so it’s not, I don’t want to over­sell it, peo­ple aren’t try­ing to hurt each oth­er, but they’re try­ing to push you to see, like, the whole idea of the spar­ring sec­tion of the grad­ing is to push you till you’re exhaust­ed and see what comes out.

[01:02:10] CR: See how much Kung Fu you can actu­al­ly do when you’re com­plete­ly exhaust­ed. And as it turns out in my case, noth­ing. Like,

[01:02:22] CR: this guy punched me in the throat and then did­n’t take his fist away. He just kept push­ing me back­wards on my throat. And he said, and after­wards I said to him, like after the smoke had cleared and we’d got our belts and been through the cer­e­mo­ny and the whole thing, I said, I could bare­ly talk. I was like, dude, what was that?

[01:02:40] CR: He said. I was wait­ing for you to do some­thing. I was like, I should have moved out of the way,

[01:02:48] CR: but lit­er­al­ly my brain was just like on stand­by mode. I had noth­ing. It was so shock­ing to me how, how noth­ing I had in the tank after­wards in ret­ro­spect. I was like, Oh my God. And so I haven’t, so my throat has been absolute­ly messed up.

[01:03:06] CR: It was right there, like on the side of my like voice box. It’s like, yeah, I’ve been liv­ing on parac­eta­mol for the last few days. It’s start­ing to get improved now, but um, yeah, so we were kind of depressed. I mean, we turned up the next morn­ing at 8am and did a cou­ple of hours of gung fu again in our fit­ness class and every­thing.

[01:03:27] CR: We, you know, I did­n’t want to go because I was like, could­n’t, I did­n’t sleep the night before because of my throat and um, I said to Chris­sy, I got up at like 7. 30 and I said, I don’t think I’m going to go this morn­ing. I don’t feel up to it. She goes, yeah, it’s fine. And then the boys texted me, they came to the grad­ing.

[01:03:43] CR: They texted me and said, how you doing? And they said, you’re not going to train­ing today, are you? And I was like, well, prob­a­bly not, but it’s kind of a thing, like kind of a tra­di­tion at the school that you go to the wall the night before of your grad­ing. And then you turn up the morn­ing just to show that you’re not a weak­ling.

[01:04:02] CR: And as I was tex­ting that to them, I real­ized I got to go. So I said to Chris­sy, I think I need to go. So I got my shit on and we went and I said, I’m just going to take it easy. But then I did­n’t. And so we went hard for anoth­er cou­ple of hours. So any­way, any­way,

[01:04:19] TK: why were you feel­ing depressed after get­ting your

[01:04:21] TK: brown belt? What would depress you about that?

[01:04:24] CR: Because in my mind going into it, I had all of these, all of this stuff I’d been work­ing on for the spar­ring sec­tion that in my head, I looked like a young Jack­ie Chan mixed with a bit of. Bruce Lee, and maybe a lit­tle bit of, you know, I don’t know, like who else? Some cool man, and Neo from the Matrix. Uh,

[01:04:49] TK: Right. Okay.

[01:04:50] CR: had all of this stuff that I was going to pull out of my kit bag.

[01:04:53] CR: These moves that I was going to use, did­n’t use a sin­gle one of them. Tried a cou­ple of times and could­n’t land any­thing and just got pum­melled and pum­meled and pum­melled by the black belts. And look, log­i­cal­ly I know, A, they were fresh, I’d been out there work­ing for an hour before they even stepped on the mat.

[01:05:14] CR: And dur­ing that hour, like 45 min­utes into it, one of the brown belts above me was on the mat help­ing me do some of, help­ing me demon­strate some of my stuff. And he said to me, we’ve been watch­ing you from the side­lines, you need to Pull it back or you’re going to have noth­ing left in the tank by the time you get to spar­ring.

[01:05:32] CR: And I was like, yeah, yeah, you’re prob­a­bly right. Uh, cause then I said, the last thing I said to Chris­sy before we stepped on the mat was I got­ta, I got­ta pace myself. And I did­n’t cause I can’t. Cause once you get on the mat, the adren­a­line kicks in and you’re like, Oh, Boom, boom, boom, boom, boom. Try­ing to do, I’m try­ing to demon­strate that I’m a badass, but con­se­quent­ly I had noth­ing left.

[01:05:56] CR: Um, and it was just, you know, I did­n’t, noth­ing came out, noth­ing worked in that last bit. And I just got home and I was like, I’m an idiot. I should have paced myself. I should have done this. I should have done that. Yeah. You got the brown. Yeah, I know.

[01:06:09] TK: Okay. So you’re sec­ond guess­ing your­self. Alright. I get

[01:06:11] CR: There’s one of the

[01:06:12] CR: Black­belts who texted me over the week­end and said, he was­n’t there, he said, but I heard from oth­er Black­belts that you did a great job, you should be real­ly proud. And I said, you know, I don’t feel proud, man. I just kind of feel a lit­tle bit depressed and bummed about the whole thing.

[01:06:24] CR: And he said, look, keep in mind that there are peo­ple that did­n’t get to do the grad­ing because they weren’t ready. You know, they weren’t, you know, you, you were, you were You know, you did it, you know, so, yeah, I know, you’re right, log­i­cal­ly, I know, I did it, I sur­vived it, but it was bare­ly sur­vived, you know, bare­ly sur­vived the ordeal.

[01:06:45] TK: But that’s how it’s sup­posed to work,

[01:06:47] TK: isn’t it? Yeah.

[01:06:47] CR: Yeah, absolute­ly, that’s how it’s sup­posed to work,

[01:06:50] CR: you’re sup­posed to

[01:06:51] TK: a brown belt, they’re a black belt.

[01:06:52] CR: Yes! Yeah, and, and, you know, they’ve been doing it two, three times as long as I have, in a lot of cas­es, like, I’ve been there three years, a lot of them have been there six, sev­en, ten, fif­teen years, in some cas­es, yeah, of course, they’re just gonna crush me, even when they’re going easy, they’re gonna crush me, because they’re way more expe­ri­enced, but, you know, it’s, you can log­ic it, you can log­ic it, but, emo­tion­al­ly, I felt real­ly, sort of, blur, for a few days after.

[01:07:24] CR: Any­way, now I’ve got a year to get ready for the next one. Um, a cou­ple of just bits and pieces enter­tain­ment wise. You ever seen M by Fritz Lang?

[01:07:36] TK: I have not. No.

[01:07:38] CR: Me either, until

[01:07:39] CR: recent­ly, um, and I haven’t fin­ished yet, I’m about halfway through it, but I’m lov­ing it. 1931, black and white film, um, 100 per­cent rat­ing. On Rot­ten Toma­toes. Um, so must be pret­ty good. Um, Dark though, real­ly dark. It’s about, it stars Peter Lorre as a ser­i­al killer who’s tar­get­ing chil­dren.

[01:08:07] CR: And I’m going to like an hour into the film and you haven’t even seen him yet. Um, from, from face on any­way, you just see him from behind, uh, tak­ing chil­dren, um, offer­ing them can­dies and sneak­ing off any­way. Very beau­ti­ful­ly shot, um, inter­est­ing, um, act­ing, an inter­est­ing script and sto­ry, and yeah, so I’m enjoy­ing watch­ing that final­ly.

[01:08:33] CR: It’s one of those films that’s, you know, it’s always on the list of, you know, the top great­est films of all time, but just nev­er,

[01:08:39] TK: Yeah.

[01:08:40] TK: I still haven’t seen Metrop­o­lis. have, you seen that

[01:08:42] CR: I have, yeah, a cou­ple of times. And in fact, watched it with Fox recent­ly, um, and he loved it. I mean, it’s, it’s mag­i­cal to watch. It’s, you know, it’s beau­ti­ful. You’ve prob­a­bly, you’ve prob­a­bly seen bits of it from the, um,

[01:08:56] TK: I

[01:08:57] CR: Queen I Wan­na Break Free film clip from the

[01:08:59] TK: yes. Yep. But oth­er ones. Yeah. Oh, before I for­get, speak­ing of Metrop­o­lis, Alex went to see the Cop­po­la movie,

[01:09:06] CR: Oh! And?

[01:09:09] TK: She called it the best thing she’s seen. She’s, she said it was so bad. It was good. She laughed the whole way through

[01:09:16] CR: Oh no!

[01:09:17] TK: got the, sort of, got the sort of arty side of it, you know, the sort of, um,

[01:09:23] TK: sur­re­al­ist side of it.

[01:09:25] TK: Real­ly enjoyed it.

[01:09:26] CR: Well, she knows a bit about Roman his­to­ry too, and from what I’ve

[01:09:31] TK: Yeah, she

[01:09:32] CR: you know, it’s basi­cal­ly a retelling

[01:09:34] CR: of Roman his­to­ry in a mod­ern sense, and that if you don’t real­ly appre­ci­ate that sort of a sto­ry, you’re not going to get it either, and I’m sure a lot of peo­ple who go to see it don’t. Well, that’s great.

[01:09:45] CR: I can’t wait to see it.

[01:09:48] TK: Mm

[01:09:48] CR: have to go. I have to make an effort.

[01:09:51] CR: Um, well, I’ve also been read­ing, uh, a book called Pimp, the Sto­ry of My Life by a guy who was a pimp in New York in the six­ties and sev­en­ties.

[01:10:03] TK: oh, not an auto box

[01:10:09] CR: I just dress like a pimp. I am not actu­al­ly a pimp, but it’s always been my dream to dress like a. From the 70s, like the big, the big hat with the feath­er, wide brim hat, furred coat, bell bot­toms, dri­ving around in a big cad­dy, um, No, I, I, I, there’s this guy called Ice­berg Slim, who, um, was a pimp, and he did a lot of time in jail, and then I think he con­vert­ed to Chris­tian­i­ty and want­ed to, uh, Sort of, I don’t know, redeem him­self.

[01:10:44] CR: So he wrote a book about his life and what a bad man he had been. What a bad life it was, but it’s real­ly, real­ly inter­est­ing book. Um, so yeah, I’m about halfway through that rough life, like, you know, as a kid and abused by fathers and step­fa­thers and moth­er, his moth­er is a piece of work. And he just, yeah.

[01:11:08] CR: Through one thing or anoth­er he ends up becom­ing a pimp when he’s like 16, 17, 18 and goes to jail, talks about what the jail expe­ri­ence was like in the 60s for black men in the South and what­ev­er, it was bru­tal. Any­way, it’s uh, fas­ci­nat­ing, real­ly, it’s, you know, it’s one of these books that’s just a slice of exis­tence that I can’t relate to with my whitey, whitey, you know, what­ev­er, Queens­land upbring­ing.

[01:11:35] CR: And the

[01:11:39] TK: I know

[01:11:40] CR: music.

[01:11:41] TK: as I like to, to den­i­grate. Bris­bane in the 60s

[01:11:45] TK: and 70s. It’s much bet­ter than a lot of oth­er

[01:11:48] CR: Yeah, it was­n’t Geor­gia. You weren’t grow­ing up as a black man in Geor­gia in the six­ties.

[01:11:53] TK: Cor­rect. Yeah.

[01:11:54] CR: Um, my playlist for the last, most of the last week has been 80s hair met­al. I’m just all in going back, uh, 80s hair met­al. Playlist that I’ve built.

[01:12:07] TK: So help

[01:12:07] TK: me out. Is that Twist­ed Sis­ter? Who’s, who do you class as hand met­al?

[01:12:11] CR: Well, lis­ten, and I’m, I’m being a lit­tle bit gen­er­ous in terms of what I’m clas­si­fy­ing as hair met­al, uh, heavy met­al and even the eight­ies, but I’ll read you. So Ozzy Osbourne, it start­ed with Ozzy. Cause I saw this thing. There was, um, some sort of

[01:12:29] CR: like Ozzy, uh, in the last week. And they had, you know, Peo­ple up on stage play­ing some of his songs for him.

[01:12:39] CR: And I was like, I do lis­ten to Ozzy all the time. And I was like, I real­ly need to go back and lis­ten to Ozzy. So I start­ed off, I loved Ozzy in the eight­ies, man. I lis­tened to a lot of Ozzy. So it start­ed with Ozzy. Then it was Mot­ley Crue, put all the Mot­ley Crue stuff in from the eight­ies, most­ly the cult.

[01:12:55] CR: Um, not real­ly, don’t clas­si­fy the cult real­ly as hair met­al, but put them in there. Alice Coop­er’s albums from the 80s, which isn’t my favourite Alice Coop­er stuff, I pre­fer his 70s stuff, but I threw that in there. Then Sax­on, Def Lep­pard, then I went to Judas Priest. In the 80s, um, ACDC from the 80s. Don’t real­ly think of ACDC as hair met­al either, but had to put them in there.

[01:13:19] CR: Then Twist­ed Sis­ter, Qui­et Riot, Deep Pur­ple from the 80s. Again, Deep Pur­ple have had lots of dif­fer­ent phas­es, but they did sort of have a heav­ier phase in the 80s. Iron Maid­en,

[01:13:33] CR: Motor­head, Ace of Spades, that kind of stuff. KISS,

[01:13:37] TK: Ace of Spades.

[01:13:38] CR: all the KISS 80s albums and maybe some late 70s stuff too in there. Scor­pi­ons, Yng­wie Malm­steen, Aero­smith’s stuff from the 80s when they had their post Run DMC come­back.

[01:13:52] CR: Um, what else have I got here? Poi­son, Whites­nake. I nev­er was real­ly into Poi­son and Whites­nake. I’m going to put them in there any­way. Leader Ford, Europe, Even though Final Count­down’s real­ly the only song any­one knows from Europe. Uh, Bon Jovi, Guns N Ros­es, Hanoi Rocks, where it all start­ed. Then I even threw in The Angels, man.

[01:14:13] CR: Um, cause I was like, you know, once you go down that path, you got­ta throw in The Angels, 80s

[01:14:17] CR: albums. Um, Extreme,

[01:14:20] TK: Again, not real­ly hair met­al though.

[01:14:22] CR: No, not real­ly ham­mer, but

[01:14:23] CR: heavy. It’s, well, it was real­ly sup­posed to be heavy met­al. Then it sort of turned into hair met­al and, but it’s not heavy heavy. Like, I don’t go to the Metal­li­ca or Megadeth extreme.

[01:14:33] CR: It’s sort of some­thing low­er than Metal­li­ca and high­er than the Angels and ACDC and up, so Ron­nie James, Dio.

[01:14:42] TK: Yep.

[01:14:43] CR: Late at night, when I’m clean­ing the kitchen after din­ner and then work­ing