QAV 809 — The Reporting Season Red Flag

QAV Club AUDIO 809

​[00:00:00]

Cameron: The clock is tick­ing. Wel­come to QAV. This is episode 809 TK. We’re record­ing this on the 4th of March in the after­noon. Uh, 24, 48 hours before Bris­bane gets flat­tened by Cyclone Alfred.

TK: Alfre­do. You’ve got to start call­ing it Fre­do. I love you, but how could you do that to us?

Cameron: You broke my heart! You broke my heart! Well, I tell you who broke my heart this week, Tony. Lots of, lots of com­pa­nies broke my heart this week, includ­ing HLO, but we’ll talk about that lat­er on.

TK: Yep.

Cameron: It’s been anoth­er tur­bu­lent week on the, uh, stock mar­kets. Lots of more half year­ly results. Some good, some not so good.

1. S. mar­ket is also [00:01:00] In a lit­tle bit of a chaot­ic state, uh,

TK: the mar­ket. Just the mar­ket in the US.

Cameron: mar­ket is a reflec­tion of the gen­er­al state of affairs over there.

TK: The mar­ket’s going, hey, come on, will you sit down? Qui­eten down.

Cameron: Yeah. Um, I thought I would, before we get into news, I might just touch in with our port­fo­lio and see what’s going on. Uh, let’s see where the dum­my port­fo­lio is at after all that. In the last sev­en days, our port­fo­lio is down 1%. The STW about 0. 6%, so every­thing’s been a bit down. Where are we for this finan­cial year?

We’re up 11 per­cent for this finan­cial year ver­sus the STW, which is up about 8. 5%. So we’re doing. Kind of [00:02:00] 50%, maybe 40 per­cent bet­ter than the STW for the finan­cial year. So that’s all right. Can’t real­ly com­plain about that despite every­thing. Uh, in the buy list this week, there were, well, you know, for peo­ple who, uh, QAV club mem­bers, and they’re like, what is going on with the buy list this week?

I did have some­body email me after I put out the buy list last week say­ing, what are all these? Sheets and pages and it’s all so con­fus­ing and I thought well, maybe we’ve gone over­board with the amount of stuff we put in the bylaws So I stripped it right back to the bare bones this week And then of course peo­ple com­plained that there was­n’t stuff that they need­ed So they got to try to find a hybrid.

Look, I don’t want to be stuff that peo­ple don’t real­ly need each week and aren’t using at the same time if you need stuff I want to pro­vide it for you. So we’ll try and find a nice bal­ance in between the two

TK: I like it the way it is, frankly.

Cameron: Well, yeah, but you don’t have to do it. So, you [00:03:00] know,

TK: Ah, so it’s not because some­one wrote to you say­ing sim­pli­fy, it’s

Cameron: Well, if I

TK: you just

Cameron: it and I can do, if I can do an hour’s less work every week, I’m going to do it.

I’ve got enough

TK: Fair enough. agree. I thought you were doing it via AI. I thought it was all cod­ed now. It was auto­mat­ic.

Cameron: the main part of it is, but

TK: Right. I

Cameron: doing the com­mod­i­ty checks and I’m doing this and I’m doing that and new three point cells

TK: Yeah, okay.

Cameron: there’s oth­er bits and pieces that I need to pull togeth­er and it just, it’s a bit of finagling around, which I’d rather not. Speak­ing of the com­modi­ties, the big one this week is iron ore became a josephine and crude oil became a cell when I checked it yes­ter­day.

Did­n’t seem to impact my port­fo­lio though, so I don’t think I was hold­ing onto any oil com­pa­nies for some rea­son. Looks like oil’s been a josephine for quite some time, so prob­a­bly haven’t been buy­ing oil [00:04:00] stocks. Do you have any oil stocks as far as you know,

TK: No, I don’t, no.

Cameron: There you

TK: I think I did notice Wood­side back on the buy list, but that’s about the only one I can think of. been on the buy list for a while, but I don’t own it. You’re

Cameron: at the oil price, it’s been declin­ing since it peaked in May 22. Ear­ly days of the now defunct Ukraine Russ­ian war. By the

TK: defunct. I’m not sure if you’re an opti­mist or a pes­simist say­ing that.

Cameron: De Trumped. It’s been de Trumped.

TK: Oh, de trumped, not defunct, de trumped.

Cameron: I, Um, well maybe it’s been Trumped and de Bidened. I don’t know. Yeah,

TK: de trumped. His fin­gers are all over it.

Cameron: let’s not get side­tracked into that whole can of worms. So yes, crude oil is a sell, but it does­n’t seem to have an impact on our buy [00:05:00] lists any­way.

But if any­one does hold any oil stocks for some rea­son, you might want to pay atten­tion to that. else did we have on the buy list of note this week? stocks enter­ing the buy list this week was Karoon Ener­gy, but it’s a crude oil stock. Dusk Group, Yang Coal, but coal is a sell as well. Fleet­wood Lim­it­ed.

I had a look into them. They’re a weird one. Ramelius Resources. That’s good. Gold’s a buy. South­ern Cross Media Group. Wood­side Ener­gy, as you men­tioned. I’ve got that as a buy because I think it’s pri­mar­i­ly

TK: Yes, yeah, it is. And try­ing very hard to expand its LNG. The gov­ern­men­t’s hold­ing up its five year renew­al, or five year expan­sion.

Cameron: Our old friends the dares were back on the buy list this week, but I went to buy them yes­ter­day for the light port­fo­lio And they [00:06:00] were hav­ing a down day So I did­n’t end up pick­ing them up haven’t checked where they’re at Perseus min­ing back on rice grow­ers back on and G8 edu­ca­tion who I think you a bit of a pulled pork on not that long ago

TK: Last year. Yeah.

Cameron: What have you got on your list of talk­ing points for today, TK?

TK: Well, I want­ed to run through some results report­ing, and these are left­overs from last week, I think, or occurred last week after the show was record­ed. But, um, I have media to talk about. So they were back on the buy list, um, they had one of the pos­i­tive results for a report­ing sea­son, at least, uh, from our neck of the woods. Uh, Fin Review report­ed shares in out­door adver­tis­ing group, Boo Media, jumped more than 15 per­cent yes­ter­day after the com­pa­ny [00:07:00] said rev­enue in the March quar­ter was so far grow­ing at about 14%. But as the media indus­try thrums with the excite­ment of the 2. 7 bil­lion bid for Domain by CoStar and its impli­ca­tions for Domain, 60% Enter­tain­ment. We could­n’t help but notice this graph from Her­me­di­a’s pre­sen­ta­tion pre­dict­ing hard times for tra­di­tion­al media, except of course for out­door adver­tis­ing. That was in the clos­ing bell. I had a look at it just before we came on. I think it’s, This morn­ing, it’s just below its byline in the bread lat­er. Can you con­firm that for me? Thanks. I was look­ing at the bread lat­er this morn­ing. I’m not sure if I’ve adjust­ed some­thing, but, uh, I did, do I dou­ble take It’s OML is the code. It was called dou­ble. Oh, but they’ve, they’ve changed. No, the, the red light is work­ing for me again.

Cameron: Right.

TK: about that. [00:08:00] I had prob­lems with my com­put­er ear­li­er today.

Cameron: No,

TK: so it’s, uh. It’s a buy, but it’s a Josephine today. I think it came back on the sort of mar­ket wide sell off that we’ve had.

Cameron: because it’s just come down a lit­tle bit, but it had a big bump after its results came out, did­n’t it?

TK: Yeah, it did. Yep, so good result from them. I want­ed to go back and revis­it a peren­ni­al ques­tion that we get asked about CFOs resign­ing and there being no one to replace them. this may be a bit of evi­dence to start mak­ing that a hard red flag. So this is a, arti­cle about, uh, the admin­is­tra­tion of, um, one steel man­u­fac­tur­ing in South Aus­tralia. And it talks about Core Demen­tha being, set up as the admin­is­tra­tor. uh, the AFR revealed last week that the largest preda­tor is min­ing ser­vices oper­a­tor Gold­ing, which is part of the ASX list­ed NRW Hold­ings. And I [00:09:00] think they’ve come out and con­firmed this now, the AFR was say­ing last week that they will report­ed­ly owe up to 120 mil­lion, so a bit, goes on. I mean, this was in rear win­dow, so it makes a lot of fun about the CEO tak­ing a hol­i­day at a cru­cial time, etc. I’m not going to go through that, but it does say that on Jan­u­ary 13, NRW issued an announce­ment to the ASX inform­ing share­hold­ers that CFO Richard Simons had ten­dered his res­ig­na­tion, and it did­n’t have a per­ma­nent replace­ment in place.

So, that did turn out to be a red flag. He resigned in Jan­u­ary, just before the results came out, and just before about the, um, of, uh, the way all the steel­works came out, so I’m think­ing of mak­ing that a red flag. Auto­mat­i­cal­ly from now on. I know in the past I’ve said check sen­ti­ment, and sen­ti­ment was going down for NRW so don’t think any­one would have been in it any­way, even though I think it’s been on the buy list [00:10:00] on and off for a long time now, but it did start turn­ing down towards the end of last year, and I think I recall at the time there was nois­es and arti­cles in the paper about the way all the steel works going broke and some­one quick­ly worked out that NRW was a large Um, cred­it it to them and so that they can start sell­ing off back then.

But yeah, the share price for NRW is back on the board. So they, um, soon as they, uh, that, uh, they were owed mon­ey and the com­pa­ny was admin­is­tra­tion, they went into a trad­ing halt and the share price dropped, of course, when it came back online. in the last day or so. They’re down to 2. 87 from a high of around 3.

90 in Novem­ber. So, I think if you, I don’t know if you update the Bible or what­ev­er you do can, but I think CFO resign­ing with­out any­one to replace as a red flag just prob­a­bly can’t take the risk from now on.

Cameron: Right, alright, I’ll make a note to add that to the Bible.

TK: Thank you. Uh, good news from [00:11:00] Qan­tas. I know you added Qan­tas to the bio to, uh, sor­ry. The gum­my port­fo­lio recent­ly. but they had a good re report. Uh, they of course have a new CEO, Vanes­sa Hud­son. Uh, it was report­ed. Qan­tas has declared its first div­i­dends since the COVID-19 pan­dem­ic. After a jump in prof­its for the first half of the finan­cial year, a bumper result that was helped by Jet­star and the deliv­ery of new, more effi­cient.

air­craft. Uh, it goes on to talk about, uh, Vir­gin being allowed to have Qatar Air­ways as a 25 per­cent share­hold­er. it says Qan­tas’s shares were 5. 6 per­cent high­er to 9. 39. That was last week after the results and now 10. 16. Um, when I checked before we came on, so they’ve gone up again uh, they’re up 80 per­cent over the last 12 months. the big prof­it and resump­tion of div­i­dends, um, and the com­pa­ny announced a base pay­ment of 250 mil­lion and a spe­cial div­i­dend of 150 [00:12:00] mil­lion is a sign that turn­around plans under CEO Vanes­sa Hud­son are work­ing. Uh, she goes on to talk about, um, upgrades to the fleet, which have, um, real­ly boost­ed the prof­its there by some 54%. uh, I think ana­lysts are also look­ing to the future when they get around to doing the Qan­tas fleet. some­thing sim­i­lar in the boost of earn­ings from them. They’re also say­ing that, uh, in 2027 they should be ready to roll out their direct flights from Syd­ney and Mel­bourne to Lon­don and New York, which is a big deal.

Project Sun­rise. It’s been com­ing for a long time. a long night wait­ing for the sun­rise, but it’s com­ing in 2027 appar­ent­ly. Inter­est­ing com­ment from their, um, from their com­peti­tor, Vir­gin, by the out­go­ing CEO, Jane Hur­ley. And who said she was not con­cerned about the new air­craft being deliv­ered to Qan­tas for ser­vices to Europe and the US. says, and I quote, I don’t real­ly think cus­tomers [00:13:00]prefer to fly direct. I think con­sumers like great val­ue and choice, and it depends on how you define val­ue. I thought that’s a very strange com­ment to make. A good one for Qan­tas if your com­peti­tors say­ing that peo­ple want to take indi­rect routes any­where.

But I know per­son­al­ly, um, I’ve flown the Perth to Lon­don route and it’s much bet­ter than stop­ping in Sin­ga­pore or wher­ev­er else and hav­ing to get, you know, sev­en hours sleep rather than sleep­ing for as long as you like on the plane. Um, yeah, so, uh, I thought that was a strange com­ment from Vir­gin, although what she’s prob­a­bly say­ing is it’ll be cheap­er than, uh, fly­ing direct.

Cameron: yeah,

TK: Uh, next one, anoth­er upgrade was Pep­per’s Spicy Mort­gage Growth. That’s the head­line. Uh, this is again from the AFR. In a sign of ongo­ing com­pe­ti­tion in the mort­gage mar­ket, non bank lender Pep­per Mon­ey said it had grown new home loans by 27 per­cent over the sec­ond half of [00:14:00] last year, com­pared to the first, dri­ving its mort­gage book to 10.

2 bil­lion. man­aged to deliv­er high­er vol­ume growth and high­er returns. Unlike Bendi­go and Ade­laide Bank, which report­ed a mar­gin crunch last week, and Res­i­mac, anoth­er non bank lender, which report­ed tighter mar­gins on Wednes­day as it also chased growth. net inter­est mar­gin expand­ed by eight basis points to 1.

65 per­cent. will pay a total 40 franc div­i­dend of 12. 1 cents per share. that’s good to hear. Pep­per wore our num­ber one stock on the buy list. for a long time over the last few months any­way. I did a pull I think towards the end of last year or the start of this year. Uh, so yeah, good to see that they’ve, um, deliv­ered in spades when oth­er banks are going back­wards in the mort­gage mar­ket.

Cameron: And yet, they’re get­ting close to their 3 point sell line. They’re com­ing up as a flag for me. They’re cur­rent­ly about 1. 48. The 3 point sell line is 1. 41. So,[00:15:00]

TK: Okay.

Cameron: yeah, a lit­tle bit away from it, but head­ing that way. By the way, a lot of stocks have breached their 3 point sell lines for me today. VVA. M P, M Y S, which took over, um, Auswide,

TK: Yep.

Cameron: and, um, well, H L O is a 3 point trend­line cell and a 3 P T L cell, I think.

So,

TK: same thing. I’ve got, just look­ing at PPM, I’ve got them at 1. 50 cur­rent­ly and the sale price at 1. 39.

Cameron: okay,

TK: Yeah.

Cameron: well, it may have changed since

TK: Yeah. Okay.

Cameron: on the week­end.

TK: Actu­al­ly, I mean, I had to look through a lot of stocks today as I was prepar­ing, prep­ping for the show and most are down. And a lot of the ones I was going to talk about had become Josephine’s, but this one seems to have pushed through in a day when the mar­ket’s down like one and a half per­cent­age and more in the U.

1. [00:16:00] And

Cameron: Right.

TK: the last one to talk about was Karoon Ener­gy. And it’s maybe a moot point giv­en, as you say, oil’s just become a sell, but they also had good results. Uh, Yeah. did a deal to, acquire one of the ves­sels they’ve been leas­ing on its, uh, Um, I almost get, gets Clicked up by this name, the BAUNA Project, maybe? Because they oper­ate over in Brazil, off the coast of Brazil. Um, but they have acquired one of their boats. They believe that will be a good thing for them rather than leas­ing the use of the boat. Uh, they post­ed a 4 per­cent increase in full year prof­it uh, net prof­it exclud­ing one off items jumped 48%, but I haven’t worked out what the one off is yet.

So there may be some, some­thing worth dig­ging into there. Any­way, sales surged 88%. That’s prob­a­bly the, the big one to focus on. They’ve declared a [00:17:00] final div­i­dend of 5 cents. per share. And, uh, yeah, they said that the acqui­si­tion of the pro­duc­tion ves­sel should improve the reli­a­bil­i­ty of out­put from the Bau­na, field and low­er oper­at­ing costs, uh, so the field can con­tin­ue to oper­ate well into the 2030s.

So, uh, good result from them as well.

Cameron: I think the Bau­na project came after the Bau­na Iden­ti­ty, uh, then it was the Bau­na Project and then the Bau­na, what came after that? The Bau­na some­thing,

TK: Born again, be on again, be on again, yeah.

Cameron: yeah, oh dear.

TK: The oth­er, I mean, I had a chat with Chair­man Madd a cou­ple of days ago, on a few issues and I raised with him that this was a very strange report­ing sea­son because We’re get­ting shocks and sur­pris­es, um, on both ways, upside and down­side, but par­tic­u­lar­ly on the down­side, and, [00:18:00] uh, he, he also agreed with me that there should be, that the com­pa­ny is required, um, to make an announce­ment if the, if they believe their earn­ings are going to be out­side of a 10 per­cent range from what the con­sen­sus fore­cast is, and that’s clear­ly not hap­pen­ing, and I’m not see­ing. A week after the results or two weeks after the results, any sort of action being tak­en some of these com­pa­nies, so. I’m not sure what’s going on at the ASX. I’ve heard anec­do­tal­ly they’re in a bit of both­er at the moment with the chest replace­ment sys­tem and they’re on that. And I won­der if that’s detract­ing their, gov­er­nance of the mar­ket or whether it’s even an ASX issue.

It might be a, an ASIC issue. Um, but any­way, I think it’s poor, but it’s lead­ing me to think, I mean, how does it impact us? Like I did buy. at least one share dur­ing report­ing sea­son a cou­ple of days before Fortes­cue Met­als announced their results and then had to sell it soon after­wards because it was such a bad result. The shares dropped below the sell line [00:19:00] quite quick­ly, which was dis­ap­point­ing. And it’s always been my pol­i­cy up until now to buy inde­pen­dent­ly of where we are in the sea­son because, um, it’s a coin toss I guess with­out know­ing what the results are. Are they going to go up or is the share price going up or is the share price going down? and giv­en that we gen­er­al­ly pick 6 out of 10 right, it’s kind of always been okay over­all to buy, um, before a com­pa­ny announces, but I’m now think­ing I’m not going to do that because I just can’t take the risk of if, you know, in the past I think cor­po­rate gov­er­nance has been a lot stronger and cer­tain­ly com­pa­nies have been pulled up and have made a much stronger appear­ance in con­fes­sion sea­son if they’re if they are going to report a down­grade.

That just has­n’t hap­pened this year, which I think is wrong and if that’s going to be the way the mar­ket is allowed to oper­ate, then I’m just not going to play in report­ing sea­son. So, it’s a moot point now, report­ing sea­son’s over, we’re record­ing this on March the 4th, um, [00:20:00] uh, I think I’ll just keep it in mind for six months time when we go through it all again.

Cameron: So, how close to the results com­ing out do we put a freeze on buy­ing stocks then?

TK: It’s a good ques­tion, I don’t know, I may be at the, um, I don’t know, after con­fes­sion sea­son when they should have got the bad news out, so what we’re real­ly try­ing to pro­tect from, take insur­ance on, is that, uh, they did­n’t con­fess in the month before when they should have and then they came out with a bad result. which should­n’t be allowed but it’s occurred a lot this report­ing sea­son. It does mean we’ll miss the top, the first 10 or 20 per­cent in stocks, um, but gen­er­al­ly it’s also my expe­ri­ence that if some­thing has gone up by 10, 15 per­cent on the report­ing day they’re going to keep going up over the next six months so it’s prob­a­bly worth the insur­ance pre­mi­um of that 10 per­cent or 20 per­cent.

Um, [00:21:00] be sure that we’re buy­ing some­thing with good sen­ti­ment and good results rather than trust­ing them to the right thing by the mar­ket and dis­close their, their poor results before they report.

Cameron: Hmm. Alright, so four or five months from now we’ll have to revis­it this and think about what the mora­to­ri­um is before results come out. When do we just hold off?

TK: Yeah, well, I think just don’t buy in report­ing sea­son until the com­pa­ny’s report­ed. So that would be the month of Feb­ru­ary, um, and in the month of August.

Cameron: right.

TK: I want to say the month, up until they report, once we’ve got the new num­bers, we can, we can, um, act on the facts rather than what we think might hap­pen.

Cameron: Yeah. Yeah, it’s just been so many this

TK: Well it’s, yeah, and, and real­ly action­able sur­pris­es. I would­n’t mind bet­ting, know, if ASIC isn’t going to do any­thing, if the ASIC isn’t going to do any­thing, there’ll be class actions of this, uh, class [00:22:00] action law­suits against some of these com­pa­nies. They were clear­ly and man­i­fest­ly wrong in what they did. I won’t go any fur­ther. I won’t name any names, but, um, yeah, watch this space.

Cameron: Alright. Uh, you got any­thing else apart from your pulled pork?

TK: Uh, no, just the pulled pork.

Cameron: Oh, I got a cou­ple of things. Um, GRR was down. They came out with their first half results. Rev­enue down 15%. Prof­it from ordi­nary activ­i­ties after tax down 61%. I did­n’t get into the details. Just looked at the, the high lev­el. um, Share price took a hit. I haven’t looked at it today. Where is it at? GRR

TK: pulled pork on grains. This is the Tas­man­ian iron ore min­er, the iron ore min­er.

Cameron: Yeah,

TK: And, um, they at least hold the mine expan­sion. And the mine, I think from mem­o­ry ends [00:23:00] 12 months or 18 months or so.

Cameron: right.

TK: yeah, so, uh, I’m not sur­prised that they’ve pro­duced a bad result.

Cameron: Well the mar­ket was because the share price was at 24 and a half cents and now it’s at 20 cents Quite a big hit.

TK: Dude, I, um, stretch­ing my brain here to remem­ber, but I thought I put a red flag on them and said, let’s just leave them aside until I get bet­ter news about the future of the mine.

Cameron: I think you did.

TK: Hmm.

Cameron: that’s my rec­ol­lec­tion

TK: Hmm.

Cameron: look­ing. I don’t think we hold on hold it. I’m look­ing GRR 

No, we don’t hold it in any­thing. Uh, and then hel­lo,

TK: Hel­lo, world.

Cameron: trav­el. Yeah. Which I just added to a port­fo­lio. Well, I think I put it down for the like guys as a [00:24:00] pos­si­ble results came out down 20 per­cent the share price was it’s recov­ered a lit­tle bit since then. I think it’s down 17 per­cent as of today, but, uh, real­ly not good.

Um, share price was about 2. 04, crashed down to 1. 63, back up to 1. 70 today. Their results said their total trans­ac­tion­al val­ue, or TTV, the trav­el com­pa­ny, that’s how they mea­sure it appar­ent­ly, was down 6 per­cent to 2 bil­lion, rev­enue down 7 per­cent to 103 mil­lion, mar­gin at 4%. Under­ly­ing EBITDA down 20%, under­ly­ing EBITDA mar­gin at 26%, net prof­it after tax down 32%.

Any­way, there was just bad news across the board.

TK: So, [00:25:00] excuse me if I’m wrong here, just rewind the pod­cast five min­utes ago when I said if you’re down, if you’re more than 10 per­cent out­side of what the mar­ket’s think­ing, you need to come out and tell peo­ple and change the guid­ance. Um, I don’t know what the mar­ket was think­ing about this com­pa­ny. I did a pulled pork on them a month or so ago and they seemed fine. Uh, it was well, it was trad­ing below con­sen­sus fore­cast and all that kind of stuff. And there was no, one in the mar­ket say­ing bad things about them any­way. And now they’ve come out with a 30 per­cent down­grade in prof­it. So, again, watch this space. Again, where’s the reg­u­la­tor? That’s, that’s not con­tin­u­ous dis­clo­sure, is it?

Cameron: And I seem to recall this hap­pened last report­ing sea­son as well. We got a bunch of shocks, I think. Because I remem­ber us hav­ing the same con­ver­sa­tion six months ago. Not as many though, I think, as

TK: No, this is worse.

Cameron: this time.

TK: I [00:26:00] think there is a lot worse this time. Yeah, it’s the worst I’ve seen. Um, and, I don’t know if there’s a lawyer out there who’s devi­ous­ly advis­ing boards that they don’t sign off on the accounts until five min­utes before they announce them they don’t have to, they can prove, dis­prove that they did­n’t know what the results were going to be or what­ev­er but, you know, there’s doing things by the let­ter and there’s doing things right by your share­hold­ers and, uh, even if they, they can inch their way around the reg­u­la­tions and the rules, come on, lift your game. wise, you should be out. They should have known they were head­ing for a poor result. They might not have known the quan­tum, they should have been out at least a month ago say­ing that.

Cameron: And it’s not just one or two.

TK: No, I’m not pick­ing on com­pa­ny, but this is a per­fect exam­ple of, uh, of regard­less of whether they’re com­ply­ing with the laws or not, or reg­u­la­tions of the list­ing, um, it’s, you know, we should­n’t be sub­ject­ed to these kinds of shocks. They can’t just [00:27:00] hap­pen in a day when they sign the accounts off.

They must be know­ing about these things before they hap­pen

Cameron: Yeah.

TK: and oblig­ed to dis­close them.

Cameron: it’s fas­ci­nat­ing that it seems to be hap­pen­ing broad­ly.

TK: Yes, which is,

Cameron: went around

TK: yeah,

Cameron: to say, Ah, don’t have to wor­ry about con­fes­sion sea­son any­more.

TK: yeah, exact­ly. 

Cameron: It’s very strange.

TK: But it’s also, it’s also bad man­age­ment if you think about it, like, um, Take a com­pa­ny like Cred­it Corp, and I’m just pick­ing on them as an exam­ple for no, for no par­tic­u­lar rea­son oth­er than they always under promise. So they’re out in the mar­ket all the time say­ing, this, this is hap­pen­ing.

It’s not great. This is hap­pen­ing. It’s not great. And then the share price gen­er­al­ly goes up over the course of the half until the next results come out. It does­n’t always hap­pen that way because it’s, you know, they oper­ate in a fick­le mar­ket. But, um, if, if you’re run­ning a com­pa­ny. Would­n’t you be bet­ter off when you first start spot­ting some prob­lems to do a War­ren Buf­fett and get out there Two or [00:28:00] three months before the results come out and say guys you want to have a look at your guid­ance It’s look it’s look­ing bit bull­ish we think giv­en what we’re see­ing inter­nal­ly. Don’t have to say any­thing more than that. And your shares might come off 5%, but they don’t come off 20 per­cent when you shock the mar­ket on results day. It’s just, I mean, con­tin­u­ous dis­clo­sure is a, is a two way street. It, it, it’s help­ing the share­hold­ers make, good deci­sions, it’s also help­ing you man­age the share price as well.

So you don’t get, you know, shock down­grades and the price going off a cliff on a par­tic­u­lar day.

Cameron: Speak­ing of CCP, you remem­ber late last year, I was hold­ing onto them because was, they became a rule one sell­er and I was like, Oh, they always do

TK: Yeah.

Cameron: they come back and we’ll just stick with it. I end­ed up giv­ing up and I sold them

TK: Oops.

Cameron: around about 16.

TK: Uh huh.[00:29:00]

Cameron: I just thought I’d go and check

TK: Ooh, you did the right thing.

Cameron: yeah. They’re at 14. 80 today. So

TK: Looks like they became a three point trend­line sell­er around the time you sold them any­way.

Cameron: well, I sold them Novem­ber, then as soon as I sold them at 16, they spiked up to 18 bas­tards. And then they sank in Decem­ber down to 15. We’re back up to 18 in late Jan­u­ary. And now they’re down at 1485, as I said. So it’s been, um. Been a bit of a chop­py ride for them. Yeah, I would have sold them even­tu­al­ly any­way if I’d held on anoth­er month or two by the looks of it.

TK: Cou­ple of oth­er things from the Hel­lo World result I picked up on, um, it’s, it was ready to cross the board in the indus­try, so Flight Cen­ter were also down, Trav­el Man­age­ment are also down, they’ve become a, like, not that they’ll ever be on the buy list [00:30:00] because they’ve been a high, high PE for a long time, but they’re now a three point trend line sell as well. But the Dif­fi­cult thing for Hel­lo World is that they own, uh, they have a hold­ing, a cross hold­ing in cor­po­rate trav­el man­age­ment, so they’re being dragged down by that as well. Um, they also have a num­ber of sub­sidiary busi­ness­es like cruis­ers and inbound tourist bus­es and things like that. And one of them which has­n’t been per­form­ing for them, which was, uh, is a com­pa­ny that, um, lugs gear around for shows and tour­ing bands and things.

They’re putting that up on the mar­ket. So, um, that may. lead to a win 4 gain? Pos­si­bly not, but at least it’ll clear the decks of that ongo­ing drag on the roonies going for­ward. Um, it was a fair­ly com­mon refrain from Flight Cen­ter, from Hel­lo World, at least, um, oth­er play­ers in the indus­try, that they did expect that, um, that it was short term pain this half a night, that they, you know, it was a cost of liv­ing thing.

There’s appar­ent­ly an [00:31:00] over­sup­ply in the South­east Asian mar­ket for flights and fares are down, and they expect things to get bet­ter in the sec­ond half. Now, that with a pinch of salt, I guess, because they, they would say that, I guess, but um, but they, they have all been say­ing that, so there’s prob­a­bly some ele­ment of truth in it for what­ev­er it’s worth.

Cameron: Well that’s all I have. Do you want to do your PRN now?

TK: You had a cou­ple of ques­tions, you want to do those? Because one of them was about PRM, I think, or,

Cameron: Oh, so it was.

TK: yeah.

Cameron: Chris says, I did­n’t ful­ly under­stand TK’s com­ment on this week’s pod­cast cash flow and actu­al­ly think it’s a poten­tial red flag. PRN defined free cash flow as net cash from oper­at­ing activ­i­ties after inter­est, tax, and capex. Free cash flow for the first half of 25 was 11. 8 ver­sus 8. 0 in the pri­or cor­re­spond­ing peri­od.

I’ve nev­er heard of a [00:32:00] com­pa­ny manip­u­lat­ing cash flows from oper­at­ing activ­i­ties to look worse, and as TK has pre­vi­ous­ly said, it’s the hard­est finan­cial met­ric to manip­u­late. The rea­son why I see it as a poten­tial red flag is due to the size of the amount that was expect­ed but not. 42 mil­lion is pret­ty sig­nif­i­cant when they’ve only gen­er­at­ed 150 mil­lion in net cash flow and could raise a red flag in rela­tion to the clien­t’s finan­cial health and there­fore poten­tial loss­es for PRN.

Chris.

TK: Yeah, Chris, um, I do have some sym­pa­thy for what you’re say­ing, and cer­tain­ly in gen­er­al, if, uh, if late pay­ments are get­ting worse, um, that can be a red flag if some­one is. large cred­i­tor, and I’m think­ing just like NRW with the way all the steel works and, and they go bank­rupt, you don’t get a large, you don’t get that 46 mil­lion back or what­ev­er, where you get cents in a dol­lar back for it.

So it is a con­cern. I’m strug­gling to, you know, giv­en this is a 1. 2 [00:33:00] bil­lion com­pa­ny, I’m strug­gling to find much cov­er­age of it, which was sur­prised me. I fer­ret­ed around their web­site try­ing to find out who the, the cred­i­tor was or what was the some more detail behind it and I could­n’t find any­thing oth­er than I lis­tened into one of the pre­sen­ta­tions they had on their web­site for the results where the man­ag­ing direc­tor said it was paid days into Jan­u­ary and seemed to brush it off as being busi­ness as usu­al.

Um, but that’s. Again, that’s com­men­tary. I did­n’t, he did­n’t pro­vide any details about whether it was going to hap­pen again, whether they were wor­ried about that sup­pli­er or, or cred­i­tor, or any­thing like that. Uh, I agree that it’s hard to man­age oper­at­ing cash flow and per­haps that’s the why that they, that’s why they had to it in Jan­u­ary and not in Decem­ber. Um, so that’s, that’s a pos­si­bil­i­ty. Uh, not call­ing it a red flag yet, um, and I own the stock. Um, the [00:34:00] stock has recov­ered quite a bit since it report­ed the news. Uh, but yeah, it’s some­thing to watch and I might even try and reach out to Alex Hale or some­one like that and find out what if he knows what’s going on and report back because I did a fair bit of research on it this morn­ing and there was just no cov­er­age it any­where. I did note that I think it was sim­ply Wall Street out and said that the shares were down because the com­pa­ny missed. It’s earn­ings guid­ance, so that com­mon prob­lem again appeared to raise its head again. They were the only peo­ple say­ing that, and, uh, if I looked at, um, you know, if I look at Stock Doc­tor, did­n’t seem to be that much evi­dence to sup­port that, so I’m not sure if that was the case.

Um, I think, I think the sell off in the shares was around that. pay­ment of the sig­nif­i­cant amount, which the MD is say­ing was only a cou­ple of days [00:35:00] late. So, look, maybe I have some sym­pa­thy with what you’re say­ing. Um, the oth­er rea­son why I’m not treat­ing it as a red flag is that they did come out and, Con­tin­ued to con­firm their guid­ance for the full year. they did say that even though the pay­ment by that cred­i­tor was a cou­ple of days late, it does­n’t change the out­look for the cash flow that was announced for the full year. So it was only a half by half thing. But yeah, some­thing to watch and I’ll keep doing some research on.

Cameron: I did­n’t real­ly under­stand Chris’s, uh, sug­ges­tion about com­pa­nies manip­u­lat­ing cash flows from oper­at­ing activ­i­ties to look worse. Was there a sug­ges­tion, I can’t remem­ber what your com­ments were on this late last week, uh, at the end of the episode last week, were you sug­gest­ing that they had pushed that mon­ey out into this peri­od delib­er­ate­ly?

TK: I’m not sure I was sug­gest­ing any­thing. One of the hypo­thet­i­cals I was talk­ing about was, when I was run­ning busi­ness­es, you could do what’s called a [00:36:00] sundry deb­it and bring that pay­ment into the half it was incurred and would have nor­mal­ly have fall­en in if you were con­fi­dent you were going to get it a cou­ple of days late.

Cameron: Oh, that’s right.

TK: And there­fore the books would all tidy up and it would look fine. So that led me to think that, um, one of two things was hap­pen­ing. Either they weren’t con­fi­dent they were going to get the mon­ey, which is a red flag. Or, um, You know, hypo­thet­i­cal­ly man­age­ment may have made its tar­gets this half and decid­ed that they would sand­bag their results for next half and make that look bet­ter by let­ting it slip into next half and boost the num­bers for next half.

So that’s prob­a­bly a bit cyn­i­cal of me. But, um, yeah, it just seems strange to me that, uh, unless there are spe­cial rules around oper­at­ing cash flow, but cer­tain­ly. Um, when I was at Coles Myer, for exam­ple, when I was at Shell, if you knew some­thing was out­stand­ing, and it was going to come in next month, but it loaded this month, you gen­er­al­ly raise a deb­it [00:37:00] or a cred­it in the book.

So it would be a, um, an income for this half, and it would be a cost in next half when the mon­ey came in, which would bal­ance it all out the way it should be as expect­ed. Um, cause you know, things hap­pen, peo­ple do. Jan­u­ary, the first week in Jan­u­ary when the mon­ey came in, it’s quite pos­si­ble that, you know, com­pa­ny that was owing the mon­ey was it was on hol­i­days over the Christ­mas shut­down peri­od.

So, you know, but that’s the prob­lem. And with con­tin­u­ous dis­clo­sure, they’ve, they’ve called out that what’s hap­pened, but they haven’t told us a damn thing about it oth­er than not to wor­ry. And of course that makes you wor­ry. So it’s, it’s, um, it’s not good. I just want­ed to point out one more thing. I mean, what Toby was say­ing is that, uh, I talk about oper­at­ing cash flow, which is dif­fer­ent to free cash flow.

So just to get the ter­mi­nol­o­gy right, we’re talk­ing about oper­at­ing cash flow and it does flow into free cash flow in this case. So I get that. rea­son why I pre­fer oper­at­ing cash flow is because It is hard­er to manip­u­late, account­ing wise, [00:38:00] than free cash flow. Now, most ana­lysts would focus on free cash flow and, you know, War­ren and Char­lie have always said to focus on free cash flow because cash flow is oper­at­ing cash flow plus any­thing you’ve had to pay out.

in the way of CAPEX or amor­ti­za­tion, or when I say pay out, take in as a pro­vi­sion for amor­ti­za­tion and depre­ci­a­tion. that’s where the issue is for me. it’s that, it’s that tak­ing you of cash pro­vi­sions for amor­ti­za­tion and hav­ing to wade through man­age­ment com­ments on CAPEX. which gen­er­al­ly go along the line of, oh, we had to spend more than usu­al this year on replac­ing the graders and the min­ing pit, and you have to go and do your own research to find out whether that’s accu­rate or not. and you start to get, you know, many com­pa­nies that have done so much of that that they basi­cal­ly pro­duce two sets of accounts with abnor­mals and abnor­mals, um, in, and you just go, this is just, is meant to help you, not, not make it more opaque. [00:39:00] So, go up the account­ing, um, pages, up, up the account­ing ledger to oper­at­ing cash flow. you know, I can make a, I can make an assess­ment on whether the com­pa­ny’s pro­vid­ing enough for depre­ci­a­tion or CAPEX or, um, or not. if I need to, but, but gen­er­al­ly oper­at­ing cash­flow is pure and free cash­flow can­not, I often find to be quite murky and requir­ing almost an account­ing degree to pull apart to see if it’s accu­rate or not

Cameron: right.

Up the ledger.

TK: up the ledger. And look, you know, that’s, ana­lysts go down the ledger because that’s their job. They can spend days look­ing at the, the bal­ance sheet. And that’s what, that’s what War­ren’s famous for doing sit­ting upstairs in his office and not talk­ing to any­body as he tries to work out whether. Coke has pro­vid­ed enough for their bot­tling plants to keep run­ning 20 years in the future, and if they have any­thing’s beau­ty, that’s, that’s a val­ue oppor­tu­ni­ty for me, he buys, but um, and he’s been suc­cess­ful at [00:40:00] doing that, but that’s not how I run my port­fo­lio, I’m not qual­i­fied to make that kind of deci­sion, deci­sion on bot­tling plants, so it’s a hard thing to do.

Cameron: Yeah. All right. Good ques­tion, Chris. Thank you for that. Are you going to do, uh, do you want me to,

TK: I’ll do a quick, sor­ry.

Cameron: I was going to say the only oth­er com­ments slash ques­tion we got was from Toby, which was about your com­ments on Eno from last week 808. Was it the album 801 live you were think­ing

TK: Yeah, 801, I think it was 801 State, but 801, yeah. That’s exact­ly it. Yeah, they do a great cov­er of Tomor­row Nev­er Knows.

Cameron: I looked it up and appar­ent­ly it was. The Roxy Music Band, when Roxy Music was on hia­tus. Um, it was like a tem­po­rary break­away project by Phil Man­zan­era and Bri­an Eno.

TK: Okay.

Cameron: Yeah,

TK: It was real­ly good.

Cameron: Tomor­row Nev­er Knows and The Kinks You Real­ly Got [00:41:00] Me.

TK: Well, tomor­row nev­er knows is, is, is real­ly good, but thanks for that, Toby. I went back and lis­tened to it again too. It was great.

Cameron: Okay, so, PRN.

TK: Con­tin­u­ing on with Par­en­ti and I’ll try and just whiz through this because we’ve talked about it a cou­ple of times now. Um, uh, it’s a large ADT stock of some two and a half mil­lion. So it’ll suit, um, most large or most port­fo­lios for lis­ten­ers. I own the stock. Um, I’m still up. Well, it was 13 per­cent last week when I did the pulled pork after their results, but it’s gone back up again now.

So it’s prob­a­bly up more like 20 per­cent since I bought it. Um, Last time I did a pulled pork on this com­pa­ny, they were going through the acqui­si­tion of DDH1. And the DD and DDH1 stands for Dia­mond Drilling. And, uh, Per­en­ti is a drilling com­pa­ny, one of the world’s largest. DDH1 was on the buy list when it was around on the ASX. So, uh, [00:42:00] Per­en­ti has turned into a bit of an aggre­ga­tor of drilling com­pa­nies and min­ing ser­vices com­pa­nies on the ASX the last decade or so. Um, their web­site says we are an ASX list­ed diver­si­fied glob­al min­ing ser­vices group with busi­ness­es in con­tract min­ing, drilling ser­vices, min­ing sup­port ser­vices, and tech­nol­o­gy solu­tions. The group was found­ed in Kal­go­or­lie in 87 and is today one of the world’s largest min­ing ser­vices com­pa­nies pro­vid­ing sur­face and under­ground min­ing at scale. They have 10, 500 employ­ees. They are oper­at­ing 100 projects in 10 plus com­modi­ties across 12 coun­tries. They have a num­ber of, um, brand names. So they, they don’t nec­es­sar­i­ly brand every­thing Par­en­ti. may have seen or heard of the, uh, Barmin­co brand, which is one of the com­pa­nies, again, that was list­ed and they, they acquired dur­ing the course of their, uh, their life. Uh, it’s. Barmin­co is one of the world’s largest hard rock under­ground min­ing [00:43:00] ser­vices com­pa­nies with oper­a­tions in Aus­tralia, Africa and North Amer­i­ca. Per­en­ti Drilling Ser­vices is one of the world’s largest drilling ser­vices con­trac­tors glob­al­ly the expe­ri­ence to drill the deep­est and most com­plex holes in the min­ing and explo­ration indus­tries. Per­en­ti own and oper­ate under the brands of DDH1, SWIC Min­ing Ser­vices, Ozdrill and Strike, and I think all of those were on our buy list in the last five years list­ed on the ASX and, uh, Par­en­ti saw as much val­ue in them as we did and, uh, swooped them up. Uh, so that’s, that’s them. They also have a tech­nol­o­gy divi­sion called IDOBER and OROLOGY, and they use, their, their knowl­edge, um, Uh, to plan and improve effi­cien­cies at mine sites, uh, through their offer­ing. results, uh, so last week when they, the day of the results, the share price was down 18%. was down to 1. 12. This morn­ing when I, um, had a look, they were back up to [00:44:00] 1. 30. And pre results, 1. 40. So they haven’t quite recov­ered every­thing they dropped, but they’re get­ting back there. Um, they nev­er became a, one for me or a three point trend line sell the whole time. So they were far enough in advance of this, this sell line to, um, just, uh, enable me to ride through this. Uh, they’re an A SX 300 share. They report­ed a 6% increase in rev­enue, to a record, 1.73 bil­lion. they had a three point a three per­cent­age lift in EBIT. Um, and what else they. They did call out a fall in net prof­it to 64 mil­lion, so that’s prob­a­bly what Sim­ply Wall Street talk­ing about. Um, but, uh, yeah, I made the point in my notes from last week, what caught the eye of investors was its free cash flow gen­er­a­tion. neg­a­tive free cash flow of minus 11 for the half, um, due to late [00:45:00] debtors. How­ev­er, they reaf­firmed their guid­ance for FY25, as I said. Uh, they expect, con­tin­ue to expect rev­enue on the range of 3. 4 to 3. 6 bil­lion, EBIT R of 325 mil­lion to 345 mil­lion, uh, Yeah, so that’s, that was report­ed in Mot­ley Fool. Here’s in Par­en­ti, um, lose 18 per­cent as investors fret about weak cash gen­er­a­tion despite CSO’s, assur­ances was the head­line in the West Aus­tralian. Um, that was behind a pay­wall and I was­n’t pre­pared to pay to read the arti­cle giv­en picked up most of the gist else­where. Uh, what else? M Pac was down 6 mil­lion, so down rough­ly 10%. How­ev­er, man­age­ment high­light­ed that, uh, there was a $29 mil­lion non-cash gain on acqui­si­tion of DDH one rec­og­nized in the first half peri­od of last year. And that’s why their, [00:46:00] their, um, impact was down this half ’cause they did­n’t have that write­up. I think I made the, the com­ment last week after the results that, that, you know, these. I would like to say that they are apply­ing this account­ing stan­dards rig­or­ous­ly. So what hap­pened last year was the DDH1 acqui­si­tion worked out bet­ter than expect­ed. made more mon­ey from it. And there­fore some­one said, well, we only paid this for it. We should real­ly write it up on our books. And so they, they, um, Increase the, the equi­ty val­ue of, uh, or the asset val­ue of DDH when on their books.

That’s some­thing that you rarely see in cor­po­rate land. Why would you do that? Yeah. You know, because you may have to write it down in the future and it’s real­ly just play­ing with num­bers on the, on the bal­ance sheet. It’s, it’s not affect­ing, affect­ing the num­bers in the net prof­it line, but it’s not actu­al­ly changes in cash.

It does­n’t affect cash­flow, either oper­at­ing cash­flow or free cash­flow. Any­way, they did it. Per­haps, you know. to look good. [00:47:00] Um, but any­way, they did­n’t have it this half and so net prof­it looked bad. Now, maybe that was the trig­ger for the down­grade that sim­ply Wall Street seems to think it was, but, um, unless this was like com­plete algo trad­ing, any ana­lyst I think would look at that and go, okay, they, some dumb rea­son, they wrote it up last half and it’s not there this half.

The under­ly­ing looks in line. It looks okay. So I was­n’t that wor­ried by it. The oth­er thing that they did dur­ing the half was pay down some debt, which was good. I thought the result was fine. but man­age­ment are going to have to calm down on their account­ing. Manip­u­la­tions, I think. It’s just, it’s just not a good look to have to dig and dig and dig and dig to work out what’s going on.

Um, if there are issues, just call them out. Tell us, tell us about some­one pay­ing late. Who were they? Is it going to hap­pen again? You know, they, they could have put a graph of their 90 day debtors trend­line in the pack or some­thing like that, just to put some con­text around it, which they haven’t, unfor­tu­nate­ly. [00:48:00] Uh, any­way, um, the QAV num­bers for Par­en­ti, uh, these were, this was last week. Um, and when I, when the share price was a dol­lar 16, but I was using the lat­est result num­bers. So, uh, num­ber, the QAV score, may, may have gone down a lit­tle bit this week, but it’s still, um, still very robust. Uh, the price was below con­sen­sus tar­get. I have IV one at 44 cents and IV two at a dol­lar 91, so it’s. Above IV1 and below IV2. Yield was 3. 45 per­cent when the price was 1. 16, so it’s going to be less than that now. So too low for us to give it a score, um, on our check­list for that. Doc­tor finan­cial health and trend was strong and steady.

So, you know, what­ev­er they’re using. They’re not wor­ried about, um, the late pay­ment. Uh, Stock­o­pe­dia have a, uh, an F score for health of 6 out of 9, [00:49:00] and a qual­i­ty rank­ing of 82, an over­all rank­ing of 96. So, 6 out of 9 is, you know, get­ting a lit­tle bit on the low side. I think we score at 5, we stopped scor­ing at 5 out of 9 from mem­o­ry. Um, on the US, uh, Biased. But any­way, so it’s, it’s stock Edia are call­ing it out as being okay for health, but not great. But over­all they’re see­ing, um, a rank­ing of 96 out of a hun­dred based on the fact of the, the val­ue rank­ing being high. Um, p is 13.5 times. It was in the mid range for the last three years, so we don’t score it for that. calf is 2.3. times. And this is the real kick­er, why it’s, um, uh, it’s high up on our buy list. So we’re see­ing ter­rif­ic val­ue in the com­pa­ny. Um, I take Toby’s point, you know, that they may actu­al­ly use some of that prop caf to, um, buy equip­ment or what­ev­er. And so free cash­flow might be more impor­tant, but at least at an oper­at­ing cash­flow lev­el, [00:50:00] it’s, it’s, it’s very cheap. Net equi­ty per share is 1. 93. Again, which was high­er than the share price, so we can score it for that. I will call out Net Tan­gi­ble Assets was 1. 29 after the lat­est results. So the share price is around that price today. So we’re still able to buy even at Net Tan­gi­ble Asset Val­ue. And it’s below net equi­ty per share by some 80 cents or 75 cents. again, because of the fact that they’ve been acquir­ing all these com­pa­nies and uh, the good­will is, um, is hurt­ing their, um, Net Tan­gi­ble Assets, but um, like we saw with DDH1, if they paid a good price it won’t always be a neg­a­tive NTA to Net Equi­ty Per Share. Uh, any­way, either way you can buy this com­pa­ny for less than its booked val­ue on a Net Tan­gi­ble Asset. basis, def­i­nite­ly on the net equi­ty per share basis. Earn­ings per share is fore­cast to grow per­cent that means growth over P is nine [00:51:00] times, so well above our thresh­old. There is no own­er founder. Uh, so it was found­ed back in Kal­go­or­lie in 87, I think, so. It is cur­rent­ly scor­ing in the buy list for being a recent 3 point trend­line upturn that was of last week, but I think been a buy for a while from a sen­ti­ment point of view, so it lost that score after the new results came in. Uh, the com­pa­ny has five halves of con­sis­tent­ly increas­ing earn­ings, which is again a telling thing. Um, to sug­gest that the com­pa­ny’s on a strong finan­cial foot­ing. in all, the qual­i­ty score is 13 out of 16 or 81 per­cent. QAV score is 0. 35, which is quite high up on the list. Um, I did list last week when I was going through the results, as Toby has, that one of the risks is that, uh, the debtor late pay­ments real­ly is a prob­lem. if it occurs again, I think that would be a red flag. Or if we start to see some­thing com­ing out of man­age­ment say­ing that they are get­ting more late pay­ments, um, that’s a prob­lem. Uh, [00:52:00] They, they’ve giv­en us a large fore­cast in earn­ings per share to grow of 132%. I don’t know how con­ser­v­a­tive that is, but such a large fore­cast the risk that if they miss it for what­ev­er rea­son, that, that will tum­ble the share price as well. Uh, min­ing is, has been strong. Not so much in coal, but iron ore recent­ly, I think, turned into a com­mod­i­ty bio­lite. So Josephine, I think today, uh, so, uh, and gold strong. So min­ing is pret­ty strong at the moment. So, uh, even though there’s a, um, a risk in the future that it turns down, it’s pret­ty good at the moment. On the pos­i­tive side of things, great Prop­Caf price ratio, Debt pay­ments are down and they, they’re con­tin­u­ing with their buy­back, which is always a good sign and in the back­ground work­ing to put that into the buy list in some shape or form. So, um, I think that’s a good thing too for them

Cameron: Thank you, Tony PRN.

TK: and have a look to your own [00:53:00] research, debate it with me like Toby has and make your own mind up. And if you, if you are out there and you’re, you know, your stock bro­ker has done a research report on them, ask them what they think of that late debtor prob­lem. Um, they may have some more research, which we nev­er got to see or hear.

And the inter­est­ing thing, too, is I went through the man­age­ment call, uh, on the announce­ments on the results, and they cut it off before ques­tions were tak­en. So I thought that was inter­est­ing as well.

Cameron: Mmm.

TK: Might have a con­spir­a­cy the­o­ry.

Cameron: I hold them in a few port­fo­lios. So one of the light port­fo­lios bought it back in May 2024 at a dol­lar one. It’s up 29%. We added it to the dum­my port­fo­lio about a week lat­er at a dol­lar. Um, I added it to my super, um, six months lat­er, Novem­ber at a dol­lar 21, it’s up 8 per­cent since then. [00:54:00] So yeah, it’s had a, had a good run share price wise in the last

TK: Yeah, I think it’s a, it’s a good com­pa­ny. But please don’t take my advice, go and do research and a look at it your­self as well. I’d be inter­est­ed to know what’s going on with, like, when these results announce­ments come out and the share price moves so much straight away, it’s either Ana­lysts form­ing a very quick opin­ion, or there’s some kind of algo­rith­mic trade going on is, you know, run­ning through a sum­ma­ry of the results and going good, bad, good, bad, good, bad, buy, sell. Um, and, you know, with­out hav­ing the prop­er man­age­ment con­text, which is man­age­men­t’s fault, not the AI’s fault, the shares are being tossed around. That’s, you know, one expla­na­tion for it. I’m not sure what hap­pened in this case, but, but it’s been a strange one, I thought. 

Cameron: Alright TK, [00:55:00] well that gets us into after hours. What have you been up to this week?

TK: Been busy going back and for­ward to Mel­bourne. Went up on Thurs­day for who’s had an art open­ing. So even though she’s got a full time job now, she to do a bit of a side hus­tle. Uh, before she got the job, she had spo­ken to a wine bar own­er in South Yarra, uh, who agreed to, uh, put their paint­ings up on the wall and, uh, uh, sell them for her. Um, so Alex and two of her friends in three paint­ings each and had a launch last Thurs­day night at a place called Mu Noir, on High Street, just near Chapel Street. A love­ly place. We went there for the launch. Um, And Alex sold a paint­ing on the night, um, through one of the locals who was in there hav­ing din­ner. Liked it, liked what they saw, and bought one. So she’s chuffed.

Cameron: excit­ing.

TK: great result for [00:56:00] her.

Cameron: what was the paint­ing of?

TK: uh, so when Alex and I went to the Tom York con­cert at the Syd­ney Myer Music Bowl, the way out, um, this was at, you know, 11 o’clock at night or what­ev­er, saw a tree which had a light on it. In, in, um, the botan­ic gar­dens and she took a pho­to­graph of it with a sort of cloudy back­ground and she paint­ed it. She’s always doing that. She’ll be walk­ing around talk­ing and then all of a sud­den she’ll pull a cam­era out and in on some­thing and take a pho­to. And, and it’s, I’ve got­ta say, when I look at what she pho­tographs, I go, oh yeah, that’s actu­al­ly a real­ly inter­est­ing the light is, um, play­ing on a brie or what­ev­er build­ing. So, um, yeah, to her.

Cameron: Yeah. That’s fan­tas­tic, good for her.

TK: Yeah, and then we had the horse sales, um, I think they’re wrap­ping up today at the Inglis sales, and I had a cou­ple of go for sale, and I was a bit dis­ap­point­ed in the results, [00:57:00] so, um, that may be a red flag for the econ­o­my. Often­times the way horse sales go is a bit of an indi­ca­tor, uh, but it’s also, this will be the fourth or fifth, fifth sale, I think for the year.

So some­times the mar­ket just runs out of steam. But look, we sold two, um, a bit less than what I was hop­ing for, for the sec­ond one, and a bit more than I was hop­ing for, for the first one. So, um, I’m a lit­tle bit behind bud­get, uh, prob­a­bly won’t be buy­ing anoth­er horse. This year, with­out the cash injec­tion I was hop­ing for, but we got them both away, so that was good. And we had nice func­tion. Lind­say Park, who trained some of my hors­es, invit­ed Jen­ny and I along to a cock­tail recep­tion, which was nice. We got to talk to peo­ple that we know and have a few, uh, few, uh, canapes with them. That was good to catch up. they’re try­ing to sell the hors­es they bought to us, but they’re pret­ty low key about it.

They’re a good bunch. Um, but that was fun. Uh, but yeah, anoth­er trip up to Mel­bourne. and then [00:58:00] Baf­fleck ran third in a race last Thurs­day. Pret­ty close actu­al­ly. It was unfor­tu­nate that he did­n’t win, but uh, I think he’s got a win­ning at some stage in the future. So yeah, a lot of horse, horse activ­i­ty, horse busi­ness activ­i­ty over the last week. A lot of com­mas. Yeah.

Cameron: Well, as I told you off air, Chris­sy and Fox and I have all been sick with the cold or a flu or some­thing over the last three or four days. So we haven’t been doing much. Did­n’t even train on Sat­ur­day. We were too sick to train or Fox did. Chris­sy and I did­n’t, but that gave us a good excuse to sit down and watch a Bol­ly­wood film over the week­end.

So we watched A com­plete­ly bonkers Shah Rukh Khan film

TK: Oh, Black Bet­ty, Ram Jaane. Is that like? Is that Ram Jaane?

Cameron: Ram Jaane means God knows. He’s a, it’s a sto­ry of a, a [00:59:00] baby that’s found in a dump truck. It’s aban­doned. He’s raised on the streets, becomes a gang­ster, takes over a gang­ster orga­ni­za­tion and, uh, played by Shah Rukh Khan in the ear­ly part of his career when he was. to be a bad guy, slash, slash, action star.

And then in the same year, this came out in 1995, he made his first big rom com. Big one. Kuchi Kuchi Hota Hai,

TK: Gigi.

Cameron: with Kajol. Which turned him into the biggest sort of rom com, uh, star in Bol­ly­wood. And his career went down that path. He’s, he’s back to being an action star now in his fifties, but, um. Yeah, it was a com­plete­ly typ­i­cal bonkers three hour epic Bol­ly­wood film that made no sense.

An action movie about a gang­ster with a dance num­ber every, uh, 15 min­utes or so. But, uh, loved it. We absolute­ly loved [01:00:00] it.

TK: No, very good.

Cameron: And of course, we had R. I. P. Gene Hack­man,

TK: Mmm. Mm hmm. Mmm.

Cameron: And I know a lot’s been said about Gene Hack­man, tru­ly one of the great actors of the late 20th cen­tu­ry, missed.

Almost every­thing that he did was superb, a lot of great films he was in. He had a few stinkers too, but not his fault. But last night I was look­ing for some­thing to watch. And I found the Posei­don Adven­ture, which I don’t think I’ve seen since I was a kid. And I got about halfway through it last night before I had to crash, but um, Oh my god, I was lov­ing it so much!

a cast! incred­i­ble cast! When was the last time you saw it?

TK: Oh, yeah. 20 or 30 years ago. But I still recall it. We may nev­er live like this again. And, uh.

Cameron: who the cap­tain of the ship

TK: Ooh. [01:01:00] I don’t. Was it William Hold­en?

Cameron: Leslie Nielsen!

TK: Oh. I don’t. I don’t. I don’t. Talk­ing of Shah Rukh Khan chang­ing direc­tions in his career.

Cameron: Ha ha ha ha! This is 72, I think Air­plane was like 79 or 80.

TK: He did­n’t say some­thing like, what a day to give up glue sniff­ing. 

Cameron: Sure­ly you don’t mean the ship’s gonna sink I do mean that and don’t call me Shirley hard to watch him Play a straight role back

TK: Yeah.

Cameron: Um,

TK: Tell me what’s hap­pened so far. Well, first of all, the earth cooled, then the dinosaurs roamed. 

Cameron: Get me a hos­pi­tal! A hos­pi­tal? What is it? It’s a big build­ing with sick peo­ple in it Um, he, um There’s this great scene when the wave is about to hit the ship. Spoil­er alert for peo­ple who haven’t seen the Posei­don Adven­tures. It’s about a ship who sinks.

TK: Well, flips on its bel­ly, does­n’t [01:02:00] it?

Cameron: yeah, it flips

TK: Upside down.

Cameron: He sees the wave com­ing, he knows it’s com­ing, he’s placed the call to baton down the hatch­es.

And he just stands there, sto­ical­ly, star­ing at it when it slams into the, what­ev­er it’s called on a ship. The,

TK: Bow.

Cameron: well, yeah, but the, where, where the cap­tain stands, what­ev­er

TK: right, okay. Yep.

Cameron: yeah. And he just stands there and it just smash­es through and the glass smash­es and he and the rest of the crew that are there

TK: The bridge.

Cameron: around.

The bridge,

TK: Yeah.

Cameron: but, but he’s just stand­ing there sto­ical­ly, just star­ing it down, not flinch­ing while it slams into him. It’s a great scene. in it. I mean, um. Ernest Borg­nine, who’s

TK: Right. The

Cameron: mar­ried a hook­er that he arrest­ed six times. She goes, you arrest­ed me. Say Stel­la Stevens is the pros­ti­tute.

Who’s his wife, for­mer pros­ti­tute. You arrest­ed me six times. He goes, well, I had to keep you off the streets until you’d mar­ry me. And, uh, Gene Hack­man’s, you know, is [01:03:00] the. who’s being

TK: con man.

Cameron: by his bish­op because he’s, uh, sort of a rene­gade priest who believes pray­ing is a waste of time and, he gives this big speech at the begin­ning of it to anoth­er min­is­ter that’s on the boat and he takes con­trol of the whole sit­u­a­tion and he’s

TK: Yeah.

Cameron: a a, it’s inter­est­ing because I remem­ber see­ing as a kid and uh, I did­n’t like, and I think it was the first time I prob­a­bly ever saw Gene Hack­man, did­n’t like his char­ac­ter in this.

he is a, I thought at the time he was a bit of an arse to every­one. But re watch­ing it now, I’m like, well he’s just a get shit done guy. And

TK: Mm.

Cameron: berat­ing the pa the sur­vivors to push them through, to keep them going. He’s treat­ing them to bring out their sur­vival instincts, uh, to get them to push through the hur­dle so they’ll get to the [01:04:00] next lev­el and get to the next lev­el.

It’s sort of an old school foot­ball coach kind of

TK: Oh, Marine. He’s an ex-Marine.

Cameron: ex marine.

TK: It’s a drill sergeant type char­ac­ter. Yeah. Mm-hmm.

Cameron: and then of course, they get almost to the res­cue team, there’s a, there’s this steam vent or some­thing that’s stop­ping them from get­ting up the plat­form, he sac­ri­fices him­self to turn off the steam vent, and I remem­ber see­ing this as a kid, and it absolute­ly.

Just blew my mind. This, this guy who was a bit of an arse­hole then doing this ulti­mate act

TK: Self­less. Yeah.

Cameron: self­less­ness and self sac­ri­fice to save the rest when he can see the res­cue crew

TK: Hmm,

Cameron: 20 meters away, but he just with­out blink­ing, with­out bat­ting an eye­lid, he gives up his life to save the rest. and I’ve always remem­bered that scene, you know, when we did the [01:05:00]documentary on ear­ly Chris­tian­i­ty, And I was talk­ing in the film about how deeply com­pelling the idea of the human sac­ri­fice is to peo­ple still today Chris­tian­i­ty.

Like that’s a very, very com­pelling idea. died so that we could live, but so he died for our

TK: hmm.

Cameron: that kind of thing. And I do believe that, you know, I mean, humans were sac­ri­fic­ing our chil­dren to appease the angry gods for. Thou­sands and thou­sands of years. I think there’s some­thing that was bred inside of us to real­ly con­nect deeply with that idea and it’s still there.

Like, you know, it gets used in films. I remem­ber the last Chris­t­ian Bale Bat­man film. Bat­man flies a

TK: Right.

Cameron: and

TK: Yeah.

Cameron: out and blows him­self up. And Bond in No Time for [01:06:00] Die, No Time for a Script, what­ev­er that one was. So

TK: No time for a script, yeah.

Cameron: yeah. um. Yeah, the idea of self sac­ri­fice in Hol­ly­wood is, you know, it’s still some­thing they’ll pull out on a reg­u­lar basis.

So,

TK: Yeah,

Cameron: any­way.

TK: a few tropes, obvi­ous­ly, but um, They, they do, they’re either there and then Hol­ly­wood exploits them or they’re con­ve­nient for Hol­ly­wood to use. But the oth­er one which always gets me is the rags to rich­es sto­ry. It just like con­tin­ues to con­tin­ues to rein­force cap­i­tal­ism and entre­pre­neur­ship and hav­ing a goal and all that kind of stuff. Um, yeah,

Cameron: it. If he

TK: can do it. Yeah.

Cameron: Yeah. 99. 99999 per­cent of you won’t, but you

TK: Cor­rect. Yeah. And then we’ll make a movie out of it

Cameron: Yeah,

TK: and make it seem like any­one can do it.

Cameron: yeah, yeah, yeah, Schwarzeneg­ger doc­u­men­tary.

TK: Yeah.

Cameron: there and have a [01:07:00] pos­i­tive atti­tude you can be pres­i­dent. Um, oth­er per­son we lost this week was David Johans­son from the New York Dolls,

TK: Hmm.

Cameron: AKA Buster Poindex­ter in the 80s. But, uh, like, I think he was the last sur­viv­ing mem­ber of the New York Dolls.

TK: Oh, real­ly?

Cameron: Yeah, I think the rest of them have died over the

TK: Poi­son Ivy? I saw some­thing from, oh, it may have been an old clip. I thought I saw Poi­son Ivy on a clip recent­ly, but it could have been an old one. Mm hmm. Mm hmm. Mm

Cameron: uh, I think they’re clas­si­fied tech­ni­cal­ly as a pro­to punk band, but a big part of the punk move­ment, uh, the his­to­ry of the punk move­ment, the New York Dolls,

TK: hmm.

Cameron: and, uh, did­n’t last very long, like the Pis­tols, but, uh, he went on and had a career, and of course he was

TK: Mm

Cameron: um, the Bill Mur­ray Christ­mas movie was that came out ten years or so ago.

TK: hmm. A very Mur­ray Christ­mas.

Cameron: [01:08:00] Yes, David Johans­son. I think he does, um, does­n’t he does the, uh, uh, what­ev­er the And the boys from the NYPD choir

TK: Oh, is he?

Cameron: Ball­way

TK: the guy from the Pogues. 

Cameron: The Pogue song. Yeah, I think he

TK: He cov­ers it? Okay. Right.

Cameron: I think, that’s the one he does. He does a cou­ple of songs I think in that, but he plays like a wait­er or some­thing in it who

TK: Right.

Cameron: coax­es into a song.

But I think he does that. Yeah. Um, great song. So any­way, uh, what else? Yeah, that’s it for me.

TK: Yeah, same. I’ve just start­ed read­ing the, a book called Source Code, the orig­i­nal sto­ry of Bill Gates as a kid.

Cameron: Oh, okay.

TK: Yeah.

Cameron: I’ve read a few Bill Gates books over the years. Tay­lor was, uh, he made a cou­ple of trips last week. My son Tay­lor was in Syd­ney, Mel­bourne. He was speak­ing [01:09:00] in front of Meta and Fuji­film. He’s just, he’s fly­ing some­where else tomor­row, I think, to speak at some­thing else in Syd­ney. He’s just, he’s the man of the hour now.

They’re fly­ing

TK: Wow.

Cameron: speak at things. He’s basi­cal­ly, I said, you’re basi­cal­ly doing the job I was doing. 25 years ago when I was at Microsoft fly­ing around and talk­ing about the inter­net, uh, cor­po­ra­tions. Now you’re doing that job, basi­cal­ly, but work for your­self, which is much bet­ter. But he said he had two bad Uber dri­vers, and he got two MAGA.

Uber

TK: Oh,

Cameron: And one day, one at six o’clock in the morn­ing, at nine o’clock at night. But he said the one in the morn­ing was telling him that Bill Gates is the biggest mass mur­der­er in his­to­ry

TK: Oh no.

Cameron: vac­ci­na­tions and he’s killed bil­lions of peo­ple and blah, blah, blah, blah, blah.

It’s just, I had to spend two of these, these two Uber dri­ves just going, uh, I pick them? This is just,

TK: [01:10:00] yeah.

Cameron: And Trump’s the great­est thing that’s ever hap­pened to the world, and he’s going to make every­thing great again. And any­way, well, that’s it. Now you and I are going to go off and record a US QAV.

TK: we are,

Cameron: See

TK: woke up this morn­ing and I thought, beau­ty. I’ve got lots of stuff car­ried over from last week. I can just

Cameron: Yeah.

TK: spend a lit­tle bit of time

Cameron: us through it.

TK: Yeah. for today’s show. And I got your email say­ing, let’s do a Euro show. And Oh, yeah. I agreed to that, did­n’t I?

Cameron: Ha

TK: I spent a whole day prep­ping

Cameron: Oh, did you? Oh, it’d be an easy one. Oh, okay. Alright, well, let’s go do that then. Have a good week, every­body.

TK: Yes, and report­ing sea­son’s over so hope­ful­ly the volatil­i­ty will qui­eten down and we’ll have a good week.

Cameron: Or anoth­er six months.

TK: Yeah.

Cameron: that. [01:11:00] [01:12:00]