QAV 810 — The QAV Magnificent 12

QAV 810 Club Audio

 [00:00:00]

Cameron: Wel­come back to QAV, Tony. QAV.

TK: your, he did nail your head to a cof­fee table. Oh yeah, he did that.

Cameron: that. He did that. Is it the Kray broth­ers?

TK: Yeah, well, it was actu­al­ly Doug and Dins­dale Piran­ha, it was the Piran­ha broth­ers on them.

Cameron: Broth­ers.

TK: Python sketch, yeah.

Cameron: Yeah.

TK: Doug knew all the tricks. Hyper­bole. Pathos.. Sar­casm.

Cameron: Oh, you’re tak­ing me back. Well, wel­come to QAV. We don’t have a lot to talk about today, except just the col­lapse of every­thing every­where all at once. Um,

TK: It’s a bit like watch­ing the cyclone on the fore­shore on the Gold Coast, isn’t it?

Cameron: Yeah.

TK: the waves are get­ting big­ger. Yeah, it’s like watch­ing the US mar­ket.

Cameron: we were sit­ting here for two days just watch­ing it because it got real­ly close and then it just and just sat there and thought about what it was going to do next for a cou­ple of days and we’re all sit­ting here twid­dling our thumbs.

TK: Right, [00:01:00] Cyclone Alfred, like, like the Fre­do in The God­fa­ther, did­n’t know what to do, could­n’t help him­self, lashed out, caused prob­lems, and even­tu­al­ly went away.

Cameron: Well, I don’t know if you saw my post about this the oth­er day, but the big ques­tion on my mind still, again recent­ly for the 50 mil­lionth time is, who killed the assas­sins who tried to kill at the Com­pound in Lake Tahoe. Fre­do’s

TK: Yeah, I saw your post, um, I just always thought it was just a bit of edit­ing by Cop­po­la just to keep the pace of the movie mov­ing, but um, it could also have been Fre­do and he did­n’t want to fore­shad­ow. What was going to hap­pen to Fre­do? I’m just guess­ing.

Cameron: kill a cou­ple of assas­sins.

TK: Uh, true.

Cameron: And Fre­do lat­er, when he con­fess­es to Michael, says that he did­n’t know it was gonna be a hit.

TK: Right.

Cameron: [00:02:00] So, I don’t think he was stand­ing there ready to kill him. he was in his bed­room any­way, there’s no that Fre­do was­n’t in his room. His wife starts scream­ing, there are bod­ies out­side my win­dow. says, Michael says to Tom, If I’m, if I’m If I’m right, they’re dead already after the goes into lock­down. Then Fre­do’s wife starts scream­ing. There’s two dead bod­ies at the of her win­dow, might sug­gest that they went to speak to Fre­do, but then she would have seen Fre­do kill them.

I mean, I don’t know, just, I’ve nev­er been able to fig­ure out the assas­sins. Every time I watch the film, it bugs the hell out of me, but

TK: Real­ly. I just assumed it was the goons on the, you know, patrolling. That’s why Michael thinks that they’re dead already.

Cameron: would they kill them? They would cap­ture them and say, who are you work­ing for?

TK: Unless there was a shootout.

Cameron: There’s no [00:03:00] sound of a shootout. Peo­ple are patrolling the grounds. There’s spot­lights on, music. You don’t hear any big shootouts scream­ing, just wife say­ing there’s two dead bod­ies. All right. Any­way, mov­ing right along.

TK: Yeah. Well, it’s obvi­ous­ly either Trump or Putin, one or the oth­er.

Cameron: Yeah, that’s right. Zelen­sky did it to him­self. Um, US mar­ket is in cri­sis, Tony. By the way, I want to, I think I’m going to call this episode The Riley Indi­ca­tor Wins Again. Um,

TK: Wins again.

Cameron: well,

TK: Is it the sec­ond time it’s won? Yeah.

Cameron: indi­ca­tor sug­gests things are about to go south. And I was right. Um, the U S mar­ket, this is a sto­ry I’d read just before we came online. . [00:04:00] Tum­bles near­ly 900 points. NASDAQ suf­fers worst day since 2022 as reces­sion fears erupt. week mar­ket sell off inten­si­fied on Mon­day with investors wor­ried that tar­iff pol­i­cy uncer­tain­ty would tip the econ­o­my into a reces­sion, some­thing Pres­i­dent Don­ald Trump did not rule out over the week­end in an inter­view. S& P 500 shared 2. 7 per­cent touch­ing its low­est lev­el since Sep­tem­ber at one point and clos­ing at 5614. 56. The tech heavy NASDAQ com­pos­ite saw the sharpest decline of the major aver­ages, falling 4 per­cent for its worst ses­sion since Sep­tem­ber 2022. S& P 500 is off 8. 7 per­cent from its all time high reached Feb­ru­ary 19th. And the NASDAQ com­pos­ite is off near­ly 14 per­cent from its recent high. The Mag­nif­i­cent Sev­en cohort, once the stars of this bull mar­ket, [00:05:00] led the declines Mon­day as investors dumped the group for per­ceived safer plays. Tes­la tum­bled 15 per­cent for its worst day since 2020, while Alpha­bet and Meta fell more than 4%. Arti­fi­cial Intel­li­gence dar­ling NVIDIA lost 5%. Palan­tir Anoth­er once loved stock by retail traders was down 10%. Uh, it’s, you know, not like I’ve ever heard you say that these, uh, growth stocks, the dar­lings are going to fall the fastest when things go wrong. Oh, maybe I have heard you say that once

TK: Yeah, so what were the fig­ures in NASDAQ down about twice as much as the S& P,

Cameron: Yeah,

TK: like that? Yeah.

Cameron: I had a look at some of those stocks

TK: Mm-hmm

Cameron: Tes­la has halved from where it was. is back down to where it was sort of May last year. Microsoft is at a 12 month low. [00:06:00] Um, Apple’s still doing okay, Google and Meta, they’re down, but they’re still up from where they were last year, so they’re not as bad. But I had a lot of sell­ing in the light port­fo­lios last week. A lot

TK: Right?

Cameron: crashed through their three point trend lines. had to sell, um, let’s see here. I had quite a big list on one day. Um, appar­ent­ly I’m not a sub­scriber. I can’t see that blog post. Ha ha ha ha

TK: I get that all the time as well.

Cameron: ha ha ha ha

TK: I’m like, I Do you know who I am?

Cameron: ha ha. Oh dear me, let me see if I can find it. No. Not that day, the

TK: I know recent­ly a MP went through its three point trend cell line. I know Bank of Queens­land did. They’ve both been on the bio list in the last 12 [00:07:00] months.

Cameron: wow. Let me see, the 4th, I sold, L Y L, V V A, B G, A M P, M Y S, E R D, L O. All in one, go. Had a lot of things to replace him with, so it was­n’t all, like, there was noth­ing to buy. Replaced him with a lot of stocks, so. That’s good. I think I bought DSK, RRL, and PRU. Sounds like I’m say­ing the alpha­bet back­wards there.

TK: Yeah,

Cameron: WV, UTS, RQP, ONM, LKJ, IHG, FED, and CBA. Which is actu­al­ly a stock, huh?

TK: it is, yeah.

Cameron: Um,

TK: you don’t have Alzheimer’s? Isn’t that the Alzheimer’s test? Demen­tia test?

Cameron: Yeah, it is.

TK: Yeah.

Cameron: So yeah, sort of a crazy week, Tony. [00:08:00] Mm.

TK: we’ve been talk­ing about it for a while. I’ll even include a graph in today’s phone notes about the Buf­fett indi­ca­tor, which I think we spoke about a cou­ple of weeks ago as well. U. S. mar­ket cap to GDP. So, this comes from Alan Cole’s week­ly mis­sive, uh, source was IFM investors, and it’s, obvi­ous­ly you can’t see it because we’re talk­ing about it, but um, it’s a graph of the US mar­ket cap to the US GDP.

And, it, it goes from 1975 through to now, it, it, uh, basi­cal­ly has a shad­ed area which is two stan­dard devi­a­tions from the aver­age, and we’re now prob­a­bly at the widest above two stan­dard devi­a­tions in his­to­ry. And gen­er­al­ly, every time it gets above two stan­dard devi­a­tions, the mar­ket crash­es. Um, the [00:09:00] last time I did it was in COVID, the time before that was in the dot com bub­ble.

So it’s not sur­pris­ing, um, I’m glad we’ve got three point trend indi­ca­tors to help us through it, just as it did dur­ing COVID. Um, so that makes me feel a lit­tle bit more com­fort­able with where we are in the mar­ket. But I also has­ten to add, if you look at the graph. Yes, if the mar­ket, mar­ket cap to GDP gets above two stan­dard devi­a­tions above the aver­age, it gen­er­al­ly pulls back.

How­ev­er, it can go up 20 or 30 per­cent before it pulls back. That’s the first thing to note. And there’s also been oth­er pull­backs when the mar­ket cap to GDP has been aver­age and of course, um, the GFC fits that pat­tern as well. So it’s a rea­son­able pre­dic­tor of over­val­ued. Or over­val­ued­ness, but it’s pret­ty hard to trade from it because you can [00:10:00] miss upsides um, by get­ting out too ear­ly and some­times when the mar­ket’s at the aver­age it can drop as well.

So,

Cameron: Mm

TK: it’s a, it’s a inter­est­ing thing to note, um, but I do expect sell offs because you know, as we’ve said on any oth­er mea­sure, the US mar­ket and even the Aus­tralian mar­ket is above his­tor­i­cal. val­u­a­tion aver­ages and so the pen­du­lum usu­al­ly swings back. Regres­sion to the mean is alive and well.

Cameron: But I thought Amer­i­cans were going to get tired of all of the suc­cess that they were, the mar­ket was going to have under Don­ald Trump.

TK: Well, I think Trump’s got a cun­ning plan, much like Baldrick in Black­ad­der. He’s, uh, he’s, uh, want­i­ng the, uh, Fed to low­er inter­est rates. So he does­n’t mind if Amer­i­ca goes into a slight reces­sion because of the low­er rates and, and that will see anoth­er upward leg in the share mar­ket, most like­ly. Uh, but we’ll see.

Cameron: a, there is a con­spir­a­cy the­o­ry run­ning around that he keeps say­ing he’s going to bring in tar­iffs, the mar­ket crash­es, then he [00:11:00] goes, Oh, I’m post­pon­ing them. The mar­ket shoots back up. Then he goes, Oh, I’m going to bring it back in now. And they crash. And then the mar­ket goes, Oh, wait a minute. And they go back up.

And that, uh, some­body is buy­ing the dip.

TK: Yeah, trad­ing. Yep, short­ing and buy­ing. Elon’s got­ta make some mon­ey some­how because Tes­la shares are in the toi­let. Appar­ent­ly there was an out­age on X recent­ly overnight I read. Um, there was a huge denial of ser­vice attack, which Elon was point­ing the fin­ger at Ukraine as being the source of.

Cameron: Yes.

TK: more Elon being Elon.

Cameron: So I guess for new long term sub­scribers know the answer to this ques­tion, but for new sub­scribers, I’m going to ask inevitable ques­tion. If the mar­ket starts to go into decline, Tony, how does that change what we do on a week by week basis at QAV?

TK: As you know, it does­n’t. [00:12:00] We just keep fol­low­ing the rules. We, you know, as we saw in COVID, we may actu­al­ly sell every­thing and sit on the side­lines with a bit of cash or most things any­way, which did­n’t turn out to be long. Um, but yeah, we, we’re going to sell things and I, I has­ten to add that not all stocks go down in this kind of sell off for val­u­a­tion rea­sons, usu­al­ly, um, there are plen­ty of stocks on our buy list, which have low PEs, low, high prop calves, um, that we’re inter­est­ed in.

There are more and more gold min­ing stocks com­ing onto the buy list and they’re all going up. because gen­er­al­ly as the share mar­ket goes down, gold ris­es, um, as a, as a so called store of val­ue. Inter­est­ing­ly, I think Bit­coin’s come off. Um, it’s sup­posed to, that was sup­posed to have replaced gold as a store of val­ue, but it does­n’t seem to be work­ing.

And, and MicroS­trat­e­gy, a com­pa­ny I had a bit to deal with back when I was work­ing cor­po­rate­ly and we were using their prod­ucts, um, has become a Bit­coin trad­er and its share price [00:13:00] is down dra­mat­i­cal­ly now. As well. So, yeah, um, We may see a bit of tur­bu­lence, we may see a bit of trad­ing in our port­fo­lios, just like you did last week.

Uh, but, um, yeah, we have insur­ance in place and we have safe­guards in place for just this kind of, um, mar­ket frame­work.

Cameron: Yeah, I was hav­ing a zoom call yes­ter­day with one of our new QAV club mem­bers, Scott, shout out to Scott. And I was just talk­ing about like my expe­ri­ence with this over the years and how the rules me are a god­send because I know from all the stuff that I’ve heard and read over the last five or six years. the biggest risk for ama­teur investors and even a lot of pro­fes­sion­al investors is emo­tion. It’s, um, get­ting sucked into the [00:14:00] emo­tion of the boom times and buy­ing stuff you should­n’t be buy­ing.

TK: No,

Cameron: Things you should­n’t be sell­ing or sell­ing when you should­n’t be sell­ing. And the, you know, one of the great things about QAV is it tells us what to do. And I said, look, you know, you’re new, but over time, if you stick at it, you will devel­op a trust in the sys­tem or you won’t, and you’ll, you’ll do some­thing else. But for those of us that have learned to trust the sys­tem over the years, it just makes it easy.

Like it tells me what to do. I don’t need to sec­ond guess. I don’t need to think about it. I don’t need to get. Sucked up with the emo­tion. Am I doing the right thing? Am I, and Scott was say­ing he’s been, you know, read­ing a lot of stuff, watch­ing a lot of stuff, try­ing to learn about invest­ing for a while, pre dis­cov­er­ing QAV.

And he said, read 20 dif­fer­ent web­sites, they’ll tell you 20 dif­fer­ent things. You lis­ten to 20 dif­fer­ent pod­casts, they’ll tell you 20 [00:15:00] dif­fer­ent things. He said he’s been lis­ten­ing to shares for begin­ners, Phil’s great pod­cast. And Phil obvi­ous­ly has a lot of guests on and the guests all have a dif­fer­ent. Plan and a dif­fer­ent approach and a dif­fer­ent strat­e­gy. And it’s a bit like. You know, my buck­et the­o­ry of, uh, reli­gion and phi­los­o­phy, the big, the big buck­et and the small

TK: put, put a, put a buck­et on your head and just ignore it.

Cameron: That’s a good one. I got to remem­ber that’s the three buck­ets. Now it’s the three buck­et

TK: Three buck­ets. Yeah,

Cameron: one of the things that I pull out, I came up with it for the twins when they were sev­en or eight, some­thing like that, they went and spent. school hol­i­days, I think, with their Mor­mon grand­par­ents, their moth­er’s par­ents, and they came back and they said to me, Um, you know, maybe God is real, sci­ence just haven’t dis­cov­ered the evi­dence for it yet. And I said, well, you’re right, that’s pos­si­ble. And I said, but here’s the way I think [00:16:00] of it. take all of the ideas about gods and mon­sters and sci­en­tif­ic the­o­ries that humans have had, over 10, 000 years of record­ed his­to­ry con­tin­ue to have today. So Greek mythol­o­gy, Roman mythol­o­gy, Norse mythol­o­gy, Aus­tralians, indige­nous North Africans, Africans, take it all. And you, you, you take all of those pos­si­ble ideas you know, uh, Wic­ca. And sci­ence, and all, every­thing, and you throw, that’s a big buck­et of ideas. So that’s, that’s what you have to work with.

These are all the ideas that humans have ever had about how things work. Now, you can either choose to believe in all of them equal­ly, simul­ta­ne­ous­ly, and try to prac­tice what they all say you need to prac­tice, but you’re not going to have a lot of time left in the day, and a lot of them are con­tra­dic­to­ry, so it’s not going to real­ly work. [00:17:00] So you need to fil­ter all of the ideas that are in the big buck­et down into a lit­tle buck­et. And the lit­tle buck­et’s the one you’re actu­al­ly going to work with. So then the ques­tion is, well, how do I decide what’s going in the lit­tle buck­et that I’m going to car­ry around with me every day, that are going to be my go to ideas for liv­ing life? And there are dif­fer­ent ways that peo­ple fil­ter. big buck­et down to the lit­tle buck­et. They pick the ideas that their par­ents believe or the ideas that their friends believe, or the ideas that make them feel good, that feel right, that make them feel com­fort­able, make them feel hap­py. Or you have the ideas that are sup­port­ed by the most evi­dence and ratio­nal the­o­ries and, you know, uh, sup­port­ed by the most log­ic and rea­son that the con­sen­sus of experts believe is prob­a­bly most like­ly to be true based on, you know, devel­op­ing, devel­op­ing a hypoth­e­sis and then test­ing the evi­dence against that hypoth­e­sis and refut­ing that don’t have the sup­port­ing evi­dence, et cetera, et [00:18:00] cetera. you know, you, you pick whichev­er one of those approach­es that you want, but the one that I. the one that’s makes the most sense to me is the one that’s where it’s based by evi­dence and investing’s like that There’s a there’s a lot of dif­fer­ent ideas out there

TK: it is.

Cameron: You can’t do them all at the same time. So even­tu­al­ly you need to pick some­thing that makes sense for you and that you think is sup­port­ed by research and evi­dence and, uh, you know, been applied and prac­ticed by peo­ple and you can look at their results. And, and so for some of us, that’s QAV. That’s my

TK: Yeah,

Cameron: lit­tle buck­et.

TK: that’s a good sum­ma­tion.

Cameron: put a buck­et over your

TK: Yeah.

Cameron: block it all out.

Go la la la la la la la la la la la.

TK: Yeah, well, unfor­tu­nate­ly, the buck­et over your head. Prob­a­bly means you’re an index investor or you’ve got mon­ey in your, in a super­an­nu­a­tion fund because most peo­ple in Aus­tralia do because they, they have it com­pul­so­ry tak­en out of their wages, but [00:19:00] um. As I’ve said once before on the show recent­ly, there’s a huge amount of unknown expo­sure to the US MAG7 and the US stock mar­ket in those ETFs that track index­es and in the super­funds which are invest­ed large­ly through index­a­tion, um, but have a, a high pro­por­tion of their stocks exposed to the US.

So unfor­tu­nate­ly, putting a buck­et over your head and putting mon­ey into an index fund may hurt you, has prob­a­bly already hurt you.

Cameron: I think index fund is a lit­tle buck­et strat­e­gy. I think putting the buck­et over your head is say­ing, I’m not going to invest. It’s not for me.

TK: Yeah, tree.

Cameron: I’m not,

TK: Cash under the mat­tress.

Cameron: Invest­ing is all, it’s all a scam.

TK: Mm hmm.

Cameron: to try and fig­ure it out. I’m just gonna. Block it out. No, think about it.

TK: Mm hmm. I like Ricky Ger­vais’s answer to the ques­tion of, um, does God exist? It’s, it’s, well, which God? Is it Ra? Is it the ser­pent? Is it the, yeah, it goes, it goes through and lists about [00:20:00]ten of them, and, uh, it kind of makes it clear that. If you think the oth­er nine gods don’t exist, then why does yours exist?

Cameron: You don’t believe in 99 per­cent of the guys. I just don’t believe in one more guy than you don’t believe in.

TK: Yeah, exact­ly.

Cameron: Any­way, that’s QAV. Um, like, yeah, get­ting back to my ques­tion, what do we do dif­fer­ent­ly? We don’t do any­thing dif­fer­ent­ly. If you’re a new lis­ten­er,

TK: Yeah.

Cameron: just fol­low our rules and they get us through now. That’s not to say our, our port­fo­lios won’t go back­wards, you know,

TK: Mm hmm.

Cameron: some peo­ple seem to think that QAV is, uh, cycli­cal and we, are able to, I don’t know, hov­er like a Jedi above the mar­ket fray. Does­n’t work that way, when the

TK: No.

Cameron: our stocks

TK: will too.

Cameron: go down too,

TK: Mm hmm. Yeah. Um. What we find, if the mar­ket [00:21:00] goes down dra­mat­i­cal­ly, we’ll get out. So we’ll miss out on the, on the huge drop to the bot­tom, um, and get back on the way back in, on the way back up. Um, yeah, so no, my, my port­fo­lio has gone down in the last cou­ple of weeks since report­ing sea­son.

Um, but so has the mar­ket. Uh, so it’s not, it’s not a. It’s not a process designed to always go up. There’s always going to be volatil­i­ty in it. It’s, it’s a process which says when this hap­pens, here’s what you do. So as you said before, you take the, you take the emo­tion out of it.

Cameron: I did do a look at our port­fo­lios this morn­ing. The dum­my port­fo­lio for this finan­cial year is down quite a lot since. We were sort of ear­ly Feb­ru­ary up 16 per­cent for the finan­cial year.

We’re now down 9%. I mean, this is per annum. Um, [00:22:00] uh, you know, so just to put that in a lit­tle bit per­spec­tive, the, um, STW, the SPDR 200 fund is also down. It’s now at 5 per­cent for the year. We’re at 9. 18 per­cent for the year. So not quite dou­ble it, but we’ve both come back quite a lot

TK: Sor­ry,

Cameron: and

TK: what’s, um, I think you said we were down 9%, but you mean we’re down to 9%? Is that right?

Cameron: down to 9%.

TK: Yeah.

Cameron: you for

TK: Okay.

Cameron: that.

TK: Okay.

Cameron: we were up 16 per­cent for

TK: Yeah. And we’ve dropped. Yep.

Cameron: for the finan­cial year. Um, the US port­fo­lio. And peo­ple may have seen, uh, that we record­ed a US episode last week. I should send a link to that out in the newslet­ter today. For the finan­cial year, the Aus­tralian finan­cial year, because that’s what I’m mea­sur­ing it against, because that’s It is also, [00:23:00] uh, come back. It was at one point it was up around 70 per­cent up for the finan­cial year. It is now up 27 per­cent the finan­cial year. So that’s back a lot. The S& P 500 is up 7 per­cent the finan­cial year. So again, we’re doing three times the S& P 500 over there, but it has. come back a long way, uh, in the last month or so in par­tic­u­lar.

TK: How many stocks are in that dum­my port­fo­lio, Cam? In the US?

Cameron: good ques­tion, Tony. Let me see. Um, I have that open some­where. We have 8, 9, 10, 11, 12 cur­rent­ly.

TK: Well, I think we should call it the QAV Mag­nif­i­cent 12. It’s more than three times the US mar­ket. [00:24:00] Yeah.

Cameron: to give you an indi­ca­tion. Um, we’ve talked about W. LFC a few times, Willis Lease Finance, which is our big hit­ter in that port­fo­lio. was up around 300 per­cent a cou­ple of weeks ago. It’s now down to, oh, hold on. That’s just for the finan­cial year. Let me see. Um, I don’t, yeah, over the long haul, no, it’s up 221 per­cent over the long haul uh, up 300%.

So it’s come back near­ly a third in the last three or four weeks. Still doing okay, not going to com­plain, but, uh, the mar­ket’s hit­ting even our port­fo­lio pret­ty hard over there.

TK: Yeah.

Cameron: So,

TK: And that’s an impor­tant point too, Cam, as I’ve made this before as well. It’s been my expe­ri­ence that the low­er, um, PROC CAF or low­er PE stocks still [00:25:00] com­press, but they don’t com­press as much as the high PE stocks, um, which can some­times see their PEs halved. In this kind of sit­u­a­tion where the mar­kets run ahead of itself, where­as with a low­er PE stock, yeah, it’ll come back, but it does­n’t have the sort of room to go back as far before it starts to become, it’s already a com­pelling val­ue, so how far does it have to drop before some­one else sees it to be a com­pelling val­ue?

It’s a lot quick­er for that to hap­pen than uh, you know, say­ing should I be pay­ing 90 times earn­ings for a gross stock or 45 times earn­ings for a gross stock. It’s a,

Cameron: hmm.

TK: there’s a, there’s a nat­ur­al buffer in load, load price to earn­ings type stocks that we focus on.

Cameron: Of course, like, I’m, I’m stu­pid, but my ques­tion is, well, if you thought NVIDIA was a good buy three months ago. Why are you sell­ing it now? What, what changed? Why don’t you think

TK: Pre­dic­tion,

Cameron: [00:26:00] any­more?

TK: pre­dic­tion.

Cameron: Well,

TK: yeah, no, well,

Cameron: times PE for it three months ago, you obvi­ous­ly in the­o­ry thought that at some point it was going to be worth 90 times PE. Do you sell and then decide you’re going to buy back in in a month when it’s at a low­er price? Is it dol­lar cost aver­ag­ing on the way down?

TK: they might be. Look, you know, if, if an ana­lyst said I’ve sold NVIDIA on the back of the What’s it called? Deep Thought? The Chi­nese AI that’s come out. DeepSeek, thank you.

Cameron: Deep Throat.

TK: Deep Thought? No, that’s the, from Hitch­hik­er’s Guide to the Galaxy.

Cameron: Guide, yeah, yeah.

TK: Um, no, Deep, what­ev­er it’s called, Deep State. Um,

Cameron: Deep Seek.

TK: If you think, if you think DeepSeek is going to cut the earn­ings of NVIDIA, then that’s, if that’s your rea­son for sell­ing, that’s a valid rea­son, I think.

But again, how do you quan­ti­fy it? Like, It’s, it’s, I don’t know what the change in P is for [00:27:00] it, but um, if it’s gone from 90 down to 70, is it a buy? Or is 70 still over­val­ued? It’s just, it’s just all guess­work real­ly, isn’t it?

Cameron: Well, if you sold it because Chi­na came out with a mod­el, why, when you bought NVIDIA in the first place, did you buy it think­ing there was going to be no com­pelling mod­els com­ing out of Chi­na? I

TK: Yeah, yeah,

Cameron: how much, how much research, I don’t know. I mean, I’m being face­tious real­ly. I don’t think there’s a lot of that thought or think­ing goes

TK: no.

Cameron: it’s most­ly just. Hype, bub­ble, stuff. Any­way, uh, enough of that. What else have you got on your list of talk­ing points today, TK?

TK: Chair­man, Chair­man Mab and I’ve had a cou­ple of con­ver­sa­tions from Steve Mab from the ASA around the fact that, uh, well I in par­tic­u­lar don’t think the guid­ance has been great dur­ing report­ing sea­son and there’s been a lot of volatil­i­ty in the share mar­ket [00:28:00] as com­pa­nies report num­bers which weren’t expect­ed by the mar­ket and there are rules around that.

And the ASX is meant to mon­i­tor those rules. So, Steve sent me a, um, uh, an arti­cle about that. Uh, It’s from the Aus­tralian last week 10th of March. Oh, no, sor­ry. I’m not sure the date last week any­way Results day sur­pris­es that move the mar­ket come under the ASX micro­scope The ASX is tar­get­ing com­pa­nies that come out with earn­ing sur­pris­es on results day with Bendi­go Bank, IAG and Min­res All on the mar­ket oper­a­tors hit list in the past month.

Eight list­ed com­pa­nies so far have come for­ward with their respons­es to aware let­ters, also known as please explain let­ters, from the ASX after sub­stan­tial share price moves on the day they report­ed earn­ings. But there could be more, with plumb­ing sup­plies giant Rees, health insur­er NIB, and fin­tech Ires, among those that had big mar­ket reac­tions on Result­State, [00:29:00] and in a high­ly, in a high­ly volatile earn­ings sea­son.

Uh, goes on to say the ASX is focused on earn­ing sur­pris­es, the ASX has a role to mon­i­tor com­pli­ance with the list­ing rules. Uh, Arti­cle then goes on to say the mar­ket oper­a­tor’s height­ened focus has trig­gered a jump in please explain let­ters in august nine com­pa­nies includ­ing insignia Finan­cial and Tab­corp were tar­get­ed by the ASX There is a good chance even more will come after this report­ing sea­son Uh talks about Guz­man and Gomez, which also Saw their stock drop 14 and Bendi­go bank So this is um, this is a cup and then a cup goes on to talk about this in gen­er­al, but a cou­ple of quotes Just bog­gled the mind.

So this is a quote from Garth Rid­dell. He’s the ASX Gen­er­al Man­ag­er for List­ings Com­pli­ance. Again, I’m quot­ing an arti­cle in The Aus­tralian. Over the past few report­ing sea­sons, the ASX has [00:30:00]had a focus on earn­ing sur­pris­es. Our activ­i­ties in Feb­ru­ary is a con­tin­u­a­tion of that. Well, okay. Big, big deal. We still had more earn­ing sur­pris­es and What, what’s hap­pened?

Has any­one been fined? Has any­one been delist­ed? Has any­one been sus­pend­ed? Has any­one, has there been any­thing but a please explain let­ter and one com­ing back say­ing we’re not aware of any­thing which the mar­ket should be? uh, told about, and in my 25 years, I can’t think of any com­pa­nies that have done this and been fined for it.

It’s, you know, when Elon Musk talks about get­ting rid of box tick­ing, this is just an exam­ple of use­less box tick­ing. Either the ASX Needs to piss or get off the pot because it’s just not it’s not enforc­ing what it’s meant to be enforc­ing which is good gov­er­nance and This quote from Bendi­go Bank I found Bog­gled the mind as well Bendi­go [00:31:00] Bank con­sid­ers that mar­gin per­for­mance in iso­la­tion of oth­er fac­tors which influ­ence Bendigo’s earn­ings It’s not infor­ma­tion that the rea­son­able per­son would expect to have a mate­r­i­al effect on the price or val­ue of its secu­ri­ties the com­pa­ny said in its sec­ond response to the ASX

Cameron: Real­ly?

TK: yeah, you’re a rea­son­able per­son.

How often have I said the key per­for­mance indi­ca­tor for a bank is net inter­est mar­gin?

Cameron: Yeah, what, I mean, what oth­er met­ric is there for

TK: Yeah.

Cameron: real­ly? How else do they make mon­ey if not their net inter­est mar­gin?

TK: Cor­rect. If a rea­son­able per­son would­n’t expect it to have an impact on pric­ing, yeah, just for­get about it. Don’t, don’t, uh, don’t man­age it. Just let it take care of itself. Yeah, it’s, it’s use­less.

Cameron: I’ve, all I’ve got to say to that is, God, don’t do that. Hold on. Damn it. Ah, okay. My soft­ware does­n’t want to play nice. I can’t do it. Keep going. For­get it.

TK: Yeah, [00:32:00] so, um, the arti­cle goes on to quite for­age, uh, for­age of funds, uh, ana­lyst Steve John­son. He ques­tioned the point of Please Explains, say­ing noth­ing ever came of them. ASX puts out these let­ters and the com­pa­ny just says, we did every­thing right. And the ASX goes, okay, I

Cameron: don’t believe

TK: agree with Steve.

Cameron: explain. There you go. That’s what I was try­ing to play.

TK: Maybe Pauline Hansen’s been send­ing out the, please explain let­ters from the A SX

Cameron: So I guess my ques­tion would be what pun­ish­ment mech­a­nisms does the ASX have its toolk­it? can they actu­al­ly do? Can they com­pa­nies? Can they sus­pend them from trad­ing? Can they threat­en them with delist­ing? I mean, what, how, how much pow­er do they actu­al­ly have apart from please explain let­ters?

TK: Well, I think they have all those pow­ers. I’m [00:33:00] not, I’m not

Cameron: a reg­u­la­tor. They’re

TK: offa. Yes, they are. They’re like a club, right? They’re, they’re, orig­i­nal­ly they were all the stock­bro­kers who owned the A SX and said, here are our rules for a com­pa­ny that lists, and then it was pri­va­tized and, and list­ed sep­a­rate­ly as a com­pa­ny itself.

But the rule still exists, right?

Cameron: they’re not a gov­ern­ment orga­ni­za­tion. They’re not

TK: No.

Cameron: So, so they can’t, you know, throw their weight around at that lev­el that

TK: Yes they can. No, they can.

Cameron: As a

TK: They can delist, you’re out­side of the club, you haven’t obeyed our rules, the mem­bers have spo­ken, you’re out.

Cameron: mm, mm,

TK: Now they have all those things, but one of the prob­lems of course is, well, num­ber one, the ASX is a cor­po­ra­tion, it’s incred­i­bly, um, Focused on replac­ing the chess sys­tem, which has had an abortive start with a blockchain solu­tion and has nev­er gone off the ground and is caus­ing it all sorts of prob­lems.

So I think that’s where their focus is. And num­ber two, [00:34:00] as we’ve also report­ed on this show, The ASX is shrink­ing. There are a lot of com­pa­nies which, um, have left the ASX either through takeovers or through, um, chang­ing to an over­seas list­ing, for exam­ple, uh, or turn­ing just pri­vate, being bought by pri­vate equi­ty, and they’re not being replaced in the same sort of num­bers.

So the ASX is shrink­ing. So real­ly, the last thing the ASX wants is to have one less com­pa­ny on the ASX because they lose the fees. So there’s a kind of counter coun­ter­in­tu­itive Um, mech­a­nism to this,

Cameron: incen­tive mech­a­nism,

TK: yeah, lack of cor­po­rate gov­er­nance mon­i­tor­ing by the ASX, because

Cameron: mm,

TK: lose fees if it hap­pens to enough peo­ple any­way, it becomes mate­r­i­al.

So it’s, it’s bro­ken. Um, I think it’s about time that ASIC or APRA got involved, prob­a­bly ASIC, and I think it’s time the ASA stepped up and said, come on, let’s

Cameron: can’t the share­hold­ers do some­thing about it? Where’s Stephen Mayne? We [00:35:00] need Stephen Mayne to be get­ting in their faces over these sorts of things.

TK: Yeah, which is why I was call­ing Stephen Mabb. ASA should be tak­ing a very high pro­file cam­paign to the ASX on this. Oh, the ASX is in dis­ar­ray, and it’s not look­ing good, and yeah, and I’m And he sent me the arti­cle and I’m like, yeah, I agree with the arti­cle, get up there and do some­thing.

Cameron: though?

TK: So hope­ful­ly they will.

Uh, not that I know of.

Cameron: I might reach out to Steven main, get him to come on, talk about it.

TK: sure, but I think it’s a prob­lem and this report­ing sea­son high­lights the prob­lem. The prob­lem’s been there for a long time. I mean, if you can, you can go, I don’t know if you’re able to Google search, please explain this, but there’s always lots issued and it’s almost like a stan­dard reply. So the ASX boards have real­ized we just go back and say we’re not aware of a prob­lem or we don’t pro­vide guid­ance or what­ev­er.

And then the ASX does­n’t do any­thing about it.

Cameron: But maybe we need [00:36:00] to the AGMs QAV, uh, pitch­forks. We start storm­ing the AGMs and ask­ing the uncom­fort­able ques­tion, uh, rep­re­sent­ing the share­hold­er com­mu­ni­ty. Maybe we start our own ASA, the QAV ASA. Ssa

TK: Yeah, okay. When do we do that?

Cameron: Well, when I say we, I mean the lis­ten­ers should do that

TK: Oh yeah, okay, yeah,

Cameron: Well,

TK: absolute­ly.

Cameron: to get out­ta my chair and do some­thing.

TK: Yeah,

Cameron: Got enough.

TK: over the, over the top,

Cameron: I

TK: over the top. Come on, we’re right behind you.

Cameron: boys. We’ll be right there. Yeah. God already got peo­ple try­ing to gimme more work.

Dav­e’s ask­ing me to, I’ll do a week­ly Amer­i­can buy list. I’m like. You doing a week­ly Amer­i­can buy list? I’m flat out get­ting my work done every week as it [00:37:00] is.

TK: Has Dave sub­scribed to the US show?

Cameron: He said he’s start­ing his U. S. port­fo­lio

TK: Right.

Cameron: and he wants me to do a week­ly U. S. buy list. I’m like, yeah, right. I don’t have time to do that. I am going to auto­mate it at some point, but this week. So any­who, okay. noth­ing’s going on. So basi­cal­ly the deal is the ASX are just wag­ging their fin­ger at them, do it, giv­ing the old tsk tsk, that’s about it.

And appar­ent­ly share­hold­ers aren’t doing any­thing about it either.

TK: No.

Cameron: are just get­ting away with drop­ping bomb­shells and then walk­ing away.

TK: Cor­rect. Yep. Um, which is not good for cor­po­rate gov­er­nance. And not good for, um, not good for investors, not good for, not good for peo­ple, uh, who are new to the share mar­ket, who haven’t seen this before. Again, that would rein­force the whole idea it’s a scam, right?

Cameron: mm,

TK: too, not good for the com­pa­nies, apart from the fact that, um, [00:38:00] con­tin­u­ous dis­clo­sure is a good thing.

It helps to buffer, you know, put the right buffers in place for these kinds of shocks. But, why, you know, any, if you talk to any ASX list­ed direc­tor, they’ll say, what’s your num­ber one issue? Red tape. You know, why even have all this cor­po­rate gov­er­nance malarkey and fill­ing out reports and answer­ing please explain let­ters if, um, why, why pay the ASX to reg­u­late it if it’s not going to be lis­tened to or act­ed on?

It’s just,

Cameron: mm,

TK: just. You know, use­less, what’s the word? Dis pro­duc­tiv­i­ty or use­less hand­brake on the pro­duc­tiv­i­ty of the com­pa­nies.

Cameron: mm. Like DEI in the US.

TK: Well, I don’t know if DI is a bad thing. Um, but the­o­ry’s okay. But,

Cameron: though.

TK: but there’s box tick­ing going on.

Cameron: well, until Trump got elect­ed and then Meta and all those sorts of, just went, right, we’re not doing that any­more, that’s gone.

TK: And whether did the, whether the Zuck [00:39:00] say he’s kind, got curly hair and become a surfer now, and now he’s, what is he, he’s releas­ing his mas­culin­i­ty or some­thing into the , into the meta­verse or what­ev­er. I don’t know.

Cameron: Oh, let’s just lis­ten to Pauline one more time. I don’t believe those fig­ures. Please explain. Thank you, Pauline.

TK: I think the ASX should just play that to Bendi­go Bank and Min­res and all this. It’ll have as much effect.

Cameron: Well, every­one should just copy that sound­bite. Just ring affairs man­ag­er at all of these com­pa­nies. If you’ve owned a stock and then they’ve, know, come out with results with­out any con­fes­sions and warn­ing, just ring them up a cou­ple of times a day and just play that clip on loop over the phone and see if that gets a result. What’s next, Tony?

TK: Um, there have been a lot of results in the last cou­ple of weeks for buy list stocks and some that were on the buy list last year. I’ve com­piled a list. [00:40:00] don’t think we have enough time to go through them all now, so I’ve just picked out the first three to talk about. These are kind of mini pulled porks, if you like, but um, I think there was enough hap­pen­ing in this, in this, you know, enough volatil­i­ty in this buy list, uh, report­ing sea­son to focus on a cou­ple of them, so Uh, I’m going to cov­er, cov­er them off over the com­ing weeks.

The first cab off the rank is Helia Group, H L I, Um, who had a had the result sur­prise. Again, should­n’t, should­n’t have been a sur­prise, should have been an out­strik­ing. fash­ion sea­son, but in this case share­hold­ers were bet­ter off so they may not get a please explain from Pauline Han­son on this one, but there it’s, you know, the the rule should be applied both ways any­way.

So Helio Group, uh, hit our buy list in the mid­dle of last year when Com­mon­wealth Bank put their busi­ness up for ten­der. So Helia Group is a [00:41:00] mort­gage lend­ing insur­ance firm. So for any­one who’s bought a house will prob­a­bly have been offered lenders insur­ance, par­tic­u­lar­ly if they had less than 90 per­cent um, If they’re bor­row­ing up to 90% of, um, the val­ue of the house, they can, because they can, uh, take out, uh, this insur­ance for a cou­ple of thou­sand bucks usu­al­ly, and they can bor­row more.

The bank will them more, um, than they had. ’cause oth­er­wise they’ve got access to with­out the insur­ance. So in oth­er words, if they, um, if they default on their mort­gage, the Helio steps in and pays out, um, the bank. So the bank is more pre­pared to lend more mon­ey to these peo­ple. Um, it’s not on the buy list cur­rent­ly.

Uh, because it’s, uh, the price has risen quite a lot since the mid­dle of last year and the QAV score is now only 0. 03. Um, but back when it came on the buy list it was ham­mered by, uh, Prob­a­bly their largest client, or one of their largest clients [00:42:00] putting their busi­ness up for ten­der. Now the ten­der is still tak­ing place, so it’s like a very long process.

I think it was RFP in the mid­dle of last year, request for pro­pos­al, and now it’s more of a for­mal ten­der process. HOI have the busi­ness until the end of the year. 2025, but they may still lose it. So it is a risk for this com­pa­ny. Um, the results were good. Uh, they, the price rose when they report­ed earn­ings of 231 mil­lion beat­ing con­sen­sus of 206 mil­lion dol­lars.

So again, out­side of the con­sen­sus fore­cast, but no. Con­fes­sion sea­son about that. Uh, they’re one of the com­pa­nies that are under a going a buy­back, so that’s anoth­er thing I like about them. Um, but Stock Doc­tor isn’t as glow­ing in their com­men­tary, and I’ll just quote from them. Oper­a­tional­ly, the busi­ness is on a steep down­ward trend, dri­ven by a decline in high LVR loans, that’s loans to val­u­a­tion ratio, and [00:43:00] the gov­ern­men­t’s entry via the first home guar­an­tee scheme into the indus­try.

For exam­ple, HLI’s new insur­ance writ­ten fell by 60 per­cent with­in the same peri­od. So Stock Doc­tor are kind of say­ing this is as good as it gets, maybe. Stock­o­pe­dia are in a sim­i­lar boat. They give it a 52 rank­ing for qual­i­ty, which is pret­ty low, and over­all a 90. But they give it a 98 for momen­tum, which is what’s dri­ving up that, uh, that rank­ing.

Um, I don’t know, I’m not going to give advice to peo­ple on this, uh. I think what’s going on, I looked at the oper­at­ing cash flow and it’s back to high, a very high lev­el again. So my guess is that Helios, um, which Heli­ogrip, sor­ry, which is doing well on all met­rics that we look at, uh, is adjust­ing to a low­er mar­ket share growth envi­ron­ment and has man­aged its mar­gins to still throw off the same lev­els of opcash it has tra­di­tion­al­ly or even more, [00:44:00] which is the good thing.

So, um, I think all the bad news was in the price and now the good news is com­ing out. Whether the mar­ket keeps going down is the ques­tion, and whether they lose the CBA busi­ness which will be a huge hit to their earn­ings is the oth­er ques­tion. So, um, not with­out its risks, and has gone for a big run recent­ly.

That’s the first one to focus on Helia group.

Cameron: Should,

TK: one is,

Cameron: that, I was

TK: go ahead,

Cameron: out that we do own Heli­er in one of the light port­fo­lios. Bought it in Jan­u­ary 23. It’s up 113 per­cent since then, so Been a nice one for us.

TK: and it is a fair way above its sell price too. So, um, I’m not say­ing we would sell it. But, uh, we’ve seen stocks before go way above their sell prices and then we have to, we can wait a long time as they come down again, uh, before we sell them. Not some­thing that’ll hap­pen with [00:45:00] Helio Group. It’s still throw­ing off lots of oper­at­ing cash, so, um, I’m still com­fort­able for our port­fo­lios to hold it.

Cameron: Right.

TK: But not indi­vid­ual rec­om­men­da­tions if you hold it. Do your own analy­sis and make your own deci­sion. Next cab off the rank is IVE Group, IGL, who also had a good result. So, uh, I guess a quick pulled pork on IGL. Uh, it, they employ some 2, 000 staff. Uh, they’re a mar­ket­ing com­pa­ny. They embed design­ers, uh, They do graph­ic design into retail­ers and bankers and oth­er com­pa­nies.

They also have a busi­ness that pro­duces themed appar­el. And they also own a pack­ag­ing com­pa­ny. So basi­cal­ly, design and print­ing and mar­ket­ing busi­ness. Um, Coin­ci­den­tal­ly, they went ex div­i­dend today, so the share price came off today in line with the div­i­dend, and that’s some­thing to watch out for peo­ple who are look­ing at [00:46:00] three point trend lines and whether they should sell or not.

Just be care­ful that the stock has­n’t gone ex div­i­dend, because I would add that back to, or take it off the 3PTL sell price before decid­ing to sell. And this com­pa­ny trades on a yield over 11%, so it’s not a, it’s a big thing when they go ex div­i­dend. It’s dropped I think 6 per­cent today ish. But you’re mak­ing it back in a dip and in they also have an on mar­ket buy­back, which was announced in the before the results.

So cou­pled with a strong yield it sug­gests me just to me that they can’t find much to do with the cash that they’re throw­ing off in terms of growth oppor­tu­ni­ties but hav­ing said that Stock doc­tors fore­cast fore­cast­ing that ana­lysts see an increase in the earn­ings per share fol­low­ing the lat­est results, so they’re still doing some­thing right.

Uh, the share price was up 6 per­cent on the day of the announced results, so that was good. Um, I had a quick look at the results. Rev­enue was flat, but they called out they were com­ing off some big events. So [00:47:00] they did a lot of work in the voice ref­er­en­dum. Um, and they did a lot of work for the Wom­en’s Foot­ball World Cup, the Soc­cer World Cup for females last year.

So uh, they’re say­ing that those two things were one offs, um, but rev­enue was­n’t too bad on an under­ly­ing basis. But um, the, the good news was earn­ings per share and net prof­it after tax were both up approx­i­mate­ly 28%. So that was a good result for any­one who’s um, who’s hold­ing IVE Group.

Cameron: Which we do too, I think. Let me see. I was just look­ing at, um, SUL. For peo­ple who, uh, hold SUL. It’s just gone ex div on the 10th of March too. And it’s a cent div­i­dend. 100 per­cent franc. So it’s a big one. will have a big impact on. The share price as well, no doubt. I G

TK: spoil­ing, spoil­ing my pulled pork, Ken.[00:48:00]

Cameron: Oh, sor­ry, is that where you’re going?

TK: That’s all right.

Cameron: We don’t hold IVE Group at the moment. I thought we did, must have got rid of it. Sor­ry, keep

TK: That’s okay. One more and I’ll do the pulled pork. So next one I want­ed to focus on was that West African resources. Uh, so this is a mine, a gold min­er list­ed on the ASX, but oper­at­ing in Burk­i­na Faso. And, um, Africa as the name sug­gests, uh, gold’s had a very big run up over the last 12 months or so. And this com­pa­ny does­n’t hedge its gold book.

So it’s what’s called unhedged lever­age to ris­ing and falling gold prices. Um, and that tends, tends to dri­ve the price of the stock price of this com­pa­ny, which is up, um, a lot recent­ly. I think it did come off today as the gold price did come down overnight. The oth­er thing which is dri­ving the share price though is mine expan­sions, or mine exten­sions as they [00:49:00] call it.

So they have three oper­at­ing gold mines, or sor­ry, two oper­at­ing gold mines I think and one that’s under devel­op­ment. And they have a lot of, um, A lot of their free cash is going into explo­ration around those ten­e­ments to see if they can expand the gold mine. So this stock can be dri­ven by announce­ments that they found more under­ground resources to mine.

The oth­er thing which I like about this com­pa­ny is that it’s all in sus­tain­able cost space. The AISC is 1, 240 USD per ounce and I’m not sure what the US pric­ing gold as can per­haps you can look it up but it’s a that’s a quite low cost of pro­duc­ing gold com­pared to some of the Aus­tralian min­ers at least.

And they report­ed earn­ings per share up 45 per­cent in their results and net prof­it up 52 per­cent in their results. Inter­est­ing­ly enough, oper­at­ing cash flow was flat and free cash flow [00:50:00] declined, so they are putting mon­ey back into their mines and explo­ration, which is prob­a­bly why those two things were flat or in decline.

Stock­o­pe­dia ranked it as 79 for qual­i­ty and 97 over­all, and again it’s a high momen­tum stock for them. So that’s WA. West African resources.

Cameron: Hmm. Again, we don’t own them any­more, but we have in the past.

TK: Yeah, and I think, well they, they, I know they were called up once when there was a um, a coup in one of the West African states. And I don’t know if they were called up, it was, it was Res­olute I think that were called up with um, the gov­ern­ment ask­ing for a big­ger cut in the gold­mine. But per­haps WAF also had some uh, blow­back from that um, going on.

Yeah. [00:51:00] Yeah.

Cameron: some one on one time as a guest of the gov­ern­ment. Until they Could work out some sort of accom­mo­da­tion. And then he got released and prob­a­bly resigned. Retired.

TK: not worth it.

Cameron: No, fair call. Okay. What’s next?

TK: Pulled Pork. On. Wait for it. Super Retail Group.

Cameron: Oh.

TK: So the first thing to declare is I own shares in these and they are, they have been com­ing back towards their three point trend sell line. So, um. That may be an issue in the com­ing weeks. Uh, they went ex div­i­dend yes­ter­day. And so that, uh, again is to be tak­en into account. So, the three point trend sell price for this com­pa­ny is 12.

70. They’ve just gone ex div­i­dend with a 32 cent share. Uh, sor­ry, div­i­dend. So that brings the sell price back to [00:52:00] 12. 38. And that’s with­out tak­ing frank­ing cred­its into account. Which, um, for most peo­ple will reduce that again by, anoth­er 30 per­cent for the tax that’s being paid. Or 30 per­cent if you gross up the 0.

32 and then net it back for tax. So, uh, the way to do that is 0. 32 divid­ed by 7 times 0. 3, uh, which will give you the gross after which includes frank­ing. But I did­n’t include frank­ing in the cal­cu­la­tion because depend­ing on the hold­ing struc­ture for peo­ple and depend­ing on what tax brack­et there and it’ll be dif­fer­ent for dif­fer­ent peo­ple.

But at least 12, 12. 38 is the sell price until the div­i­dend is paid which I think from mem­o­ry was about the 10th of April. So, um, yes, 10th of April. So that’s a short term adjust­ment to make. Uh, the stock is a Josephine, um, so it is on the buy list, but this is a pulled pork, uh, because one of our lis­ten­ers request­ed it after their results came out.

And, uh, there were some ques­tions about the results. [00:53:00] Inter­est­ing com­pa­ny, um, goes back, uh, 35 odd years, I think. Uh, was found­ed by a chap named Reg Rowe, who, uh, start­ed sell­ing auto parts through the mail from his, uh, garage on the Gold Coast. He no longer sits on the board, he did for a long time, ran the com­pa­ny for a long time, sat on the board for a long time.

He still retains over 30 per­cent of the com­pa­ny, but, um, his mate, who was his advi­sor for a long time, a chap called Mark O’Hare, still does sit on the board and has just under 30%. Hold­ing. So not quite an own­er founder, but I’d score it as an own­er founder, giv­en that there’s 60 per­cent tied up in two peo­ple who’ve been inti­mate­ly involved with the run­ning and growth of the com­pa­ny over the years.

So Mar­co here was the Reg Rowe’s advi­sor. He was a part­ner at Grant Thorn­ton, the account­ing prac­tice and, uh, and has been an advi­sor and inti­mate­ly involved with Super Retail Group for a long time. Uh, who are they? Um, Super [00:54:00] Retail Group from, this is from their web­site, oper­ates four brands, Super Cheap Auto, Rebel Sports, BCF, which is boat­ing, camp­ing, fish­ing, and Mat­Pak.

And is one of Aus­trali­a’s and New Zealand’s largest retail­ers. Uh, by 1974, after being found­ed by Regin Hazel Rowe, the busi­ness, uh, had a turnover of 1 mil­lion and opened its first retail loca­tion. By 2004, when the com­pa­ny went pub­lic, there were more than 2, 900 team mem­bers and 176 stores across Aus­tralia and New Zealand.

Today the com­pa­ny employs 16, 000 team mem­bers and oper­ates 774 stores, the bulk of which are still super cheap auto stores, but they also include the oth­er brands. A shout out to the com­pa­ny if any­one’s lis­ten­ing. Jen­ny, my wife, is on the board of NBCF, Nation­al Breast Can­cer Fed­er­a­tion, and, uh, Research Fed­er­a­tion.

Um, and they [00:55:00] get togeth­er to raise mon­ey to, uh, donate to breast can­cer research. But I keep telling her, go and see BCF, same ini­tials, and, uh, you should be able to do a tie, to, uh, help them pro­mote, uh, breast can­cer research. But that has­n’t hap­pened yet. Maybe some­one can reach out the oth­er way and sug­gest it.

Um, Lat­est results, uh, Stock Doc­tor, because of its lat­est results, upgrad­ed SUL from a bor­der­line growth stock to a star growth stock. Um, and it’s also a star income stock, uh, giv­en its yield is, uh, 5. 28%. Uh, inter­est­ing­ly enough, the com­pa­ny did­n’t increase its div­i­dend, uh, and I think that’s due to the results which were flat­tish in, uh, in nature, uh, but also in the past they’ve had a his­to­ry of giv­ing out spe­cial div­i­dends.

So they tend to be a lit­tle bit con­ser­v­a­tive with div­i­dend increas­es, but if they, um, have a good year they’ll give it, uh, an extra div­i­dend, a spe­cial div­i­dend. So that may occur. [00:56:00] Uh, you can’t bank on it, hap­pened last year, um, but their div­i­dends flat this year. Uh, from Stock Doc­tor’s com­men­tary on the results, Super Retail’s first half 25 per­for­mance under­scored a more com­pet­i­tive indus­try land­scap­ing with earn­ings com­ing in about 4 per­cent below con­sen­sus.

Hence, one of the rea­sons why it sold off. Com­pe­ti­tion inten­si­fied in the auto seg­ment, which saw Supercheap under­per­form expec­ta­tions this peri­od with flat sales year over year, match­ing the down­turn in the sale of new vehi­cles in Aus­tralia, and also mar­gin pres­sures at Rebel, as the loy­al­ty pro­gram has yet to deliv­er mean­ing­ful return on invest­ment.

Supercheap paid out a spe­cial div­i­dend in both 23 and 24, with ongo­ing abil­i­ty to con­tin­ue this trend in 25 and 26. Um, drilling down a bit fur­ther, I found that BCF, uh, improved sales and they had growth of near­ly sev­en per­cent, um, reflect­ing sol­id growth in camp­ing, [00:57:00] uh, but also sup­port­ed by expan­sion into oth­er cat­e­gories like fish­ing, car­a­van­ning, and four wheel dri­ve, um, acces­sories.

And Mac­Pack also con­tin­ued to get mar­ket share gains in Aus­tralia. So, um, they are the small­er parts of the puz­zle. Over­whelm­ing­ly, the com­pa­ny is, um, dri­ven by super cheap auto and rebel sports, but the small­er, the small­er brands are doing well. Bal­ance Sheet is con­ser­v­a­tive and they haven’t had to draw down bank debt, which is good.

Uh, Like for Lifestyles, which is an impor­tant met­ric for retail­ers across the group, was only up. 1. 8%. Um, so not bad, but, uh, it was flat­tish, uh, in super cheap, the biggest, um, part of that, uh, port­fo­lio of brands. And the com­pa­ny will need to improve and, uh, um, to, to see the sen­ti­ment change for the stock. Uh, they are call­ing out they’re see­ing a loy­al­ty pro­gram as a key dri­ver for this.

So we’ll see how that goes. Uh, online sales [00:58:00] increased by 10 per­cent and are now mak­ing up 14 per­cent of total sales. So. That’s a good thing. And again, the strat­e­gy of man­age­ment is to con­tin­ue to grow that and become, as they called, an on the chan­nel retail­er. And obvi­ous­ly an online sale, um, isn’t incur­ring store costs.

Uh, I think a cou­ple of things to high­light, uh, and, and Stock Doc­tor did it well. Super cheap all day sales were almost flat, like for like, reflect­ing a down­turn in the indus­try gen­er­al­ly. Um, you’d think this would recov­er. espe­cial­ly if inter­est rates con­tin­ue to fall. Peo­ple will need to replace their vehi­cles at some stage so that should pick up.

Rebel sports sales increased 4. 4 per­cent but the mar­gin was down and man­age­ment called out the loy­al­ty pro­gram and an increase in cost of doing busi­ness for this. Apart from infla­tion, um, and its impacts on the costs. They also called out more [00:59:00] stock loss­es at Rebel Sports and, um, they spoke about, uh, orga­nized gangs of thieves going in and steal­ing prod­uct at Rebel Sports.

So, no doubt there’ll be increased secu­ri­ty in the stores. Um, I think, uh, yeah, I want­ed to talk a bit about the loy­al­ty pro­gram, but I’ll leave it until I talk about the strengths and risks for the com­pa­ny. Um, One last thing to call out before going into the QAV num­bers is that there’s an out­stand­ing law­suit against the, the com­pa­ny.

And, um, I has­ten to add that, uh, stock doc­tor think it’s a bit of a dis­trac­tion at best. Um, but it is still a risk because it has­n’t been set­tled yet. But, um, last year super retail was served a law­suit by two ex lawyers alleg­ing an affair between the CEO and the head of hr. And that, uh, that. Affair was being sup­port­ed with com­pa­ny funds.

Alleged­ly, a set­tle­ment, a set­tle­ment, um, an exit set­tle­ment for these two lawyers was appar­ent­ly ver­bal­ly agreed, but a deed was not exe­cut­ed and it went to court. [01:00:00] Uh, that was, um, unsuc­cess­ful­ly, uh, tried at court, but legal action con­tin­ues over a breach of whistle­blow­er laws, alleged breach of whistle­blow­er laws and work­place bul­ly­ing.

Um, I’ll add that an inves­ti­ga­tion under­tak­en by exter­nal lawyers cleared S. U. L. of wrong­do­ing. So, I think Stock Doc­tor may be right that it’s, uh, it’s, uh, may not have a mate­r­i­al impact on the com­pa­ny, but it’s got to be a dis­trac­tion for man­age­ment. And, um, hope­ful­ly they can, uh, set­tle it and move on as quick­ly as pos­si­ble.

Cameron: sounds like man­age­ment was get­ting dis­tract­ed, alleged­ly, with a mem­ber of the staff. Maybe, you know, man­age­ment will be more focused now on the busi­ness and not on quick­ies in the board­room. I don’t know. I’m just say­ing. It

TK: I don’t know either. And I’m spec­u­lat­ing. Look, it’s a, it’s a tricky one, this one, because I remem­ber back when Mark McInnes ran David Jones and had an affair with one of his staff mem­bers and was sum­mar­i­ly sacked, and then was picked up by Solomon Liu to [01:01:00] run a big part of his retail empire and has had a suc­cess­ful retail career since then.

So, I think for me, the key part about what I read about the law, the legal suit, was around whether whether there was some mis­ap­pro­pri­a­tion of com­pa­ny funds, but that’s kind of been side­lined in all of the report­ing since then. So I’m assum­ing that, uh, that may not have much steam in that. So peo­ple are always, peo­ple are humans, they’re always going, human beings, they’re always going to have affairs or they’re always going to, um, you know, fall in and out of love with peo­ple they work close­ly with or be attract­ed or not attract­ed to them.

I, in my cor­po­rate expe­ri­ence,

Cameron: you, you try­ing to say some­thing, Tony?

TK: am I, am I, am I, no, no, I’m going back to

Cameron: close­ly, you work close­ly with me, Tony. Are you, are you

TK: Ah, two hours a week,

Cameron: Oh,

TK: and I

Cameron: that

TK: turned the video off.

Cameron: it was­n’t an offer, it was­n’t an offer.

TK: The point I was going to make was, [01:02:00] when this has hap­pened in my expe­ri­ence when I was work­ing cor­po­rate, you’ve got to look at the out­comes, how’s it affect­ed S there, some­one’s per­for­mance. Has there been a change in a, in a crit­i­cal deci­sion because of it? Like, was some­one, you know, um, meant to be sacked, who was­n’t sacked or what­ev­er?

So I, I’m not see­ing any of that kind of smoke in these alle­ga­tions. So, um, that would be what I’d be focus­ing on. Um, you know. Regard­less of the fact that it’s their, it’s their per­son­al lives we’re talk­ing about and we’re not going to know the details of what went on. It will be very hard to know the details.

Cameron: that were suing sug­gests that tried to do some­thing about it, or they would­n’t. bury it and then they resigned or got pushed out and then they were suing. Was that part of it? They were suing, there was some sort of, you said there was some sort of agree­ment in place with the two for­mer lawyers that was­n’t hon­ored by the com­pa­ny.

And suing for like [01:03:00] ter­mi­na­tion relat­ed issues, not the affair per se.

TK: Uh, so they, so my under­stand­ing, this is from what I’ve writ­ten basi­cal­ly in the paper, uh, in the papers, is that, um, they called out the affair. They said that, uh, there had been a mis­use of com­pa­ny funds to sup­port the affair. No more infor­ma­tion was giv­en than that. That they told, uh, the board about that.

And then they were bul­lied. is, or alleged­ly bul­ly. Um, they felt the need to leave. It does­n’t, again, well, you’re oper­at­ing in almost a vac­u­um here because you don’t know whether they were asked to leave or whether they left. Um, appar­ent­ly they had a, they thought they’d come to a ver­bal set­tle­ment to exit the com­pa­ny, which then was­n’t hon­oured when the deed was drawn up.

to, to put all the legal fine points around it. Um, they thought they had a deal, they took that to court, and the judge threw it out say­ing, you had a, you had a ver­bal [01:04:00] agree­ment, but you did­n’t have a solemn deed, so. You can’t rely on the ver­bal agree­ment, and now they’ve tak­en the lawyers. Yeah.

Cameron: you thought a ver­bal agree­ment was going to pass muster? what my

TK: And look, I,

Cameron: that this, it actu­al­ly does­n’t seem like it’s real­ly like the issue here. The court case isn’t real­ly about that.

The affair per se, or the com­pa­ny funds, it’s

TK: yeah,

Cameron: the ter­mi­na­tion, the terms of the ter­mi­na­tion of the two lawyers, or the exit of the two lawyers, and that’s it. That’s not real­ly going to have a mate­r­i­al impact on the com­pa­ny unless they man­age to sue them for a tril­lion dol­lars for some sort of, you know, relat­ed issue.

TK: yeah, and look, it’s um, I think I said this when the case was first announced, there was a mul­ti mil­lion dol­lar num­ber pub­lished in the papers as the poten­tial expo­sure, but Um, from hav­ing lived through peo­ple’s exits from com­pa­nies, uh, that have been, you know, at least [01:05:00] threat­ened with legal, um, cas­es, gen­er­al­ly you’re not get­ting much more than about a year’s salary.

As the pay­out. So I sus­pect that’s prob­a­bly the legal expo­sure here. But I think the, the route that the two lawyers are tak­ing now is more along the lines of a breach of whis­tle blow­ing leg­is­la­tion and work­place bul­ly­ing. Um, which is more prob­a­bly in the, in the b wick of the work­place ombuds­man. And so there could be a fine, I, I don’t know, but I, I don’t.

My read­ing of it is not, it’s not a poten­tial threat to the com­pa­ny finan­cial­ly, but it’s got to be a dis­trac­tion for the peo­ple involved who are still there.

Cameron: Right.

TK: And look, I mean, I laughed about this as we were talk­ing about it, but look, it’s real­ly affect­ed those two peo­ple who’ve left and they thought they were doing the right thing.

And as we’ve often seen in cor­po­rate whistle­blow­ing, um, cas­es, why would you ever want to be a whistle­blow­er? Because, you know, you, you’re gen­er­al­ly exit­ing the com­pa­ny. Gen­er­al­ly, there’s some kind of [01:06:00] tar­nish­ing cam­paign that goes on about you. And, uh. Yeah, it just nev­er seems to end well for the whistle­blow­er, in my expe­ri­ence, my opin­ion.

Yeah,

Cameron: pro­tec­tions that we have in this coun­try, the gov­ern­men­t’s going after The whistle­blow­ing, for­mer mem­bers of the mil­i­tary, peo­ple talk­ing out about off­shore deten­tion camps. It’s even, even our gov­ern­ments go hard on whistle­blow­ers. It’s,

TK: yeah, exact­ly. So, um, I have some sym­pa­thy for the, for the plain­tiffs from that point of view, but again, it’s very hard to know, you know, what actu­al­ly went on. Um.

Cameron: bot­tom line is you don’t think it’s going to have a major impact on the busi­ness, but it could direct­ly or indi­rect­ly

TK: Yeah, I don’t think it will. I think what my gut feel is the worst pos­si­ble impact it could have on the busi­ness if it forces the [01:07:00] CEO to resign. Um, giv­en that he’s already been through an exter­nal­ly con­duct­ed legal review, I don’t think the board­’s going to do that. But if it does come out that there was a breach of whistle­blow­ing and his lawyers were hard done by and pres­sure mounts, then yeah, poten­tial­ly they could be asked to step down.

Um, but who knows? I mean, it’s a, it’s a pre­dic­tion and I don’t think it’s going to hap­pen.

Cameron: and would­n’t even real­ly fall under our red flag

TK: No.

Cameron: issue, right?

TK: Did­n’t when it came out at the time, um, and it does­n’t now. But it’s cer­tain­ly been a talk­ing point about this com­pa­ny. Now, giv­en that the results were flat ish and, and, um, not liked by the mar­ket, has it been a dis­trac­tion on man­age­ment? Who knows? That’s, you know, that’s the ques­tion real­ly, isn’t it?

Um, there seems to be oth­er rea­sons for the results declin­ing and cer­tain­ly infla­tion on costs and inter­est rates stop­ping retail cus­tomers from spend­ing would be the obvi­ous ones. But, yeah, maybe man­age­ment [01:08:00] has been dis­tract­ed by, by the whole

Cameron: not like the

TK: issue. Yeah,

Cameron: out with fan­tas­tic results and super cheap was the only one that did­n’t, right? It was

TK: cor­rect.

Cameron: pret­ty rough report­ing sea­son across the board.

TK: Yeah, pret­ty much, yeah. Yep. So, um, any­way, I thought we should talk about it, but, uh, I’m going to park it as a risk for the com­pa­ny or an issue for the com­pa­ny. Onto the QAB num­bers. The share price I’m using for analy­sis is today, so 1309, which is ex div­i­dend. So if you’re buy­ing it today, you’re not get­ting access to a div­i­dend for six months.

Uh, that’s 15 per­cent less than con­sen­sus tar­get, but it’s above IV1 and IV2. IV1 is 5. 08, IV2 is 9. 57. ADT for the com­pa­ny is near­ly 7. 4 mil­lion, so it’s going to suit most investors, uh, retail investors. Stock Doc­tor rate finan­cial health and trend as strong and steady, and that’s not sur­pris­ing giv­en they’ve upgrad­ed the [01:09:00] stock to be a star growth stock and a star income stock, so we score at 1.

5 for being both of those two things in our check­list. Stock­o­pe­dia rate, uh, rat­ed a bit low­er. Stock­o­pe­dia rate SUL as a four out of nine on the F score rank­ing. So that’s the dri­ver of their qual­i­ty rank­ing. Um, some of the rea­sons for that, if you drill into the F score, it’s, uh, the com­pa­ny was less prof­itable than it was last year.

They have increas­ing costs and less pro­duc­tiv­i­ty among oth­er things. They have a few oth­er tech­ni­cal ratios they go into. Stock­o­pe­dia rank­ing for super cheap or super retail group. is 81 for qual­i­ty and over­all is a 92. So it’s not, not too bad, but we’ve seen some bet­ter scores on qual­i­ty than 81. Uh, com­pa­ny’s yield is 5.

28%. Um, uh, does­n’t quite score for yield on us, even though that’s a high yield. And it’s a star [01:10:00] income stock for Stock Doc­tor. PE is 13 times, which is in the mid­dle of the recent three years. Prop­Caf is 5. 4 times, which is the real dri­ver of it being on our, on our buy list. Um, it cer­tain­ly is a cash gen­er­at­ing machine, uh, being a, a retail­er with strong brands.

Net equi­ty per share is 5. 78. So we can’t buy it for book val­ue or book val­ue plus 30%. Earn­ings per share fore­cast is flat, and I think that’s prob­a­bly the most wor­ry­ing sign for the share price, because that’s often a thing that ana­lysts focus on, is how much is the earn­ings grow­ing, and we can’t score it on earn­ings per share over growth met­rics.

Equi­ty is not con­sis­tent­ly increas­ing, so we can’t score it for that, so it’s not a great Qual­i­ty score 63 per­cent or 9. 5 out of 15 for us and a QAV score of 0. 12, which puts it towards the bot­tom of our buy list. Uh, strengths and risks, um, [01:11:00] the over­whelm­ing issue for them is the flat like for like sales in the main brand, super cheap order that needs to be rec­ti­fied.

And in fact, I You know, if I was at the AGM, I’d be ques­tion­ing whether super cheap store roll out capex should­n’t be scru­ti­nized. Why invest in rolling out stores with flat, like for like sales? And I always had this debate when I worked in retail. The retail­ers answer would be because we’re grow­ing in our mer­chan­dise share of mar­ket and that gives us more buy­ing pow­er with our sup­plies.

So I get that, but if you’re If you’re putting mon­ey into a for­mat, which is not real­ly grow­ing. It’s only grow­ing by the new stores you’re open­ing. Can you find a bet­ter use of that mon­ey, I guess, is where I’m going. Um, the sec­ond thing I’ll call out is the loy­al­ty pro­gram. So that needs to be a laser focus for man­age­ment.

I did­n’t get much vis­i­bil­i­ty of it. Loy­al­ty’s been my thing over my cor­po­rate career, hav­ing run, um, [01:12:00] Retail­er’s sec­tions on loy­al­ty pro­grams and it’s been CFO of loy­al­ty Pacif­ic who run fly­bys. Um, I did­n’t see any­thing about cus­tomer seg­men­ta­tion, about one to one mar­ket­ing and tar­get­ed pro­mo­tions using the loy­al­ty pro­gram, or about inte­gra­tion into the sup­ply chain for mak­ing sure, you know, for exam­ple, that things that are crit­i­cal to good cus­tomers are always in stock.

All those things have to mar­ry up to get real val­ue out of a loy­al­ty pro­gram. Um, I haven’t seen any vis­i­bil­i­ty out of that so far, but it’s ear­ly days. So hope­ful­ly once they, I think they had the first 12 months. Um, of a loy­al­ty pro­gram up, end­ing up in Octo­ber. So it’s pret­ty ear­ly for them, um, but I’d like to see in future results, you know, them dri­ving the cus­tomer data, um, to, to improve the busi­ness.

Uh, we’re see­ing some. I mean, retail in gen­er­al is show­ing some green shoots, uh, since the first inter­est rate cut, um, but it’s still pret­ty pre­car­i­ous. [01:13:00] And if there aren’t any more inter­est rate cuts, then that might be a short lived thing. But the com­pa­ny did call out, uh, earn­ings per share growth, um, sor­ry, did call out growth in the first sev­en weeks, um, of the year when they announced their results.

So they, they’ve seen, uh, more growth. than they had last year in the same sort of peri­od. Um, obvi­ous­ly, if they can set­tle the law­suits, that’ll allow man­age­ment to focus with­out dis­trac­tion on the busi­ness. And the stock is cur­rent­ly in Josephine, and it may actu­al­ly become a three point trend­line sell because it’s not too far off that sell price before we get any sort of earn­ings per share fore­cast or improve­ment in guid­ance to turn the stock price around.

So it’s not one you should be buy­ing right now, but I think it’s still a good com­pa­ny, deserved­ly on the buy list, and one to watch into the future.

Cameron: let me see. I’m look­ing at our hold­ings of SUL. Had it in a cou­ple of the light port­fo­lios for a while. One par­cel I bought back in [01:14:00] August 22. It’s up 28%. But the oth­ers, eh, not great per­form­ers. Dum­my port­fo­lio, bought it in Octo­ber 23. It’s up 3%. Uh, my own super I bought it in Novem­ber 23. It’s down 1%. Over what that like near­ly 18 months a lit­tle bit over 12 13 14 months and Yeah, so it’s a not a real star per­former in our port­fo­lios over

TK: No,

Cameron: of years

TK: no, and it’s helped by its div­i­dend yield, but the oth­er thing which I found inter­est­ing when I thought about these results was, in the past, when­ev­er we had um, Retail spend­ing under pres­sure, super cheap, although held up because peo­ple went from Tak­ing their car to the garage for ser­vic­ing to do it to do it like doing grease and oil changes them­selves now I know cars are a lot more advanced than being able to do a lot at home by [01:15:00] your­self but whether that’s changed the mar­ket or whether You know, they’re buy­ing their parts and oil from some­where else, um, but tra­di­tion­al­ly super cheap retail, the super cheap auto part of super cheap, uh, had done well in reces­sions and we’re not see­ing that this time.

Well,

Cameron: my local super cheap I mean, I don’t know what ben­e­fit I get out of that. When­ev­er I go in and buy some­thing, which is rare, I might get a slight­ly cheap­er price as a mem­ber than if I was­n’t. I was try­ing to think out of all the loy­al­ty pro­grams that I’ve been signed up to over the last 10 years, like, which ones do I actu­al­ly get any ben­e­fit that I can I can’t real­ly think of any. What do you think about loy­al­ty pro­grams? Is there any good ones that you can point out?

TK: I think, um, you know, the one that I use is fuel dock­ets, so, [01:16:00] you know, Woolies Rewards or Coles Fly­buys, where they, they record when you’ve spent more than 30 bucks and you get 3 or 4 cents a litre off your fuel, um, you know, that’s a rea­son­able sort of dis­count for me, um, but yeah, I’m in your camp. I get points on my Qan­tas card, which is prob­a­bly the oth­er one that I tend to be a lit­tle bit engaged with, but uh, Actu­al­ly, I’ll take that back.

I get points on my Qan­tas, Qan­tas points on my Visa card, and I recent­ly bought a wine fridge with them, so there was some ben­e­fit in it. Um, yeah, so there’s, yeah, some ben­e­fit in it. But again, I, I saw some improve­ments in retail­ers from using cus­tomer data. A lot of it’s always behind the cur­tain so you don’t see it, but I, you know, I haven’t.

The sort of nir­vana for loy­al­ty pro­grams was that every cus­tomer would get a dif­fer­ent offer. [01:17:00]So, you know, if you’re inter­est­ed in Kung Fu, then You know, Rebel Sport should have been mak­ing you an offer to come in and buy Kung Fu robes from them rather than from some­body else. Um, but I, you know, that one to one mar­ket­ing nir­vana real­ly has­n’t appeared in my life any­way.

Cameron: pro­gram though?

TK: It’s the data, the data, from the re, the re, from, you a good deal on the Kung Fu. out­fit.

Cameron: Right.

TK: Yeah, so that’s, I mean, that’s the, that’s the clas­sic, but the clas­sic exam­ple was Tesco’s and how it inte­grat­ed into their sup­ply chain. And when a mer­chan­dis­er came along and said, we should stop, stop, stop. sell­ing quail eggs in super­mar­kets in the UK.

Uh, they worked out that was a bad idea because that was all the bas­kets of all their best cus­tomers. And if I stopped hav­ing quail eggs, they might take their busi­ness some­where else. So that’s what, that’s the val­ue of a loy­al­ty pro­gram. You don’t always see it, um, you know, [01:18:00] in the results, uh, all out like that, but if that’s going on behind the scenes, that’s great.

But, um, you know, I, I, with­out It being called out, you don’t know, so I ques­tion whether it is.

Cameron: I know I com­plained about Tel­stra last week, so I don’t want to do that again. But, I got an email from Tel­stra recent­ly, you know, to get my mobile plan through, say­ing I had accu­mu­lat­ed points for what­ev­er, and that they were going to expire. I had to use them or lose them, basi­cal­ly, my points. I went and had a look at their shop, and there was noth­ing I want­ed to buy in their shop

TK: Heh heh.

Cameron: Vouch­er or an Ama­zon gift card or some­thing like that, which I did and I’ve got noth­ing to buy at Ama­zon either. So it’s They’re just sit­ting there with Ama­zon gift cards now, but I thought at the time points expir­ing

TK: Yep.

Cameron: points are gonna expire. I was like, [01:19:00] well, that’s just a pain in the ass now I need to take time out to fig­ure out what to do with the points It was­n’t, it was­n’t a ben­e­fit to me.

It was just anoth­er has­sle that I had to deal with or lose the points, which I’m quite sure is what they expect­ed me to do, which was just ignore it and go, Oh, that’s too hard. I don’t have time. And then, you know, they don’t have to wor­ry about redemp­tion of the points. Um,

TK: that’s prob­a­bly my

Cameron: like it, it felt like a, uh, you know, a hack against me.

It did­n’t feel like a bonus. It felt like they were just try­ing to waste my time. So they did­n’t have to pay me out some­thing. Stuck

TK: that’s the That’s, that’s how a lot of the cost of the loy­al­ty pro­grams fund­ed is by points break­age, it’s called. So when they put the pro­gram, when Fly­bys was put togeth­er, it was, there was a cer­tain amount which was assessed by an actu­ary to say well, only, you know, not all these points are ever going to be redeemed and there­fore, you make mon­ey two ways.

One by sell­ing them [01:20:00] to the per­son who pro­vides the reward, like an air­line, that’s a cen­ter point. Um, but then, um, you know, some of those points, uh, nev­er get used. So you’ve sold the point to the air­line of descent, but it has­n’t cost you any­thing. Um, uh, or, uh, You can make a mar­gin, so you can sell some of your own prod­uct to the cus­tomer, um, and you’re basi­cal­ly account­ing for the cost.

So, there’s two, or you’re sell­ing it to a third par­ty at cost and they’re pay­ing a mar­gin to you. So there’s a, you know, that’s, it’s the, it’s the points. Points mer­ry go round that makes these things fun. So I agree with you, it’s not, it’s not, um, the best cus­tomer expe­ri­ence, but it’s how it’s paid for.

Cameron: Cus­tomer loy­al­ty pro­gram where real­ly, you’re not get­ting any­thing out of it. It’s just going to make your life hard­er. And they want you to car­ry a card around. I’m like, lady, I don’t even car­ry a wal­let. What am I going to do with a card? I mean, I don’t want a card. Can I have it on my phone? No, we need to give you a card.

Well.[01:21:00]

TK: Yeah.

Cameron: unless you walk around with me and car­ry the card around for me, I’m not, I’m not tak­ing your damn card. Keep your damn card.

TK: I must admit, we’ve, With Tel­stra I gen­er­al­ly buy a new elec­tric razor every year from their points.

Cameron: An elec­tric razor. Right. I’m old fash­ioned. I have a dou­ble edged razor blade razor, like my grand­pap­py had and his grand­pap­py before him. And Tay­lor has one now too. The same thing. I got my boys into dou­ble edged. Brush, razor blade, old school. Any­way. Okay. Thank you for SUL, Tony. Sucks a lot. That’s what SUL stands for.

Um, that’s it.

TK: Yeah,

Cameron: after hours. Got noth­ing for me? Got any rec­om­men­da­tions this week, Tony?

TK: I do. I’ve got a rec­om­men­da­tion to watch a TV series called Lud­wig. Have you heard of that?

Cameron: Lud­wig?

TK: Yeah,

Cameron: As

TK: [01:22:00] unfor­tu­nate­ly, it’s on chan­nel, it’s on chan­nel 7. Well, it’s named after Beethoven. It’s, um, David Mitchell, an Eng­lish come­di­an. It’s a series that he’s in. And, uh, he, he plays a very, yeah, that guy,

Cameron: Yeah, I know him. Yeah.

TK: plays a very intro­vert­ed char­ac­ter who is the set­ter of puz­zles.

And he adopt­ed Lud­wig as his, um, pseu­do­nym. Um, in the books he writes, in the, you know, news­pa­pers he puts his puz­zles in. Uh, because he likes Beethoven. Um, and it’s, it’s a, it’s a real­ly nice series, quite fun­ny. But he’s, he’s a twin, and his twin broth­er is a cop who goes miss­ing. And so his sis­ter in law cajoles him into tak­ing his place.

Um, as the, his broth­er, sole­ly to go into the, the cop’s office and retrieve some note­books which his sis­ter in law thinks might help to shed some light on where her hus­band has dis­ap­peared to. But of course he gets [01:23:00] way­laid and he’s using his puz­zle skills to solve crime, which he does four or five times and becomes basi­cal­ly a super detec­tive by using log­ic that the cops don’t pos­sess them­selves.

So it’s quite good. I liked it.

Cameron: Sounds good. Sounds sim­i­lar. Did I tell you about that, um, high poten­tial show I watched 15 min­utes of, um, the actress who plays Dean­dra on always sun­ny in Philadel­phia. mar­ried to one of the oth­er stars of always sun­ny. Who’s the cre­ator of the show? Rob McEl­haney, who you would

TK: Oh, yeah, Rick­son,

Cameron: thing.

TK: yeah.

Cameron: She’s got a new show, um, called high poten­tial where she’s, um, a sin­gle moth­er of three, who’s got a job as a house clean­er. She’s just sort of aver­age soc­cer mom kind of stuff. It’s not a house clean­er office clean­er. hap­pens to be clean­ing the. LAPD’s offi­cers one night and she sees some files that she acci­den­tal­ly knocks [01:24:00] over and then she solves the crime and writes who the killer is on the white­board and they come in in the morn­ing and there’s like, some­body’s solved it and they look through the CCTV and find it’s her and drag her in and she’s just got this Sher­lock in mind but she’s very sassy and. know, does­n’t care and blah, blah, blah, blah. I gave it about 15 min­utes and went, no, this is trash. And

TK: Oh, ha, ha, ha, ha, ha, ha.

Cameron: TV ish for me.

TK: Right,

Cameron: sure the David Mitchell does a much bet­ter job.

TK: he’s very, very endear­ing.

Cameron: Webb.

TK: Yeah.

Cameron: Webb back in the day was great. It was real­ly weird and fun­ny.

And what’s the

TK: And the Peep Show.

Cameron: win a, and the peep show. Yeah. And I can’t remem­ber which one it was. The, um, the actress who’s gone on to win a bunch of Acad­e­my Awards. Um, and she was in the crown.

TK: Oh, Olivia Col­man.

Cameron: Olivia Col­man, yeah, she

TK: Yeah.

Cameron: in one of

TK: Mmm.

Cameron: Has a comedic tal­ent and

TK: Mmm.

Cameron: on to [01:25:00] one of the world’s most beloved actress­es in all the Padding­ton films.

Have you seen the Padding­ton films?

TK: I haven’t, no.

Cameron: Just

TK: Are they good, are they?

Cameron: oh my God. Well, one and two, I haven’t seen three and the boys said three was­n’t as good. I think Chris­sy and Fox went to see three too with­out me, but um, school hol­i­days, but yeah, one and two are just mas­ter­pieces. Just real­ly, real­ly well done. And, uh, Hugh Grant is the bad guy in the sec­ond one. Olivia, hold on, Olivia Col­man, no. Is in those? No, she was in, um, Willy Won­ka, the Willy Won­ka reboot. is made by the same guy, and has a lot of crossover cast in it. Did you see Willy Won­ka?

TK: No.

Cameron: Cha­la­met Won­ka? Oh, it’s great!

TK: I’m not a Cha­la­met fan, I got­ta say.

Cameron: Yeah, I know, you’re gonna watch the Bob Dylan biopic?

TK: Oh, maybe. Ha ha ha.

Cameron: biopics [01:26:00] gen­er­al­ly. Biopics tend to just, nev­er real­ly land for me. The John­ny Cash one,

TK: Yeah, I was just gonna say Walk the Line was good. Yeah.

Cameron: Walk the Line was sur­pris­ing­ly good. I can’t

TK: Mmm.

Cameron: one that I

TK: The Doors. I liked Oliv­er Stone’s The Doors.

Cameron: Doors I real­ly liked, and we re watched that not that long ago, in the last year or so, we re watched that, held up real­ly well. Val Kilmer did a great job, um, Kyle MacLach­lan did a great

TK: Mmm.

Cameron: although he was­n’t in it that much, but yeah, most­ly Val Kilmer.

Love Val Kilmer, big Val Kilmer fan. Like the only good thing about the last Top Gun film for me was the Val Kilmer cameo, which was kind of very bit­ter­sweet and sad.

TK: was, was­n’t it? Yeah. Bukows­ki.

Cameron: got a cou­ple of things for you. Notes of a dirty old man, um, When the pow­er was out here on the week­end, I went down to my book­shelf, which I nev­er go to because I don’t read paper books, thought I got to find a paper book to [01:27:00] read.

We, Fox was going nuts, um, with no Wi-Fi. So we, Tay­lor was still here and Tay­lor had pow­er. So Tay­lor took him for the after­noon and Chris­sy and I just, it was like, it, we were both said it was like a week­end. 30 years ago, 25 years ago, remem­ber before the inter­net,

TK: Yeah, I love that.

Cameron: devices,

TK: We often have week­ends like that. I spent Sun­day read­ing. And so did Jen­ny.

Cameron: Chris­sy and I just pulled out books and we curled up on the lounge and made a cof­fee and there was no air con. So it was a bit sort of mug­gy doors open breeze com­ing through storm out­side, up with a book, can­dles. It was love­ly.

TK: It’s like being on hol­i­days. Yeah.

Cameron: So any­way, the book I pulled out was Notes of a Dirty Old Man, which. I think bought in San Fran­cis­co in the late 90s, [01:28:00] prob­a­bly. read it since then. I read Post Office recent­ly, when you put me onto that. And I’ve read some­thing else of his recent­ly, but I went, I start­ed read­ing it. Abs, I’m, I’m deep into it now.

TK: It’s good? Oh, good.

Cameron: it’s great.

TK: Okay.

Cameron: great. And I thought the fun­ny thing is I now am dirty old man, prob­a­bly the age he was when he wrote the book.

TK: Right.

Cameron: So, you know, mis­sion accom­plished, I thought. I read that when I was in my twen­ties, now I’m in my mid fifties. Yeah, it’s real­ly good. I’m real­ly enjoy­ing it.

TK: Yeah, you’ve seen the movie, haven’t you, too? Tales of Ordi­nary Mad­ness?

Cameron: no, what’s

TK: fuck. It’s great. Ben Gaz­zara plays Bukows­ki.

Cameron: Oh,

TK: think, from mem­o­ry, is it Ornel­la Muti, I think, plays his girl­friend? It’s bril­liant.

Cameron: Well, no, but I’ve seen Barfly,

TK: Yeah, let’s

Cameron: many, many years.

TK: I’m pret­ty sure Barfly came out [01:29:00] Around the same time, you know, how dif­fer­ent stu­dios

Cameron: Yes.

TK: is mak­ing a Bukows­ki, so they make a Bukows­ki. But I always thought Ordi­nary Mad­ness was much bet­ter.

Cameron: I’ve nev­er seen that. Ben Gaz­zara. Wow. Love Ben Gaz­zara. I haven’t

TK: Ooh.

Cameron: for years. Um, right. I’m just look­ing at it. It looks, sounds great. Oh, thank you for that tip. Ital­ian pro­duced by the looks of it. Mar­co Fer­reri. Um. The oth­er thing is Chris­sy’s friends Robert Forster and Karen, his wife, out with a new track.

Uh, the first track off their new upcom­ing album. It’s called Straw­ber­ries. They shot a video clip for it, set in their kitchen, like most of their video clips in recent years are set in their kitchen. And it’s love­ly. It’s a

TK: Oh, okay.

Cameron: I high­ly rec­om­mend it. I think you know the [01:30:00] sto­ry, um. But Karen was diag­nosed with stage four can­cer a cou­ple of years ago. Um, and she got through it and their last album was sort of writ­ten and record­ed as they were going through her, you know, um, what­ev­er she was going through chemo and they thought she was going to die and they wrote and record the last album. That’s the one that Chris­sy on one of the tracks. Karen came through it and she’s got a clean bill of health.

TK: Wow.

Cameron: this song is kind of about rebuild­ing after hav­ing gone through it. It’s a very sweet track, love­ly. Um, the open­ing line is some­body ate all the straw­ber­ries that some­body might’ve been me. And it’s, um, but it’s. It’s a real­ly sweet track. And know­ing this cou­ple, they’re, been togeth­er for 30 years.

They’re crazy in love. They’re like a big romance sort of cou­ple. They dote on each [01:31:00] oth­er. sings and plays vio­lin and plays lock and spiel and sings back­up vocals in a lot of his albums. they’re a real­ly sweet cou­ple. So it’s real­ly sweet. A bit like was with. Lau­rie Ander­son kind of thing. Just a real­ly sweet. They met, she used to be in a band when she lived in Ger­many. uh, any­way, yeah, yeah. So check that out, Straw­ber­ries, Robert Forster on

TK: Yeah, okay. Thanks.

Cameron: Real­ly, real­ly, real­ly love­ly song and real­ly sweet film clip.

TK: Yeah, I love Forster.

Cameron: Yeah. He’s great. And it just gets bet­ter with age. He’s one

TK: Yeah.

Cameron: like gets bet­ter with age. I love all of his new stuff.

TK: I loved, I must have been about 85, I lived in Spring Hill in Bris­bane, and, uh, real­ly felt, you know, close to the go betweens because I’d, just in a few years before, I’d writ­ten all about Spring Hill and had a real­ly good vibe to it. [01:32:00] Real­ly nice time of life.

Cameron: That’s good. Uh, well, that’s it from me, Tony. Thank you again. We had,

TK: Yep.

Cameron: you an email this morn­ing say­ing we’ve got noth­ing to talk about. And it’s been an hour and a half of us talk­ing about noth­ing. So. That’s how

TK: Yeah. Oh, before I for­get, I’ve got, prob­a­bly going to have three hors­es run­ning this week. Two on Thurs­day night at Pack­en­ham, uh, Bath Lake and Lake For­est, and then future changes on Sat­ur­day at Gee­long. Ah. Oh,

Cameron: of Hunter, my son has just been in Austin, Texas for a South by South­west the cou­ple of last cou­ple of days, went to the pre­miere of Ben Affleck­’s lat­est film, Accoun­tant Two,

TK: I love the accoun­tant. Great Phil.

Cameron: uh, Well, I haven’t seen it, but he, uh, he said this was good. And, um, he was at the after par­ty. Affleck was there. He said he ran into Matt Damon, sort of bounced into, sort of bumped into him and his [01:33:00] secu­ri­ty. He was

TK: Wow.

Cameron: a club one night and there was two guys block­ing the door­ways. Excuse me, can you mind if I get past? And it was, um, Casey Affleck was one of the guys that was block­ing the door­way.

So was rub­bing shoul­ders with, uh. Celebri­ties over there.

TK: Fan­tas­tic. Yeah, South by South West would be a great thing to go to.

Cameron: I told him like he was like, oh, I don’t want to go to Austin I don’t want

TK: Ah,

Cameron: bunch of cow­boys. I said, you know, I’ve want­ed

TK: North Austin. Yeah.

Cameron: not Austin. Yeah. Yeah, remem­ber Taran­ti­no used to run a film fes­ti­val there every year At the Alamo. And I, you know, I des­per­ate­ly, he’d do like four days of just back to back films from his pri­vate col­lec­tion.

He’d intro­duce every­one, talk about it, why it was impor­tant, got to go. I mean, it kills me. That would have been just.

TK: Ooh.

Cameron: Like just heav­en. We should have [01:34:00] gone

TK: Ooh. Would have been great.

Cameron: But yeah, let’s go to Austin some­time. Do a QAV in Austin. Once our Amer­i­can show kicks off and it’s huge, go over and we’ll do an Austin event.

Yeah,

TK: in there. Yeah, I’d like to go. I haven’t been there, but I’d like to go there. I heard good things about it.

Cameron: me too. Every­one lives there now. Like Elon lives there. Joe Rogan’s based in Austin. Um. Uh, the guy who does

TK: Yeah, maybe I won’t go to Austin then.

Cameron: pod­cast, sort of where a lot of, a lot of, um, yeah, tech indus­try, movers and shak­ers, uh, live in Austin now. Cause it’s cool. It’s a cool place.

TK: Well, it’s the cool part of Texas, but I think they’re more attract­ed because Texas has very low, if not zero, state tax­es. Yeah.

Cameron: No

TK: It’s either Texas or Flori­da. Yeah.

Cameron: Yeah. Yeah.

TK: They start off in Texas, then they go to Flori­da in about 20 years. Yeah.

Cameron: Less hur­ri­canes, Texas maybe. All right. [01:35:00] Thank you

TK: Okay.

Cameron: Talk to

TK: Thanks.

Cameron: Ciao.

TK: Have a good week. [01:36:00]