QAV 821 — Roombas, Regulators & Rogue Traders

 

[00:00:00]

Cameron: Hel­lo, Tony. Wel­come to QAV Aus­tralia, episode 8 21. We are record­ing this on the 27th of May, 2025. What’s new with you, TK?

TK: Oh, hi camp. Well, um, it’s, uh, what’s new with meats. Love­ly weath­er down here, but get­ting cold. Um, the only news we had was our gas ran out yes­ter­day, so, got an emer­gency deliv­ery. So

Cameron: It ran out.

TK: yeah,

Cameron: not on, you’re not on pipes.

TK: gas down here. Yeah. Yep.

Cameron: Wow.

TK: Yeah. So no broad­band, no pipe to gas. Um, any­way, they, so they installed like a, I mean, shout out to Super Gas for being respon­sive and get­ting us filled up quick­ly.

But, um, I had­n’t been check­ing the gas lev­el because they installed an anten­na on the. [00:01:00] The gas bot­tles and said, don’t wor­ry about call­ing us now. We’ll know when it’s run down and we’ll come and fill you up. And it did­n’t work and I did­n’t check. And so it ran out. So we had no heat­ing or hot water or gas cook­ing for 24 hours, but it got fixed.

Good on them for doing it for us. So out to them for the help. But yeah, that’s news that was, uh, dicey. I could have been sit­ting here in a wool­ly jumper rather than my QAV T‑shirt today.

Cameron: Cold show­ers. Wow.

TK: Yep. It was fun­ny, um, when the gas came back on, Jen­ny dove straight in the show­er and I fired up the cook­er and had bacon and eggs and Jen­ny said, now we know what we both have as a

Cameron: The pri­or­i­ties. Yeah. Mm. I remem­ber when we had that, uh, cyclone hit here. For some rea­son, our gas water heater blew up and it took. Only a day or two for them to get that replaced. But uh, you real­ly appre­ci­ate the [00:02:00] gas

TK: Oh

Cameron: when you don’t have, when you’re hav­ing cold show­ers for a day or two.

TK: yeah. Yep. So, yeah, it was­n’t off long enough. I, I did­n’t have a show­er. I planned to have one at the gym or the club­house it got extend­ed, but, know, best came back on with­in 24 hours. So I had one then. Yeah. But that was the, that was our big news. We did­n’t know what was gonna hap­pen. We could have been, ’cause the truck only comes once a week and luck­i­ly it was Mon­day and the gas went out on the week­end.

So, um, I rang up and, and sort of said, you know, come on, your anten­na did­n’t work. He’d rather fit us in the sched­ule and they did, which was good.

Cameron: Good for them.

TK: Yeah.

Cameron: Well, let me get onto port­fo­lio updates. Tony, uh, the Aus­tralian dum­my port­fo­lio was down lit­tle over 1% in the last week ver­sus the bench­mark, which was up For the finan­cial year, we are up [00:03:00] 15.3% per annum ver­sus the bench­mark, which is up 13.06% per annum. Since incep­tion, we’re up 13.43% per annum ver­sus the bench­mark up 8.87. as you and I were talk­ing offline the oth­er day, depends when you actu­al­ly start our, uh, If you track it from the day of the first invest­ment, I think that’s where it comes in. If you. Track it from when we actu­al­ly had invest­ed the $20,000 in cap­i­tal. It’s bet­ter than that, but I thought Navex had told me it all comes out in the wash when they cal­cu­late it, but the num­bers are dif­fer­ent, so I don’t know.

TK: Yeah, I, I, I would do it from when we were ful­ly invest­ed. ’cause then you’re com­par­ing apples with apples. Oth­er­wise you’re com­par­ing cash to the ASX.

Cameron: Yeah, yeah. Well, yeah, I thought last time I talked to [00:04:00] Navarre at Navea, he said they don’t do that. They just cal­cu­late each, share the per­for­mance of that. They don’t look at the uh, dur­ing that peri­od. They only look at it once it’s invest­ed. I’ll have to go back and check my notes any­way. ’cause if you look at it from when it was ful­ly invest­ed, I think we’re doing dou­ble mar­ket over that peri­od of time.

If you look at it from day dot, it’s not, it’s about 50% than the mar­ket.

TK: We took some­thing, I think you took some­thing like six months to become ful­ly invest­ed, did­n’t you? You did­n’t just go straight away and have a port­fo­lio.

Cameron: No, because I was doing them one at one at a time, and

TK: Hmm.

Cameron: it was, was slow, slow going back in those days. The US port­fo­lio was also down about 1% this week in the last sev­en days ver­sus the bench­mark up near­ly 10% cent. And for the finan­cial year, the Aus­tralian finan­cial year that is the US port­fo­lio is now up 25% ver­sus the bench­mark up a lit­tle under [00:05:00] six. So it’s come, like the US port­fo­lio has come down a lot since Trump’s tar­iffs kicked into gear, but it, it, it’s still doing quite well. I mean, it was up like a hun­dred per­cent on the mar­ket, I think at one point, uh, like four times the mar­ket up a hun­dred per­cent at one point. It’s, it’s regressed a lit­tle bit, but it’s still doing quite well by com­par­a­tive.

But like, I think w. Uh, will Willis leas­ing com­pa­ny, WFLC was up like 300%, 350% at one stage. It’s now only up 177%, so it’s, it’s tak­en a bit of a beat­ing with, I don’t know why the tar­iffs are affect­ing it, but it’s tak­en a bit of a beat­ing any­way, so that’s that. Uh, what else? HLSI sold our parcels of HLS yes­ter­day after the div­i­dend, their spe­cial cash div­i­dend, which was quite large when it was, [00:06:00] it was paid.

The pay­ment date was last Fri­day, the 23rd of May, and when I checked yes­ter­day, the share price was about. 30% below our buy price. So it, you know, once the div­i­dend was gone, it’d blown right through our rule one. Even if I took the 20% rule one, can’t remem­ber exact­ly where it was vis-a-vis the three point trend line, but I think it was pret­ty close to that as well. I know you talked about giv­ing it a bit of grace to come back, but I was not feel­ing very grace­ful, uh, yes­ter­day, so I dumped it.

TK: It’s your pre­rog­a­tive.

Cameron: Yeah. Uh, and I’m, I’m tempt­ed to check and see what hap­pened to it today, but I’m not gonna, because I, I don’t wan­na hurt. I don’t want the pain if it’s come back up.

TK: Don’t look up

Cameron: Yeah. Yeah. That’s it.

TK: They might be doing bet­ter.

Cameron: Well, um, why does Trump keep [00:07:00] using the burn the house down? as his open­ing line in nego­ti­a­tions. Tony, this week’s fire, there’s been two. said he was gonna slap 50% tar­iffs on the EU. he also said he was gonna slap 25% tar­iffs on Tim Apple because, uh, they’re mak­ing their iPhones in India, not in the US yet.

And he’s not hap­py about that. And then sur­prise, he got a phone call from the EU and he said, all right, all right. I was only kid­ding. Any­way, we’ll put a pause on the 50% tar­iffs, we put a pause on the oth­er tar­iffs. just get­ting out there say­ing loud, noisy things, and then walk­ing them back a day or a week or a cou­ple of weeks lat­er. And I don’t know what your take is on it, but my take that this is just clas­sic Trump mis­di­rec­tion and smoke­screen. [00:08:00] It is, keep the media busy, keep the pub­lic busy say­ing these out­landish things that every­one has to re, I mean, the media has to react to it. They can’t not react to it. his project 2025 team are push­ing through the one big, beau­ti­ful bridge bill. It’s a beau­ti­ful bridge it’s gonna be there every time I hear about the one big, beau­ti­ful bill. That’s all I hear. It’s a big, beau­ti­ful bridge. It’s clas­sic old school mag­ic mis­di­rec­tion. You know, watch the right hand while the left hand is pass­ing a bill full of, uh, sneaky gotcha claus­es that they’re hop­ing no one, and they’re try­ing to push it through.

They did push it through the house. They’re try­ing to push it through the Sen­ate. They’re try­ing to rush it through. A cou­ple of Repub­li­cans, like Rand Paul are push­ing back and going, whoa, whoa, whoa. Hey, hey, hold on. Slow down. It’s also gonna increase the [00:09:00] deficit by $4 tril­lion. He’s sup­pos­ed­ly, you know, try­ing to fix the deficit prob­lem while push­ing through a bud­get bill that’s gonna increase it by $4 tril­lion, accord­ing to most econ­o­mists.

But that’s like this whole, you know, the mar­ket reacts every time he says he’s going to put tar­iffs up, and they, they crash, it crash­es, and then it bounces back when he says, oh no, I was only kid­ding a day or two lat­er. I mean, it’s just, it’s just mad­ness. Tony. It’s mad­ness.

TK: You? Yeah, it is. Well, yes and no. It’s not mad­ness. It’s cal­cu­lat­ed as you say, it’s flood the zone.

Cameron: Flood the zone,

TK: I also think it’s, have to go back and leaf through the art of the deal. It’s, it’s lever­age for him to be able to say to Europe, I’m slap­ping a tar­iff on you now. Gimme a call and we’ll talk about it and I’ll that back.

Cameron: but they’re already It’s [00:10:00] not like he has to force them to pick up the phone because they’re already talk­ing.

TK: no, he is forc­ing the pace. He’s got midterms com­ing up, so he is forc­ing the pace. ’cause you know, rene­go­ti­at­ing a free trade agree­ment takes years and years and years and he has­n’t got the patience for that. Um, or the abil­i­ty to con­cen­trate for that long to keep every­thing going straight in his head over that time peri­od.

So he’s, he’s com­press­ing the time zone. It’s a nego­ti­at­ing tac­tic.

Cameron: Izzy though, com­press­ing the time zones.

TK: absolute­ly. You,

Cameron: What DHH, what evi­dence do you have of the, that deals have been done in a com­pressed time zone.

TK: none. um, what’s her name? Meel or Van Lewin, what­ev­er the, uh, EU

Cameron: she a sci­ence fic­tion author?

TK: Kay­la Gwynn. Yes.

Cameron: Yeah, that was her, yeah.

TK: yeah. Uh, well, she said she’ll have a deal done by what­ev­er the dead­line was, July 21 or some­thing. Um, [00:11:00] Mid­sum­mer Equinox, when they can all dance around the bon­fire. But, um, so that’s what it’s about.

He’s, he’s try­ing to get some lever­age and it may work. Um, I don’t think he’s focus­ing, I don’t think the tar­iffs are the issue for him, apart from the fact he thinks it’ll raise funds to help cov­er the tax cuts in the big, beau­ti­ful breach Bill. he’s, I, my gut feel is that. The tech bros want him to get the EU to back down on some of the restric­tions they place on, you know, um, news con­tent gath­er­ing on, uh, pri­va­cy issues on Google, being a monop­oly, et cetera, et cetera.

So I would­n’t be sur­prised if, if, uh, again, it’s a mis­di­rec­tion, but it’s bring­ing the EU to the table to get some kind of con­ces­sion for, um, his sup­port­ers.

Cameron: Speak­ing of things, I, I took the one big beau­ti­ful bridge bill and I threw it [00:12:00] into Google’s Gem­i­ni AI morn­ing, and I said, read this and tell me what claus­es, uh, the aver­age Amer­i­can should be most con­cerned about. And one of them that it pulled out was that the bill pre­vents any states from try­ing to reg­u­late AI for 10 years. So no one’s allowed to reg­u­late AI in the us.

TK: those neg­a­tive waves, cam. It’s a beau­ti­ful bridge. It’ll be there.

Cameron: Yeah. All right. Well, that’s, uh, it’s inter­est­ing any­way, from a, so from a mar­ket per­spec­tive, from an invest­ing per­spec­tive, obvi­ous­ly we, we have, I. It’s, it is noise, but it affects our port­fo­lios

TK: yeah,

Cameron: all we can do is just do what we nor­mal­ly do. Right. Just it day by day.

TK: exact­ly. Tune into the com­pa­nies and tune out the noise. But, um, I was sur­prised dur­ing your [00:13:00] mar­ket update that the US stock mar­ket is up 10% in a week. I mean, that’s huge.

Cameron: Yeah.

TK: about the size of the US mar­ket to move by 10%. That’s a, that’s an incred­i­ble amount in a short peri­od of time.

Cameron: Yeah. Well, let me, um, let me just pull up my stocks chart here, s and p 500 in the last week. it’s down now. Well, that’s no good. How’s that work? How well it did jump? Quite a bit from. The 10th of May up to the what, the 21st of May, but now it’s, uh, down last day or two. Any­way, it’s been, you know, top­sy-turvy as all hell.

TK: Oh yeah. Incred­i­bly

Cameron: Mm Uh, what else have I got? Well, the buy list this week we had some new stocks on the buy [00:14:00] list, uh, TPG it’s been on before, but reran, I guess, includ­ing ref­er­ence, T‑P-G-E-Z-L-T-W‑R.

And the one I wan­na talk about, VVA, Viva Leisure, which last gyms, uh, Viva Leisure had an announce­ment yes­ter­day too, that they had tak­en a strate­gic stake in a com­pa­ny called Goril­la X Labs that, uh, make goril­las.

TK: Mm-hmm.

Cameron: It’s, it’s, it’s a lab. Uh, goril­la, uh, goril­la Glue and, uh, just goril­las, they just breed goril­las. goril­las make goril­las great again. That’s their, their mot­to. No, it’s a, it’s a drinks com­pa­ny. They make per­for­mance drinks kind of thing. I did buy some VVA for the light port­fo­lio. When I [00:15:00] sold HLS yes­ter­day, I bought some VVA and the share prices col­lapsed since then. Oh, that’s great. God Damnit. VVA. Obvi­ous­ly the mar­ket did­n’t real­ly like that announce­ment after it came out. I did check it before I bought it, after the announce­ment had come out and the mar­ket had­n’t react­ed to it, and I thought, oh, okay. And then it col­lapsed. But I did go back and read. You did a pulled pork on VVAA while ago.

TK: they run a series of, a net­work of gyms, don’t they?

Cameron: Yeah, I went back and reread your pulled pork, read the tran­script of it, uh, to see what you had to say about it. It’s an inter­est­ing busi­ness and you, you high­light­ed a lot of the, the risks and con­cerns of it back then. But, uh, they’re back on the buy list again. They’ve had a, they haven’t had a great run in the last cou­ple of years.

It’s been very [00:16:00] tur­bu­lent, as have many things. the share price crashed in March down to a dol­lar 20. It’s been work­ing its way back up. It’s like a dol­lar 34. Dol­lar 33 today has been as high as dol­lar 50 over the last cou­ple of years. But, uh, yeah, I don’t know much about what’s going on in the gym busi­ness, but, um, yeah.

’cause I’m a, I know a lot about the kung fu busi­ness, not so much about the gym busi­ness.

TK: Well, maybe they’re cloning goril­las to be per­son­al train­ers in the gyms, you

Cameron: I was just won­der­ing,

TK: do your pushups, you have to, they put you on the tread­mill and they think that you, you’re run­ning away from a goril­la, but

Cameron: I was won­der­ing this, this morn­ing when we’re gonna have robot home secu­ri­ty and I was think­ing he was­n’t real­ly

TK: build­ing.

Cameron: he was not real­ly a robot. He was like a more of [00:17:00] a cyborg I think.

TK: No,

Cameron: I was think­ing.

TK: rope. There was secu­ri­ty

Cameron: Oh, they were, that’s right. He had to shoot them or some­thing, did­n’t he? He had to blow them up at some point

TK: Mm-hmm.

Cameron: I was think­ing they were like not even humanoid robots. What about the Room­ba? The Room­ba should have a cam­era built into it and a micro­phone.

So when you’re out of the house, if it hears some­thing. It should self acti­vate. Zip, zip around with a cam­era look­ing for intrud­ers. do an intrud­er alert at night when you’re sleep­ing. It can be lis­ten­ing and then zip­ping around the house if it hears any­thing. should have some ai so it can tell the dif­fer­ence between a cat and a, an intrud­er in the house.

And then it could have like a lit­tle stun gun built in it so it could like just zap intrud­ers in the house.

TK: Why stop. with a stun gun?

Cameron: Oh, really?[00:18:00]

TK: Go the full sub­ma­chine gun. Oops. Made a mis­take. It was, it was Fox going to the bath­room. Sor­ry about that.

Cameron: Well that’s my new busi­ness idea. Room­ba. Room­ba Secu­ri­ty. Room­ba Secu­ri­ty robots. Mm-hmm.

TK: Yeah, Right. Be like the Daleks. If you have a two sto­ry place, it gets to the stairs and can’t get up or down.

Cameron: NWH, also on our buy list. Uh,

TK: hear you say that, I think of what you used to call them.

Cameron: yeah, yeah, yeah. Nin­jas with atti­tude. Yeah. Uh, min­ing con­trac­tor, NRW has warned of a $113 mil­lion impair­ment from a messy dis­pute over who con­trols the Whyal­la port near the loss mak­ing steel­work seized from San­jeev Gup­ta’s Empire. In Feb­ru­ary, NRW shares plunged 8% on Thurs­day after the West­ern Aus­tralia [00:19:00] based com­pa­ny came out of a trad­ing halt on the ASX.

This is an arti­cle in the Finan­cial Review from May 15th. The Holt was prompt­ed by a move by the South Aus­tralian gov­ern­ment on Tues­day to amend leg­is­la­tion and over­ride a legal dis­pute to give the way ALA Steel Works Admin­is­tra­tor Kor­da­Men­tha clear title to the whale port so it could embark on a sale process with cer­tain­ty. I got a feel­ing you’ve talked about this in the past. Have you talked about this

TK: I from mem­o­ry, I think we raised it as a news item when that went into a trad­ing halt.

Cameron: right?

TK: they, they have a sub­sidiary from mem­o­ry, it’s called Gold­ing, who con­tract min­ing for the Gup­ta group of com­pa­nies. I think from mem­o­ry be an iron ore mine close to the steel­works. And they were run­ning that to pro­vide iron ore to the steel­works.

so when, the steel­works went into admin­is­tra­tion, then um, uh, there was a lot of spec­u­la­tion. The com, the com­pa­ny was [00:20:00] gonna lose over a hun­dred mil­lion dol­lars from mem­o­ry and, uh, they went into a trad­ing halt. Um, inter­est­ing­ly enough, the share prices recov­ered a bit since then. ’cause that was, as you say.

May 15. Uh, and all I could see was an announce­ment from NRW say­ing that they had some secu­ri­ty over this, assets, uh, involved, um, did­n’t dig down far enough to see what the assets were, but whether that was pro­vid­ing the mar­ket com­fort enough to, um, to start buy­ing the stock again. But, uh, it cer­tain­ly turned up in the last week.

Cameron: Well, I, I just scrolled through my notes. I, I, we talked about it when they had the trad­ing halt back in Feb­ru­ary. Then we talked about it again in Feb­ru­ary when the CFO sud­den­ly resigned. Uh, but I dun­no if we put a red flag on it or not. We also talked about that, uh, [00:21:00] their com­mod­i­ty expo­sure a lit­tle while ago.

Uh, we men­tioned the CFO, but did we put a, do you remem­ber putting a red flag on this?

TK: I don’t recall it. Sor­ry.

Cameron: Hmm. I’ll have to look up my, uh, tran­script of that episode. I don’t think I have it in my notes as red flagged. Let me just check.

TK: I thought we talked about the most recent trad­ing halt, but it may have just been in my notes that we did­n’t get

Cameron: I.

TK: ’cause there was a cou­ple of, you know, there was a cou­ple of things we did­n’t get to dur­ing report­ing sea­son.

Cameron: Mm, well I was going over this yes­ter­day and I end­ed up adding it. I, I added it to my super yes­ter­day ’cause I had to sell HLS well, I decid­ed to sell HLS from my super and I replaced it ’cause I was look­ing at this and I was like, look, I, I took it as a, as a unfor­tu­nate event, but I did­n’t think it was gonna have any sort of long-term under­ly­ing impact on the busi­ness.

And the rest of the busi­ness looked okay. [00:22:00] So I decid­ed they’ll fig­ure it out and put my trust in man­age­ment to work with it. And the share price has been a lit­tle bit depressed a result of this. So I thought it might be a good time to buy in. It was on the buy list,

TK: Mm-hmm.

Cameron: so we will see what hap­pens. But I just want­ed to high­light that I did buy it.

TK: Okay. No thank you. It was, um, yeah, it, it’s a bit com­plex. I mean, if it’s the com­pa­ny’s admin­is­tra­tion and they have secured assets, they may get their mon­ey back or they might get cents in the dol­lar. And then the ques­tion is, um, uh, how does that affect it? So that would be, I’m assum­ing, their own monies by the Gup­ta Empire, haven’t been paid, and they’ve done work with­out being paid.

So it’ll be a write off, which will affect their accounts. but yeah, going for­ward, yeah, I’ll move on.

Cameron: Yeah. All right. Well, that’s all I have in my notes. What have you got in your notes for today? Tk,

TK: Yeah, not much. Just the [00:23:00] pulled pork to do on ANZ, the bank,

Cameron: our old friends.

TK: not the, not the whole of Aus­tralia and New Zealand, just ANZ, the bank,

Cameron: Oh, that’s good. Don’t have time. Don’t have time for you to do the whole coun­try.

TK: I. 40,000 years ago, the, uh,

Cameron: Mm.

TK: the

Cameron: You’ll start,

TK: sprin­kled star­dust on the lizard dream­ing.

Cameron: you’ll, start bang­ing on about tax­ing. Super funds, again, unre­al­ized gains and super funds. By the way, shout out to any­one who was one of the 60,000 views of that video on Tik­Tok from last week, who’s now lis­ten­ing to the show. Wel­come. Thanks for join­ing us. I,

TK: Yeah. Thank you. we’ll try and man­u­fac­ture some oth­er con­tro­ver­sy for you. We’ll pick, pick some­thing out of what we say. Put it up on Tik­Tok, so,

Cameron: yeah.

TK: uh, every­one can have a bang on about their point of view. I think I’ve said enough about the super fund, [00:24:00] um, except to say one more thing, is that the thresh­old for the extra tax and the tax on unre­al­ized gains is not indexed.

So you might think that it’s only gonna apply to rich peo­ple like you and I cam, but, uh, with­out index­a­tion, it’s gonna affect most peo­ple over time. So just, uh, con­sid­er that when you are, draw­ing your bat­tle lines for, for a Tik­Tok bat­tle on unre­al­ized games. Any­way. Pulled pork on A and Z. Um, want­ed to clear, I own the stock.

Uh, so off the bat, um, that have a look at their share. today. It’s cur­rent­ly Josephine. but it did go ex-div­i­dend on the 13th of May and uh, with a bit of a long pay­ment date until July 1st. So you should take that into account. Uh, if it does, uh, flirt with the cell line ’cause it is in a bit of a down­trend since it went ex-div­i­dend.

But you know, that’s what hap­pens when these large stocks go. Ex div­i­dend, [00:25:00] di div­i­dend was 83 cents 70%, 70% frank­ing, uh, on that. So it’s worth the round about a buck in round num­bers. So, uh, um, sale price is cur­rent­ly $27 28 and the share price when I did the analy­sis this morn­ing was 28 64. So, um, with­out tak­ing a div­i­dend to into account, it’s only, um, you know, a bit over a dol­lar above the sell price.

Um, sec­ond bull line is 29 point 63, so. If you add the div­i­dend and the frank­ing cred­it to the cur­rent price, it is float­ing with a sec­ond byline. So just be aware of that if you can, are con­sid­er­ing buy­ing it that, um, it is ex-div­i­dend and we don’t get paid until the 1st of July. Uh, inter­est­ing time to talk about ANZ.

It’s in a bit of, um, bit of flux because there’s a new CEO com­ing in. Uh, a guy called Nuno Matos, which we, we did report when he came, when he start­ed a cou­ple of weeks ago, [00:26:00] hire. He’s already recruit­ed his first senior exec from a bank called San­tander Span­ish Bank. Um, he’s com­ing across to be the oper­a­tions man­ag­er, and I would expect there to be more inter­na­tion­al recruits, uh, into the exec­u­tive rank.

So there’ll be turnover in the exec­u­tive ranks of ANZI would expect. Thought I’d spend some time just, uh, set­ting the scene for what he’s got on his plate, um, imme­di­ate­ly with­out wor­ry­ing about what his strat­e­gy and direc­tion is for the bank. first thing is a cou­ple of, you know, gen­er­al back­drops to bank­ing.

Um, inter­est rate cuts are hap­pen­ing. This year, I would’ve thought, um, we’ve had one already, which was only 25 basis points. RBA in their speech­es, when they talked about the cut, thought that there would be, you know, giv­en all that’s going on in the world with tar­iffs and uncer­tain­ty, that there would be more cuts dur­ing the year.

uh, I think should be a tail­wind [00:27:00] for Aussie banks because, um, it’s like­ly that inter­est rate cuts will spark, um, inter­est in the hous­ing mar­ket, which would mean more mort­gages out with banks like ANZ. So I sus­pect that, um, he gets a, gets a tail­wind behind him on that. The oth­er thing which I thought was inter­est­ing was a cou­ple of reports I read in the papers recent­ly about n Z’s use of arti­fi­cial intel­li­gence and, uh, ANZ aren’t the only bank doing this.

I think all banks are prob­a­bly doing it. but uh, last week I. As report­ed in the, uh, fin, um, the ci, the chief, uh, uh, it offi­cer of, um, of ANZ came out and said his teams are cre­at­ing arti­fi­cial intel­li­gence pow­ered agents that will ini­tial­ly be deployed to help bankers pre­pare for client meet­ings, lift­ing work­force pro­duc­tiv­i­ty.

Jared Flo­ri­an, who [00:28:00] has been group exec­u­tive of tech­nol­o­gy at ANZ for more than eight years the roll­out of AI sys­tems that work along­side bankers on every­day tasks will be the sin­gle biggest change pro­gram the bank under­takes. Over the next few years, agents will soon be help­ing ANZ busi­ness.

Bankers can pow­er reports on com­pa­nies and sec­tors improve engage­ment dur­ing meet­ings. Flo­ri­an said in time agents could be used to triage loan appli­ca­tions, AI’s com­ing. ANZ are adapt­ing it. So that could be anoth­er, anoth­er tail­wind for them be a com­pet­i­tive advan­tage ’cause I expect all the banks will be doing it, but it, it should be a boost of pro­duc­tiv­i­ty you would hope.

So they’re, they’re two sort of gen­er­al back­ground things. The oth­er things that are going on at ANZ that inter­est­ing to call out one is a, a IT project, which has been going on for a long time, called the One Plat­form. And this is a, an app on your phone, which is, um, ANZ intends to migrate all cus­tomers [00:29:00] across to time and then, um, uh, start to pro­vide dig­i­tal bank­ing ser­vices to cus­tomers rather than the sort of clunky branch ser­vices that hap­pen now.

Uh, so ANZ report that they have reached a mil­lion cus­tomers on their one plat­form app. Um, that ha that was a, uh. Report­ed on the 13th of March this year. Um, and they also report­ed that they’re going to it eas­i­er for peo­ple to log in. They’re gonna scrap inter­net bank­ing pass­words, um, in an Aus­tralian first secu­ri­ty move.

So this is a report from Chan­nel sev­en News. Uh, inter­net bank­ing frames plus cus­tomers will be rolled out in mid 2025, and that is what is set to be a pass­word free expe­ri­ence. bank said it was the first pass­word­less web bank­ing fea­ture in Aus­tralia Instead of a pass­word, cus­tomers will be able to log into their accounts using a pass key, which could be their fin­ger­print face or mobile device.[00:30:00]

PIN or cus­tomers will be able to enter their mobile phone num­ber and approve a login request by, uh, sent to their ANZ plus app. By intro­duc­ing this change, we’re help­ing pre­vent cus­tomer login details from the risk of data breach­es or phish­ing attacks. Uh, the bank said, so

Cameron: Hold on a sec­ond. just logged into my Bendi­go Bank app with my face. I don’t have a pass. I don’t have a pass­word on my Bendi­go bank app.

TK: shush can, it’s

Cameron: That’s not right.

TK: ANZ are claim­ing it’s a first.

Cameron: ANZ are full of .

Cameron Reil­ly: beep

TK: Hmm.

Cameron: I’ve had that on my Bendi­go Bank app for a year or so.

TK: Real­ly? Wow.

Cameron: Hmm.

TK: Okay. Well, Nuno needs to take note. Can’t talk to the mar­ket­ing team at ANZ. Uh. How­ev­er, um, the ANZ plus plat­form has not been with­out its con­tro­ver­sy and, uh. [00:31:00] The, uh, an arti­cle in the, uh, I think it was in the fin any­way, an arti­cle, um, uh, writ­ten by James there. So that’d be the fin says, um, ANZ Quizzed Over Aris of new plat­form cost­ing $1 mil­lion a day since the project was first flagged in 2020, app with lim­it­ed func­tion­al­i­ty launched in 2022, the bank has spent $1.5 bil­lion on the plat­form.

Uh, it will ulti­mate ulti­mate­ly replace that lega­cy ANZ tech­nol­o­gy reduc­ing the cost of serv­ing cus­tomers. So that’s the head­line at a brief­ing on Mon­day, which was in March, 2025, ANZ Group Exec­u­tive for retail bank­ing. Male Carnegie, how I’m pro­nounc­ing that right. Male Maley pro­vid­ed no hard num­bers, cost tar­gets, com­mit­ments on the time it will take to fin­ish the project.

failed to rule out. The cost would rise from cur­rent lev­els before sav­ings are real­ized. We are. Why are we in the posi­tion where you can’t pro­vide some more num­bers to us? [00:32:00] Ask Vic­tor, Ger­man and ana­lyst from Mac­quar­ie. Carnegie assured him. Returns will be real­ized over the medi­um term when more prod­ucts and fea­tures are rolled out dur­ing 2026 and after mil­lions of exist­ing ANZ cus­tomers are migrat­ed onto.

Plus, over the next cou­ple of years. Incom­ing Chief Exec­u­tive Nun, no Matos, who will replace Shane Elliot in July be close­ly involved in migra­tion deci­sions. Carnegie said a pilot, Franz of staff will begin in June. Sor­ry. Back then, they thought that the han­dover was hap­pen­ing in July. I think none those already start­ed.

Uh, Carnegie said A N Z’s upgrades went fur­ther than oth­er banks. New sys­tems will use open bank­ing for home loan appli­ca­tions while fea­tures such as intro­duc­er com­mis­sions and nego­ti­at­ing pric­ing will be rolled out next year. Plus, plus­es Con has focused on con­sol­i­dat­ing 350 SES sys­tems in the messy mid­dle of ANZ, she said, which have now been rolled into TWI 12 pri­ma­ry sys­tems.

[00:33:00] MST Finan­cial Ana­lyst Bri­an John­son, ques­tioned whether a N Z’s cost sav­ings esti­mates for attract­ing new home loan cus­tomers were too high giv­en mort­gage bro­kers still need to be paid com­mis­sions. I think a lot of time and effort and mon­ey’s been put into the ANZ one Plus pro­gram. Um, I think ever since it was announced, the, the, the num­bers around it have been gray, to say the least.

Um. And, uh, it’s been years and years and years before any­thing’s hap­pened it’s now get­ting rolled out. I think it’s also fair to say that any sort of cost blowout in the one blo, one plus pro­gram will hurt the bot­tom line. And like­wise, any, uh, ben­e­fits which they thought they’re get­ting, which don’t hap­pen will hurt the bot­tom line.

So,

Cameron: Can I, can I make a pre­dic­tion here?

TK: that’s a, key, key, uh, project for Nuno to, to man­age. Yes, go ahead, make a

Cameron: pre­dic­tion is, my [00:34:00] pre­dic­tion is with­in about six months, Nuno is gonna go, you know what? We need to scrap this whole thing because the future of bank­ing is all about AI and we, you have an inte­grat­ed AI into this entire sys­tem. It needs to be com­plete­ly rebuilt around an AI back­end frame­work so that I’ll scrap the whole thing and start again.

TK: Yeah, that’s door num­ber one. It often hap­pens with large IT projects ’cause what, when they take too long to be built inter­nal­ly, ven­dor builds it exter­nal­ly and will sell you, you know, um, and soft­ware as a ser­vice to replace it at a very cheap price or what­ev­er.

Cameron: All the, the, the soft­ware par­a­digms change dra­mat­i­cal­ly with­in 10 years. And cus­tomer expec­ta­tions, which is the big one here, change dra­mat­i­cal­ly. And busi­ness­es wan­na derive ben­e­fits from the new tech­nolo­gies. And this is gonna lock ’em in for long it’s, yeah. This is, this is dead on arrival as far as I’m con­cerned.

TK: and it has­n’t real­ly arrived yet. So, uh, that’s the oth­er point. It’s still 2027 is when we can [00:35:00] see the com­ple­tion of the roll­out. So I. If it goes to plan. So yeah, that’s gonna be an issue for Nuno. Um, there’s a cou­ple of oth­er issues if you bear with me. Um, there’s been a, a js between ANZ and the reg­u­la­tor, as there often is with banks and large com­pa­nies.

But, um, there’s been a cou­ple of issues with ANZ, um, and a PR, the bank­ing reg­u­la­tor, the pru­den­tial reg­u­la­tor, which reg­u­lates the banks and finan­cial insti­tu­tions has over time, but, uh, added to it more recent­ly, um, imposed a $1 bil­lion cap­i­tal over­lay on ANZ, which is more than what the oth­er banks have.

1. To give that some con­text, the, the banks are all required to hold cap­i­tal for, um, uh, a rainy day for when there’s a down­turn, like a GFC in the econ­o­my in case there’s a run on the banks. Um, ’cause what the bank­ing mod­el is, you deposit with us and then we take that and we loan it out as [00:36:00] mort­gages and oth­er loans.

Um, and if there’s a run on the bank and you come to get you the mon­ey out­ta the bank and the bank could go, uh, well we have to call in all these mort­gages to pay you. We don’t actu­al­ly have the cash you put into the bank. to, um, try and reg­u­late that the banks are all required to hold what’s called tier one cap­i­tal, and there are var­i­ous tiers.

ANZ has to hold more tier one cap­i­tal than the oth­er banks, an extra bil­lion dol­lars. Um, because the a PR, the reg­u­la­tor sees it as being slight­ly more risky than the oth­er banks. And so if there’s a run, they have more of a finan­cial buffer to pay our cus­tomers who put deposits into the banks.

that extra cap­i­tal just sits there and it’s not earn­ing income for the bank or as much income as if it was owned out as mort­gages, and so it hurts their, their bot­tom line. That’s, that’s occurred because, um, over time there’s been a cou­ple of, uh, uh, [00:37:00] prob­lems high­light­ed by the reg­u­la­tor. so this is, uh, from an arti­cle, we’ll, going back to April 4th, and it talks about some of these issues.

Um, so Thurs­day before April 4th, accord­ing to the, uh, this arti­cle from the A FR AAN Ze released the find­ings of a long run­ning review by con­sul­tants Oliv­er Wyman of its mar­kets divi­sion that uncov­ered bul­ly­ing, sub­stance abuse, and man­agers turn­ing a blind eye to cul­tur­al fail­ings these issues could extend across the com­pa­ny’s retail bank.

there was­n’t evi­dence of sys­temic mis­con­duct, the report found lead­er­ship short­com­ings and gaps in how ANZ man­aged non-finan­cial risks. reg­u­la­tor went fur­ther say­ing ANZ had per­sis­tent and preva­lent prob­lems with non-finan­cial risks. uh, Aus­tralian Pru­den­tial Reg­u­la­tion Author­i­ty on Thurs­day said ANZ would have to hold an extra mil­lion on its bal­ance sheet to [00:38:00] mit­i­gate those risks, tak­ing its total cap­i­tal at over­lay as it is known to a bil­lion dol­lars.

com­pares to no cap­i­tal over­lay for ANZ. Big­ger rivals, Comm­Bank and Nation­al Aus­tralia Bank. And a $500 mil­lion impulse for West­pac, the chair, uh, Paul O. Sul­li­van has issued a mere cul­pa and says, it is dis­ap­point­ing that we have not yet done enough on non-finan­cial risk. will appoint an inde­pen­dent review­er and real­lo­cate resources to deal with its gov­er­nance.

Uh, the, lemme just go on, skip over that. Um, anoth­er issue, the Aus­tralian Finan­cial Review revealed in May that there’s the Aus­tralian Secu­ri­ties and Invest­ment Com­mis­sion had received a refer­ral from the Aus­tralian Office of Finan­cial Man­age­ment, which man­ages mul­ti-bil­lion dol­lar debt issuances for the fed­er­al gov­ern­ment how ANZ orga­nized the sale of $14 bil­lion in gov­ern­ment bonds uh, how they [00:39:00] behaved.

Since then, ASIC has ramped up the pres­sure with its chair­man, Joe Lon­go, telling a par­lia­men­tary com­mit­tee last year, the inves­ti­ga­tion had the high­est pri­or­i­ty, giv­en the seri­ous­ness of the alleged mis­con­duct. inves­ti­ga­tion remains ongo­ing and no action has been tak­en. That’s as of April the fourth.

AIC is also prob­ing poten­tial com­pli­ance fail­ings with­in a n Z’s retail bank, includ­ing alle­ga­tions that inter­est on sav­ings accounts was­n’t prop­er­ly accrued and that the bank charged fees on dead cus­tomers accounts, et cetera. So this is all I’m read­ing from the Aus­tralian Finan­cial Review arti­cle by Joyce Cus from the 4th of April.

Some of these things, are in progress. Some of the things, these things are being resolved. But my point is that there’s a lot of focus on ANZ, uh, because of reg­u­la­tor issues with the way the bank has being run. a lot of these things are, uh, are being reviewed and there’s, you know, inter­nal process­es to fix [00:40:00] them, et cetera, et cetera.

so I’d say that to the cred­it of the board and per­haps the out­go­ing CEO Shane Elliot, the deck­’s being cleared as much as pos­si­ble for the new CEO. And I would say com­ing from a Euro­pean bank­ing back­ground that he has and a glob­al bank­ing per­spec­tive, he’s used to deal­ing with gov­ern­ment reg­u­la­tors, and I would expect that clear­ing the bil­lion dol­lar cap­i­tal over­lay is a pri­or­i­ty and per­haps a rea­son for why he was hired.

I see you smil­ing their com. Uh, can care, care to com­ment

Cameron: I want, oh, I wan­na go back to these non, non-finan­cial risks. What did you say some­thing about sub­stance abuse issues.

TK: Yes. In the, trad­ing room at ANZ,

Cameron: So, snot­ting, snort­ing, snort­ing coke in the trad­ing room. Is that essen­tial­ly what the, uh, or alle­ga­tion is here? Read­ing between the lines?

TK: Oh, I’m not gonna com­ment on that.

Cameron: Well sub­stance abuse. What it’s, [00:41:00] it is either alco­hol or e illic­it or illic­it drugs. Caf­feine. that clas­si­fy APRA take issue with peo­ple drink­ing too much cof­fee at work. Now

TK: What was that? Uh, side for episode? Oh man, I’ve had eight cups. Jer­ry, we have to do some­thing. Come on.

Cameron: Chris­sy’s been say­ing to me for the last week or so, are you doing coke or some­thing? You’re all like wired up. And then she fig­ured it’s the matcha. I’ve been drink­ing this new brand of cer­e­mo­ni­al grade matcha. She’s like, that’s It’s get­ting you wired up.

TK: Oh, you should, should send your CV over the ANZ See, see if you qual­i­fy.

Cameron: Yeah, that’s my sub­stance abuse. Too much matcha.

TK: Mm.

Cameron: uh, I was just think­ing about you talk­ing about them clear­ing the decks says Shane has cleared the decks. They’ve been.

TK: Well, hope­ful­ly, I mean, if, if, if Nuno can, um, in the good books of the [00:42:00] reg­u­la­tors, then um, that’s a, then they remove that bil­lion dol­lar cap­i­tal over­lay. That’s a big win for the bank.

Cameron: So my ques­tion to you is, is this a gov­er­nance red flag? If they’re all snort­ing coke in an ANZ, are we, should we be gov­er­nance red flag, ANZ on our buy list?

TK: Uh, I, I haven’t, and I own the stock. poten­tial­ly. Um, look, you could also say poten­tial­ly it’s, well, I won’t say it. Um, the CEOs the almost 10 year tenure around the time that these things are being looked at. So, uh, and, and I, it may go appeas­ing the reg­u­la­tor that, that they’ve claimed to scalp, um, and that Nuno can come in now and, and say that he’s, uh, you know, sweep sweep­ing the, the, the bad, uh, eggs from ANZ and it’s a

Cameron: Sweep­ing the

TK: cetera, et cetera.

Cameron: sweep­ing [00:43:00] the coke under the, the mat.

TK: So, uh, look, it, it’s, it’s, it’s still uphill for them, but it’s, um, it’s prob­a­bly a change in the right direc­tion. Some, it’s, maybe it’s an orange card, but, um, yeah, new man­age­ment, so hope­ful­ly new cul­ture. then the last thing that Nuno has to deal with is that, uh, uh, Shane Elliot, uh, acquired Sun­corp before he left, which is, or he invit­ed the, acquired the retail bank­ing arm of Sun­corp.

the,

Cameron: did per­son­al­ly, or ANZ did,

TK: ANZ did.

Cameron: right?

TK: Yeah, he, he, uh, engi­neered it. So, um, again, I’ll quote from an arti­cle in the fin among his achieve­ments, Elliot stream­lined the bank’s Asian foot­print to strength­en focus on the core busi­ness in Aus­tralia, suc­cess­ful­ly mar­shaled the $4.9 bil­lion takeover of some corp bank. to his [00:44:00] achieve­ments, Elliot point­ed to the sale of 30, most­ly Asian busi­ness­es and cut­ting about 10,000 insti­tu­tion­al bank cus­tomers.

Moves that freed up $14 bil­lion of cap­i­tal, of which was dis­trib­uted to share­hold­ers via share buy­backs and the rest invest­ed. Elliot said the first half had been a N Z’s strongest ever for rev­enue at $11 bil­lion, reflect­ing a step change in earn­ings fol­low­ing last year’s acqui­si­tion of Sun­corp Bank.

Still ana­lysts wor­ry that Sun­cor­p’s con­tri­bu­tion is cov­er­ing up under­ly­ing soft­ness in the ANZ brand. think under­ly­ing fran­chise results at a divi­sion­al lev­el for the lega­cy ANZ busi­ness a week said UBS Ana­lyst, John Sto­ry. So that’s from the A FR May eight arti­cle by James Ays about the ANZ results, sum­ma­ry to include there.

Um, that, that Shane Elliot did do a good job of revers­ing their, the, his pre­de­ces­sor’s expan­sion into Asia, um, and has now brought the bank back to, large­ly back to the [00:45:00] Aus­tralian shores. I did read at the time when the Sun­corp. Acqui­si­tion was float­ed. Some ana­lysts were say­ing, well, N Z’s mort­gage mar­ket share was in the claim, and it, the, mort­gage mar­ket share that the bank, the bank­ing sec­tion of Sun­corp had was about the same.

And so it was plug­ging a leak. if that’s the case, that’s great. Um, but it does­n’t the leak nec­es­sar­i­ly in the under­ly­ing busi­ness, which I think is what UBS ana­lyst John’s sto­ry was refer­ring to there. so we need to see some evi­dence for the under­ly­ing blue brand, a MZ fix­ing the the mort­gage mar­ket share leak, um, before we can say that the, the prob­lem has been solved.

The oth­er thing that, uh, Nuno will face is the headache of inte­grat­ing Sun­corp. It’s a rea­son­ably large acqui­si­tion, uh, has to be, um, inte­grat­ed into ANZ sys­tems and process­es and peo­ple. uh, man­age­ment had already said that, [00:46:00] um, Sun­corp syn may not flow through until 2027. Um, although I think in the results they, they called out about 20 mil­lion, um, per annum.

I think I’ve got that right, but I’ll cov­er it off in a minute. Um, or syn­er­gies already bank, so he’s got his work cut out from him on that front as well, so are sort of five things on his plate with­out wor­ry­ing about what he wants to do to put his own stamp on the bank, includ­ing recruit­ing exec­u­tives.

So he is gonna be a busy boy. Um, but to be fair, the out­go­ing CEOs, um, the, the foot­ing of the bank by get­ting out of Asia, um, by acquir­ing Sun­corp. I’ll say it’s a messy devel­op­ment of the One­Plus plat­form, but it may prove to have some ben­e­fits to the bank. Um, and then, um, there’s the reg­u­la­tor issues, which Nuno should be well placed to, to work through being a clean skin and hav­ing a lot [00:47:00] of expe­ri­ence with reg­u­la­tors in Europe.

Um, and ’cause it’s a high­ly reg­u­lat­ed bank­ing sys­tem as well over there. um, that’s what’s on his, um, on his desk lat­est results. So ANZ report­ed cash earn­ings of $3.57 bil­lion for first half of 2025. up 12%, half on half. And broad­ly in line with expec­ta­tions though flat year on year. Uh, um, rev­enue reached $11 bil­lion, uh, ris­ing 5%, half on half, dri­ven by the full six month con­tri­bu­tion from Sun­corp Bank, also began to deliv­er ear­ly cost ener­gies.

Yeah, about $20 mil­lion real­ized to date, which is not the total sum of what they hoped to get. How­ev­er, under­ly­ing momen­tum showed signs of fatigue, um, the group net inter­est mar­gin, the NIM we’ve talked about before. When we talk about banks, it fell two basis points to, uh, 1.56%. [00:48:00] Still any­thing in the 1.5 I think is rea­son­ably healthy for a bank.

Uh, and this I’m read­ing from the stock doc­tor sum­ma­ry, uh, that key and trend did on the results. Um, so he talks about, um, the finan­cial health per­spec­tive um, uh. The tier one ratio of 12.2, uh, fell from 12.2% to 11.8%, but remains above the reg­u­la­to­ry min­i­mums rein­forc­ing the ban bank sound. Cap­i­tal posi­tion.

Cred­it qual­i­ty remains robust with the indi­vid­ual pro­vi­sion loss rate sta­ble at four basis points. though col­lec­tive pro­vi­sions increased to one 45 mil­lion up from 70 mil­lion sig­nal­ing a more cau­tious stance, I mean, eco­nom­ic uncer­tain­ty. And that’s some­thing to focus on with banks. Gen­er­al­ly, if they’re start­ing to increase loss pro­vi­sions, that means they think that there’s a bit of insta­bil­i­ty com­ing, um, and that there’ll be more the econ­o­my’s in tur­moil and there’ll be more peo­ple who are either late [00:49:00] pay­ing their mort­gages or, um, throw their keys in and.

And the bank takes posi­tion, pos­ses­sion of the asset. So it’s not good to see that increas­ing, but it’s, it’s not a, a big increase. I mean, 70 mil­lion was­n’t much, and 145 mil­lion isn’t much in the scheme of the amount of, yeah, the bil­lions of dol­lars they’ve got out there as list­ed as mort­gages. But cer­tain­ly it’s a trend to watch.

If it gets worse than that, it, it’s not a good thing for banks. Uh, like oth­er major banks, earn­ings and div­i­dend growth for the year is fore­cast to be flat to mod­est. Man­age­ment flagged the chal­leng­ing out­look shaped by glob­al mar­ket volatil­i­ty, reg­u­lat­ed reg­u­la­to­ry reg­u­la­to­ry scruti­ny, includ­ing an app per imposed cap­i­tal over­lay.

How­ev­er, ANZ remains focused on deliv­er­ing long-term val­ue through the inte­gra­tion of Sun­corp Bank, expan­sion of ANZ plus and con­tin­ued dig­i­tal invest­ment. Accord­ing to Ken at stock Doc­tor, um, ANZ have also been buy­ing back their shares. So that’s some­thing else to note. So [00:50:00] that’s the, the report on ANZ and where they’re at the QAV num­bers.

Uh, I’m doing the analy­sis at 28 66 as the stock price, which inter­est­ing­ly enough is 2% above con­sen­sus tar­get. We often don’t see that. So, um, that’s, um, it’s trad­ing around or above con­sen­sus tar­get. we give it a neg­a­tive one score for that in the, um, in the check­list. IV one’s only $11 46. two is 2195.

So both of those are below the cur­rent price of 28 66. Stock doc­tor finan­cial health and trend are strong and steady, and ANZ is what they call a star income stock. So, um. In oth­er words, it’s a, it’s a qual­i­ty com­pa­ny. If you are invest­ing for div­i­dends for retire­ment, um, you should look at it uh, we give it an extra 0.5 in our check­list for a star income stock or for it being a star income stock.

Stock EDIA rank­ing, though not as kind. [00:51:00] Um, the REST score is only four out of nine, and the qual­i­ty rank­ing is only 44 out of a hun­dred. Uh, the val­ue rank­ing was a, a rank of 90, which was good. But over­all, 69. I think the rea­son for that is that, um, uh, stock­o­pe­dia tend to rank finan­cial insti­tu­tions low­er than what stock Doc­tor does.

And this was actu­al­ly some­thing stock doc­tor used to do for a long time. In its ear­ly days. It would­n’t rank banks, because they don’t dis­play the same mech­a­nisms, uh, of indus­tri­al com­pa­nies. And if I look at the oper­at­ing cash flow for a bank, it’s, it’s meant to be the dif­fer­ence between.

The, the, the rate it pays on deposits what it pays, uh, gets in for mort­gages. Um, in broad terms. There’s obvi­ous­ly oth­er things in there too, but that’s the big, you know, the big movers of oper­at­ing cash­flow for a bank. But it is, it is, um, it is lumpy because, you know, if the bank [00:52:00] issued a bond, um, place­ment, that, that could have been for bil­lions and bil­lions of dol­lars.

Um, or if it, um, there was a lag in either mort­gage inter­est rates chang­ing com­pared to deposit rates chang­ing, that could be a, um, a big impact on oper­at­ing cash flow. So if you look at the banks oper­at­ing cash flows year to year or half on half, they can be very lumpy, but at the moment, ANZ is a wash with oper­at­ing cash flow.

um, yeah, we like it. It’s the, they, they should put that cash flow to good use. Um, you know, it’s a, it’s a large bank. Um. With, uh, very expe­ri­enced man­age­ment. So, um, we should, we should see that oper­at­ing cash flow deployed well, but I do high­light that banks come on and off our stock list, um, in dif­fer­ent ways than say a min­ing com­pa­ny does, or a sim­ple cof­fee shop does, um, because of, um, lumpy cash flows.

Any­way. going back to I just want­ed [00:53:00] to, to high­light as well that even though they’ve ranked at, uh, 69 on their scor­ing out of a hun­dred, they do high­light the fact that ANZ is what, um, termed, uh, a James O’Shaugh­nessys val­ue screen stock. we’ve obvi­ous­ly spoke about, um.

O’Shaugh­nessy before in his book, what Works On Wall Street, and I’ll quote from Ency­clo­pe­dia O’Shaugh­nessys, cor­ner­stone Val­ue is a val­ue invest­ing strat­e­gy pre­sent­ed by US Fund man­ag­er James O’Shaugh­nessy, in his 1996 book, what Works On Wall Street. His exten­sive back­test­ing found that val­ue invest­ing works par­tic­u­lar­ly well with large cap stocks with above aver­age sales and cash flow, high lev­els of share liq­uid­i­ty, which were then sort­ed for the high­est div­i­dend yield.

said, gen­er­al­ly speak­ing, when things are going against you, as they inevitably will, you have to stick to the under­ly­ing strat­e­gy only by doing so. Will you be around for when it [00:54:00] comes rebound­ing back? found that this val­ue strat­e­gy pro­duced an annu­al com­pound return of 15% between 54 and 96, to 8.3% for the s and p 500 index.

As Shaugh­nessy has con­tin­ued to con­duct detailed analy­sis of stan­dard and pause com­pus stat data­base to iden­ti­fy the most effec­tive invest­ing strate­gies. So nessy likes a stock like ANZ. We like it, it’s on the QAVB list. Um, a lot of, one of the rea­sons why we both like it is the div­i­dend yield is high.

it’s 5.79%, so we don’t, it does­n’t quite meet our thresh­old for scor­ing, which is the aver­age retail, uh, mort­gage rate, but it’s get­ting up there, it’s get­ting pret­ty close. PE is 12 point times, uh, 12.8 times, so not the high­est or the low­est in the last three years, so it does­n’t score for that.

Prop C how­ev­er, is only 1.48 times. And that dri­ves the high­er posi­tion on the buy­er list. Uh, [00:55:00] and I spoke about oper­at­ing cash flows in banks before. Um, but prop cap at 1.48 times is very, very, um, good. Very, very low. Net equi­ty per share is $24 34 and plus 30% is 31 65. So it’s high­er than the stock price, so we can buy it for book plus earn­ings per share.

Growth is fore­cast at only being 2%, so we can’t buy it for growth over pe. Um, there’s obvi­ous­ly no one in the founder. This is. Com­pa­nies almost 200 years old. Uh, equi­ty is, uh, almost con­sis­tent­ly increas­ing, but not quite. So we can’t score it for that. So all in all qual­i­ty score is 7.5 out­ta 15 or 50%. So not a great qual­i­ty score, but the prop calf it to a QAV score of 0.34, which brings it, um, onto the bile list since the last results, and very high up the bile list as well.

And a large a DT stock, obvi­ous­ly. So that’s ANZ.

Cameron: Thank you tk. I am just look­ing at their 10 year [00:56:00] chart and I wan­na ask you about this, like the share price has basi­cal­ly been rel­a­tive­ly sta­ble for 10 years. If I go back 10 years ago, it was trad­ing at uh, $31. cur­rent­ly trad­ing at $29. It’s gone up as high as 32. And if I leave out­side, if I leave COVID out of it, that sort of 20 20 20, oh yeah, peri­od.

Actu­al­ly it was back to $28 by March, 2021. It’s sort of hov­ered around the $28 mark. Some­times 27, some­times 29 30. But for 10 years it’s just hov­ered around 28, 29, 30. Um. It a great invest­ment unless you bought it bang at the start of COVID. It’s gone nowhere for 10 years. It just seems to hov­er around the same zone.

Goes up a [00:57:00] lit­tle bit, comes back a lit­tle bit. Like if, if you look at a chart like that, yeah, it’s scor­ing well on our buy list, but it’s done noth­ing for the last 10 years. What are the chances that in the next 10 years it’s gonna break out of that band of 27 to $30?

TK: Well, who knows? But, um, I don’t have a prob­lem hold­ing it myself. Um, the div­i­dend yields kind of

Cameron: I.

TK: you, even if the share price flat, you know, it’s yield­ing on a gross up basis, 7%. but that aside, I, I don’t see any of the banks as a buy for­ev­er stock. Um, you know, it’ll, it’ll trade through its bank­ing.

So banks tend to go in cycles like a lot of com­pa­nies do. And, um, you know, it’ll trade through its cycle. It’s, it’s, come on down, I’ll buy this now. It won’t stay there for­ev­er. uh. I expect next half oper­at­ing cash may not be as strong as this half, it’ll drop off the buy list and then we’ll trade it using our trend lines and bank div­i­dends along the [00:58:00] way.

Cameron: Okay. Uh, assum­ing you weren’t in a sit­u­a­tion where there was a lim­it­ed num­ber of things that you could buy because of your a DT require­ments,

TK: Mm-hmm.

Cameron: if you had an option between buy­ing a and Z and some­thing else that did­n’t trade with­in a very defined band over 10 years. Would you look at the oth­er option?

TK: Yeah. Um, um, it depends. I would always try and buy from the top down. So ANZ is very high up on the buy, so depends what the oth­er option is, I guess. But I don’t have a prob­lem buy­ing ANZ. It’s one part of the port­fo­lio. It’s a high yield­ing part of the port­fo­lio. And, um, I said, uh. think there’s some, um, I don’t wan­na make a pre­dic­tion.

I think there’s some chance that there’s some tail­winds behind ANZ rates this year will help. if the new CEO can befriend the reg­u­la­tors and get the bil­lion dol­lars reduced or removed from the cap­i­tal, that’ll help cap­i­tal over­lay, [00:59:00] that’ll help. you know, if the acqui­si­tion at some corp goes, well, that will help, et cetera, et cetera.

So,

Cameron: They just need to invite the reg­u­la­tors to a par­ty in the trad­ing room. Uh, that’ll, you just be like,

TK: That was the prob­lem. The, the a or hap­pened to be the, a audi­tor day to the ANZ trad­ing room. Come in. Come in. Would you like some cof­fee?

Cameron: No, the reg, the reg­u­la­tor did­n’t get invit­ed. That was the prob­lem he heard about. It was just pis­sy.

TK: invit­ed. That was the prob­lem. He went, oh my god, this, what’s going on? This is like Wall Street from the 1980s.

Cameron: Yeah. 1985.

TK: Mm.

Cameron: All right. Thank you. Tk. That’s ANZ. Are you okay? Yes, I’m okay. Thank you. it’s just what I do when I’m record­ing pod­casts. Yeah, yeah, yeah. Thank you. Burst in and ask me if I’m okay. ’cause I’m yelling.

TK: Room

Cameron: Uh, [01:00:00] AF after hours. Tony.

TK: Yeah, I had a lot. You see that George went past,

Cameron: I did. Yeah. Norm.

TK: Yes.

Cameron: Norm. I mean, con­sid­er­ing he’s been a very large gen­tle­man for a very long time, it’s not that sur­pris­ing. And he was in his late sev­en­ties, I think 76, 77, some­thing like that. But, uh, yeah. What a, what a great part of my child­hood. He was as norm.

TK: And made a career out of one part that I can think of. Um,

Cameron: He did oth­er things, but yeah,

TK: years. Yeah.

Cameron: I think he was also Norm, you know, did Cameos and Fra­zier and

TK: Hmm

Cameron: what­ev­er oth­er spin­offs there were. Yeah,

TK: But I was sad to say that part of,

Cameron: yeah.

TK: of my, uh, his­to­ry as well,

Cameron: I,

TK: um, read­ing a book called What I Ate in One Year by Stan­ley Tuc­ci. Have you ever read any of his books?

Cameron: no, but I just start­ed watch­ing Tuc­ci in [01:01:00] Italy.

TK: yeah.

Cameron: That’s a good show.

TK: It is, it’s of the same milk. So he is writ­ten a cou­ple of books already on Ital­ian cui­sine and this one’s a diary of, uh, what he ate year before last and uh, while he was film­ing Con­clave and, um, chin The Chi­ta in Roma. So I wish had the book before we went across the Rome ’cause he talks about a lot of cafes and restau­rants, which would’ve been fun to

Cameron: Hmm,

TK: to and expe­ri­ence the local Ital­ian cui­sine.

Cameron: hmm.

TK: Yeah. So that’s, that’s been fun. Makes me, um, sali­vate when I read his recipes and what he ate and good it

Cameron: Watch­ing I put on like three kilos just watch­ing an episode of the show, so yeah,

TK: Yeah. Uh, ha. Have you heard of a band called a Toba Coke? No. Otto b Beaver, dun­no how to pro­nounce it. A Toba K Beaver.

Cameron: I have not

TK: Uh, check them out. It’s a girl punk band from Japan.

Cameron: How do you spell this?

TK: O‑T-O-B-O-K‑E. [01:02:00] Beaver. Lot of fun.

Cameron: B‑O-K-O-T-O‑B. Yeah.

TK: one word. And then Beaver,

Cameron: Which is Beaver.

TK: mas­sage par­lor in Japan that was oppo­site the school of one of the, where the lead singer went to school or some­thing. So, yeah.

Cameron: Oh, okay.

TK: great

Cameron: Sounds, sounds great.

TK: Yeah. like if you like that sort of Quentin Taran­ti­no sound­track

Cameron: Yep.

TK: eights were fight­ing.

It’s that

Cameron: I

TK: of stuff. It’s real­ly good.

Cameron: now, one of the young guys at Kung fu was insist­ing that I watch or said it’s great. And I’ve seen some pos­i­tive stuff on Tik­Tok about it too. You’re not a fan appar­ent­ly.

TK: Well,

Cameron: I.

TK: Jen­ny and I would watch the episodes when they were released and go, this is, this is real­ly dull. then we go away for a bit and come back and we watch the next batch of three and we watch the last batch of three for the sea­son on the week­end. And we both looked at each oth­er and went.[01:03:00]

This is just all back­sto­ry and no plot, and it’s just tedious. It real­ly is crap. I hat­ed it. like he, like, when it gets down to the sec­ond last episode and the last episode, Jen­ny and I are say­ing, oh, okay. He, you know, that char­ac­ter’s in Rogue One and that one’s in Rogue One. It must be get­ting close now.

The, where the road one starts and, and then just like every, like the first sea­son in and it just fin­ish­es. anoth­er sea­son. No, there could be anoth­er five sea­sons to go before you get to Road One. It’s just so tedious and bor­ing. Pon­der­ous did­n’t like it at all. No plot. All, all back­sto­ry.

Yeah.

Cameron: Well, I’ve seen pos­i­tive reviews of it on Tik­Tok, peo­ple say­ing.

TK: it

Cameron: Oh, right. Yeah. Okay. Peo­ple are say­ing this is, it’s like, this is what a rev­o­lu­tion, a rebel­lion is real­ly like. It’s just lots and lots of peo­ple. Yeah. Lots of, lots of peo­ple every day just try­ing to, know, did [01:04:00] you hear that?

TK: Oh, it’s prob­a­bly the rain. This rain­storm just blown in.

Cameron: Oh, right. Uh, lots of peo­ple ded­i­cat­ing their lives to just try­ing to undo the empire bit by bit and over­throw it bit by bit. And then Luke and Han come along at the last, last minute and, uh, get medals.

TK: well, yeah, and it could have

Cameron: I.

TK: minute movie, but, um, like two series of it, hour along episodes, or nine episodes of, you know, this wed­ding feast and that wed­ding feast and Sen­ate machi­na­tions and sen­a­tor and that sen­a­tor and up who and the Sen­ate is just hideous and, um, I mean, the act­ing’s good.

The, I mean, the mon­ey they’ve pour into, it’s amaz­ing. you know, the Ben Mendelssohn’s great in it, build­ing the Death Star, you know, but again, you have two sea­sons of polit­i­cal [01:05:00] intrigue in the, in the empire as it as it tries to build a death star. It’s like, it, it’s just, it’s like watch­ing a pub­lic ser­vice try and pro­duce some­thing and just, it’s just tedious inter­minable.

Cameron: Like, it’s like utopia, but with­out the jokes.

TK: Yeah. It’s exact­ly what it’s like. It’s exact­ly what it’s like. Any­way, I, I’ll save you from it. Don’t watch it shot. Um, but Mob Land and Land­man, still real­ly enjoy­ing those. The lat­est Mob Land drop dur­ing the week. Thomas Har, Tom Hardy, just bril­liant act­ing. Um, Helen Miran, crazy as fan­tas­tic char­ac­ter.

Pierce Bros­nan. Crazy as, as well. It’s over the top

Cameron: What’s that on again?

TK: it’s on Para­mount Plus

Cameron: Oh, god dammit.

TK: which is not as good, but it’s, it’s, it’s fun. um, what’s his name? Bil­ly [01:06:00] Bob Thorn­ton.

Cameron: All right.

TK: yeah,

Cameron: I.

TK: it’s good fun. So we watch those. Um, got a cou­ple of hors­es run­ning this week and Julee and Lady Prance a lot.

I both prob­a­bly have starts this week, so I watch that. about me for the week. How about you?

Cameron: Well, I want­ed to do an RIP, uh, for a guy who was real­ly influ­en­tial to me. Uh, when it comes to the sin­gu­lar­i­ty, Damien Brod­er­ick, um, I’ve prob­a­bly men­tioned him to you over the years. He wrote a cou­ple of books in the mid to late nineties that I read and real­ly if got me inter­est­ed in the whole thing. He may, I may have read him before I read Kurtzweil.

TK: right.

Cameron: He wrote a book called The Spike around about

TK: That,

Cameron: 97. And then he wrote one a cou­ple of years lat­er called The Last Mor­tal Gen­er­a­tion, [01:07:00] where he basi­cal­ly said that peo­ple be born sort of 1970 ish, would be the last mor­tal gen­er­a­tion. Um, but he also said that if we played our cards right, we, and we stayed healthy, we might last long enough to become immor­tal, effec­tive­ly immor­tal. I took him out to din­ner around about 99, 2000. He was liv­ing in Mel­bourne. I was liv­ing in Mel­bourne. I reached out to him and took him out to din­ner at the Stoke House in St. Kil­da. And I remem­ber ask­ing him, when are peo­ple gonna take the sin­gu­lar­i­ty seri­ous­ly? And he said, when it’s too late to do any­thing about it. And I’ve tried to track him down over the years to get him on a pod­cast, but he end­ed up, he was sort of a recluse. Was­n’t on social media. His, the email that I had bounced, he end­ed up mov­ing to the US and then he moved to South Amer­i­ca. Any­way, I went, I was talk­ing about him the oth­er day and I went look­ing up to, went and [01:08:00] looked him up again and found out he died last month.

He was like 80 some­thing. So that was kind of trag­ic for me. Like the guy who wrote all these books that talked about AI and the sin­gu­lar­i­ty com­ing

TK: And

Cameron: part of the, part of the pre­dict­ing. It just got to the edge of it and, uh, did­n’t make it through. Um, it’d be like if Kurtz Wild died before he got to take advan­tage of it.

The guy who spent a lot of time think­ing about it, he was a sci­ence fic­tion author most­ly, but yeah.

TK: We should put a list togeth­er of peo­ple who should sur­vive till a sin­gu­lar­i­ty so they can live for­ev­er. You and me.

Cameron: Yeah, of course. Top of the list.

TK: yeah, the tragedy will be i’ll, I’ll have Alzheimer’s just, just, uh, diag­nosed before I live for­ev­er,

Cameron: We will fix that. Yeah, we’ll fix that.

TK: good.

Cameron: Yeah. So RIP Damien Brod­er­ick, um, there are new albums came out last week, the new album by the Sparks, or [01:09:00] just Sparks Not The Sparks By Sparks

TK: Mm-hmm.

Cameron: dropped. we’ve been lis­ten­ing to that on repeat. We love it. It’s got a lot of just clas­sic Spark songs. Ron May is turn­ing 80 in August, this album has some funky, funky grooves and his usu­al sar­cas­tic humor in it. it’s, it’s real­ly, I mean, super impressed that he’s 80 and is just churn­ing out like they’re the peak of the suc­cess that they’ve had in their 55 odd year career pop­u­lar­i­ty, sell­ing out tours all over the world. I. But the tunes that he’s putting out are bangers. I mean, it’s not for every­body, but just real­ly funky grooves,

TK: I’ll check it

Cameron: which is impres­sive for some­body who’s 80.

It’s called Mad is the name of the album with an excla­ma­tion mark ’cause he’s mad. And then Robert Forster from the Go-Betweens. His new album came out on Fri­day or Sat­ur­day as well. And we went to see [01:10:00] him

TK: Oh,

Cameron: a record launch in the city on Sun­day lunchtime at Rock­ing Horse Records that were cel­e­brat­ing their 50th anniver­sary.

TK: I was gonna say, is rock­ing horse still going?

Cameron: Still going. It’s 50 years they’ve been going. He did three tracks from the new album as a bit of a record launch. It was packed. We took Fox and one of his friends down and they were bored with­in about 10 sec­onds. But we loved it. It’s good to see Robert again and

TK: did they steal albums?

Cameron: no, but um, I. Uh, they went out­side ’cause it’s down­stairs, uh, in the mall. They went upstairs at one point they tried to come back down and some guy said, Hey, where’s your tick­ets to them?

TK: Uh.

Cameron: was not a, not a tick­et­ed event. He was jok­ing around. Fox came and told me, some guy said, where’s our tick­ets? I said, you just hold this up and you go, here’s my tick­et. That’s all you do. Here’s my tick­et, mate. You like that? Uh, but yeah, the Robert Forster album we love, it’s clas­sic late Robert Forster sounds like [01:11:00] all of his oth­er albums, but songs of love and loss and um, just his sort of groove, his own sort of iron­ic sense of humor mapped all through it. But he’s get­ting old too.

TK: Yes, he

Cameron: lis­ten,

TK: him on a clip recent­ly. Yeah.

Cameron: lis­ten­ing to him intro. Oh right, yeah. Just lis­ten­ing to him intro­duc­ing the num­bers. He is got old man voice, you know. Talk­ing like this, look­ing at old, so he should live for­ev­er too.

TK: Gosh. Rock­ing Horse. Oh. Must have gone to Rock­ing Horse records almost once a week. I’d say. Check out the lat­est imports and, uh, I’d some­times bump into school­mates who had made a habit of tak­ing in their tech­ni­cal draw­ing fold­ers and walk­ing out with at least one album into the, into the fold­er.

Cameron: Well, it sort of amazes me that sort of [01:12:00] amazes me that those stores have sur­vived. Like it’s, they’ve got just walls and walls of records and CDs and cas­sette tapes, but just amaz­ing. That to me, that there, there’s still a thing. There you go.

TK: Yeah.

Vinyls mak­ing a come­back

Cameron: Hmm.

TK: headless­ly expen­sive.

Cameron: Hideous­ly. Yes.

TK: nieces and that I buy records for, and they’re like, some­times they’re 70 bucks an album. It’s just

Cameron: Mm

TK: very expen­sive. I wish

Cameron: mm

TK: instead of

Cameron: mm Yes. I feel that about my DVD col­lec­tion too. ’cause there’s stuff that I thought, oh, it’ll be on stream­ing and it’s not. You know, there’s stuff I had that you can’t get on stream­ing and it’s annoy­ing. The, uh, the, it’s the bait and switch. Yeah. Get rid of your DVDs and your CDs and your records.

You won’t need it in the new dig­i­tal world until you do.

TK: yeah. And all they wan­na charge you to [01:13:00] down­load it. That’s hap­pened to me a few times. I keep a list of movies I want to see and. You know, ’cause peo­ple have referred them or what­ev­er, and you go online, you final­ly track it down, then some­one wants to charge you 30 bucks to watch it.

Cameron: Yeah.

TK: Hmm.

Cameron: Oh, well, that’s the new world. Thank you, tk. Have a good week every­one.

TK: Yeah. Thanks Cam. Hap­py ASX.

[01:14:00]