The Most Overlooked Commodity Opportunity? (Vas Piperoglou)

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JD, when I ask you of the
fundies that you really have a

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similar investing style to one
of the people you always name is

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Vas Piproglou of Collins Street
and lucky us, we got to speak

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with him in the very.
Flesh that's true mate.

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We love talking with Vas.
We really like their style of

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how they go about their business
at Collins Street Value as

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you'll get from the show and
being the third time we've now

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spoken with them, I find it
fascinating to see how a lot of

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the themes have evolved as you
pick upon in the conversation.

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So let's jump into our chat with
Vas People Ugly.

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We we pulled out a new thing for
him as well at the end.

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Stay tuned.
All right, Vas, thank you for

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joining us.
We're we're over in Melbourne

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again.
We're excited to be chatting

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with you.
There's there's never a shortage

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of things happening in this,
this wider world.

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And as I mentioned to you just
before I was, I was listening

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back to our conversation about a
year ago and some of your calls

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were just fantastic.
They were spot on.

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And it does leave me wondering
with about what is happening in

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some of the big themes that we
love to follow, namely gold.

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To start with, you made the
comment that when silver goes

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crazy, you know, we're pretty
close to the top.

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And we were already reflecting
back then that we might be, you

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know, at least halfway through
that sort of cycle.

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So let's start with gold in the
big picture.

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How you seen that play out right
now?

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Well, I mean, I can tell you
what we've done, which I guess

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is reflective of how we're
seeing things.

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So we, we have taken quite a bit
of profit off the table.

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I did get very nervous when
silver went parabolic and for

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the gold fund that's that's
predominantly when we took our

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first sell down.
Yeah.

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Look, I don't even know where to
start in in the crazy world

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we're in.
I I think it's easy to say, you

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know, some of the easy gains
have been made clearly when it's

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in the newspapers every day.
When, as you were saying before,

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when, when people were lining up
at ABC wanting to buy, you know,

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usually, usually that's, that's
a sign that everyone's already

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on to kind of the trade or
thematic.

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But, but, you know, I don't
think it's, you know, I don't

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think it's about to collapse,
but, but you know, certainly the

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easy money's been made.
We've taken quite a bit off the

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table.
We still have exposure, but

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nowhere near as much as we did
previously.

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But I, I think it's fair to say
that the ironic thing is I, I

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still think institutional
ownership and I don't have a

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figure in my head, but I still
think from a historical basis,

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they're still underweight in the
sector.

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So yeah, it's, it's interesting.
Yeah, you, you hear that number

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that got fleshed around quite a
bit of people starting to think

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maybe you need 10, maybe you
need 20% of your part for

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portfolio and gold, we're
nowhere near that kind of

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happening.
But another number you threw out

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was that through this cycle, you
might see gold 5X.

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And we did that from the law you
mentioned 1000, we hit, we

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smashed through 5000 earlier
earlier this year.

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Now granted, you know, history
rhymes, it doesn't repeat, but

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it's quite a cycle.
Yeah, look again, my the, the

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figures of 5X, you know, the
memory, it was based on the last

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three previous gold cycles from
Truft.

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Eek.
I think the lowest, the lowest

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was a 5X.
And so to be conservative, you

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know, we're normally
conservative investors.

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We thought, oh, let's pick the
lowest, I think gold Truft in

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this cycle.
I think it was slightly above

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1000, but we just rounded it
down to 1000 and then times it

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by 5.
It was 5000.

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And, and yeah, we did reach that
level.

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And yeah, I mean, if I had to
think as a percentage, we've

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taken 3/4 off the table.
So yeah, it's, it's, it's been

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interesting.
But but but, and, and why I

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still, I still think there is a
symmetry as crazy as the gold

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price has gone, I think it's
fair to say.

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And if you disagree, happy to
hear it, But but the equities

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have clearly still
underperformed the move in the

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commodity in general.
Sure, you can get anomalies out

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there, but yeah, so, so I still
think the equities assuming gold

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doesn't collapse or fall much
further from now.

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You still think the equities and
and especially what the analysts

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are putting in their forward
got, you know, kind of forecast

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they're they're still not using,
in my opinion, gold price that

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reflects current reality.
Yeah.

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These sell side analysts aren't
known to be conservative either.

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So it is, it is kind of
interesting to to marry up those

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points.
You look at previous cycles and

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these things were marked on two
times NAV, three times NAV at

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times.
You you did pick up a number of

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the the smaller players in the
portfolio as well as some larger

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names as well.
But would you have expected more

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M&A this this sort of fire into
the journey or do you think

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we're kind of par for the course
there as well?

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Would I expected more M and AI
to be honest, I think, I think

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in my opinion, I didn't expect
the bull market to move as

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quickly as it did.
Like I mean it was only a year

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ago, right?
Like I think for our precious

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metals gold fund, you know, we
only set it up a couple of years

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ago and and did I expect the
thesis to pan out within a

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couple of years and you know, us
return 3/4 of money to

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investors?
No.

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So, so, so it's happened quicker
than I would have thought, which

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then means clearly there hasn't
been enough time for the M&A to

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play out.
So I still think it will be

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playing out.
Am I surprised it hasn't

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happened as quickly yet?
Not, not really.

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You know, you could argue.
Maybe it's moved so quickly that

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it's caught everyone off guard.
I'm a big fan of these these

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special sits, you know, theme
specific fun.

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I mean, I mean the, the
resounding kind of theme across

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you you're investing like
experience today is, is, is

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being earlier along these like
cyclical things, of course

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uranium then you know, oil
services and gold.

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Yep.
So it's been 3 times.

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Yep.
And, and these, these are

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capital intensive, like
industries.

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The, the, the reason that
they're exciting in a special

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situation is because you're at
the wrong end of the capital

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cycle.
You can be patient and then wait

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for the incredibly exciting turn
around, which can happen faster

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than you expect.
But these vehicles, they, they,

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they have to expire
definitionally because there's

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a, a cycle.
The cycle changes.

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So it changes your whole
mentality as an an allocator of

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capital where you normally just
trying to accrue as much fun as

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possible because it's it's a
different way to think of it.

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Yeah, Well, I won't mention the
name, but we last week we, we

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spoke to one of the rating
agencies that it might be rating

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actually we just launched a
global long only equities fund

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and we're looking to get that
rated.

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And, and they, they didn't
understand how we've returned so

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much to our investors.
It's like you're, you're

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shrinking your business.
And I'm like, Oh yeah, if you

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want to look at it that way, but
but the intention from the start

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was always to return as a close
ended fund, right.

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And hopefully you return more
than not, which means you've

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made your, your investors a lot
of money.

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Yeah, I think, I think the
special situation funds and

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again, it's only been three
times we've played thematics

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over really been 10 years.
So common Street's been around

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for 10 years.
I think it's in my opinion the

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perfect vehicle playing as you
said, capital intensive cycles

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and yeah, we're I wish before
today's meeting I tried to think

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of what do I think's the next
thematic actually don't have one

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so that.
Was one of my questions.

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I don't have one, but when I do
I'll let you know.

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Yeah, yeah.
Well, I mean, it's that how you

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structure the fund, Trev
mentioned before how excited I

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am whenever I get back from
having spoken with you because

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that how you set up the fund
from the beginning.

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Having the alignment with the,
the, with how you think about

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management fees and these sorts
of things always made it such a,

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such a contrast to many of the
other funds out there.

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And it made it really, really
interesting.

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And there's a, there's another
investor we we spoke with not

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too long ago.
I think there's a lot of

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commonality from the school of
sort of like Marathon Asset

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Management, the capital cycles
book.

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Yeah, yeah.
And the, and the book.

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Yeah.
And there it was one on, on the

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shelf behind us when we we spoke
last time.

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I would have thought there's a a
lot kind of in common.

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If we look at one of the other
ones, the oil services, another

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comment you made is I would
expect more consolidation and

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that one had a bit of a pause in
it.

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It did, it did, and it's picked
up again it.

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Did it in fact.
So if we if I with that fund,

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it's actually gone longer than I
would have expected because of

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the lull we've seen over the
last year and a bit.

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And to be honest, there was one
holding in our fund which we

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were hoping there would be some
M&A and it, it took a year

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longer than we would have bought
Matrix.

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Matrix.
Yeah.

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And and I mean, I don't think
I'm talking out of school.

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You know, before the deal was
inked, we, we were pretty

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instrumental in making that
price happen, but we were kind

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of involved.
But but yeah, it took, took 12,

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at least 12 months longer than I
would have thought.

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But yeah, that industry, you
know, Valaris and Transocean

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obviously recently decided to
come together.

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Obviously Matrix getting taken
over by AII.

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Just know the stock code, AIH.
Yeah.

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And so, yeah, there was a lull,
but I think, I don't know if we

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thank Trump or not, but it's
back with a vengeance.

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Yeah, all the way to the big end
of town, like I think

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Schlumberger was holding
previously in the fund.

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It might still be, yeah.
It's still, it's actually still

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in the fund.
But we're once Matrix gets taken

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over and I think it's the deal's
likely to conclude end of July,

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then we're gonna be closing that
fund and be selling the

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underlying investments and, and
we only have I think 4 holdings

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left.
And yes, slumages still in

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there.
Yeah.

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That that matrix position, I do
wanna, I do wanna like untangle

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like the thesis coming into it
and also Collin Street's role in

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that deal because the ultimate
acquirer and sent might have

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been a few iterations of things,
but but there was a call option

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involved.
Yeah, yeah.

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So I mean it's in the public
domain.

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So it's I'm happy to just kind
of disclose how that came about.

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So well, I'll take a step back.
Originally, the reason why we

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got interested in Matrix, one of
the things as a fund manager as

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opposed to PA investments is,
you know, you've got to be

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cognizant of how much money
you're managing and, and kind of

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target opportunities that, you
know, I'm not saying all mega

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caps, but a liquid enough to buy
enough to make a difference.

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So Matrix actually originally
was just APA position and it

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was, it was a weird situation
where, you know, we, I could

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witness the downturn in the, in
the offshore oil services

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sector, specifically with the
buoyancy products that Matrix

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obviously produces and sells.
And, and so clearly huge

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downturn in the industry.
I was starting to see green

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shoots.
So then I, I, I called the

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management of matrix, quizzed
them a bit and I'm like, OK, I

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think this industry is about to
turn.

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It's, it's very liquid.
How do I even get stock?

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I'm not even going to waste my
time for Collin Street.

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So it I literally at the time I
think it was Paradise and

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Forager and I'm like, I called
my broker.

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I said, look, I don't expect
they're going to be selling, but

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can you just approach Paradise
and Forager?

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I'm interested to buy the
shares.

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I think it was myself and my
father PA don't remember.

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It was 13 cents.
I said, I just bid him 13 cents.

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00:11:55,840 --> 00:11:57,600
I'm not expecting to get
anything.

225
00:11:57,600 --> 00:11:59,800
And I got a call back saying,
yeah, they both of them want to

226
00:11:59,800 --> 00:12:02,920
sell everything you want to.
I'm like, oh, shit.

227
00:12:02,920 --> 00:12:08,840
OK, So that was, that was the
initial kind of thesis behind

228
00:12:08,840 --> 00:12:11,880
Matrix.
And then obviously I do believe

229
00:12:11,880 --> 00:12:14,840
in, you know, whatever you own,
whether it's the right or the

230
00:12:14,840 --> 00:12:17,360
wrong reasons, you do get to
know more intimately, right,

231
00:12:17,360 --> 00:12:20,800
because you own it.
Then we started looking in

232
00:12:20,800 --> 00:12:25,080
further, then made a call to
Matrix.

233
00:12:25,080 --> 00:12:27,520
I'm like, well, they obviously
need some capital to grow the

234
00:12:27,520 --> 00:12:30,000
equity market.
Still didn't believe the sector

235
00:12:30,000 --> 00:12:31,720
had turned even though you saw
green shoots.

236
00:12:31,720 --> 00:12:36,320
So we we offered them money in a
convertible note which they

237
00:12:36,320 --> 00:12:41,520
took.
And then after that we did buy

238
00:12:41,520 --> 00:12:46,560
some shares for the Offshore Oil
Services Fund.

239
00:12:46,560 --> 00:12:49,760
I think there was a raising
again, I can't remember the

240
00:12:49,760 --> 00:12:52,680
prices.
I think it was $0.18 an equity

241
00:12:52,680 --> 00:12:55,880
raising.
And then Fast forward to

242
00:12:55,880 --> 00:13:01,280
probably 12 to 18 months ago.
So, yeah, it was clear to me

243
00:13:01,280 --> 00:13:10,360
that AIH wanted to look at
consolidating that sector.

244
00:13:10,920 --> 00:13:13,280
And I think the difficulty was
at the time they, they weren't

245
00:13:13,280 --> 00:13:16,960
listed that they were privately
owned AUK company.

246
00:13:17,560 --> 00:13:21,760
And the, the, the original offer
was complicated because it was

247
00:13:21,760 --> 00:13:27,480
predicated on a successful
listing and the price they

248
00:13:27,480 --> 00:13:30,080
wanted to list at it was quite
hefty.

249
00:13:30,200 --> 00:13:32,680
I think for memory, originally
they wanted to list it 10 times

250
00:13:33,240 --> 00:13:38,800
EV to EBITDA and so, so they had
too many conditionalities to

251
00:13:38,800 --> 00:13:41,400
that.
So then I think rightly the

252
00:13:41,400 --> 00:13:44,840
board of Matrix kind of didn't
engage even though the headline

253
00:13:44,840 --> 00:13:48,680
price was $0.40, but it was
$0.40 based on AIH actually

254
00:13:48,680 --> 00:13:50,560
listing at 10 times EBITDA,
EBITDA.

255
00:13:51,160 --> 00:13:53,800
So yeah, I think Matrix
management did the right

256
00:13:53,800 --> 00:13:55,680
decision.
They, they, they, you know, they

257
00:13:55,680 --> 00:13:58,920
didn't engage.
They decided to wait till it

258
00:13:58,920 --> 00:14:01,920
actually did list and they
actually did list, but I think

259
00:14:01,920 --> 00:14:05,080
they listed at 8 times, sort of
10 times, even though earnings

260
00:14:05,080 --> 00:14:10,280
were going up.
And then recently they

261
00:14:10,280 --> 00:14:14,720
approached AIH, approached the
largest shareholders I believe

262
00:14:14,720 --> 00:14:18,840
at the time.
And I think it was a direct

263
00:14:18,840 --> 00:14:21,000
reach out.
They, they wanted kind of

264
00:14:21,000 --> 00:14:23,240
shareholder support before they
approached the company.

265
00:14:24,000 --> 00:14:30,880
And yeah, they, they came to
myself and yeah, they offered a

266
00:14:30,880 --> 00:14:33,800
price that I didn't think was
acceptable.

267
00:14:33,800 --> 00:14:36,600
And, and then they said, what do
you want?

268
00:14:36,600 --> 00:14:38,360
And I said, what, what, what was
the previous price?

269
00:14:38,360 --> 00:14:40,240
I said $0.40.
Well, I said $0.40 and I said,

270
00:14:40,240 --> 00:14:44,400
what did you base it off?
And I think I said just $0.40 or

271
00:14:44,400 --> 00:14:48,680
you can go away.
And then, and then they came

272
00:14:48,680 --> 00:14:52,440
back and they said, all right,
well, if it's $0.40, but we want

273
00:14:52,440 --> 00:14:58,920
to lock in your shares through
an options deal.

274
00:14:58,920 --> 00:15:01,160
And we don't normally do that
because we don't normally like

275
00:15:01,160 --> 00:15:03,160
to get locked in because what
happens if there's a competing

276
00:15:03,160 --> 00:15:06,040
bid or, you know, but yeah, they
locked us in.

277
00:15:06,040 --> 00:15:08,040
We thought there was a low
likelihood of a competing bid at

278
00:15:08,040 --> 00:15:11,960
that level.
The options, obviously Wood

279
00:15:11,960 --> 00:15:14,200
Forest management to take the
bid seriously.

280
00:15:14,840 --> 00:15:17,760
And it was cash, by the way.
It was a cash bid, was a script

281
00:15:17,760 --> 00:15:21,800
bid.
And so, yeah, that's kind of the

282
00:15:21,800 --> 00:15:25,200
background of of the deal.
Did did you think at any point

283
00:15:25,200 --> 00:15:28,040
it'd be interesting taking stock
AIH stock?

284
00:15:28,240 --> 00:15:33,120
So, so I was actually open
minded for my personal and

285
00:15:33,120 --> 00:15:35,240
family holdings to consider
script.

286
00:15:37,560 --> 00:15:39,520
I mean, I haven't disclosed
we're, we're actually the

287
00:15:39,520 --> 00:15:41,720
Collins Street Value Fund is
actually a shareholder.

288
00:15:41,720 --> 00:15:45,080
We've bought stock on market.
So we actually like AIH, think

289
00:15:45,080 --> 00:15:46,800
there's huge synergies with
Matrix.

290
00:15:46,800 --> 00:15:50,680
Yeah, very good management.
And always like when industries

291
00:15:50,680 --> 00:15:54,880
no one cares about goes from
three competitors down to two,

292
00:15:56,560 --> 00:15:58,160
you know, with pricing power and
all that.

293
00:15:58,160 --> 00:16:02,640
But so I was open minded
personally, but because the

294
00:16:02,640 --> 00:16:05,280
offshore oil services fund I
knew was, you know, we wanted to

295
00:16:05,280 --> 00:16:09,840
wind it up, you know, clearly
cash was more preferable.

296
00:16:11,680 --> 00:16:15,920
And I think what actually
happened was because AIH is

297
00:16:15,920 --> 00:16:20,320
below its listing price of a
dollar, I think they themselves

298
00:16:20,360 --> 00:16:23,120
thought they were cheap and
didn't want to issue their

299
00:16:23,120 --> 00:16:27,520
script at a low price, so the
cash component actually came

300
00:16:27,520 --> 00:16:29,160
from them.
So that's just there talking

301
00:16:29,160 --> 00:16:33,240
about great alignment with unit
holders, people invested in his

302
00:16:33,240 --> 00:16:35,040
fund made me think of another
group that we love to talk

303
00:16:35,040 --> 00:16:37,200
about, Trev.
Alignment is a hard thing to get

304
00:16:37,200 --> 00:16:39,480
right, exceed capital.
They have thought about this

305
00:16:39,480 --> 00:16:42,120
diligently and I think they I
think they've got a model of

306
00:16:42,120 --> 00:16:44,640
commercial property investment
vehicle that has very strong

307
00:16:44,640 --> 00:16:46,680
alignment with its investors.
You know why?

308
00:16:46,680 --> 00:16:49,000
Because they are investors in a
very meaningful way.

309
00:16:49,320 --> 00:16:52,280
That's true as well as the
management fees that only go to

310
00:16:52,280 --> 00:16:54,400
them if you make money on your
investments.

311
00:16:54,400 --> 00:16:58,800
They are targeting A7 to 8% cash
return paid out via monthly

312
00:16:58,800 --> 00:17:01,520
distributions and that doesn't
even include the capital uplift

313
00:17:01,520 --> 00:17:03,320
you see on the property as well.
It's a.

314
00:17:03,440 --> 00:17:05,920
Private investment vehicle The
collective flagship.

315
00:17:06,040 --> 00:17:07,400
Find 5 commercial properties in
there.

316
00:17:07,560 --> 00:17:09,079
Check it out on the website
Money Minors.

317
00:17:09,599 --> 00:17:13,920
Go exceed capital.
So in in your latest quarterly,

318
00:17:14,640 --> 00:17:18,040
I think there was a headline to
to a piece that was written

319
00:17:18,040 --> 00:17:21,839
there that oil was set to
explode before all this started.

320
00:17:22,079 --> 00:17:23,839
I'd love to hear your framework
about that right now.

321
00:17:24,359 --> 00:17:29,240
Yeah.
So our view was, and I guess it

322
00:17:29,240 --> 00:17:33,080
still is, is I think a lot of
people miss, I guess you could

323
00:17:33,080 --> 00:17:37,000
argue on, on, on all commodity
cycles and thematics, people

324
00:17:37,000 --> 00:17:39,600
always miss.
And everyone's concentrated on

325
00:17:39,600 --> 00:17:41,280
this, the demand, the demand,
the demand.

326
00:17:41,280 --> 00:17:44,880
But you know, usually speaking,
most commodities, the demand,

327
00:17:45,440 --> 00:17:49,440
you know, on average is pretty
easy to model out and it's

328
00:17:49,440 --> 00:17:51,640
usually increasing population
growth.

329
00:17:52,560 --> 00:17:55,000
It's the supply side.
So again, I don't know the

330
00:17:55,000 --> 00:17:57,760
figures people are quoting, but
you know, billions of dollars a

331
00:17:57,760 --> 00:18:05,000
day in Tepex that should be
spent just so that the supply of

332
00:18:05,160 --> 00:18:10,120
global oil remains constant.
Obviously oil is a depleting

333
00:18:10,120 --> 00:18:13,480
asset and so you've got to
constantly invest just to make

334
00:18:13,480 --> 00:18:15,920
sure that you, you know, you
stay constant on the supply

335
00:18:15,920 --> 00:18:19,760
side.
And I still think because of the

336
00:18:19,760 --> 00:18:24,480
shale revolution, which I think
it's on its legs just because

337
00:18:24,480 --> 00:18:28,120
the, the best oils has already
been taken out of the ground, I

338
00:18:28,120 --> 00:18:30,560
still think there's an under
investment in supply.

339
00:18:30,960 --> 00:18:37,280
And so I, you know, I guess the
premise of that, that comment in

340
00:18:37,280 --> 00:18:40,880
our most recent quarterly was it
was always going to come home to

341
00:18:40,880 --> 00:18:42,880
roost.
So when the supply side is

342
00:18:42,880 --> 00:18:46,400
always not catching up, it's
always, there's always going to

343
00:18:46,400 --> 00:18:48,920
be a trigger.
So what is the trigger?

344
00:18:48,920 --> 00:18:52,640
You know, you never know what
the a catalyst is, but but you

345
00:18:52,640 --> 00:18:55,960
know, the Iran war could be the
catalyst to eventually get

346
00:18:55,960 --> 00:18:58,400
supply to wake up.
The the cornerstone of the

347
00:18:58,400 --> 00:19:00,880
Capital Cycles book we we
referenced before focus on

348
00:19:00,880 --> 00:19:04,080
supply, on the demand.
But that's with everything and I

349
00:19:04,080 --> 00:19:08,280
don't know, it's like to me
it's, it's easy to see it, but I

350
00:19:08,880 --> 00:19:12,960
don't know.
Yeah, I think the hard part is

351
00:19:12,960 --> 00:19:15,520
you can see it and you can be
right.

352
00:19:15,520 --> 00:19:19,400
But if you're sitting there for
five years and then eventually

353
00:19:19,400 --> 00:19:22,600
get proven, well, are you right
or you're wrong on value of

354
00:19:22,600 --> 00:19:25,040
money?
I think the key, the key is that

355
00:19:25,040 --> 00:19:29,160
catalyst, finding the catalysts
whilst the prices are still

356
00:19:29,160 --> 00:19:31,520
cheap, but whilst the market's
still asleep.

357
00:19:31,920 --> 00:19:33,480
I think that's generally the
key.

358
00:19:34,960 --> 00:19:37,080
It is, yeah.
It's reminiscent of the your

359
00:19:37,080 --> 00:19:39,440
uranium trade where you were
certainly too early.

360
00:19:39,560 --> 00:19:41,240
You know, it could be, it could
be argued, but.

361
00:19:42,120 --> 00:19:46,360
We were too early that the the I
guess it's if you had to choose

362
00:19:46,360 --> 00:19:48,240
between being too early or too
late, you'd probably be too

363
00:19:48,240 --> 00:19:50,520
early.
But in that thematic where we

364
00:19:51,120 --> 00:19:54,960
were wrong, not wrong, but what
we missed out and I guess still

365
00:19:54,960 --> 00:19:58,400
to this day, there's no way of
anyone actually pointing their

366
00:19:58,400 --> 00:20:03,800
finger on it was the amount of
inventory just out there because

367
00:20:03,800 --> 00:20:06,120
it's strategic, because, you
know, it's associated with

368
00:20:06,160 --> 00:20:09,760
nuclear weapons, I guess, and
you know, confidentiality and

369
00:20:09,760 --> 00:20:13,000
it's, you know, it's a very
efficient commodity.

370
00:20:13,000 --> 00:20:18,160
Like you know, you know, unlike
bulk commodities where you need

371
00:20:18,160 --> 00:20:22,440
a lot of room to store, you
know, because the value is is a

372
00:20:22,440 --> 00:20:25,480
low value item, obviously
uranium.

373
00:20:25,920 --> 00:20:27,520
Yeah.
No one actually knows how much

374
00:20:27,520 --> 00:20:29,240
inventory there is on a world
basis.

375
00:20:29,720 --> 00:20:32,600
And I think that's why it took
three years effectively from

376
00:20:32,600 --> 00:20:36,480
when we entered to when it
actually started to move.

377
00:20:36,480 --> 00:20:38,840
But then I remember then six
months, I think everything far

378
00:20:38,840 --> 00:20:40,440
backed.
There was nothing for three

379
00:20:40,440 --> 00:20:42,800
years.
Goldberg hitting me on my

380
00:20:42,800 --> 00:20:44,640
shoulder saying Are you sure
we're right, Are you sure we're

381
00:20:44,640 --> 00:20:45,920
right?
And then, in six months, it far

382
00:20:45,920 --> 00:20:48,840
backed.
I want to I want to ask Bass.

383
00:20:49,320 --> 00:20:55,160
We're fresh off a conversation
with, with Rusty and I know that

384
00:20:55,160 --> 00:20:58,960
you know Rusty well as you know,
both, both being substantial,

385
00:20:58,960 --> 00:21:01,960
well quite large shareholders
of, of Canarvon together.

386
00:21:02,240 --> 00:21:06,040
And in fact at one point they're
both both Nero and and Collin

387
00:21:06,040 --> 00:21:09,480
Street jointly, yeah, jointly
declared an association for

388
00:21:09,520 --> 00:21:13,320
purposes of, of challenging the,
the board dynamics at Canarvon.

389
00:21:13,320 --> 00:21:15,800
So a clear kind of activist
intent.

390
00:21:15,800 --> 00:21:17,680
Then things have have since
changed.

391
00:21:17,680 --> 00:21:20,480
There is different a different
board at Canarvon.

392
00:21:21,360 --> 00:21:23,880
Rusty was fighting the good
fight for for the merits of

393
00:21:24,040 --> 00:21:27,960
Dorado to to move ahead on our
podcast recently.

394
00:21:28,240 --> 00:21:32,360
So I do want to like firstly,
just ask about your investment

395
00:21:32,360 --> 00:21:34,720
in Carnarvon right now.
Did you think it would take as

396
00:21:34,720 --> 00:21:35,920
long as it has?
Do you think the share price

397
00:21:35,920 --> 00:21:39,040
would still be, you know,
roughly kind of cash and liquids

398
00:21:39,160 --> 00:21:42,680
as it is right now?
I mean, the answer is no to

399
00:21:42,680 --> 00:21:43,680
both.
Am I happy?

400
00:21:43,680 --> 00:21:44,960
No.
Did I think it would take as

401
00:21:44,960 --> 00:21:45,560
long?
No.

402
00:21:46,560 --> 00:21:50,480
Yeah.
Look, I guess again, there's

403
00:21:50,480 --> 00:21:53,640
always a risk in all projects
where if you're a minority

404
00:21:53,640 --> 00:22:00,480
partner that the majority holder
or operator calls the shot.

405
00:22:00,480 --> 00:22:11,480
So, so did I envisage Santos to
be so slow and to not show that,

406
00:22:11,880 --> 00:22:18,800
you know, one of Australia's I
think best oil prospects ever

407
00:22:18,800 --> 00:22:22,680
found in the last 50 or 60 years
that I still think nothing would

408
00:22:22,680 --> 00:22:24,600
happen?
No.

409
00:22:26,520 --> 00:22:28,800
So I I am very surprised by
that.

410
00:22:31,160 --> 00:22:35,800
And I guess, you know, if you
look at the current Knarvin

411
00:22:35,800 --> 00:22:39,320
share price, clearly no one
cares.

412
00:22:39,640 --> 00:22:44,240
As you said, it's, it's if you
add the value of their strike

413
00:22:44,240 --> 00:22:52,360
investment plus cash plus 90
million US free carry, you know,

414
00:22:53,120 --> 00:22:54,640
and these are hard assets,
right?

415
00:22:54,640 --> 00:22:58,120
Well, you know, it's
significantly above the current

416
00:22:58,120 --> 00:23:01,680
share price.
And that's not even valuing the

417
00:23:01,720 --> 00:23:07,040
economics of the 10, their 10%
share in Dorado, you know, So

418
00:23:07,160 --> 00:23:13,000
yes, it's frustrating.
I still believe eventually

419
00:23:13,000 --> 00:23:15,520
something's going to get done on
Dorado.

420
00:23:16,360 --> 00:23:20,800
Again, I don't know if there's
much truth to it, but I've seen

421
00:23:20,800 --> 00:23:23,680
quotes and I think Carnarvon had
a presentation yesterday, the

422
00:23:23,680 --> 00:23:27,440
day before where they quoted the
CEO of Santos saying, oh, now

423
00:23:27,440 --> 00:23:31,320
it's a priority after the Iran.
Well, OK mate, thank you.

424
00:23:34,360 --> 00:23:36,920
So I think something will
happen.

425
00:23:37,120 --> 00:23:39,120
The timing is very
disappointing.

426
00:23:39,480 --> 00:23:41,760
Obviously it's hurt our IRR on
that investment.

427
00:23:44,600 --> 00:23:49,480
Yeah, it's, you know, nothing
has happened.

428
00:23:49,480 --> 00:23:52,200
And then when it will, it will,
you know, in my opinion, happen

429
00:23:52,360 --> 00:23:55,240
overnight and everyone would be
like, oh, that's interesting.

430
00:23:55,240 --> 00:23:56,800
The stock doubled.
Well, yeah.

431
00:23:56,920 --> 00:24:03,640
Well, it's, it's cheap.
Yeah, I and yeah, I, I always

432
00:24:03,640 --> 00:24:04,920
describe kind of and like that
to people.

433
00:24:04,920 --> 00:24:07,400
It's like you could wake up one
day and the stocks are 300%

434
00:24:07,440 --> 00:24:08,680
because the catalyst that was
required.

435
00:24:08,680 --> 00:24:10,080
I mean, you could look at it
another way.

436
00:24:10,080 --> 00:24:12,440
And again, I wish average price
was where the current price is,

437
00:24:12,440 --> 00:24:15,120
but it's not, I think average
about 16.

438
00:24:15,120 --> 00:24:17,840
So it's not that bad, but it's
still not good.

439
00:24:18,960 --> 00:24:21,360
You know, you, you flip it if
you believe that, you know,

440
00:24:21,360 --> 00:24:26,400
we're going to need oil for the
foreseeable future and you, you

441
00:24:26,400 --> 00:24:29,680
like to invest in asymmetry and
asymmetry, obviously low

442
00:24:29,680 --> 00:24:33,800
downside, reasonable upside.
You know, I don't know what the

443
00:24:33,800 --> 00:24:37,320
downside based on hard assets
and cash and investments and

444
00:24:37,320 --> 00:24:41,400
Carnarvon is, but it's, it's,
you would think there's not much

445
00:24:41,400 --> 00:24:44,400
downside.
Again, it's not investment

446
00:24:44,400 --> 00:24:46,200
advice, but just based on
mathematics.

447
00:24:46,200 --> 00:24:49,880
So, you know, it's pretty
asymmetry frustrating.

448
00:24:51,560 --> 00:24:55,520
But I guess, I guess you got to
take the good with the bad,

449
00:24:55,520 --> 00:24:57,760
right?
Like that one's taken a lot

450
00:24:57,760 --> 00:25:00,160
longer than expected.
And on the flip side, I guess

451
00:25:00,160 --> 00:25:03,000
the gold, the gold's moved
quicker than we would have

452
00:25:04,600 --> 00:25:05,760
expected as well.
So.

453
00:25:06,560 --> 00:25:09,120
Sometimes you can be too early
sometimes, sometimes just in

454
00:25:09,160 --> 00:25:10,800
time.
But but you know, always what I

455
00:25:10,800 --> 00:25:17,040
like to do with investments is
when you make an investment,

456
00:25:17,400 --> 00:25:19,880
it's always good to look back
at, you know, the the

457
00:25:19,880 --> 00:25:23,120
information at the time for you
to make your judgement.

458
00:25:23,120 --> 00:25:26,960
And and again, you know,
probably still would have made

459
00:25:26,960 --> 00:25:31,360
the same decision because we
just never would have thought

460
00:25:31,360 --> 00:25:34,600
that again.
One of Australia's best oil

461
00:25:34,960 --> 00:25:39,480
fines over the last 60 years
with with the lowest, the lowest

462
00:25:39,600 --> 00:25:41,200
OpEx.
I think their their break evens

463
00:25:41,200 --> 00:25:47,520
like $15 a barrel.
Just never thought Santos would

464
00:25:47,520 --> 00:25:52,240
be so slow and not a personal
thing.

465
00:25:52,240 --> 00:25:55,040
But yeah I'm just not the
biggest fan and not not not

466
00:25:55,040 --> 00:25:58,560
necessarily related to Dorado.
I just think everything is done.

467
00:25:58,560 --> 00:26:01,000
Not not the biggest fan of the
current CEO of Santos.

468
00:26:01,560 --> 00:26:08,200
If if I yeah, think of the the
Carnarvon president to to us at

469
00:26:08,200 --> 00:26:09,560
least.
But there was an observation

470
00:26:09,560 --> 00:26:12,960
that OK, like Collin Street has
some some some activist tilt

471
00:26:12,960 --> 00:26:16,120
when required to oriented on
their investments.

472
00:26:16,120 --> 00:26:19,600
And Carnarvon's not the only
time that's come amount

473
00:26:19,600 --> 00:26:23,000
publicly.
There's yeah, clearly been some

474
00:26:23,120 --> 00:26:26,960
some some joint support for for
the campaign at Home group as

475
00:26:26,960 --> 00:26:30,120
well joining with Jeremy.
Yes.

476
00:26:30,200 --> 00:26:33,160
So I, I I do want to.
That's a live 1.

477
00:26:33,320 --> 00:26:35,520
It is a live 1 I.
Wasn't sure if we were going to

478
00:26:35,520 --> 00:26:36,720
jump into.
This it's particularly

479
00:26:36,720 --> 00:26:40,680
interesting, but I really before
you addressed that that that

480
00:26:40,680 --> 00:26:43,600
specifically, I do just want to
understand how you think of of

481
00:26:43,720 --> 00:26:46,440
of activism, how you think of,
you know, the the times where

482
00:26:46,440 --> 00:26:48,440
Collin Street.
That's a that's a good question.

483
00:26:48,440 --> 00:26:50,720
I'll be honest, and people might
be surprised.

484
00:26:50,720 --> 00:26:54,320
I actually hate doing it.
Like, again, we're human beings,

485
00:26:54,320 --> 00:26:55,160
right?
We're lazy.

486
00:26:55,160 --> 00:26:59,800
I'd much rather just buy a
share, sit on my desk and watch

487
00:26:59,800 --> 00:27:03,400
it go up, you know?
You know, I'd much rather work

488
00:27:03,400 --> 00:27:10,720
with management.
So it's a rarity for us, but but

489
00:27:10,720 --> 00:27:12,920
we're willing to do it where I
think a lot of other fund

490
00:27:12,920 --> 00:27:16,760
managers aren't willing to do
it, whether I don't know why,

491
00:27:16,760 --> 00:27:19,560
but they think it's bad for the
reputation or they can't be

492
00:27:19,560 --> 00:27:21,200
bothered or they don't want to
spend the money.

493
00:27:22,160 --> 00:27:23,680
So we're willing to roll our
sleeves up.

494
00:27:23,680 --> 00:27:28,760
But it's it's like, put, let me
put it this way, I had no

495
00:27:28,760 --> 00:27:31,280
inclination when we first
invested in harm that I would

496
00:27:31,280 --> 00:27:35,280
ever be doing this.
So, you know, but we're in a,

497
00:27:37,360 --> 00:27:39,080
you know, we're, we're I guess
pot committed.

498
00:27:39,080 --> 00:27:43,240
So, you know, when, when
circumstances change and we, we

499
00:27:43,240 --> 00:27:46,880
feel like that we, we need to
make a stand.

500
00:27:48,040 --> 00:27:50,680
We will.
How much does the lack of

501
00:27:50,680 --> 00:27:52,760
liquidity play into this?
The fact that it can be

502
00:27:52,760 --> 00:27:55,800
difficult for for a funded to
get out of these kind of

503
00:27:55,840 --> 00:27:57,920
positions.
That's a good question.

504
00:28:01,640 --> 00:28:10,440
Well, I think it's fair to say
due to, I mean usually speaking

505
00:28:10,520 --> 00:28:13,440
if, if it's not the most liquid
company, then it's obviously not

506
00:28:13,440 --> 00:28:15,760
the most, not the largest
company.

507
00:28:16,240 --> 00:28:19,160
And we don't manage billions.
I think we've managed, I can't

508
00:28:19,160 --> 00:28:22,520
remember how 4 or 500 million at
the moment.

509
00:28:22,520 --> 00:28:27,400
So, so if it wasn't liquid then
we probably wouldn't have a

510
00:28:27,400 --> 00:28:29,560
larger stake to actually have a
voice.

511
00:28:30,400 --> 00:28:36,360
That's number one.
Number two, you know, a lot of

512
00:28:36,360 --> 00:28:40,040
the times we're, we're not
scared to, to sell a stock,

513
00:28:40,280 --> 00:28:43,040
whether it's liquid or illiquid,
at a loss.

514
00:28:43,040 --> 00:28:46,560
If we thought our, our thesis
was incorrect, We've, we've done

515
00:28:46,560 --> 00:28:49,160
it, you know, not often, but
we've done it.

516
00:28:49,720 --> 00:28:53,840
And, and so, you know, it's fair
to say that, you know, if the

517
00:28:53,840 --> 00:28:57,600
fundamentals don't stack up and
it's an, a liquid stock, you

518
00:28:57,600 --> 00:29:00,280
know, we're not going to be just
agitating, just trying to make

519
00:29:00,280 --> 00:29:03,280
money.
And so we still believe in, in,

520
00:29:04,040 --> 00:29:05,960
in the business of harm.
We still think there's huge

521
00:29:05,960 --> 00:29:07,520
value.
It's still trading a huge

522
00:29:07,520 --> 00:29:10,000
discount.
Unfortunately, we think the

523
00:29:10,000 --> 00:29:14,920
discount is there maybe because
of, you know, what management

524
00:29:14,920 --> 00:29:20,880
have done.
So yeah, I mean, that's yeah.

525
00:29:20,880 --> 00:29:24,360
Hum hum hum's a live 1.
How's it end?

526
00:29:31,800 --> 00:29:35,400
Well, I think there's two to
outcomes, right?

527
00:29:35,400 --> 00:29:43,240
We, we either, we either come to
an agreement with management to

528
00:29:43,240 --> 00:29:49,480
kind of, you know, have a, have
a resolution where we're happy

529
00:29:49,480 --> 00:29:52,720
and, and, and they're a little
bit happy.

530
00:29:52,720 --> 00:29:57,080
And, and, and you know, maybe
maybe we call the meeting off or

531
00:29:57,080 --> 00:30:02,240
on the flip side, we continue,
it's fair to say, obviously I

532
00:30:02,240 --> 00:30:06,120
know the numbers, right.
We're so, so this general

533
00:30:06,120 --> 00:30:11,080
meeting that we've called, I
think it was called a 2249 F

534
00:30:11,080 --> 00:30:16,000
where we call the meeting, we
use our own share registry votes

535
00:30:16,000 --> 00:30:20,320
come to us.
And so all I can say is we've

536
00:30:20,320 --> 00:30:25,600
got a lot of support and, and
there will be management change

537
00:30:26,040 --> 00:30:29,040
if it heads to the vote.
The the difficulty is the vote

538
00:30:29,040 --> 00:30:33,560
keeps getting delayed because of
this crazy takeovers panel

539
00:30:33,560 --> 00:30:35,560
process that's been really
elongated.

540
00:30:39,360 --> 00:30:42,800
And so I've actually lost track.
I think the meeting's meant to

541
00:30:42,800 --> 00:30:47,440
be held next week, but it might
get delayed again, yeah.

542
00:30:48,680 --> 00:30:54,800
If I, if I, yeah, peel off JD's
comment on on liquidity, 1

543
00:30:54,800 --> 00:30:58,480
observation I have about some of
the most phenomenal investments

544
00:30:58,480 --> 00:31:02,040
that Collin Street has made is
they are often in liquid

545
00:31:02,040 --> 00:31:03,760
companies.
But those are positions that

546
00:31:03,760 --> 00:31:06,760
were acquired by virtue of a
convertible note, which allowed

547
00:31:07,240 --> 00:31:10,960
allowed Collin Street to maybe
maybe get a like a sizeable

548
00:31:10,960 --> 00:31:13,640
claim on the equity upside while
also protecting the downside and

549
00:31:13,640 --> 00:31:16,880
these liquid names which
subsequently became very liquid

550
00:31:16,880 --> 00:31:18,880
when the cycle.
Turned yeah, that's true, that's

551
00:31:18,880 --> 00:31:21,600
true.
But, but I think and why we

552
00:31:21,600 --> 00:31:25,640
haven't done many convertible
notes, you know, over the last

553
00:31:25,840 --> 00:31:28,680
one or two years, we did a lot
more before then.

554
00:31:29,400 --> 00:31:35,360
I still think the market right
now still in general, I think

555
00:31:35,360 --> 00:31:38,960
hates, I don't know, hates
convertible notes because I

556
00:31:38,960 --> 00:31:42,200
always feel like there's going
to be that overhang once you

557
00:31:42,200 --> 00:31:45,640
convert.
And so, you know, in in normal

558
00:31:45,640 --> 00:31:48,120
times, convertible notes are
brilliant because obviously your

559
00:31:48,120 --> 00:31:51,960
downside is limited because, you
know, you're effectively a

560
00:31:52,440 --> 00:31:56,000
secure debt holder company, but
then you've got equity like

561
00:31:56,000 --> 00:31:57,600
upside.
So you've got unlimited, in

562
00:31:57,600 --> 00:31:59,760
theory, unlimited upside, good
downside.

563
00:32:00,320 --> 00:32:03,120
But I just feel now convertible
notes and again, while we

564
00:32:03,120 --> 00:32:06,160
haven't done a lot recently, is
you tend to find you don't

565
00:32:06,160 --> 00:32:08,760
actually get that upside.
But I'll give you an example

566
00:32:08,760 --> 00:32:11,320
like Matrix, we did it and you
know, they paid us out at the

567
00:32:11,320 --> 00:32:14,200
end.
Shares never really went that

568
00:32:14,200 --> 00:32:19,680
crazy when we were holding the
convertible note for us to

569
00:32:19,680 --> 00:32:21,040
convert.
Like, I would have loved to

570
00:32:21,040 --> 00:32:26,520
convert, especially take $0.40
on the AIH deal, but but it it

571
00:32:26,520 --> 00:32:28,640
didn't happen.
The the note came up for

572
00:32:28,640 --> 00:32:34,880
maturity and at the time, I
think the shares were trading at

573
00:32:34,880 --> 00:32:37,480
$0.25.
Our conversion was 30 cents.

574
00:32:37,480 --> 00:32:39,640
Yeah.
It's like, well, you know, we're

575
00:32:39,640 --> 00:32:42,000
a fund manager, how can we
convert an autumn and straight

576
00:32:42,000 --> 00:32:46,920
away, you know, be behind.
And so, yeah, they paid us back

577
00:32:47,200 --> 00:32:49,600
and then and then a couple of
months after, that's when AIH,

578
00:32:49,920 --> 00:32:52,160
yeah.
Approached us, it's an overhang

579
00:32:52,200 --> 00:32:57,600
and I even think of JBZ as well.
Yeah, like really interesting

580
00:32:57,880 --> 00:32:59,760
deposit.
The Collin Street convertible

581
00:32:59,760 --> 00:33:01,920
note, big overhang.
The moment it was kind of

582
00:33:01,920 --> 00:33:03,560
cleaned up the the stock would
ripple.

583
00:33:03,560 --> 00:33:08,640
So that's another good example.
I think another example, we got

584
00:33:08,640 --> 00:33:11,520
lucky actually.
So the one of the more

585
00:33:11,520 --> 00:33:15,800
successful ones was we had a
convertible note in a gold

586
00:33:15,800 --> 00:33:19,520
company called Van Gogh Mining
or Van Gogh Gold.

587
00:33:19,680 --> 00:33:23,040
Yeah, Mango something and and
Van Gogh got taken over by

588
00:33:23,040 --> 00:33:27,440
Catalyst and then and then our
note.

589
00:33:27,840 --> 00:33:31,360
Yeah, then we converted.
We took the risk, right?

590
00:33:31,360 --> 00:33:36,400
We converted And then once the
overhang was gone, you know, it

591
00:33:36,520 --> 00:33:39,880
did go for a bit of a run.
I mean, don't get me wrong that

592
00:33:40,200 --> 00:33:45,080
Catalyst has done an amazing job
from minnow to a decent sized

593
00:33:45,080 --> 00:33:47,400
company, but yeah, that's
another example.

594
00:33:48,160 --> 00:33:50,320
The market just doesn't like
that overhang.

595
00:33:51,000 --> 00:33:53,360
You, you've sparked my memory.
They're talking about Catalyst,

596
00:33:53,360 --> 00:33:57,840
another company we spoke about
last time was Maker as well and

597
00:33:58,400 --> 00:34:01,680
a potential tie up like Maker
had a fantastic run and then

598
00:34:01,680 --> 00:34:06,120
it's, it's really peeled back as
light as they try and get to get

599
00:34:06,120 --> 00:34:09,320
to name plate capacity.
How do you see that neck of the

600
00:34:09,320 --> 00:34:12,880
woods playing out?
I still reckon there's going to

601
00:34:12,880 --> 00:34:16,400
be further M&A.
Yeah, sure.

602
00:34:17,120 --> 00:34:19,239
Yeah, about actually was looking
at Maker the other day.

603
00:34:21,199 --> 00:34:26,120
Yeah, obviously, you know, on
side it went too fast too

604
00:34:26,120 --> 00:34:32,920
quickly and and you know a lot,
a lot of a lot of good gold

605
00:34:32,920 --> 00:34:36,239
operations now that we just
think I've always been amazing

606
00:34:36,239 --> 00:34:39,920
have had ramp up issues.
That's the nature of mining.

607
00:34:42,960 --> 00:34:51,159
Yeah, I I, I do believe, I
think, I think for your your

608
00:34:51,159 --> 00:34:56,440
question earlier on M and AI
think a less volatile gold

609
00:34:58,240 --> 00:35:01,600
something that's just range man
within a you know, small range

610
00:35:01,600 --> 00:35:07,680
is very inducive to M and.
AI can't shake since we spoke

611
00:35:07,680 --> 00:35:12,760
with with Mark Connelly,
chairperson at at Catalyst, the

612
00:35:12,760 --> 00:35:14,600
feeling that they're on the
block as well.

613
00:35:14,600 --> 00:35:17,240
This this hardly accompany his
chaired that he hasn't sold

614
00:35:17,240 --> 00:35:18,520
along the way I.
Agree.

615
00:35:19,160 --> 00:35:22,800
I agree he's yeah, he's a
Wheeler and dealer.

616
00:35:23,400 --> 00:35:25,680
Absolutely, absolutely.
It makes it, it makes it a

617
00:35:25,680 --> 00:35:28,080
really interesting spot.
I, I want to zoom out as well

618
00:35:28,080 --> 00:35:31,120
with us because I think a couple
years ago now you started the,

619
00:35:31,200 --> 00:35:34,600
the Global Fund.
So from, you know, the first

620
00:35:34,600 --> 00:35:37,880
eight years you, you had a, an
Aussie mandate and then you went

621
00:35:37,880 --> 00:35:41,280
global.
And I remember the first time we

622
00:35:41,280 --> 00:35:43,000
spoke, you were licking your
lips about some of these

623
00:35:43,000 --> 00:35:47,360
opportunities in China, jd.com
and and other kind of touch

624
00:35:47,360 --> 00:35:48,400
names.
And then you finally got the

625
00:35:48,400 --> 00:35:50,640
opportunity actually played in
in the fun.

626
00:35:50,640 --> 00:35:54,720
So how do you think about where
valuations are across the world

627
00:35:54,720 --> 00:35:57,320
and where a pockets of of really
interesting opportunities?

628
00:35:57,920 --> 00:36:00,200
Yeah.
So, yeah, so our global fund we

629
00:36:00,200 --> 00:36:03,320
did launch I think February
2024.

630
00:36:03,320 --> 00:36:11,880
Throughout that period we have
bought and sold couple of, I

631
00:36:11,880 --> 00:36:14,760
mean Hong Kong listed, but
predominantly China domicile

632
00:36:14,760 --> 00:36:18,400
revenue and earnings companies.
We've taken some good profits

633
00:36:18,400 --> 00:36:23,760
off the table.
I think currently the only stock

634
00:36:23,760 --> 00:36:26,800
that is listed on the Hong Kong,
but it's really a Chinese

635
00:36:26,800 --> 00:36:32,920
company that we currently own in
a reasonable way is jd.com.

636
00:36:34,560 --> 00:36:36,480
So that's the, you know the
Amazon of China.

637
00:36:36,480 --> 00:36:38,600
I still think that's
ridiculously cheap.

638
00:36:40,960 --> 00:36:47,880
Look, valuations globally, I
think obviously, you know, if I

639
00:36:47,880 --> 00:36:52,520
had to generalize America, the
US, yeah, is still very, very

640
00:36:52,520 --> 00:36:55,400
expensive.
It's like, you know, so most of

641
00:36:55,400 --> 00:37:03,120
the value is X the US and you
know, it depends on pockets and

642
00:37:03,120 --> 00:37:06,560
sectors, but you know, there's
some value in China, Hong Kong

643
00:37:06,640 --> 00:37:13,400
listed, but Chinese domiciled
companies, I think Europe and,

644
00:37:13,800 --> 00:37:17,440
and I mean, I, I think, I think
it's an amazing company.

645
00:37:17,440 --> 00:37:20,960
It's listed on the NASDAQ and
you probably think it's, you

646
00:37:20,960 --> 00:37:22,280
know, it's an interesting
jurisdiction.

647
00:37:22,280 --> 00:37:23,320
Why would Collar Street be
there?

648
00:37:23,320 --> 00:37:26,280
But I think our third largest
holding is a company called

649
00:37:26,280 --> 00:37:28,280
Caspi.
I was so curious about this one.

650
00:37:28,440 --> 00:37:30,720
Yeah, Kazakhstan.
Kazakhstan.

651
00:37:30,720 --> 00:37:32,240
Borat.
Yeah.

652
00:37:32,560 --> 00:37:33,960
Tell us more.
Yeah.

653
00:37:33,960 --> 00:37:41,680
So, so Caspi is effectively,
they've got a banking business,

654
00:37:42,000 --> 00:37:47,880
they've got a online payments
business and they have a fintech

655
00:37:47,880 --> 00:37:49,840
arm.
So effectively the best way to

656
00:37:49,840 --> 00:37:56,320
describe CASPIE is it's kind of
like a monopoly in Kazakhstan.

657
00:37:56,520 --> 00:38:03,080
I'll give you an example.
If you need to make a payment

658
00:38:03,080 --> 00:38:10,920
online for your utility bills,
have to use CASPIE if you go to

659
00:38:10,920 --> 00:38:16,360
any terminal on any retail
store, so all the terminals for

660
00:38:16,360 --> 00:38:22,400
the cards, the Caspian machine
now it doesn't mean you and then

661
00:38:22,400 --> 00:38:26,520
they've got a bank as well.
So they're fully integrated and,

662
00:38:26,520 --> 00:38:30,240
and the Caspi, if you just look
at its earnings, so the earnings

663
00:38:30,240 --> 00:38:35,680
growth of CASPI have been
between 15 to 20% per annum

664
00:38:35,680 --> 00:38:39,560
compounding.
So strong earnings growth.

665
00:38:39,560 --> 00:38:43,920
They're they're growing.
They they, they had AI think 12

666
00:38:43,920 --> 00:38:46,280
months ago.
They got a Turkish banking

667
00:38:46,280 --> 00:38:47,920
license.
So they're growing in Turkey.

668
00:38:48,800 --> 00:38:52,480
They've got logistics.
So they're, they're actually

669
00:38:52,480 --> 00:38:57,520
CASPI is beating Amazon in
Turkey, the kind of online

670
00:38:57,520 --> 00:39:01,400
logistics services.
It's just a just a really smart,

671
00:39:01,400 --> 00:39:03,880
well run company.
It's trading at six times

672
00:39:03,880 --> 00:39:06,520
earnings.
They just turn the dividend back

673
00:39:06,520 --> 00:39:08,040
on.
So they, they, they turn their

674
00:39:08,040 --> 00:39:11,920
dividend off to make sure they
had enough capital to reinvest

675
00:39:12,200 --> 00:39:15,600
in new initiatives such as the,
the Turkish banking license.

676
00:39:16,040 --> 00:39:18,080
But now they're making so much
money that they've decided to

677
00:39:18,080 --> 00:39:20,680
turn the dividend back on.
And we were surprised.

678
00:39:20,680 --> 00:39:22,600
We like, we thought the shares
would, would pop.

679
00:39:22,600 --> 00:39:24,160
So they've turned the dividend
back on.

680
00:39:25,280 --> 00:39:32,280
I believe the payout ratio is
60% of earnings and so

681
00:39:32,280 --> 00:39:34,680
effectively it's a 10% dividend
yield based on the current

682
00:39:34,680 --> 00:39:37,800
price.
It's only 60% of earnings and

683
00:39:37,800 --> 00:39:40,400
it's training at six times and
it's listed on the NASDAQ.

684
00:39:41,840 --> 00:39:44,520
And I think the market cap is,
so it's not a small company.

685
00:39:44,520 --> 00:39:46,440
The market cap is about 16 US
billion.

686
00:39:47,960 --> 00:39:49,720
And you said, well, how did you
get interested?

687
00:39:49,720 --> 00:39:55,680
So, so the stock was doing
pretty well until Russia invaded

688
00:39:55,680 --> 00:39:57,120
Ukraine.
Like this sounds crazy.

689
00:39:57,120 --> 00:39:59,960
So Russia invaded Ukraine and
then there was a fear, I don't

690
00:39:59,960 --> 00:40:02,280
know if you guys remember at the
start that then Russia might

691
00:40:02,280 --> 00:40:05,680
invade Kazakhstan.
I don't know where that came

692
00:40:05,680 --> 00:40:08,280
from, even though they're,
they're kind of Kazakhstan's

693
00:40:08,280 --> 00:40:10,960
kind of neutral, friendly with
Russia, but friendly with the

694
00:40:10,960 --> 00:40:13,680
world.
So there was a fear that Russia

695
00:40:13,680 --> 00:40:16,440
would invade Kazakhstan.
And because Caspi was Kazakhstan

696
00:40:16,440 --> 00:40:21,360
based, the stock effectively
half because of that.

697
00:40:21,360 --> 00:40:23,800
And it's never recovered the
stock, but the earnings keep

698
00:40:23,800 --> 00:40:29,680
going up.
So our view is if the Russian

699
00:40:29,680 --> 00:40:32,200
war in Ukraine continues and
there's still a fear that

700
00:40:32,200 --> 00:40:34,880
Kazakhstan might be next, well,
well, then hopefully the

701
00:40:34,880 --> 00:40:37,440
continued earnings growth should
inflect on the price.

702
00:40:37,440 --> 00:40:42,200
Or on the flip side, if and when
the Russian war in Ukraine, they

703
00:40:42,200 --> 00:40:45,280
come to an agreement and then
there's peace, I think it will

704
00:40:45,280 --> 00:40:48,800
get a kick straight away.
Yeah, Caspi's an interesting

705
00:40:48,800 --> 00:40:52,120
one.
Six times PA for a monopoly is a

706
00:40:52,120 --> 00:40:53,520
remarkable thought.
Yeah, Yeah.

707
00:40:53,520 --> 00:40:57,400
The risk, I guess the risk with
that is it's such a strong

708
00:40:57,480 --> 00:41:01,640
business and good monopoly.
I guess that that as Kazakhstan

709
00:41:01,640 --> 00:41:05,360
becomes more democratic, maybe
something you know, might happen

710
00:41:05,360 --> 00:41:08,560
to some of their licenses.
But but the the founder who I

711
00:41:08,560 --> 00:41:12,440
think has 30% of Caspi's very,
very, very friendly with the

712
00:41:12,440 --> 00:41:15,920
President of Kazakhstan and I
think president is locked in

713
00:41:15,920 --> 00:41:20,000
till I think 2030.
So, you know, my gut tells me,

714
00:41:20,160 --> 00:41:23,760
you know, between now and 2030,
hopefully we've realized that

715
00:41:23,760 --> 00:41:26,920
investment.
You, you've sparked some sort of

716
00:41:26,920 --> 00:41:29,800
thinking with, with your
comments on, on, on yields on,

717
00:41:29,800 --> 00:41:33,440
on dividends on, on where
investors are finding returns.

718
00:41:33,440 --> 00:41:36,800
And it takes me back home to
Australia to think about the,

719
00:41:37,000 --> 00:41:39,760
the, the right cycle.
So over the past year cutting

720
00:41:39,760 --> 00:41:44,800
and then appreciating again to
to a pretty recent upgrade

721
00:41:44,800 --> 00:41:47,960
again.
So where do you think we are

722
00:41:48,040 --> 00:41:52,360
with with the the right hiking
cycle now and what that means

723
00:41:52,360 --> 00:41:57,080
for for valuation?
But I, I, if I, if you don't

724
00:41:57,080 --> 00:42:00,640
mind, I want to first touch upon
a lovely government.

725
00:42:00,640 --> 00:42:04,160
Please do.
And, you know, tax changes and

726
00:42:04,520 --> 00:42:06,760
what they've recently disclosed
on CJTI don't.

727
00:42:06,760 --> 00:42:08,680
I think it's terrible.
I don't think it's a good thing.

728
00:42:08,680 --> 00:42:12,840
I think, you know, you know, I
guess I'm fortunate enough that,

729
00:42:13,120 --> 00:42:16,480
you know, I've done reasonably
well and, and you know, I don't

730
00:42:16,480 --> 00:42:20,040
get paid like my, my incomes
from really Frank dividends,

731
00:42:20,040 --> 00:42:21,800
right?
But, but if I was an employee

732
00:42:22,240 --> 00:42:25,000
and I look at some of my
employees, doesn't matter how

733
00:42:25,000 --> 00:42:27,280
much they make with bonuses on
that, they, they're getting paid

734
00:42:27,280 --> 00:42:31,600
in their names, right?
So, so you know, nearly half the

735
00:42:31,600 --> 00:42:33,640
money they make needs to get
paid to tax.

736
00:42:33,640 --> 00:42:35,040
And then when it's in their
name, right?

737
00:42:35,040 --> 00:42:38,400
Just think about this when it's
in their name on cash that

738
00:42:38,400 --> 00:42:41,360
they've already paid all their
tax, there is literally no

739
00:42:41,360 --> 00:42:46,040
incentive that they'd invest
like, well, if you're going to

740
00:42:46,040 --> 00:42:48,160
get rid of the capital gains
tax, right, If you can't

741
00:42:48,160 --> 00:42:54,840
negative gear and the property,
you know what, what a, what are

742
00:42:54,840 --> 00:42:57,480
employees that are on decent
income, whether they're young or

743
00:42:57,480 --> 00:43:00,080
they're old?
Where's the incentive to invest

744
00:43:00,080 --> 00:43:03,320
in this country?
You know, so I'm, I'm

745
00:43:03,680 --> 00:43:06,360
disappointed for the nation that
I think it's just a terrible

746
00:43:06,920 --> 00:43:08,800
idea what they're thinking about
doing.

747
00:43:10,160 --> 00:43:13,040
And so I think that's going to
have some serious, you know, mid

748
00:43:13,040 --> 00:43:15,200
to long term effects in this
country.

749
00:43:15,200 --> 00:43:19,000
And then on the flip side,
inflation, you know, inflation

750
00:43:19,000 --> 00:43:25,240
and interest rates, again, sorry
to bring up politics, but but if

751
00:43:25,240 --> 00:43:29,000
we believe inflation is slowly
getting ingrained in, in

752
00:43:29,040 --> 00:43:34,080
Australian society, right?
Well, surely all this government

753
00:43:34,080 --> 00:43:37,800
spending and handouts and trying
to buy votes isn't helping,

754
00:43:38,640 --> 00:43:41,640
right?
So, so if you separate the, the,

755
00:43:42,200 --> 00:43:47,440
the oil price and surely the oil
price, yes, it's high and yes,

756
00:43:47,440 --> 00:43:50,400
it's spiked.
But, but you know, I guess the

757
00:43:50,400 --> 00:43:52,800
trajectory and how quickly it's
gone up that, you know, you

758
00:43:52,800 --> 00:43:55,920
would, you would assume it's
going to come down a little bit

759
00:43:56,920 --> 00:44:00,720
once, you know, if if and when
there's a kind of a ending to

760
00:44:00,720 --> 00:44:03,440
the Iran crisis.
So, so you know, that part of

761
00:44:03,440 --> 00:44:06,600
that inflation is, you could
argue slick cyclical, but the

762
00:44:06,600 --> 00:44:09,520
structural stuff, you know, the
government's not helping.

763
00:44:09,760 --> 00:44:15,160
So, so yeah, if they continue to
do what, you know, they've

764
00:44:15,160 --> 00:44:17,760
announced, you know, last night
what they're going to be doing,

765
00:44:17,760 --> 00:44:22,440
it's it's not going to help.
And, and, and inflation, yeah, I

766
00:44:22,440 --> 00:44:26,720
don't think there is a, you
know, interest rates is a blunt

767
00:44:26,720 --> 00:44:30,840
tool, but I don't think there's
any other way to try and stop,

768
00:44:31,120 --> 00:44:34,520
you know, inflation being, you
know, rampant and permanent and,

769
00:44:35,320 --> 00:44:39,360
and, you know, inflation, high
inflation for a long period is

770
00:44:39,360 --> 00:44:42,680
obviously very bad on the
average person.

771
00:44:43,480 --> 00:44:46,960
I I found it pretty notable
looking at Michelle Bullock's

772
00:44:46,960 --> 00:44:50,560
comments on on warning
government over over fiscal

773
00:44:50,560 --> 00:44:52,440
policy.
Like I contrast that with what

774
00:44:52,440 --> 00:44:57,360
we see in other countries and it
it did stick out to me.

775
00:44:57,360 --> 00:44:59,680
Yeah, I think, I think she, I
mean, clearly she said it for a

776
00:44:59,680 --> 00:45:05,360
reason to to, to make a stand.
And yeah, I don't know, Uncle

777
00:45:05,640 --> 00:45:07,840
Uncle Jimmy Chalmers is is an
interesting cat.

778
00:45:09,280 --> 00:45:12,600
Interesting times as we.
Speak from studio in the failed

779
00:45:12,600 --> 00:45:15,200
state of Australia.
Yeah, yeah, like.

780
00:45:15,280 --> 00:45:17,360
Promising like freebies every
day.

781
00:45:17,400 --> 00:45:20,200
Yeah, so, so it's kind of
productive what they're trying

782
00:45:20,200 --> 00:45:23,080
to do.
I I just, you know, I don't

783
00:45:23,080 --> 00:45:25,760
know, I guess I'm just what am
I'm a dumb fund manager.

784
00:45:25,760 --> 00:45:29,160
But but but, you know, it's not
good.

785
00:45:29,640 --> 00:45:33,400
I don't know what the solution
is, is, is right.

786
00:45:34,240 --> 00:45:39,800
I don't know what the solution
is, but but you know, it's very

787
00:45:39,800 --> 00:45:43,000
disappointing.
But it's disappointing because

788
00:45:43,000 --> 00:45:46,120
to me it's obvious.
It's obvious what they shouldn't

789
00:45:46,120 --> 00:45:51,560
be doing, you know, to to
effectively help on the

790
00:45:51,560 --> 00:45:53,760
inflation front.
So yeah.

791
00:45:53,880 --> 00:45:58,520
You mentioned pretty pretty
early vast that you don't have a

792
00:45:58,520 --> 00:46:01,760
next good idea for for an
asymmetric.

793
00:46:01,760 --> 00:46:03,720
Not yet.
Cyclical, divergent.

794
00:46:05,640 --> 00:46:08,600
Can I, can I, can I throw
something in the wind and see if

795
00:46:08,600 --> 00:46:09,960
you think there's any merit to
this.

796
00:46:10,320 --> 00:46:13,360
You think on the the flip side
of this, like SAS Apocalypse,

797
00:46:13,360 --> 00:46:15,600
that there'll be some
interesting opportunities there?

798
00:46:16,880 --> 00:46:22,760
Well, I have to disclose, I
guess you could call a thematic.

799
00:46:23,840 --> 00:46:29,320
We, we did sorry in, in, in the
international fund, we did buy 2

800
00:46:29,320 --> 00:46:35,480
businesses that were hit because
of the SAS apocalypse and they

801
00:46:35,480 --> 00:46:41,840
were online, online classifieds
businesses.

802
00:46:43,160 --> 00:46:44,400
Yes, it was one of these, a
London.

803
00:46:44,400 --> 00:46:46,840
List yeah, they're both London
listed, so right move an Auto

804
00:46:46,840 --> 00:46:49,160
Trader.
So effectively the car sales and

805
00:46:49,160 --> 00:46:55,040
the realestate.com of the UK.
Yeah, I, I guess you could think

806
00:46:55,040 --> 00:47:00,080
of that as a thematic.
Yeah, I yes, to answer your

807
00:47:00,080 --> 00:47:05,440
question, yes, obviously there's
lots of moving parts with what

808
00:47:05,440 --> 00:47:10,960
AI can do.
But, but I think people, if I

809
00:47:10,960 --> 00:47:13,720
specifically think about an
online classifieds business and

810
00:47:13,720 --> 00:47:16,200
not necessarily Auto Trader or
right move, but just online

811
00:47:16,200 --> 00:47:20,360
classifieds, you know, you've
got the front end where

812
00:47:20,360 --> 00:47:24,480
obviously the consumer logs
online and checks whether it's

813
00:47:24,480 --> 00:47:27,280
cars or whatever cars and
houses.

814
00:47:27,280 --> 00:47:31,080
But but I feel like the market's
missed the back end and I'll

815
00:47:31,080 --> 00:47:33,520
explain why.
So the the back end not that

816
00:47:33,520 --> 00:47:36,360
easy to replicate.
Like there's a reason why car

817
00:47:36,360 --> 00:47:39,920
sales is good in Australia, but
nowhere else.

818
00:47:39,920 --> 00:47:42,280
There's a reason why auto trade
is good in the UK, but nowhere

819
00:47:42,280 --> 00:47:44,640
else.
I don't know what the American

820
00:47:44,640 --> 00:47:47,640
equivalent is for car sales, but
there's a reason why they're #1

821
00:47:47,640 --> 00:47:52,040
and so, so even dominant online
classifieds businesses in a

822
00:47:52,040 --> 00:47:54,600
certain region, they can't
replicate that in another

823
00:47:54,600 --> 00:47:56,000
region.
And you say, well, why?

824
00:47:56,720 --> 00:48:00,600
Because the back end, it's like
for Autotrader, I think they

825
00:48:00,600 --> 00:48:04,440
have contracts with 4000
independent car dealerships.

826
00:48:05,040 --> 00:48:07,040
So they're still sending reps on
the road.

827
00:48:07,040 --> 00:48:12,000
I think they've got 250 reps on
the road to visit car dealers to

828
00:48:12,000 --> 00:48:14,720
lock him in contracts to help
them with the photos and the

829
00:48:14,720 --> 00:48:17,320
inventory and all that stuff.
So that stuff's still pretty

830
00:48:17,320 --> 00:48:22,080
physical and for, for real
estate portals as well.

831
00:48:22,080 --> 00:48:24,640
I'm pretty, I mean, I don't know
how many independent real estate

832
00:48:24,640 --> 00:48:27,400
agents there are, but but you
still need to engage with these

833
00:48:27,400 --> 00:48:30,560
agencies, you know, meet up with
them, help them.

834
00:48:30,560 --> 00:48:34,960
So, so I think the markets kind
of missed the back end part of

835
00:48:35,000 --> 00:48:38,640
the classifieds business.
So that's why we felt pretty

836
00:48:38,640 --> 00:48:39,760
comfortable with the
classifieds.

837
00:48:40,040 --> 00:48:42,880
And then why we did the UK and
not Australian stocks or

838
00:48:42,880 --> 00:48:45,200
American stocks or UK stocks was
just from a valuation

839
00:48:45,200 --> 00:48:49,080
perspective because how terrible
the UK economy's been.

840
00:48:51,840 --> 00:48:55,480
So I think there's three stocks
we own in the UK, the the two

841
00:48:55,480 --> 00:48:57,760
online classifieds and also
Domino's UK.

842
00:48:58,840 --> 00:49:02,200
So I think there's a disconnect
with the UK price earnings

843
00:49:02,200 --> 00:49:08,400
multiples.
And so, yeah, I guess that's a

844
00:49:08,400 --> 00:49:10,080
thematic.
I think it's, I think it's

845
00:49:10,120 --> 00:49:15,960
really interesting because the
the bootstrapping liquidity is

846
00:49:15,960 --> 00:49:18,600
going to be incredibly hard for
any, you know, it's easy to

847
00:49:18,600 --> 00:49:20,440
build, might be easy to build
software, but actually like

848
00:49:20,440 --> 00:49:23,640
getting buyers and sellers to
converge, especially when you

849
00:49:23,640 --> 00:49:25,560
tie in the physical real world
staff.

850
00:49:25,560 --> 00:49:27,480
Yeah, there's a lot of
resilience to that business

851
00:49:27,480 --> 00:49:29,120
model.
I think so.

852
00:49:29,120 --> 00:49:31,760
I think so.
And I think we're again, other

853
00:49:31,760 --> 00:49:34,760
businesses.
My view is if you're already an

854
00:49:34,760 --> 00:49:37,640
incumbent and you've already got
the customer contracts and

855
00:49:37,640 --> 00:49:41,160
connections, you know, why
couldn't they themselves

856
00:49:42,040 --> 00:49:45,440
implement and utilize AI in
their services and products,

857
00:49:45,560 --> 00:49:49,160
which I think they're doing?
I think I where I do think it

858
00:49:49,160 --> 00:49:52,880
may have an effect is maybe
pricing and margins.

859
00:49:53,160 --> 00:49:55,600
And when I say that is if if
you're an incumbent, you

860
00:49:55,600 --> 00:50:00,080
probably have to spend more on
your own AI initiatives just to

861
00:50:00,080 --> 00:50:03,720
earn the same dollar of revenue.
So I guess maybe margins will

862
00:50:03,720 --> 00:50:06,160
come down a bit.
But entire business models

863
00:50:06,360 --> 00:50:10,240
ending tomorrow because of AI.
Yeah, I don't, I don't think

864
00:50:10,240 --> 00:50:13,600
it's that easy.
One last commodity to to talk

865
00:50:13,600 --> 00:50:15,760
about this.
I think it's a commodity we've

866
00:50:15,760 --> 00:50:17,680
never spoken about on the show
before.

867
00:50:17,760 --> 00:50:20,680
Almonds select harvest, an
Aussie business.

868
00:50:21,360 --> 00:50:24,040
I've I've read a few papers on
it and and done a bit of reading

869
00:50:24,040 --> 00:50:26,640
on, on the company itself.
It's a, it's a really

870
00:50:26,640 --> 00:50:29,920
fascinating set up the almond
market where you've only got

871
00:50:29,920 --> 00:50:32,480
certain pockets of the world
where it's appropriate.

872
00:50:32,520 --> 00:50:36,400
Water challenges, land issuing
challenges, permitting these

873
00:50:36,400 --> 00:50:39,480
sorts of things.
I'm curious to to get the quick

874
00:50:39,480 --> 00:50:41,080
sort of one O 1 on on the way
you like it.

875
00:50:41,760 --> 00:50:44,720
Well, I think you've caught me
up twice here on thematics.

876
00:50:44,720 --> 00:50:46,320
I guess you could argue as
thematics.

877
00:50:47,240 --> 00:50:48,920
So.
So put it this way, if there

878
00:50:48,920 --> 00:50:52,760
were more than one way to play
the almond market, we probably

879
00:50:52,760 --> 00:50:54,320
would have a special situation
fund.

880
00:50:54,400 --> 00:50:56,440
Yeah, but it's hard to have a
special situation fund when

881
00:50:56,440 --> 00:50:58,920
there's only one way to play it.
You could set up a private thing

882
00:50:58,920 --> 00:51:01,360
and just go to the other little
farms that aren't even listed

883
00:51:01,960 --> 00:51:03,280
behind them.
Baby.

884
00:51:03,320 --> 00:51:08,200
So, so yes, yes, we like if you
want to call it the almond

885
00:51:08,200 --> 00:51:12,600
thematic, there's only one way
to play it in from our knowledge

886
00:51:12,600 --> 00:51:14,720
in the listed space and that's
through select harvest.

887
00:51:14,720 --> 00:51:23,120
So, so yeah.
So almonds have elongated booms

888
00:51:23,120 --> 00:51:28,400
and busts.
Obviously, the previous boom

889
00:51:28,400 --> 00:51:32,480
induced a lot of supply and then
clearly there was an oversupply

890
00:51:33,920 --> 00:51:36,920
and then the bust happened.
And then what happened during

891
00:51:36,920 --> 00:51:45,360
the bust phase is so when you
plant an almond tree, it takes

892
00:51:45,360 --> 00:51:51,040
between 3:00 to four years for
almonds to the first bear.

893
00:51:51,240 --> 00:51:55,400
And so what's happened is
effectively.

894
00:51:55,880 --> 00:52:00,320
So almond demand on average
apparently goes up roughly 4%

895
00:52:00,320 --> 00:52:01,840
per annum.
So, so it's not a demand

896
00:52:01,840 --> 00:52:05,920
question.
So a lot of people eating

897
00:52:05,920 --> 00:52:08,400
almonds and drinking almond
milk.

898
00:52:08,960 --> 00:52:12,000
And I think a lot of demand
comes from China.

899
00:52:12,440 --> 00:52:17,240
The growth and demand globally
has come from China, India and

900
00:52:17,240 --> 00:52:22,320
surprisingly the Gulf region.
I don't know why they eat so

901
00:52:22,320 --> 00:52:23,800
many almonds.
Not just an inner North

902
00:52:23,800 --> 00:52:26,640
Melbourne thing.
No, to have almond milk between

903
00:52:26,640 --> 00:52:29,560
those three regions, they're
growing very strongly.

904
00:52:30,760 --> 00:52:34,400
And so the thematic is
relatively simple.

905
00:52:34,560 --> 00:52:42,360
So supply, I think this is the
second, second year in a row

906
00:52:42,360 --> 00:52:47,760
where supply has fallen.
You say, well, how's it fallen?

907
00:52:47,760 --> 00:52:53,440
Because either trees have
reached their maturity and and a

908
00:52:53,440 --> 00:52:58,160
tree that an almond plantation
that's between 15 to 20 years

909
00:52:58,160 --> 00:53:01,720
old.
After that they become less and

910
00:53:01,720 --> 00:53:04,680
less efficient.
So they produce less almonds.

911
00:53:06,040 --> 00:53:08,800
So effectively supplies going
down because of the age of the

912
00:53:08,800 --> 00:53:11,600
existing trees.
And then on the flip side, a lot

913
00:53:11,600 --> 00:53:16,400
of people have been ripping them
out because it's been such a

914
00:53:16,400 --> 00:53:21,040
bear market and, and, and doing
other things and because

915
00:53:21,040 --> 00:53:26,640
California is the world's
largest region for supply.

916
00:53:26,640 --> 00:53:29,680
I think California is about 70%
of world almond supply.

917
00:53:30,080 --> 00:53:31,560
They're having a bit of water
issues.

918
00:53:33,520 --> 00:53:40,480
And I think it's 30, roughly 30
to 32 liters of water needed for

919
00:53:40,760 --> 00:53:44,960
one almond.
And so they've got water issues

920
00:53:45,360 --> 00:53:49,160
and there's been rules and
regulations where certain

921
00:53:49,160 --> 00:53:53,000
regions in California just don't
don't have enough water.

922
00:53:53,000 --> 00:53:54,840
So they're they're ripping out
plants as well.

923
00:53:54,840 --> 00:54:00,000
And so you've got a scenario
where supply is coming off,

924
00:54:00,040 --> 00:54:05,720
demand is continuing to go up.
And the almond price is

925
00:54:06,240 --> 00:54:08,960
certainly off its lows.
So it's not near its high like

926
00:54:09,720 --> 00:54:11,720
highs from the previous bull
market.

927
00:54:12,640 --> 00:54:17,280
I think the almond price is, is,
is it 60 or 80% off its lows?

928
00:54:19,760 --> 00:54:22,440
Select harvest has cleaned its
balance sheets.

929
00:54:23,680 --> 00:54:28,200
They have a pretty good balance
sheets.

930
00:54:29,680 --> 00:54:35,560
They have yeah, they have farms
throughout Australia in, in in

931
00:54:35,560 --> 00:54:41,160
various States and yeah, I, I, I
think their their earnings will

932
00:54:41,320 --> 00:54:46,040
continue to inflect.
I think it's trading at half,

933
00:54:46,040 --> 00:54:48,640
it's half its book value
replacement value of its

934
00:54:48,640 --> 00:54:53,360
infrastructure.
And so yeah, I'm I'm pretty

935
00:54:53,360 --> 00:54:58,920
bullish select harvest.
And what I like about it is, as

936
00:54:58,920 --> 00:55:01,840
I said, long periods of long
bull markets and bear markets.

937
00:55:01,840 --> 00:55:06,480
I think where, you know, one or
two years into this almond bull

938
00:55:06,480 --> 00:55:11,280
market, if you want to call it
it's demand for almonds is also

939
00:55:11,720 --> 00:55:13,920
pretty resilient.
So even in downturns, people

940
00:55:13,920 --> 00:55:17,600
still eat almonds.
Now if the armament price goes

941
00:55:17,600 --> 00:55:21,000
up double or triple from where
it is, you know, would we see a

942
00:55:21,000 --> 00:55:25,600
decrease in demand?
Maybe, but but I still think

943
00:55:25,600 --> 00:55:27,880
there will be growth.
But maybe instead of 4% growth,

944
00:55:27,880 --> 00:55:30,960
might be 1% growth.
But it doesn't really matter if

945
00:55:31,240 --> 00:55:34,400
if if demand falls 3%, but
you're getting whistle three

946
00:55:34,400 --> 00:55:37,560
times the revenues, you know, it
hits the bottom line.

947
00:55:39,440 --> 00:55:41,480
So yeah, we we like select
harvest.

948
00:55:42,000 --> 00:55:45,880
The discount to to replacement
or book value is is always a

949
00:55:45,880 --> 00:55:49,120
fascinating place to to look for
value and and hunt around.

950
00:55:49,280 --> 00:55:54,000
Especially for capital intensive
sectors, yes, yeah, yeah.

951
00:55:54,560 --> 00:55:57,560
Best we could talk for for hours
but really appreciate you your

952
00:55:57,560 --> 00:56:01,280
time coming on, chatting through
the the way you view the world,

953
00:56:01,280 --> 00:56:03,520
the situations in in front of us
and looking forward to doing it

954
00:56:03,520 --> 00:56:05,360
again in future.
Thank you, gentlemen.

955
00:56:05,640 --> 00:56:07,000
Thank you, Vas.
How'd you reflect on that?

956
00:56:07,000 --> 00:56:09,600
Come back with Vas mate.
I'm going to go do some digging

957
00:56:09,600 --> 00:56:10,840
on almonds.
What about you?

958
00:56:11,080 --> 00:56:14,040
I am.
I'm I'm definitely going to eat

959
00:56:14,040 --> 00:56:15,560
a few almonds, drink some almond
milk.

960
00:56:15,560 --> 00:56:16,920
Coffee Bring some almond milk
coffee and.

961
00:56:16,920 --> 00:56:19,640
Research What about almonds?
Very good.

962
00:56:19,720 --> 00:56:22,600
Thank you to VAS and a big thank
you to Sandwich Ground Support

963
00:56:22,680 --> 00:56:25,880
Interlinks, focus the platform
by market Tech Metals Hub and

964
00:56:25,880 --> 00:56:30,880
Exceed Capital Hoodoo.
Now remember, I'm an idiot.

965
00:56:31,160 --> 00:56:33,600
JD is an idiot.
If you thought any of this was

966
00:56:33,600 --> 00:56:36,120
anything other than
entertainment, you're an idiot

967
00:56:36,480 --> 00:56:37,640
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