ASX week: Adam Dawes – Buy, Hold, Sell

Bryce: [00:00:15] Welcome to another episode of Equity Mates, a podcast that follows our journey of investing, whether you're an absolute beginner or approaching Warren Buffett status. Our aim is to help break down your barriers from beginning to dividend. My name is Bryce, and as always, I'm joined by my equity buddy Ren. How are you going? 

Alec: [00:00:29] I'm very good. Bryce. Great to be with you again. Particularly excited about this episode. Buy, hold or sell. And in Australia, if you'd want to do a buy a holding cell episode, there's one person you go to and we've got him in the studio. So I'm pumped to get into this episode 

Bryce: [00:00:45] back by popular demand. It is our pleasure to welcome Adam Dawes to the studio. Adam, welcome. 

Adam Dawes: [00:00:50] Thank you, boys. It's great to be here. 

Bryce: [00:00:52] So Adam is a senior investment advisor at Shaw and Partners and one of the most successful guests on Equity Mates. Still holds the mantle, I think, the most downloaded episode of all time. 

Alec: [00:01:03] So he's back to defend his title.

Bryce: [00:01:06] Let's go. So how this is going to run? Essentially, we have a huge list of stocks from the Equity Mates community that you're going to give a buy, hold or sell recommendation, and we're just going to pump through it. It's going to be epic 

Adam Dawes: [00:01:20] By all means, this is not advice. 

Bryce: [00:01:22] No, this is not advice. This, in your opinion, correct.

Adam Dawes: [00:01:27] Get advice before you do anything.

Bryce: [00:01:28] Yes, do your own research. However, before we do, jump in. As Ren said, this is part of our ASX week here at Equity Mates. In partnership with the ASX. Yesterday, we had an amazing episode from Anthony at Fidelity and it continues this week. Tomorrow we have Eugene from Franklin Templeton talking about emerging markets and electric vehicles. On Thursday, we have Chris from Montek talking about private markets and then we close out on Friday with an awesome episode from Antipodes. Alison chatting all things decarbonisation. So huge weight coming up Ren huge week. 

Alec: [00:02:03] We don't have enough time to cover all the stocks that we've got on the list, so let's get into it. Let's do it. We should say though, if you do want to hear more of Adam after this episode, you can go over to the ASX website. The link is in the show notes, and you can hear his presentation as part of ASX Investor Day by holding. So that's what Adam does best, and they will be talking more individual stocks. So if you can't get enough of him here, head over there after this. But let's get into it. There's probably no hotter topic at the moment in the Equity Mates community than hydrogen when we were emailing before we started recording. You said you had some thoughts. So let's start with hydrogen. What are you saying in the industry? 

Adam Dawes: [00:02:45] Yeah. Look, it's a really interesting one, and it's certainly one of those ones where Australia could definitely be a world leader in overall hydrogen and production of energy now taking it all the way back. Hydrogen is basically taking H2O, so water and the hitesh out of water being hydrogen and then splitting that. Now it does take a lot of energy and generally it's always been. This technology's been around for many, many, many years. But what the difference is now is that we've got enough solar wind renewable energies now to potentially make hydrogen that is zero carbon emissions. And the difference is is that before we didn't have the reliable baseload power to be able to do that. So now hydrogen has a couple of sectors. It is a green hydrogen, a blue hydrogen, those kinds of things. That green is obviously made by fully recycled renewable materials or renewable energy. But then really, the blue hydrogen is partially made by a potentially coal or something like that. So if you're looking at hydrogen, it's not all the same. And definitely then also there's not a large moat around hydrogen at the moment when we talk about a mode is the amount of defensible that your company can have because anybody can split atoms. I mean, not me, but anyway, it's all. Anybody can split an atom, but it takes a lot of energy. But then also it is. It is quite different going forward. So the real IP in in hydrogen is the actual transporting of the hydrogen is quite dangerous to transport it. And that's where the big mode is. The actual production isn't too bad, but anyway, everyone's getting on the bandwagon of this. There's certainly some new hydrogen plays that are out. There is even an ETF hydrogen, which has gone ballistic at the moment and been put out right now in New South Wales. Government say they're going to put $3 billion into this. You know, we are going to do this and certainly Twiggy Forrest has also done quite well and I think yesterday he was doing a deal with Argentina or something like that of some hydrogen as well. So he's definitely moving in the right direction for that. So I think though, it's certainly a buy from made the sector. However, you've got to be careful about the individual players in there, and I think that ETF hygiene is a fantastic way to get some exposure in its early days. 

Alec: [00:04:56] Nice one. Well, we start with a by love to say that, and I think we should move to materials and Fortescue because it was one of the most requested stocks and Twiggy has been out and about that deal that you were talking about. He also. Painted a whole bunch of London cabs green and was advertising hydrogen over in the UK, yeah. So we were going to start with materials and mining. Get your thoughts on the industry, top buyers and top sellers. But let's just put a pin in all of that and let's go straight to Fortescue. 

Adam Dawes: [00:05:27] Yeah, it's a nice Segway, I think, isn't it? So look, Fortescue, I think, is a buy. I'm sorry. I know it's a buy. I know it's a buy. You taking it back again, but certainly Fortescue, as well as BHP and Rio, so all buys from me. But Fortescue and BHP and Rio can make a tonne of iron ore for $15. That includes their dividend right now. Iron ore price has gone from 220 down to $100 in sort of been bouncing around and went limit down on the Dalian Iron Ore Exchange just the other day. Limit down means that it's gone lower than five per cent in one trading day, and they stopped trading because it's falling so fast. So limit down means that it's moving fast, but we've all seen these miners now start to bounce back. The thing is, with iron ore at $100, it takes out a lot of these marginal players that are around the world. China has been trying to decouple themselves from Australia because of our iron ore and then moving that to Africa, Indonesia, those kinds of things. There was a coup in Africa the other day, and China's got a massive mine there that they're looking to. That's put them back six months because of the political, unstable ness of the area. So at $100 iron ore price, that takes a lot of these marginal producers out now, Fortescue can make a tonne of iron ore for $15. It's still at $100 spot. It's not as good as $200, but it certainly means that these guys are still going to be able to provide good quality iron ore going forward. So, yes, the iron ore prices come down. I think it'll stabilise around this $100 mark. The government's got an $80. Most analysts have got $80 is a spot price for iron ore. So I think we're there. I think it should move along sideways and then continually start to move higher. So Fortescue, Rio and BHP should be a buy in anyone's portfolio at these levels. 

Bryce: [00:07:14] Sticking with the materials theme before we move on to something from the AM community, are there any top buyers or top sellers from your point of view other than those three that you just mentioned? 

Adam Dawes: [00:07:23] I think certainly on the sell side, it's a little bit tough, but I'd be cautious around copper at the moment. Now, look, copper certainly had a very good run and I really like Oz Minerals, Sandfire. We've got a buy on as well, but I'm sort of a bit cautious about samphire. They've just run out of a mine. They've now bought another mine. There might be some issues there, so I think samphire is probably one that I'd look to sell. I'm going against my analyst here. I think Sam Faiers, probably one of those ones, you've got to be a little bit careful about. But yeah, I think copper as its run has run a very good race on going from that lithium, I still think has got a lot of way to move. Obviously, with the battery technologies, those kinds of things. I'll just be a bit cautious. But it's all about cycles, and we've seen the iron ore cycle go up and now it's come back down. Org Stocks have rerated. So if you're looking at a commodity stock, you must look at the underlying commodity first. Look to where that commodities going and then the share price will definitely follow. So aluminium coal has been also I mean, a lot of people don't like coal, but 85 per cent of the world's power is still run by fossil fuels. So we still need these kinds of things. And you watch the coal price, coal prices be moving higher. We've been doing some investing in aluminium and coal. South32 is one of those examples where you could look for that diversification and some of those metals that are starting to now move up versus they've already peaked and now potentially coming down. 

Alec: [00:08:43] So you mentioned lithium there, and there are a number of lithium stocks that were asked about coal, lithium, Vulcan energy and neo metals, which I think does a few things, including lithium. Yeah. Any thoughts on any of those three names? 

Adam Dawes: [00:08:59] Okay, so called lithium. A lot of the guys on the desk that I sit around have been trading this one, and I think this is a really interesting one. So look, I'd keep a buy on that one. Definitely. Vulcan, on the other hand, has just starting to fire off a shorting report that's just come out now. I don't know if anybody knows what a shorting report is, but a shorting report is, is that basically these guys get themselves set to the short side. So in other words, they're taking a bet that the stock is going to go down. And this report basically came out that said it Vulcan on its PFC study, it basically came out and said that it wasn't going to be able to produce what it was saying. It was going to be out of produce and at the cost that it was going to be producing. So the stock went into trading halt. And there's two ways you can deal with the shorting report. One is you can just let it go and let the market decide or you put your stock into trading halt. And then from there you can review it. Yeah, basically tell them that they've got all these things wrong. And that's exactly what Vulcan did in the share price fell a little bit, but now starting to come back. The problem is with Shorter's that if you throw enough mud on the walls, some mud is going to stick. And that's the problem with these things, because it puts a little bit of doubt because Vulcan has been a fantastic story for the market and a fantastic way of being able to produce lithium as. Zero carbon output because it is quite an intensive mining process as well as in production as well. So be a little bit cautious on Vulcan at the moment. I think it's had a very good run, but I think that Sean is now starting to come off and I think there will be some more questions being asked about that one. So I think, yeah. And what was the only metal snare metals? Yeah, yeah. I don't know too much about that one. I think it's got some good stuff in there. Everyone's got this claim to fame that they're going to be now zero mining or zero carbon output for miners. It's going to be very, very difficult for a lot of these guys to be able to do that. They say they can so that heap leach processing all of these kinds of things. They're going to say environmentally friendly, but it's not. It's pouring acid on to rock to break it down. Yeah, yeah. There's nothing. There's nothing about that that is environmentally friendly, but I think so. Vulcan, I think, would be cautious. I'd say it's a hold near metals. I'll leave that one alone and call it he might say it's a. I think that's a good little, little spooky one for you. 

Alec: [00:11:10] Okay, nice. Well, the last sort of section of the materials in mining, then we'll move on to a few different sectors. But we've got a couple of gold miners that came through evolution, mining, ASX, Alien and Radius Resources. RL is the ticker. Any thoughts on either of those? 

Adam Dawes: [00:11:30] So I'll be quick on this one. Else, probably a cell and evolution is a bi evolution I really like. I think evolution is one of those sort of mid-tier, but it's in now in the big boy area. They've consolidated a couple of companies. I think evolution is one of those ones that it will do very, very well rages on. The other hand, if you look at their share price chart, it's just been going sort of slowly going down further. They came out with a couple of reports saying that they weren't going to be able to get their output or the gold output as much rages has always been those ones that is basically moving a lot of dirt to get a small grade. So it's a lot of intensive mining to get a little bit of a little bit of gold out of the ground. So you just got to be a bit cautious in markets always known that they are that kind of miner by the management, a very, very good on radius, but I think that one is one to avoid at the moment.

Bryce: [00:12:18] All right, Adam. So let's move on to the tech sector. Always a hot sector for not only the AM community, but investors out there. So. Before we get into the community picks, are there any top buys and top sales on your list? 

Adam Dawes: [00:12:33] Okay. So if we look at the overall market as such, tech stocks have had a fantastic run. They've had their day in the sun and look, you know, back to back to the late 90s where there was a tech crash. The reason why there was a tech crash because everybody got hyped up about these things, but there was no revenue coming in the door. So yeah, that's a classic example. But you know, this time is different. This time there's actually revenue coming in the door. And I think that's that's the biggest thing for these tech stocks is that revenue and that continuing to come through in saying that we are at a peak of the market. We've had a fantastic couple of years. Markets have done well and tech stocks have done well. So be cautious in this tech space at the moment because you need to look at companies that have got annual recurring revenue are you need to make sure that they're making money and they've got a decent idea. Now one of the stocks we're going to talk about Airtasker, I don't think it's got a good idea, but it struggled. So my top buys and sells. I'm going to be very, very boring in the tech space at the moment. I know what some grey haired guys 

Alec: [00:13:42] with boring, if it makes money go, that's right, 

Adam Dawes: [00:13:44] because I think we're in the cycle. We're at the part of the cycle of the tech stocks that when this market does fall and this market will fall, okay, this market will rewrite back because there's going to be no quantitative easing, no free money anymore. The mattress is going to get pulled away from us as well as then interest rates are going to start to rise. So all of a sudden, all of these growth tech stocks are going to struggle as well. So my favourites are zero. I think it's a fantastic business. Rain, hail or shine. This thing will do very, very well. Everybody might say at one hundred and fifty bucks, Geez, what are you talking about? But I think this one is certainly one so zero. And then the other one is Phineas FCL. I think the stock code is from my buy. This is a really boring tech play, right? It goes in and re-energize his big insurance companies and schools and those kinds of things computer systems, because in the in the US, everything's still paper based. You wouldn't think so. But like even they just got rid of certificates, right? For shares? Right, right. So so everything's paper based. So these guys come in and then take over and then build a system. So I think that one is very, very boring, but it will do you 

Bryce: [00:14:52] quite well and need to go into law firms. 

Adam Dawes: [00:14:54] Yeah, exactly. So insurance and schools are their big sort of target market, but the market is huge for what they can do. 

Bryce: [00:15:00] What about on the sell side? 

Adam Dawes: [00:15:03] Can I say Afterpay? 

Bryce: [00:15:05] Absolutely. Certainly. 

Adam Dawes: [00:15:08] Afterpay has had its run, its now a Square stock. Yeah, yeah. Right now, the reason why I say sell for Afterpay, there's two reasons. One is that a lot of investors don't know how to deal with US stock. Now, if Afterpay comes out and delist from the ASX and goes overseas, all of a sudden you've got this stock that you don't one don't know how to get rid of, don't know how to manage and don't know how to do your tax on. So I would say Afterpay is going to stay in Australia once it gets moved across. It will stay in Australia for a little bit, but it's going to disappear when you do more than 60 per cent of your revenue, your business overseas. Why are you still listed in Australia? So I think that's the reason. So the first reason is this is Afterpay is because you don't want to hold international stock. The second reason is is that I think it's already done like the movement up that we've seen and it's been fantastic for our industry, has been fantastic for me as a stockbroker to to have that. But I just don't feel that if it's done, it's run. And I think in the last week we've seen the last sort of three months Afterpay has been sideways to down. You could have invested that money, put it into something else and you would have done better. So yeah, dare I say it. Market darling. But I think it's had its run Afterpay.

Alec: [00:16:22] We're burning bridges left, right and centre here. But that's why we like you coming on out and you're willing to make the big calls. Yeah. So let's get stuck into some of the tech stocks from the Equity Mates community. You mentioned Antosca this, so let's start at Tesco. What are your thoughts? 

Adam Dawes: [00:16:41] My thought is, is that this company listed with a bit of fanfare. I think that was fantastic. The stock rallied really hard and it did well, and then it sort of plateaued out. So, you know, it was a good trade on the open and things like that. The second thing is is that then three, maybe two months later, they came out and did another capped price. Like all of a sudden, you're thinking, Well, you know, in your prospectus, you said that this is money's going to last us for a year to two years. All of a sudden you're raising more money for another big acquisition. All of a sudden, I think that's really dented the company's outlook. It started to rally a little bit at the moment, but my problem is is that I've used Airtasker before and a guys come over and painted our deck and done some stuff. But then all of a sudden he gave me his card and said, Don't worry about going through Airtasker, just give me a quick call. And I think that's the way it will work, because he doesn't have to pay Airtasker the 10 percent off 15 per cent or whatever the percentage is going forward. I just think the business model is flawed because those contractors will just say, Look, call me next time, here's my card. And so they don't need Airtasker over the longer period. And I think that's the reason why I'm a seller of Airtasker. I think the business model is good for the first meeting, but second, third meeting, I don't think you need to use them. And and yet, unless you know you're talking about developing and developing a website and you get some Indians to to bid against it, then I think it's in the right space for trades, those kind of things where they come over and build IKEA furniture for you. Yeah, I don't see that being as a sustainable business model going forward. 

Bryce: [00:18:13] Mm-Hmm. That's exactly how I use our task to get them once and never use it again. Get that number, they go, Yeah, so we've got one here from Sam Ready Tech Holdings. ASX adi. Why? 

Adam Dawes: [00:18:25] It's good little software as a service business, and it's done very, very, very well. So I'd be a holder of this one. I think it's already had a really good run. I think that IRR so that annual recurring revenue is looking good, but I'd just be cautious on the share price. It looks a little bit choppy up here, so hold for me on ready take 

Alec: [00:18:45] in the spirit of boring companies. We've got one from Craig Computershare, CPA you. 

Adam Dawes: [00:18:51] Yeah. So it's a classic example of how the US and they've they've gone into the US and they've they've changed the whole share registry side of things to become computerised. So I still deal with people who want to sell us stock and have to send me a certificate right up to $75 to then courier from Australia to to the US. Because if I lose that certificate somewhere along the line, I'm stuffed. So Computershare, look, I think it's a great little great. It's a great business, it's not a little business. I think it is doing well in the US. It's very interest rate sensitive or dollar sensitive. So interest rates move up and down the US dollar. Aussie dollar moves around. It is quite sensitive to that. So I'll be a little bit cautious along those lines. But look, I think for boring stock big blue chip,

Bryce: [00:19:40] it's a buy, a well known part of the wax appen apex. 

Adam Dawes: [00:19:45] They've had a hard time, haven't really had our members as talking about this one. Yeah, last time we're there and I don't think the share price has gotten any really any better. I think that they really need to re-energize their business model. I think overall, the big companies are now saying that they can do exactly what happens, been doing the whole way through. And I think it's a hold. I prefer Altium if we're looking at that kind of space, I think Appen Altium, I think Altium is a better business with better revenue, so it would be a definite hold for me on Appen. I'd be cautious here and Altium would be my buy in that wax. And we like Xero. We like to think so. 

Alec: [00:20:23] Yeah, yeah, yeah. I think Appen is a story that a lot of investors can learn a lot from in terms of, like reliance on big customers and like a great business model. But is it a sustainable business model? Yeah, yeah. It's a really interesting case study. Well, it's it's 

Adam Dawes: [00:20:37] all about voice. So, you know, voices is a big thing. And when we talk, my 11 year old doesn't type into his phone, he just talks to it, you know, so happens fantastic for that. Evan also does those, you know, find a bus on those six tile things, but a computer can't do that. So they've got rooms and rooms full of people putting these images together. So it's manual. But then Microsoft, Google, whatever said, we can do this ourselves. Why do we need to employ Afterpay to do that? And that's what the lesson investors should learn is that don't get always get very comfortable with these stocks. You ladies can get taken out of you pretty quickly. And so you always need to be monitoring the portfolio and taking profit where you can de-risking the portfolio as much as you can going forward. 

Alec: [00:21:22] So probably no bigger story in the world economy, I guess, than semiconductors at the moment. A couple of semiconductor stocks listed on the ASX are two materials, and we built nano. What are your thoughts on those two? 

Adam Dawes: [00:21:35] Yeah, look, archer. I actually remember when it used to be graphite miner in South Australia and wasn't doing very well at it, but was claim to fame was one of the biggest graphite flakes. Now, when we talk about graphite, it's like a it's going to say a commodity and it's like layers like slate. It's got layers and layers and layers. And the longer you can get that graphite out the layers of those, it's more conductive for electricity, better heat, body kinds of things. So I remember when that was, this was this kind of company. Now, obviously, they've moved themselves into quantum computing, right? 

Bryce: [00:22:15] And from that, 

Adam Dawes: [00:22:17] from a mine, it's like a miner becoming a biotech, and then a biotech becomes a quantum computing 

Alec: [00:22:24] business. It's like when Kodak went into blockchain, you go there, you go. 

Adam Dawes: [00:22:27] Well, they had to do that. I had to do something. So look, I think overall with the quantum computing side of things is done very, very well, and it's been a very successful story. They're talking about their quantum computing to be able to be smart enough to be on your mobile phone. So having a quantum computer because quantum computing is all about heat and the energy that it takes. But these guys have got it so well down and so that they can basically put it on a mobile phone. And you could have I mean, these are very powerful machines already. It can be more powerful going forward in that quantum computing. So look, I think it's had a good run. I think it still needs I think they raise some capital the other day. I think, you know, so they still continue to do. I don't know if there's any real revenue coming in the door. So be cautious. But hey, look, let's stick a up on this one. I mean, you know, what are you got to lose money? 

Bryce: [00:23:18] Sorry, I've had one. Covid it. I should. I should pull back. I love the. But you know, 

Adam Dawes: [00:23:23] you know, if you get to swing for the fences, I think something like this, quantum computing and those kinds of things, I think you're going to do quite well. So I think that's fine. So we're building that again is a very, very interesting story. It's always been a competitive 40 hour set. And if anybody knows 40 years, it's all about memory and flash drives. So when you use your phone or your camera, you know it used to be out of 50 photos on the little flash drive. You can now fit 30 300000 photos and with your mobile phone. So that memory in that storage, I think, is a really interesting area. Forty years has slowed down a lot, but we've it. Nano has definitely run. So, yeah, I'm happy to buy a wee bit nano as well. I think this one is the leader in its field. 

Bryce: [00:24:06] I saw an Adam to close out the tech space, one that has a bit of buzz. 

Adam Dawes: [00:24:11] Ordinate 88 Yeah, ordinate is a really interesting business. Now this is a reopening trade. Now we hear a lot about this reopening trade as far as travel, you know, supermarkets, you know, all these kinds of things for this reopening trade. But certainly ordinate is one of those ones. Now, ordinates got a fantastic business that it takes audio cables, which is the white plug in the red plug they used to pluck it. I'm showing my age here, but plug it into the back of your stereo to put two speakers. Now they've made it basically made it digital. And so you'd really think that that overall the world should be digitalised. But audio is still very much like we can say in this studio. It's very much a cord based system. So ordinate has been an electronic and this is going through two massive stadiums to the speakers that go on the. Train stations, all of those kinds of things. So for me, it's a buy. We did have some problems with chip shortages. Okay, and that is still going to plague them, I say. So I think we'll be careful about that one. But look, certainly I think overall ordinate is a buy, and I really like that story going forward. 

Bryce: [00:25:20] Awesome. Well, Adam, let's move to one of my favourite sectors of the market, and that's retail and consumer discretionary. So before we get into some of the EM picks, any that are top buys or top sells? 

Adam Dawes: [00:25:32] When I came on last time, we talked about Woolworths, we did and we taught us what to store. 

Bryce: [00:25:38] I did like that one. 

Adam Dawes: [00:25:40] But look, you know, so OK. So probably Woolworths is a hold and Coles is a hold. The reason why is that basket size for people is going to slow down now. OK, we're having two years of lockdown. What did you do? We had a run on toilet paper. Go figure. We had a run on all these things, right? So people basket size was massive because they weren't able to go out. They had to eat at home. Now, all of a sudden, we're opening up again. That basket size is going to shrink because I can go out for breakfast, I can go out for dinner, I can do those kinds of things. So I think you've got to be a little bit careful about that. Also food inflation. So that's going to be a huge issue for Woolworths and Coles as well as Metcash. It's food inflation. Are they going to pass that on to the consumer? I reckon they will. Yeah, I reckon they will. So all of a sudden food starts to rise. And then also, you know, you see on the on the shelves, sorry for the inconvenience, but we're having trouble getting these products right. So mark my words. Coming into Christmas, you're going to need to make sure that you've got your tuna spam ready for your ham because it might not be delivered, right? Okay, so just be careful about that. So they've got they've got food shortages or supply chain issues. They've got a food inflation and basket sizes are shrinking. 

Bryce: [00:27:04] So no food on the Christmas table because of issues there and no presents under the tree because this supply chain looks like a heavy Christmas. I've got one before we move on by hold or sell endeavour. 

Adam Dawes: [00:27:14] I think it's a buy. Alcohol has never been a bit better place to invest, and we did talk about Endeavour last time and the reasons why we buy Woolworths is to get access now. Then Endeavour is actually done. OK, it's done. It's still a little bit choppy, but again, it's a reopening try because they've got 330 pubs around Australia. Those pubs haven't really been open for the last six, eight, 12 months or whatever, so they'll start to then move forward. And then really, from there, that pub industry is very fragmented. You don't have maybe you've got, you know, a who have got 10 15 pubs, but it's fragmented around there. And with the backing of a $11 billion market cap, endeavour can come in, consolidate a lot of those businesses and then do well. Plus, Dan Murphy's is fantastic. Jemmy brings is a great little service as well. I think endeavours by I think it will do well. 

Alec: [00:28:04] So we've got three consumer discretionary stocks that will rip through us. The first one getting a lot of buzz recently as satire, satiety 

Adam Dawes: [00:28:14] wise luxury goods online. I mean, I don't know. I can't see what the the value is in that. When we talk about Moat, there's there's a lot of people that can compete against that. Yeah. So I don't know where it's getting its market clout from, but it's certainly done very, very well. It's buzzing. Yeah, absolutely. So I'm going to say hold because I don't know that much about the business and it doesn't, you know, anybody can set up a website to put luxury goods on now. Maybe they've got some individual contracts from Louis Vuitton or, you know, some of these sort of businesses so that they could only use their website. But I doubt that they would be happy to sell on any website. 

Alec: [00:28:54] So I think it's a it's a race to build a brand and get a loyal customer base before anyone else does do. Exactly. Yeah, all the other brands don't direct themselves. Well, that's right. 

Adam Dawes: [00:29:04] So like, you know, you look at adore beauty, right? It came on with a lot of fanfare but didn't do very, very 

Bryce: [00:29:10] well know the other day it's done nothing. 

Adam Dawes: [00:29:12] Yeah. So make up, you know, you think they build a brand. They, you know, they get Revlon and Revlon can sell it at great price, both at or Typekit. 

Alec: [00:29:21] Jones Bryce. Yeah, all right. I'm always money for you. I like if I 

Adam Dawes: [00:29:26] was a baby boomer, I'd love the portfolio of property today, 

Bryce: [00:29:29] but I don't. 

Adam Dawes: [00:29:30] So anyway, so yeah, building a brand I think is in a door is has struggled really to become, yeah, it's own. But albeit we always thought there would be a great business. But yeah, it's struggled. So Sati, I'm going to say a hold because I don't think the moat is there enough or the business isn't defensible enough. And I'd love anybody to prove me wrong, but I just don't see that that is a sustainable business going forward. But it's done very, very well for everybody who's been so I don't want to. Yeah, I think it's a hold. 

Alec: [00:29:59] Well, given you mentioned a door, let's let's throw a bone. Swan held a sell. If you haven't thought about it, oh no, 

Adam Dawes: [00:30:08] no, I know I don't, and I'm just struggling because I bought it on the IPO and I've still got clients holding it, and it was the wrong call. The reason why it was the wrong call, and I've always got to have rules when you invest the cardinal rule, which I broke myself, I never buy off private equity. I came when private equity comes in and they they'll wrap it up. They'll make it look really good. They'll cut all the cost, but they loaded up with debt and they just then bring it back to the market and no one. There's a couple of rules that I haven't for investing. One of those rules is never buy from private equity or an IPO from private equity. And I did it. It was, and I'm hurting at the moment. I think it's self. I can't. I can't say they're saying, like with endeavour, they're saying that they can get their own brands. So, in other words, is going to be adore beauty. So Revlon is going to scrub their name off it and they're going to put a dollar beauty on it and they're going to make more profit. So I think that that's that's a good thing and Devers looking to do his own branded liquor as well. But I just think for a door, it's going to struggle going forward. 

Bryce: [00:31:17] Nice. One of my favourites city, chic collective, sassy ex or city chick lit up. 

Adam Dawes: [00:31:23] Yeah, it's a buy. Yeah. Yeah. No offence to Plus-Size anybody. But this is a growing industry and certainly the market 

Bryce: [00:31:35] good niche is 

Adam Dawes: [00:31:36] getting bigger. So yeah, 

Alec: [00:31:38] that's what that's about. 

Bryce: [00:31:40] That's what I want to go any further. 

Adam Dawes: [00:31:42] But yeah, look, certainly I think it is one that is in in the right space in the US, in Europe, absolutely. Australia, plus size people don't like walking into a plus sized store. So buying it online if it gets delivered and done, chop chop. You done. So yeah, I think it's a buy. Hmm. 

Alec: [00:32:00] And then one consumer discretionary, not really retail, but or group it in here. Lock distilling. You guys are okay. Yeah, yeah. 

Adam Dawes: [00:32:09] So we've got a great brand. Well, well-renowned, there is a lag in any distilling business and we looked at another vodka tequila business that we were doing a pre-IPO round for as well. I looked into it. But the problem is with these things is, is that you make a bottle of whisky or bourbon or whatever, but it needs you need to wait two years before you can put it on the shelf. So you've got to have enough inventory cycling through, plus the sales at the other end to keep that inventory moving. Unless you get this backlog and then you've got too much inventory as well. So I'm cautious on these guys. I love drinking it. I love I love the what it does. But as an investment, if you've got a longer time period, then it's OK. But markets like to see good revenue moving of inventory and profitability, and it's very difficult with these guys because they have to keep it in the barrel for two years minimum. Then you've got your premium ones. We were sitting there for four to five years and that's just takes time money to get that out there. So I'd be cautious on long 

Alec: [00:33:14] hold or sell. 

Adam Dawes: [00:33:15] It's a sell. Okay. Yeah, I don't like that industry. I like as a drinker, but as a business, I'm not too. Yeah, not to crash on it. Yeah. 

Bryce: [00:33:24] Adam, before we head into one that I'm really looking forward to, which is travel and transport, we're going to just take a quick break to hear from our sponsors. So Adam World is reopening, airports are reopening. What are your thoughts on the travel transport sector stocks like Qantas, Webjet? Yeah. 

Adam Dawes: [00:33:43] Where's your head up? OK, so Qantas, I've never been a fan of Qantas. It takes too many people to get you on the aeroplane and it's very high, high asset business. I've got lots of planes, lots of things like that. But with oil prices rising, I think Qantas is a sell, albeit that it's done very, very well. They're going to have to raise more capital soon, albeit they sold some of the Sydney airport. They sold a bit of land they owned and that gave them another billion dollars. That's going to stave off the walls a little bit, but I think they're going to still need to raise money. We're going to have these sporadic lockdowns. And I think that's the reason why I don't like Qantas is because once we open the world up, we're going to be up and down, closing in and out, and I think Qantas is going to suffer. Plus rising oil prices is a big issue for these guys. So, yeah, I'd be cautious on that Webjet. I think it's a great little business. It's done very well flights and it's been a killer of it as well. But I think Webjet, that reopening trades already happened for these guys, so I'd be cautious on. Webjet is probably the most shorted stock on the ASX. Things and Webjet are both the highest shorted stocks on the on the ASX, so be careful. There's a lot of pressure going to the downside on those ones. 

Alec: [00:34:54] You mentioned flights selling there was is a similar similar story. Also sell because of this rolling lockdown question about travel. 

Adam Dawes: [00:35:02] Thing is with flights in is probably a hold at $20. Remember, Flight Centre Re did its whole entire capital base at about $4, $5 or something down there. It raised its whole market cap again. It was trading at 40 points quite happily. If it raised its whole market cap with dilution, that means it's a $20 stock now. So be careful about Flight Centre because it's there. The only saving grace of Flight Centre is is that you are going to need more documentation than you've ever needed to go overseas, and a lot of people can't do that themselves. Travel agents are saying why flights into saying we can actually do all of that for you? You might as well come to us, right, because you used to be able to buy a flight to Fiji, you know, and do five different legs around the South Pacific and whatever. No problems. Now you're going to need testing, paperwork, visas, but the whole kit and caboodle, and it's going be very difficult for people. The Flight Centre's come in and said we'll be able to do a lot there for us. I think that's a saving grace. They're full service travel sector and that's why I think the share price has moved. But be careful because that dilution is now its toe box. But really, it's a $40 stock in the in the world that was so yeah, just be careful in Flight Centre. 

Bryce: [00:36:14] Alright, moving to health care biotech. What are your thoughts and the two companies that have come through from the community, Mesoblast and imagine 

Adam Dawes: [00:36:24] massive losses to sell? I'm using Buy, right? Massive loss is way too volatile and I don't have the stomach to to do it in any biotech stock. It's either a binary outcome. Does the medicine work? Yes or no? Does the cancer treatment work? Yes or no? Is this effective? If it isn't effective or didn't meet its endpoint, the stock falls and goes like a drop and fall. If it is, then it starts to work and the stock goes higher. So Mesoblast has had too many tries at getting this cancer treatment right, and I just it's just too risky for me, Imogene. On the other hand, it's got some really good products and they've got some really good technology. I think at 40 cents, forty five, they did a big half raise, which surprised the market with the dilution there. But I think EMU will do well in the long term. Nice. 

Alec: [00:37:14] Let's move to financials. There's a few from the Equity Mates community, but let's start any top buyers or top sellers in the financial space. 

Adam Dawes: [00:37:23] Macquarie Even at $200, this thing is an unstoppable 

Alec: [00:37:28] beast, right? 

Adam Dawes: [00:37:30] Yes, it hurts buying a $200 stock, everybody. I get it. I get it. CSL at 300. I get it like, I get it. But this is a business that is going to be and it's been going green for ESG friendly for many, many years. But they saw it writing on the wall years and years ago. It will only be now that you realise that, Oh geez, these guys have got all these things. They're fantastic at making money, commodities, property bank, all of that kind of stuff. Macquarie is absolute buy and I'll just keep continue to buy from my clients. I don't have a problem with it. 

Bryce: [00:38:05] We did say we wouldn't do it, but let's do zip. 

Adam Dawes: [00:38:08] Oh, it's my nightmare because I've got a lot of stock in this one, so I'm partners. We've got to buy on it. I'm going to stay with us with a buy. The problem is it is highly shortage either. I think it's over 10 percent of the share register now, 11 percent of the share register is shorted, so they really betting on this thing going lower. The reason why I like it is it again, in that tech space, it's a. They've gone to South Africa, they've gone to the UK, they've gone to India, they're in the US, so it's this land grab. The rumour is and this is rumour that, yeah, that they've done a deal to do a global payment system, which will basically be overarching across all countries around the world. So that'll be on like an Amazon website, but a global one. So they're going out now, getting these land grabs and getting all of their ducks in a row for all these major areas. But then it's basically going to go on to an Amazon website, which is the global one, and it'll be just their own payment system because Amazon owns a little bit of zip, right? So this is where the rumour is, is that they're going to have this global payment system, which is going to be bigger than potentially Afterpay now with Square and Afterpay together, that's going to be tough, but that's the thing. The second thing and the reason why I like this piece is that if Afterpay does leave, it does leave it. That means that it is now the biggest and the best buy now, pay later business in Australia. Hmm. So I'm going to stay with it. I'm going to. I'm going to keep pushing forward with it. I've got a lot of stock in it. We are very close to the company, but it's a hard one at the moment because it's basically flat line and doing nothing and not really a lot of interest in it at the moment. 

Alec: [00:39:47] So be careful. I think there's a whole other episode in market rumours with Adam Dollars

Bryce: [00:39:54] is now about now my 

Alec: [00:39:55] mind is just running wild with Imagine if Amazon acquired it, how much content we could make out of it. 

Adam Dawes: [00:40:01] Yeah, absolutely. They've got a they've got a base in there, so it's not too far off from that happening. But you can see the land grab, you can see where they're going and if they're on a big portal like Amazon and it's their only their only buy now, pay later. 

Alec: [00:40:16] That's huge. That's huge.

Adam Dawes: [00:40:18] Yeah, but it just has to happen. And that's why it's a rumour. 

Alec: [00:40:21] Yeah, market rumours with Adam Dollars coming soon. So a couple more names that would just rip through very quickly. Rural Funds Group RFF.

Adam Dawes: [00:40:30] This is a buy below. Be careful. Chickens are very fickle, and I think any kind of rural business is very fickle. If you know they do the planting and then the rain doesn't come from a week afterwards in 250 grand gets toasted, you know that kind of thing. I think it's going to be really careful, but I like this one. It's got a conglomerate of couple of different things. So, yeah, rural funds management to buy from me. 

Alec: [00:40:52] Challenge us to sell, sell, sell. 

Adam Dawes: [00:40:56] I'm sorry, Jordan. Sorry about that one. It's a sell. Yeah. And it's struggled and will continue to struggle. They they change their business model a while back that they were doing a lot more high risk property investing. Those kinds of things. Challenge is a business where you get annuity, so you give them $100 and then they're going to give you ten dollars every year for the next 20 years, right? So they need to invest in things in duties. They need to invest in things that are very secure. So they had to then change the way they're investing from this property, which is doing very, very well. But back to bonds and bonds have struggled and bonds are going to get one to two per cent return and then they're gone. So challenge for me with all of the things that it's done and it's potentially come up a little bit, but I think Challenger is a sell.

Alec: [00:41:43] And then final company that we're going to cover today and apologies to everyone in the community that we didn't get to. There were just too many stocks out of is so popular. But if you want to hear more from him, you can listen to him on the ASX Investor Day website, or you could go to the Showroom Partners website and email impersonally. Let's do apologies if your inbox is now flooded, but final company for today Australian ethical funds IVF. What are your thoughts? 

Adam Dawes: [00:42:10] Yeah, this is probably one of the most expensive fund managers on the ASX. When I say expenses, I mean that they're NTI. So the net tangible assets, if they sold up all of their funds today, it's far less than what the share price is trading in. So be careful when you're looking at these things, you've got to just scratch a little bit below the surface. However, it's done very, very well because it's got ethical and yeah, right. And if you want something that you don't know how to get into ethical or don't know how to do that, then certainly something like an ethical fund like this, you think, Okay, that's fantastic. However, so for me, it's a whole, if you've got it, I think you'd hold it and you do. But I would be buying an ethical ETF and there's some out there Vanguard, do some Betashares, do some for the local as well as international markets. And I think that is a better way to get access to ethical investments for the longer term would be your ETFs. 

Bryce: [00:43:06] Well, Adam, as always, you've done an amazing job at ripping through about 50 stocks in 40 in 45 minutes, as Ren said, there were plenty more on the list. Apologies to all of the community members who did submit some, but we just couldn't get to all of them in time. We're going to have to get you on for a follow up and a separate podcast market rumours without which you could blow your voice and face. All right. 

Alec: [00:43:31] We should probably take your name out of the title. 

Bryce: [00:43:34] Adam Rose. So, Adam, for those that want to follow you more, get a sense of what you're doing. What would be the best place to look? 

Adam Dawes: [00:43:41] Oh, well, I'm yeah, absolutely. I mean, I'm on LinkedIn. You just look up Shaw and partners. That's where I've sort of that's my job. I've been there 18 years, so happy to speak to anybody. And yeah, contact me. Give me an email, and I'll definitely answer every one of them. 

Bryce: [00:43:55] Awesome. Well, it has been an absolute pleasure. We appreciate the time that you give to the Equity Mates community and certainly look forward to getting you back on for the next ASX investor day to do this all again. Absolutely. Thank you very much. Hey, thanks for listening to this episode of Equity Mates. We love hearing from you, so drop us a line at contact@equitymates.com or even better, go to your podcast player and leave a five star review. Also, a reminder that the Equity Mates content train doesn't stop when you've run out of episodes to binge. We've got a brand new website, a Facebook discussion group where on Instagram, YouTube and slowly making our way as an influencer on Tik-tok. That's Ren. So come and say hello and join the community. We'd love to welcome you. Until next time.