Buy or Sell: Adam Keily with Andrew Page

Adam: [00:00:58] Hello and welcome. This is buy or sell coming to you from the no holds bar here at Equity Mates HQ. I'm your host Adam Keily. Regarded by many as one of the simplest minds in finance. Luckily for all of us, I'm joined by an expert. Educate me and hopefully you on how they're thinking about stocks and the stocks they're thinking about. This is rapid fire, though. This is buy or sell. We're going to rip through as many stocks as we can in the time that we have. And don't forget, you can follow each stock on the buy or sell tracker on the Equity Mates website. And today I am pleased to be welcoming back to the no holds bar. Andrew Page, Founder and Managing Director at strawman.com. Nice to see you again, Andrew. 

Andrew: [00:01:39] Hi, Adam. How are you?

Adam: [00:01:40] Oh, I'm doing very well. Thank you. Andrew, from memory, you're a gin and tonic man. Is that correct? I think that was your pick last time we were on the show. 

Andrew: [00:01:48] I am rather partial to a GNT. Yes, a little bit of lemon or lime.

Adam: [00:01:52] Very good. Perfect. So as a signature cocktail this week, especially for you is the profit margin on tonic. Well, that's it, we're coming into the end of summer now. Is this a gin and tonic through the winter type thing, Andrew? Is it a year round beverage for you? 

Andrew: [00:02:11] I've never heard of seasonality with cocktails. Man, I'm a simple man. I, I'm a year round, you know. 

Adam: [00:02:18] Cocktails seasonally adjusted. Not a thing. Very good. Hey, we had you on, I think it was the end of October last year, and you gave us ten stocks almost five months ago. Probably not what we'd recommend in terms of a long investment horizon, but, we are going to take a look back at your predictions this week. So we're going to go through the same ten stocks that you gave us last time. We're going to see how they're tracking and get an updated call from you for each one. Before we start, I will say across the board, you're up 21.92%, according to the tracker on the equity mates website. So that's pretty handy work.

Andrew: [00:02:58] Well, so what you do is a tip. Tip for young players is when you're in this game you want to make lots of predictions. Lots and lots and lots. Law of large numbers. Some of them will stick. And when they stick you, you scream from the rooftops about how much of a genius you were in picking it. Had it been five months later and was like, oh, everything's down, I would be giving you a lecture on long term, time horizons and volatility and, but as it turns out, I was like, yeah, I'm a genius. I obviously knew that was going to happen. 

Adam: [00:03:32] I'm going to put a painting of the word genius and bring that back to you. What do you consider out as what you like, at least stocks? 

Andrew: [00:03:40] Yeah. Well, that's the other thing. You don't talk about the losers, Adam. Yeah, I will talk about the winners. 

Adam: [00:03:45] In that case, we're going to it. We're going to talk about six stocks today all by ourselves. 

Andrew: [00:03:50] Well, Peter Lynch said Peter Lynch said live it all through one up on Wall Street. Great fund manager. If you right six times out of ten you're good in this business. I'm going to lean into that. I'm leaning into that. 

Adam: [00:04:00] Love it. All right let's get started. We're going to kick off with Laser Bond Limited ASX LBO. You called it buy at $0.88, currently $0.71. Laser bond announced a $1 million technology sale agreement with Curtin Uni. That is down almost 20%. Andrew, is it time to go back to school on laser bond? Buy or sell?

Andrew: [00:04:22] No. And this is it's buy still, I mean nothing's changed. Nothing's really, you've got to ask yourself. I'm a little bit I know it's pressed for time, but this will cover all of the ten stocks. Is that I was right or wrong because of what happened in a five month time? It's madness. So. So why did I buy this thing? We go back to the episode. It's like he's a company with a lot of insider ownership, very long record of value creation for shareholders. They had, some, issues in the supply chain, in fact impacting their products division, some revenue recognition delays. And there was an acquisition all in there as well. But really, when you stand back, anyone who's run a business like there's always this there's two types of problems. There's the cyclical problem or there is the outside factor problem. And then there's the problem because there's a cancer within there that is a structural issue with the business. So the way I would frame the answer to this into any anyone is just sort of like what I'm trying to gauge when I revisit my stocks is what was the thesis. And as we said last time, write it down. So I remember what it was like why did I like this thing? Why did I think it was good value? And then what's changed? And so it's a long run up to answer your question, what has changed? And I would say nothing. Nothing significant. Nothing structurally. What does the five year outlook look like? Well, exactly the same as it did before in fact. And now shares, cheaper. So yeah. 

Adam: [00:05:44] But it's a buy. 

Andrew: [00:05:45] Buy. 

Adam: [00:05:46] Would you typically go back a bit around this time frame or you, you so that you bought like let's say you bought five months ago. You're looking at it again now you're looking at it again in a year, two years or kind of just continue. You'll be watching it. How does your process work? 

Andrew: [00:05:59] I'd say continually, but don't don't conjure up the image of me sitting in front of six screens, you know? Yeah, I'm like that with 100 shots on it. Like.

Adam: [00:06:08] Just matrix style green screen floating down past your eyeballs. Yeah. I mean, if ever there was. 

Andrew: [00:06:14] A bigger red flag, it's to someone who doesn't know what they're doing. It's like a six screens, six screen trading setup. You know, like, my brother didn't even have a computer. I don't even think he does have a computer now. Anyway, it's all a little bit rubbish. So you get, well depending on the size of the company, you might even get, sort of fundamental updates every quarter. But for most companies, sort of every half. So I was like, why am I not a part of this business? I'm gonna see what happened. What do they report when I mean, continually is not watching the ticker every second of the day, but it's just like, I don't know, it could be three Thursdays from today. And lazybones releases a market sensitive announcement, right? Yeah, I'm gonna read it, whether it's six months or six weeks or six minutes since I bought it. Right. 

Adam: [00:06:55] Yeah. I'm not ready to read it yet. That overall rate, I'll read that in six months. 

Andrew: [00:06:58] I said six months and six months what it's gonna be. So whenever new information, whenever new information comes out. Now, part of that might be the maybe. Nothing's changing. The prices dropped 50% or doubled or something like that. So you might put that new information in context with the underlying value. And like, you know, is it better or worse value. But you want to try and keep an interested eye on it. Absolutely. Yeah. 

Adam: [00:07:20] Cool. So LaserBond is a buy. Oh, yeah. I think I'm gonna buy. Next up we're looking at Envirosuite Ltd, ASX EVS, you called it a buy at $0.06. Currently trading at $0.06. It did hit $0.10 in January. You know, Andrew I am plugged right into wastemanagementreview.com.au. And after the initial hype hasn't been there hasn't been a single article on enviro suite buy or sell for you for Envirosuite? Still $0.06. 

Andrew: [00:07:50] It's still a buy. Like anyone is listening to me for a while this has been, I can tell this is I've done so well on Envirosuite over the years. I think I first bought it for around four cents and rode it up, sold some down. And you just it's a business that is making headway fundamentally. And the market goes from way too pessimistic to way too optimistic. So I'm not trying to trade it, but sometimes it's just clearly better value than at other times. I think it's one of these times now where it's sort of like it's been disappointing. I'll get to the reasons why, but I still think it's fundamentally cheap. Now, I've made that point for a while, so anyone wants to take everything I say here with a big grain of salt, but the trouble with them is being they're growing right, but they're not growing to the pace that we would like them to grow. They are not swinging to cash flow positivity and their profitability as quick. It's all on track, right? It's all on track. But I just think if I would lie to you, if I said I thought it would take this long, I thought things would accelerate sooner. That being said, I still think balance of probabilities. I still think it's a bigger business in five years time, and that we'll look back at $0.06 and go, yeah, that was pretty good value. Think about it this way. Even if it is ten cent I was in January, right? So I went from six to 10 to 6. You'd think about that in percentage terms. Right. Like that is. If it takes five years to get to $0.10, the compounded annual return on that is respectable. I'd hope it's more but it's respectable. And so I think you've got a low bar at this point in time. I was just putting those numbers out of the air. Like I can even ground them to expected earnings and cash flows, I think. I think it's reasonably priced. All right. 

Adam: [00:09:22] Envirosuite is a buy. next up we're looking at Catapult Group International, ASX CAT, you call it about $0.92 currently $1.24. It's up 34.78%. Catapult Group quite literally climbing to the top of the ASX charts. Since we talked about it I have note and I don't know if this is just one of those things. When you're thinking about buying a new Mitsubishi, you say Mitsubishi is everywhere. But since we talked about catapult, I've been seeing catapult everywhere. Also, the Indian cricket team, the catapult. The only thing I would say about catapult is I think they're on the wrong side of the shirts. So most companies like to get their branding and logo on the outside of the shirt. You kind of have to look through the, like the, the Indian cricket team's cricket whites to see that faint catapult logo underneath. But it's there. So, you know, they're doing something right, but I think, well, they. 

Andrew: [00:10:17] Don't sell it to consumers. They're not selling to consumers. 

Adam: [00:10:20] That's fair. 

Andrew: [00:10:21] This is they should they are, selling to the leagues and to the teams themselves. So obviously they would get more. But then it's a question of do we want to spend the sponsorship money on these, you know. So it's an interesting one. I think it's when I see ads for BHP and things like that. Like advertising too. Right. Like I'm not in the market for Lionel. I don't know who he is. And then you realise. 

Adam: [00:10:43] Just a Bunnings ad for a shovel. Get a shovel at Bunnings and then get like get some guy, get some iron or. 

Andrew: [00:10:51] You know, like copper or whatever. It's crazy. But then you realise it's own PR so. Looking catapults case. This is a really good example actually, of a of a disappointing investment for me because I've, I've bought some way back ten years plus $0.50. And it's something I've again done reasonably well out of. But it has failed to grow to the extent that I initially expected. So I think it's so cheap. It's still a buy. 

Adam: [00:11:17] Still cheap. Still a buy. All right. The next one we're going to look at is Stealth Global Holdings is SGI. You called it a buy at $0.16, currently $0.26. The name sounds like an oxymoron. Stealth global where everywhere and nowhere. No hiding the gains though. Andrew up 62%. Since you since we had you on the show. Where are we at with Stealth Global? 

Andrew: [00:11:45] So they just delivered as expected. What's interesting about this is you got a business who is just so small, especially when we were talking about it, Right. And it still is. It's tight. It's not even a small cap. It's micro-cap very liquid kind of company, but it's kind of like it's hiding in plain sight in terms if you just look at what they're doing, what the management say they're going to, and having, you know, rolling out their execute, executing on this strategy really well, the results are now starting to come through, you know, and what's what I love about the very small space. If you've got a long enough time horizon, you see two things. If you get the thesis right, you see the business perform as expected, and you get the growth that accompanies the growth in the share price that accompanies the growth in the business. But as it gets bigger, it tends to get more liquid. It tends to come onto the radar of bigger players. Some boutique fund managers look at it gets into a, you know, maybe into an index or two, and then you get this rewrite. So a tiny little liquid micro-cap that might trade at eight times earnings gets into the ASX 200 in 10 years is what happened with pragmatic is right. And you know,Ordinate, you know, Zero and all these smaller-ish ones that sort of as they ran up the growth in earnings coupled with the growth in multiples as they gain that sort of demand from, from big money. for me, this is like it's I'm really happy with the, with the gain. But yeah, it's still it's not cheap. Like I didn't have this for, for ten years. Unless something goes wrong. I think this will be multiple dollars I think by the year 2034, you know. Right. Yeah. But like, like any microcap guy, we'd be chatting another five months and it's at $0.12 again. But yeah. Yeah. Right. The North Star here is can they continue to grow their revenue as, as expected. And can they widen those margins which they have been doing. If those two things happen then this is a steal. 

Adam: [00:13:33] All right. Stealth global is still a buy. Next up the last one before we take a quick break. Andrew. And this is a big one. DroneShield LTD. ASX DRO, you called it, $0.26. Currently trading at $0.63, up 142%, if you don't mind. 

Andrew: [00:13:54] It got to 93. Yeah. It did, we should have just scheduled this a couple weeks ago. Yeah.

Adam: [00:14:03] Still, that's pretty handy. 142%. I'm really interested in this one with those kinds of gains, are we looking at selling at the moment? 

Andrew: [00:14:11] This is a tough one because I feel as though this has got a bit of a meme stock aura about it. It's a cool story, right? You got these big electromagnetic guns that look like they're out of a science fiction movie. There's a lot of bad things happening in the world where there's a bit of a tailwind for that kind of product, and I feel as though there's a lot of hot money that's gotten on to this thing. Yeah. And it's a great dilemma. There's a good kind of dilemma you want in the market, but it's a dilemma because you think, well, gosh, when we were chatting and it was what, 26? And whatever sense it was, it was cheap. Well now it's three x. That is, it's still cheap. And it's a dilemma because you would think definitionally it's well, it's not, it's three x more expensive. But what can really throw you here is that things like share prices can go up and businesses can get cheaper because the fundamentals just backfill it in. And Drone Shield has been assisted by some very good news, some very good results. There's a very big sales pipeline. There's a reason why we thought it was cheap and why it's gone up. It has got that element to it of like, whoa, okay, maybe things are running a bit too fast. So what do you do? So you might go, okay, well, I'll take some profit. That's nice. Things are a bit hot. I'll just wait for it to get back in, and I'll. I'll be back later, and then I'll get back in. You might not ever get that chance. A lot of people I mentioned before, because it's such an easy example, but there's not 100 like it, right? So yeah, you can be too fussy and too clever by half with valuations. At the same time, things start to get harder and harder to justify. And here's another great problem to have Adam, you think I like drone shield? I'm going to put 5% of my portfolio in it. And you wake up one day and it's like, oh no, no, no. Not only is it 20% of my portfolio, all else sort of being equal, maybe a few things have gone down or moved around a little bit. But the valuation proposition isn't as good. So glad you're waiting on a on a less attractively priced stock. This I would say if you're a long term holder and that's why you bought it. Nothing has really changed. In fact, the story has continued to improve. I probably just hang on to it knowing that it's going to be an incredibly volatile ride. Would I be putting fresh money to it. Probably not at this point in time. So let's go with a hold, a middle, a middle. 

Adam: [00:16:17] Go on. Hold, please hold. The other thing I think I would do is posting Reddit and just get a sense of the Reddit vibe around Drone Shield. I think that that's where that's that's another that's my tip. Andrew. As as not an expert. obviously. But I think, this is worth a post. Just a quick temperature check in Reddit to see how we're feeling about drone Shield. 

Andrew: [00:16:39] The indicator you want to look for is how many rocket emojis are being employed. That's a post. Exactly. Rocket emojis. The more you need to worry. 

Adam: [00:16:47] Now I think we're on the same page. Absolutely excellent. All right, hey, let's take a break here. We'll grab another GNT. Look, if you've got a stock you want to hear about on the show, then why not let me know. Use the contact form at equitymates.Com you can leave a voice message. You might even hear yourself on the show. Or flick. It's an email contact@Equitymates.com. We'll be right back after these short messages. Welcome back. You're listening to Buy or Sell With Me, Adam Kiley, and I'm joined by Andrew Page, founder and managing director at Strawman.com. And we are in the no holds bar. We're drinking gin and tonics, and we, going through the stocks that Andrew gave us, about five months ago. Now just to see where we're at, take a little, take a little check in, and we're going to kick off again with Alcidion Group, Andrew, Alcidion Group limited, ASX ALC. And we've had a lot of success in the first half of the show. This one, not so much. 

Andrew: [00:17:49] When you're right 51% of the time. You're wrong. 49% of the time. 

Adam: [00:17:54] You call them a buy at $0.10. They are currently at $0.05. So down 50%. These guys are in health data, right? And we all just get healthier. Is that what happens? We just don't need it. 

Andrew: [00:18:07] The quick version here is that they do, they provide software largely for hospitals and large health organisations. And the major client for them. And the big lever of growth for them in recent years has been the NHS over in the UK, sells going really well. Everything is on track. And of course you're dealing with these very large bureaucratic institutions. I don't know if you've been following political and economic developments in the UK, but, you know, things are tight. 

Adam: [00:18:31] Watching a lot, watching it like a whole 

Andrew: [00:18:35] Everyone does it. So they've just had a whole bunch of contract delays. Right. So here's the two narratives. Choose your own adventure. One, management got ahead of themselves. They ramped up costs too much when it should have been apparent that these sales weren't going to come through. It was poorly managed. And not only that, that this isn't just a temporary one off kind of thing, but there is a real structural shift in the underlying demand for this. The other narrative is, is that, well, we're a tiny little Australian ASX company that's dealing with a counterparty that's very slow to move. They've got massive budgetary constraints. We still got the work. You know, we've still got a huge amount of recurring revenue. We've still got a massive amount of opportunity. Not just us, but everyone in the sector pretty much has had the exact same impact. So it'd be different if they were singled out. And yet every other supplier to the NHS was going great, but it's just been bad across the board, in other words. And now they, you know, they reining in their costs a little bit. We actually interviewed the CEO Kate Quirke last week. Her take was, you know, take it with, for whatever it was worth, but we just had everything delayed on us. But in terms of the 3 to 4, five plus year outlook, nothing's changed whatsoever. So if you think that's the case, then this is the market giving you a gift. If you think there is something structurally wrong, no, you want to, you want to pause. I'm in the camp of I think that they are still okay. And I think the risk reward proposition is actually a little bit better, but it's a controversial take. I know a lot of people in Strawman don't like it, but I think it's interesting. 

Adam: [00:20:04] All right. Well I'm going to choose that. You're just making excuses. 

Andrew: [00:20:08] Send back to that one to. Oh well good. Can I just say iterate on that. I mean this was the point I was trying to make with catapult. And I'm not trying to say this will be catapult, but if you're only excited, enthusiastic about your investment when the share price is up, you're going to miss out. But potential opportunities like this, when everyone's negative, that's when I get more interest. It doesn't mean I'm right, but that's what I think. You should be more interested, not less interested. 

Adam: [00:20:31] All right, next up we're looking at Dropsuite Limited ASX DSE, you call it a buy at $0.25. Currently trading at $0.30. More sweets than a lolly shop. On this show we had Envirosuite. Now Dropsuite. If you bought this one, you might very well soon be in the penthouse suite. Andrew, up, up 20%. Is this still Dropsuite to buy for you? 

Andrew: [00:20:53] My brain is quick enough to come up with another suite, suffix. I just got a sweet, this business just keeps on delivering. It's like every time, every six months when you open up their presentation, there's just the page and page and page of bottom left to top right charts like choose your metric. They're all going in the right direction. A little bit of a a great example, right. Bit of fear crept into this stock last year. Now Microsoft had their own sort of, back up sort of product that they were coming to market. We went, oh, this is the end for the Dropsuite. Not recognising the model that they employ and the reality of sort of protecting data in large institutions. You want to use a third party, not the same party that you're using for all of your enterprise start, you know. But just by virtue of the fact that it's massively under penetrated, very large and massively under penetrated markets. So people tend to think that as soon as this competition, everything's all over, whereas most companies operate in a competitive environment. So I think that was overblown and that was an opportunity. And I really like Sharif. I really like Charif, their CEO. He's big inside ownership, really. Well, disciplined operator. I like it. Still a buy. 

Adam: [00:22:06] Jumbo Interactive Limited ASX JIN, you quoted a buy at $13.60, currently $17. 69. Andrew, as they say, go big or go home we go jumbo. I'm very conflicted about this one. I, it seems like a gambling company, but it also seems like it's doing it for a good cause. It's a fundraising company as well. So, which is it? 

Andrew: [00:22:31] I mean, they're definitely a gambling company. Well, they're doing it, all right. They're in it. Most of their money comes from reselling tickets. Right? Right. And it tickets in a lottery. It is literally a lottery. Like. So yeah, it's gambling. You can't pretend otherwise. Like, if you're having, if you're travelling, if you're ethically trying to wrestle with that. We spoke to the CEO, not long ago. And the thing you've got to remember is that when you look at damage done in society through gambling and you draw it on a pie chart, it's like 80% pokies, right? It's hard to be a problem gambler with a lottery ticket, you know what I mean? You can sort of double down and all of these other kinds of things. So it's sort of, I'm not, I'm not sure. I'm just trying to enable those that might be having any kind of issue. You make your own mind up. It's a very personal kind of thing. The other thing they do is software that enables other companies to run lotteries and, and what's interesting here with this business, I think, is that you've got a scenario where if you look at the lottery sector, you got this hardcore group of people who buy, just buy ticket every week and then you go, the other people are just like, I don't do anything except when I see in the bus shelter there's a 100 million Powerball. And then, I mean, me and my mates all go in.

Adam: [00:23:43] My chances of winning 100 million are better than winning. That's why. That's why I'm really into $100 million draws. It's a. 

Andrew: [00:23:49] Thing. It's a thing. And so people actually track this. They look at the companies like they look at the Lotto jackpot. When you have a run of high jackpots, they sell off, they sell heaps of tickets and they get a clip on and all of that kind of stuff. So that's going to be volatile. But it's interesting because we will get to a point where there's just a bit like maths, statistics, maths, right. You're going to get a bad run of low jackpot sort of things. Sales aren't going to be as good. The market's probably going to, you know, overreact to that kind of stuff. But I still think it's good. The thing to watch here is like, you know can forget now for seven years, six years now, they've got to re negotiate their licensing agreement with Tabcorp, who is now called the luxury company. It's very likely that they will probably reduce the commission that they get on or increase the fee in some kind of way. But jumbo has got an alternate source of revenue. So I really like the founder. Still a buy

Adam: [00:24:39] All right. Next we're talking risk, Ava Risk Group ASX AVA, you called it a buy at $0.19 currently $0.16. I went down about 16%, $0.03. 

Andrew: [00:24:51] Way down at him selling $0.03 retail. What's this percent thing that you're talking about? Yeah. 

Adam: [00:24:58] Sorry. 

Andrew: [00:25:00] It's, it's nothing, it's nothing. 

Adam: [00:25:02] Nothing. Nothing at all. All right. Down $0.03. Buy or sell for you, Ava Risk Group.

Andrew: [00:25:08] Again, this is like I put this in virus weight categories has been. I've been very bullish on this for a long time. Like a couple years at least. And they have this incredible product and they've had a change in leadership. And it just hasn't got the traction that I would have hoped that it had. There are signs. There are signs there. Right. So it's sort of like this is I feel like a gradually then suddenly kind of company. And so you develop this tech over a long period of time. You've repositioned the product set under a new CEO. You're out there and you're selling it. They announce these massive. Well, I'm gonna choose my what is it? I contract with Telstra to use their fibre optic cable and provide all that. It sort of measures the integrity of the network, etc., etc. and there's no financials around that. It was an eye, dog's breakfast in terms of the investor relations piece of them releasing like the ASX. Like I said, please explain. There's no financials here. And they they try to you know shares went into suspension. Was this very messy, very poor shareholder communication? But putting that aside it's still a very decent return. Right. Anyway that's it. More sandbags. Yeah. 

Adam: [00:26:14] Very good. So Ava risk group is still a buy. All right. It is time for the last call here in the, I got to tell you, it's the newly refurbished no holds bar. If you want to check it out, have a look at us on YouTube. It is time for the last call here. And we're looking at Bailador Technology Investments. ASX, BTI. You call it a buy at $1.16? It's up to $1.33, up 14%. As they say in the company, if you don't believe in what we're doing, then there's the baler door.

Andrew: [00:26:48] That was terrible. I love it, I love it. 

Adam: [00:26:52] We like a big finish here in the no holds bar, Andrew. Bailador, buy or sell? 

Andrew: [00:26:59] I'll go with buy. I'll keep it short because I've run over. It's too big. Big discount to its NTA. Still a huge part of that NTA is in cash and they're good at capital allocator. So it's a buy. 

Adam: [00:27:09] It's a buy. All right. Don't let the builder hit you on the way up. Very good. That's it. Thank you so much for joining me again. It's been an absolute pleasure having you back. 

Andrew: [00:27:18] Always fun. Adam, thank you so much.

Adam: [00:27:19] Yeah. Awesome. You can continue the journey on the equity mates website. There's plenty of resources there. You'll find the buy or sell tracker where you can see how all of Andrew's stocks have been performing. You can also use the Find a Company page where you can find out more information about all the stocks that we're talking about, on the show. Thank you for joining us. Don't forget, you can find us, as I mentioned, on YouTube as well. I hope you'll join me next time in the no holds bar. Until then, it is. Bye for now.