EM Chat: Steven Mabb & The Australian Shareholders Association

Bryce Leske: [00:00:57] Welcome to another episode of Equity Mates, a podcast that follows our journey of investing. We break down the world of investing from beginning to dividend so that you can hopefully make some returns. My name is Bryce and as always, I'm joined by my equity buddy Ren. How's it going, bro? [00:01:10][13.6]

Alec Renehan: [00:01:11] I'm very good. Bryce looking forward to this episode. We're going to unpack an association that I'm not as familiar with as I should be. I think a lot of people probably may not even be aware of, but they've been out there fighting the good fight, advocating on our behalf. And so I'm very excited to get stuck into this one. [00:01:28][17.6]

Bryce Leske: [00:01:29] Yes, I did come across this association a number of years ago when I attended the Woolworths annual general meeting, and they played a pretty important role, which we'll get into in a little bit later. But it is our pleasure to welcome Stephen Mabb from the Australian Shareholders Association to the show. Steven welcome. [00:01:44][15.1]

Steven Mabb: [00:01:45] G'day Bryce, Ren. How you going. [00:01:45][0.2]

Bryce Leske: [00:01:46] Very well. [00:01:47][0.2]

Alec Renehan: [00:01:47] Yeah. Good. Are you looking forward to this chart? [00:01:49][1.7]

Steven Mabb: [00:01:49] Absolutely. And I appreciate you having a son. And I just wanted to start off by saying congrats on your 300 episode a couple of weeks ago. I been listening in for a while now and that's quite a milestone. So I'm sure all the listeners appreciate all the great insight you've been sharing over the time. [00:02:03][13.8]

Bryce Leske: [00:02:04] Thank you. It has been quite a journey and we never would have thought we'd hit the big 300. So it was an exciting moment. But I appreciate the support from everyone in the community. For Steven is a director of the Australian Shareholders Association, which is a not for profit member based organization, helping educate retail shareholders and also advocate for them with listed companies and regulators. Prior to becoming a director of the Assaye, Stephen was a successful entrepreneur, launching and scaling a footwear brand that you may have heard of called Bionic Group, which was then acquired in 2013. So we're going to unpack a lot of that and very excited to do so. But before we do, over to Ren for the classic over. [00:02:45][41.8]

Alec Renehan: [00:02:47] So, Stephen, we like to start with a game where we throw out a few different themes or indexes that we may not otherwise get a chance to chat about in the conversation and just get your thoughts on whether they're overrated or underrated. So we'll start at home with the ASX 200 index. Overrated or underrated? [00:03:04][16.8]

Steven Mabb: [00:03:05] Yeah, I just sort of start by saying these are my personal views on these topics and not necessarily the the as a whole. I guess I'd also say I'm not a great forecaster of history as my guide when I'm thinking about these kind of things. So starting with the ASX 200, I think what I'd say here is if you're a long term investor, I think the ASX 200 is possibly underrated because it's been a great place over many decades to build wealth and compound wealth. But if you're more of an active investor, personally, I think it might be a bit overrated at the moment. I think there's some better opportunities internationally than just purely being focused on the ASX 200, which unfortunately most investors, it seems, in Australia have almost all of their equities tied up in the ASX. And I think that might be a bit of an overriding and that there's an opportunity to be more diversified using ETFs. Martin. You know, um, [00:03:53][48.3]

Bryce Leske: [00:03:54] well, speaking of international overrated or underrated, the Nasdaq 100. [00:03:57][3.3]

Steven Mabb: [00:03:59] Yeah. So, again, I'd probably say, you know, long term, a great place to build wealth. It's probably underrated on the short term basis. So it's very expensive looking at historical kind of ratios. There's a there's a great website that I often access that kind of compares 40 of the world's major, most liquid markets. And at the moment, the US index is the S&P and the NASDAQ historically very expensive and the most expensive in the world at the moment on a PE basis or price to cash ratio was kind of traditional valuation metrics. It's it's pretty expensive. So, you know, I think about that cliche. You often hear around buying low and selling high. And at the moment it seems to be the opposite with, you know, the Nasdaq and the S&P, they're they're pretty expensive. [00:04:45][46.0]

Alec Renehan: [00:04:46] For people who heard you mention a great website, A, do you want to give the URL if if they want to look it up themselves? [00:04:51][5.8]

Steven Mabb: [00:04:52] Yeah, it's actually a German company called Capital. So the website is just capital DC and they have a section on there that's called Global Stock Market Valuations. And you can basically look at the 40 biggest markets in the world on a whole bunch of different valuation metrics at the end of every month. And it kind of just shows you, you know, which markets are cheap and which markets are expensive by historical and comparative standard. So I find that pretty helpful with my international ETF investing just to kind of compare, you know, how expensive things or how cheap things are at different times in different markets. [00:05:25][32.4]

Alec Renehan: [00:05:25] This one, that's definitely one to look up. But going back to the game, there's been one sector that has captured most investors imaginations this year, and that's the buy now pay later sector in Australia. So overrated or underrated that by now pay later sector. [00:05:41][15.1]

Steven Mabb: [00:05:41] Yeah, look, I personally think this one's over rated to me. It seems like there's some players that have done incredibly well. And I think if you own these stocks, you've probably had a had a great time of it. But I also worry that, you know, they're really right. A disruption from from some of the big payment players that possibly have much bigger efficiencies and economies of scale than the start ups in this space do. So, you know, I think it's wonderful for consumers to buy now, pay later space, but it's a bit of a scary place for me personally to be investing in. So I've stayed away [00:06:10][29.1]

Bryce Leske: [00:06:11] an asset class that is most frequently spoken about, I guess, here in Australia is Australian residential property. So overrated, underrated Aussie property. [00:06:20][8.7]

Steven Mabb: [00:06:21] Look, I think owning your own home as soon as you can, it's hugely underrated. It's you know, to me, it's kind of a sleep well at night thing to be able to own your own pieces of property and, you know, have somewhere to call home in terms of an investment. I mean, again, just looking at the history and the returns over many decades, the whole property market and particularly the residential property market underperforms equities. So I think if you can stand the volatility of being in the stock market, it's going to outperform property most years and has done historically at least. So that's not a place that I invest anymore. [00:06:53][32.3]

Alec Renehan: [00:06:54] Speaking of volatility, to wrap up the game, we're going to ask you about probably the most volatile asset in the world these days, debatable, overrated or underrated Bitcoin? [00:07:07][13.2]

Steven Mabb: [00:07:08] Yeah. Again, I think what I'd say here is an idea or a technology or a method of payment. I can kind of see the future. I think I can really understand or see a reason for governments to be using crypto or block change to settle transactions and pay for things. But as an investment, it just doesn't seem to me like it produces anything. And you're probably relying on someone else coming along and paying more for it in the future. And that, to me, seems like a bit of a speculative investment again. So I'm not investing in it, but I can certainly see the benefit or the potential of the technology and the options that will provide in the future. [00:07:42][33.8]

Alec Renehan: [00:07:42] I like that and I think that's such an important distinction. Seth Kleinman in his book wrote the question, are you investing or are you speculating? And if you're just buying something, expecting someone to pay more in the future, the actual asset doesn't change in any way. And then you're speculating. What about gold? Well, you're speculating on the price. You're expecting someone to pay more for it in the future. But equities are this brilliant thing that changes you own them. So, yeah, I do like that answer. [00:08:07][24.4]

Steven Mabb: [00:08:08] Yeah. And I think the thing the difference with gold, I think, is that it's kind of accepted by governments too. So if you are going to put your money in something that's more of a store of wealth, at least with gold, it's you know, it's recognized and accepted and utilized by governments all around the world. So it seems to me a little less risky than the crypto investment guys personally. But, you know, it could be wrong. Bitcoin could go to the moon. He knows it's hard to predict. [00:08:29][21.4]

Alec Renehan: [00:08:30] Yeah. Yes. Anyway, we could we could really get sidetracked on that conversation. So I'm going to pull us out of that. So, Stephen, we're here to talk about the Australian Shareholders Association, you know what you do and some of the different services that you offer for retail investors. But before we do, we want to talk about you and unpack your background a little bit. And we like to start these conversations by asking about people's first investments. We generally find there's some good lessons or a good story that comes out of it. So to kick us off today, can you tell us the story of your first investment? [00:09:00][30.8]

Steven Mabb: [00:09:01] Yeah, well, this is this is a, you know, probably a bad and a good story, I guess, in the sense that I got a tip from a good friend that was working in the company that that I was at at the time. And I'd never invest in the stock market before. And apparently it was the next big winner or some kind of hot stock. I don't even remember what the name of the code of the stock was, is about 20 years ago now. But I put a couple of grand in it and within a few months, the company had gone broke and and it got zero. So that scared me up the stock market for a little while. And I, you know, with my wife then started to invest in some residential property, which went a lot better. But you know, that first experience, I guess it probably taught me that you can lose all your capital if you don't know what you're doing and you don't know anything about the company. And it's probably certainly well, you know, now that I've already entered the stock market to be a much more disciplined and bat based when I'm putting money to work, [00:09:50][48.9]

Bryce Leske: [00:09:51] we spoke about discipline and fact based approach. So I'm assuming you have developed some sort of personal investing philosophy? [00:09:59][8.4]

Steven Mabb: [00:10:01] I have, yeah. I mean, one of the things through today that was a really wild ride that that happened. I kind of used that to get down on investing plan and a set of rules basically that guide me going forward. So I kind of have a core portfolio that's made up of internationally to that that, you know, that I'm hoping will just really do well long term and compound. And I won't touch much. And then I also have to stop picking portfolios or things under that. So one of them's called QAD. It's kind of a quality value process that is really successful. Sydney investor has taught me about and it's really about finding quality companies that are producing really good cash flow that buying them at a reasonable price when the share price sentiments positive. So so that's been working well for me. And then I also have like a small and mid-cap multi bag, a potential portfolio that's also been doing well and unlike. Maybe some of those smaller tech stocks have applied to rules to it around, you know, that those companies needing to be in decent financial health before I buy them being cash flow positive and earnings positive before I buy them. So not super, super early stage, but still well before the big prize or the, you know, the ASX 200 indexes and stuff captured them. I guess so. So that's kind of how I invest in that in the market. And I've also thought about, you know, where can I get it? Which will weaken any, you know, small retail investor get an edge. And I think, you know, one thing that was staggering to me was just how many unprofitable companies there are listed on the ASX. And that 2000 odd companies is only about five or 600 that make a profit. So it seems to me like if you eliminate all of those companies that don't generate any profits, you probably reduced a lot of risk in giving yourself a much better chance because you're fishing from a pond that's trying to get healthy, efficient, I guess doesn't mean those small or unprofitable companies can't go on to win one day that. But it feels to me like that's a good way to eliminate some risk and find more likely winners. So I don't invest in anyone that's unprofitable. I also think you have been really nimble or quick if you've got the time and effort to do it. Being able to move quicker than the big guys gives you an advantage as well. So, you know, an announcement comes out or the news about the company, sometimes the big funds or the, you know, the big investment houses, it can take them days or weeks to kind over react to that when they have to have the committee meetings and all that kind of stuff. So as a small investor, I think you can move much quicker than that if you're staying on top of all the information coming through and then being willing to put in the effort. You know, if you've got the time, try and learn as much and take in as much quality information as you can so that you've got a bit of a quick, nimble day to day information edge over the other average investor out there that's not willing or not able to do that work. So so they're kind of things that I focus on that I think hopefully can can help me beat the market over time. And so far I have been so I feel very lucky and happy with how it's gone so far. [00:12:49][168.9]

Alec Renehan: [00:12:50] Nice. Nice. I like that. I like thinking about what your age is and then really, really staying true to that. But anyway, Stephen, we are here to talk about investing, but we're going to take a little bit of a detour before we get there, because as Bryce said in your introduction, you were a successful entrepreneur before becoming a director of the Australian Shareholders Association. And we love hearing entrepreneurial stories. Really, a lot of the companies that we invest in start as great entrepreneurial stories. So we'd love to sort of unpack yours and see what lessons you learned from that. And I guess we're a bit of context. You were a co-founder of a footwear business avionic group that launched in 2007, and you scaled it before being acquired in eighteen. Can you tell us what that journey was like? Cofounding a company and growing it into a big enough beast that it got acquired? [00:13:40][49.8]

Steven Mabb: [00:13:41] Yeah, absolutely. I mean, I feel very, very lucky to have that experience that the company had been around for quite a few years before I joined that it was a small kind of medical product company. And then myself and a couple of other footwear guys joined the business and basically started putting the technology into a range of shoes that looked really good. So they were you know, they were good for you. They had a really unique and positive health benefit. But they also, you know, they also looked good, which is a big driver of footwear sales. So, yeah, we took the brand over to the US in 2007 when it was tiny, and that was just before the GFC actually hit. So that was a bit of a scary time when the GFC hit and we thought, well, what do we do to come back to Australia and just protect our capital or do we stick it out and try and, you know, make it target? And fortunately, we did decide to stick it out and subsequently built the brand up into one of the top 20 footwear brands in America. Wow. So very fortunate. You know, we made a lot of good decisions along the way and also had plenty of good luck. And then in 2018, we sold the brand to one of the big publicly listed footwear groups, Calculous out of St Louis. And I have lived over there for 12 years with my wife and kids and we had a great time. But I took the opportunity when we sold come back to Australia and basically become a full time investor. So that's what I've been doing ever since. And obviously the brand still going. But I did learn a lot along the way. I think it's kind of helping me with my investing journey now as well. [00:15:02][81.5]

Bryce Leske: [00:15:03] Living the dream. [00:15:03][0.3]

Steven Mabb: [00:15:05] Yeah, absolutely. It's been great so far. I mean, it is I've got to say, it's likely that that's one of the things that's different about working in a business. When you're an investor or a full time investor, you're kind of on your own a lot. It's not the same as being in a team environment when you're when you're in the business, of course, you're going to get used to that theme. [00:15:20][15.2]

Bryce Leske: [00:15:21] So you mentioned there that it had helped inform you and I guess help you understand some lessons that informing your investing journey today. Are you able to elaborate on that? [00:15:31][10.0]

Steven Mabb: [00:15:31] Yeah, look, I think probably the couple of things in particular that really drove our success that I now look for in the companies that I'm thinking about investing in is, you know, firstly a focus on continually improving or progressing the product or the service. So we used to measure the customer ratings of every single shoe that we made. And we. We held ourselves accountable to try to improve that score the following season or the following year, any time that we'd be updating or replacing one of those particular products. So that gave us a really, I guess, you know, keen focus on constant product improvement to try and help our customers have a better experience. Season after season. The other thing I'd say that's kind of tied to that is net promoter score. So we measured something that's called net promoter score, which is basically it's a sliding scale from minus 100 to positive 100, basically. So it's kind of like if you survey 100 of your customers, how many people would tell their friends or family how bad you were or how good you are and you can have 100 out of 100 telling everyone how bad you are, right up to 100 out of 100. Fantastic. So the idea obviously is to have the highest possible net promoter score in 10, and it's a very good indicator of future sales and profit growth. So so we really honed in on that and tried to measure that and and obviously improve in the areas where we weren't scoring well. And that's something I'm now looking for in the companies that, you know, that I best Sakurada. They measure in customer satisfaction by measuring net promoter score. If they are, is it improving or declining because it's a pretty good indicator of whether their revenues in their earnings are going to grow in the future. [00:17:05][94.2]

Alec Renehan: [00:17:07] I like that idea of there's a you know, there's all these metrics out there that can give us insight into customer satisfaction and all these things that can be hard to quantify. So, yeah, I think that's a really good metric when you're looking at potential investments and you're trying to find their net promoter score. Is there a particular website you go to or is there a particular resource where you can find that information? [00:17:25][18.1]

Steven Mabb: [00:17:26] Yeah, unfortunately, I haven't found one that kind of covers, you know, all of the listed investments. I mean, there are some I mean, you can just Google search net promoter score and you often find scores for companies, but sometimes it can be outdated. So I often look in annual reports to see whether they're measuring customer satisfaction in any way. And if they are is improving because obviously it can be bad. But if it's improving, then that's still a good a good sign that they've turned it around or they change something. And the future might look rosy as in the past. But also when you go into businesses where you're asked to complete a survey, that's normally a good indicator that, you know, that they're serving their customers or trying to measure that. So, for example, there's a listed business called Collins Foods here that that owns lots of KFC and Taco Bell restaurants in Australia. And at the bottom of all their receipts, they'll always invite you to go on and kind of write your experience and give you some free fries or whatever it is for doing it. And that's because they're trying to measure the ongoing satisfaction of the customers in their restaurants. And and that's something that their executives are remunerated on. So, yeah, a little things like that. As a consumer, if you're stumbling across that, that can probably be a good indicator that the business is measuring it and that you might be able to find out how to go [00:18:40][73.9]

Alec Renehan: [00:18:40] a like that. And if there's any Equity Mates out there that are hearing that there's not one website that profiles all net promoter scores for ASX listed businesses, maybe that's an opportunity bill that will promote it on the site. [00:18:53][12.4]

Steven Mabb: [00:18:54] Absolutely. I'd love it. [00:18:55][1.2]

Alec Renehan: [00:18:56] So, Equity Mates, we're going to take a quick break here to hear from our sponsors [00:18:59][3.3]

Bryce Leske: [00:19:00] and Ren you are all about getting fit. You've bought the Garmin, you bought the golf membership at the gym membership and you're on the my MasterChef. And even in lock down last year, you bought those resistance bands of Instagram that from memory didn't even come. [00:19:15][14.2]

Alec Renehan: [00:19:16] No, look, they didn't come. But all of that effort really was canceled out by the numerous menu log orders that were a real staple of my lockdown experience. [00:19:25][9.5]

Bryce Leske: [00:19:26] Well, we've just headed into a new financial year, so I think it's time you get money fit with Virgin Money, our latest sponsor. [00:19:33][7.0]

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Bryce Leske: [00:19:46] And with the Virgin Money Go transaction account, you can earn rewards on your everyday spending with zero monthly fees. Sounds like just what you need. Ren. [00:19:56][9.3]

Alec Renehan: [00:19:56] Yeah, the FII twenty one get Ren didn't quite work but if y twenty to get Ren money it might be to go [00:20:05][8.4]

Bryce Leske: [00:20:06] back to your own beat. Virgin Money terms and conditions and monthly criteria apply. Now let's get back to the show. [00:20:11][5.7]

Alec Renehan: [00:20:13] So, Stephen, moving on, from your entrepreneurial experience in the US, you came back to Australia and you joined the Australian Shareholders Association and you're now a director of the Australian Shareholders Association. I think there'll be a lot of people listening that probably have never heard of the association before or won't be familiar with what it's trying to do, what its purpose is, I guess, to start with. Can you tell us a little bit about the association and what role it tries to play in Australia? [00:20:40][27.1]

Steven Mabb: [00:20:41] Yeah, absolutely. So it's been around for around 60 years and it's a not for profit organization that primarily serves two functions. The first one is to try and help educate retail investors. And the second function is really to advocate or stand up to retail investors with the companies and boards that they might invest in. So there's obviously lots of ways that they do that. But primarily, yeah, it's a it's a community member based organization of just a whole bunch of other retail small investors. And I've found personally, it's been a great place to kind of talk to some other people that are doing what I'm doing and have a similar mindset to me maybe. And many of them have got dozens or decades of years of experience in the market as well. So, you know, they can kind of help you learn some stuff that you might otherwise learn in a in a painful way self or avoid a mistake. And yeah, I've been a member now for a few years and there's lots of local meetings all around the country which, you know, you can go along and and hear various speakers and other members present and learn a lot from them. So I know we're going to unpack a lot of that. But, you know, in a nutshell, that's what the ACA does. [00:21:44][63.5]

Bryce Leske: [00:21:45] So, Stephen, what are some of the key focus areas for the ACA? [00:21:48][2.9]

Steven Mabb: [00:21:49] You know, as I mentioned, education's a big one. So so we have lots of key presenters and subject experts, economists and managers that come and speak to us at our national conference, for example, or at local member meetings all around the country or on webinars that we run online. And once you remember, that's all free to, you know, free to to listen to you or free to watch. And you can learn a lot and you can also pick and choose what you're interested in as well, because it covers a whole lot of different subjects. Obviously, equities and bonds, international, ethical, all kinds of, you know, various things over the course of a year will cover, you know, lots and lots of different topics that, you know, different people might be interested in. There's a great member magazine that comes out every month that has contributions from members. But also, you know, some really interesting information from, again, subject matter experts and fund managers, et cetera. We've got a great forum on the website where you can go on and talk to other other investors or other members. So see a few different ways that we try and help educate investors. And, you know, none of that's in competition to what, Equity Mates, Dollars? Of course, it's just, you know, complementary. You know, you guys do a lot of different stuff to what? And so this was a place of both. And I listen to obviously I listen to lots of podcasts that that aren't necessarily tied to the FSA because there is a lot of great information out there. And the second thing is the advocacy. So I think this is something very unique that no one else is really doing, particularly for retail investors. And so what we have is a team of monitors, we call them, that are all volunteers, and they basically meet with most of the ASX 200 companies at least once, sometimes twice a year. And typically they'll go in and they'll talk to the board. They'll talk to the chair about, you know, how the company's going and the various resolutions or issues that the company is proposing to vote on at the AGM, for example. So they'll go in and talk to the board about those issues and then they'll put together voting intentions for the AGM that really represent retail shareholders for the most part in the right way. So if you're like me, you probably going to get these letters in the mail from the companies and they ask if you've got a lot of people I think that don't probably bother with them been or don't do anything with it. But with the same membership, you can basically assign your votes to the FSA and they will go along and vote on your behalf at the meeting so that your voice is heard without you having to do all the work of, you know, reading from the report, trying to figure it out yourself. So I think that's a great benefit for the retail investor community, that there's someone in there going along to the vast majority of the AGM of that ASX 200 group representing you, trying to stand up for you and making sure your voice is heard with the board and not just the large institutional investors that get a lot of access to the board through it throughout the year. [00:24:34][164.9]

Alec Renehan: [00:24:35] I think that's a really important role that the ASIC plays advocating for retail investors interests. And I'd love to get out of the the sort of the theoretical and into the practical and talk about some examples of, you know, I guess notable successes or meaningful interactions that the ASIC has had with different ASX listed companies. Bryce mentioned at the top of the show that he saw the Assaye at a Woolies AGM. So I'm actually going to direct this to him to begin with. What was your experience with the ASIC at the Woolies AGM? [00:25:08][33.3]

Bryce Leske: [00:25:09] It wasn't a bad experience. I'd just never come across the ACA before. And was unaware of what they were doing, but he was clear Bradburn Lucienne Woolworth knew who they were because they got up and asked a number of questions on behalf of, I guess, the shareholders that they represent and I guess advocated for what their group represents and were trying to achieve in terms of asking Bradburn, did she bunch of questions. So it was interesting. I've never seen it before. Rather than old Joe Bloggs standing up there having a whinge, about 10000 things that you generally see at an annual general meeting. It was, I guess, nice to see some more, I guess, directive questions. [00:25:46][36.9]

Alec Renehan: [00:25:46] Yeah, yeah, fair enough. [00:25:48][1.2]

Steven Mabb: [00:25:48] And that's a really important point. Bryce The asset is not like an activist organization. They're not going on. They're trying to hijack an AGM and make a bunch of which does controversial. Yeah, exactly. I mean, that's not what we're. It's really about, you know, trying to find that balance between, you know, what does the company need to do and what do they need to do to keep their institutional shareholders happy as well. This is what's fair and reasonable for the retail shareholders and trying to find that balance between the two. To your point, I think there are some really great specific examples of what I say has been able to achieve over the years. Part of the reason that I think we've had these successes is most of the time we're somewhere between the 10th and 20th largest shareholder on the register when you combine all the ACA votes. So the companies really do want to listen to us because it is a decent chunk of the most of the time. And some examples are if you've ever read an annual report, there's a section called the remuneration report that's normally really long and often complicated and difficult to understand. And so we look at that and basically say to the average investor, read this report and figure out what the the board and the executives are being paid and how are they being paid and is what they're being paid fair based on the results that they've delivered. So when that's not the case, we'll obviously work with the company, encourage the company to try and improve and simplify the way they're communicating that info so that, again, the average investor can read the report. And over the years, that's got a lot better. It's significantly better now than it was, say, 10, 15 years ago in terms of tried to try and understand how companies are remunerating their people. I think another big issue has been women on boards. So the ASX taking a really strong position on this over the years to try and have at least 30 per cent women or men represented on a listed board. And I think we're now at the point with almost all of the ASX, 200 companies now have at least 30 per cent women on the board. Now, that wasn't some, again, activist effort. It was really that it is best practice to have a real range of views and diversity on a board. The whole purpose of the board really is the governance and oversight of the company. So you should have a reasonable representation of different ideas and different views. And the idea of just an all male dominated board isn't really realistic or, you know, likely to achieve that. We think so. We've lobbied really hard over the years and for example, would not vote for another male director to be elected if there wasn't at least 30 per cent women on that board normally. So I think over time, the companies have kind of got that message. And it's not just us that we've been really forward, I think, over the years in trying to make that change. And another one is probably capital raising. So I'm sure some of the listeners have received offers to invest more money in the company because they're doing a capital raising and they're saying, hey, give us some more money. We want to do X, Y and Z, which which is fine. But when they do a capital raising, we want to make sure that they're treating their retail shareholders fairly or evenly with the offer that they're giving to the institutional shareholders. So to give you an example there, I mean, earlier in the year, Cochlear, which is a great company, did a capital raising and they came out and announced that they were going to raise, I think it was about 800 million dollars, of which only fifty dollars million was was going to be offered to their retail shareholders, which was a much, much smaller percentage than retail shareholders represented of the total shareholding. So we obviously advocated really strongly that that wasn't fair and that they should increase the size of the retail capital raising. And they lifted it to over 200 million dollars, which was great. And while it still got scaled back. So, you know, if you if you applied for that when you didn't get your full allocation, it was done evenly between the institutional the retail component. So, you know, both both institutional retail shareholders got the same amount proportionally of what they applied for. So so there's some, I think, some good practical examples of how the asset is going to go in there and try and represent you and stand up for you as a retail shareholder and make a positive difference. Doesn't mean, you know, every company listens to us on everything all of the time. But over time we've made it. I think, you know, some really good improvements are made made some great progress and, you know, have helped retail shareholders get a fair deal from some of their companies. [00:30:01][252.7]

Alec Renehan: [00:30:02] Now, Stephen, I'm going to ask you maybe a slightly controversial question. I'm sure there's a percentage of your membership base that would probably advocate for. Potentially more, I guess, causing a ruckus at ATMs or something or more forceful advocacy on some other issues, especially the one that comes to mind, is around climate these days. And, you know, like climate disclosures or, you know, divesting from certain parts of businesses. Is that something that the ISI are looking at or something that they're talking about internally, you know, sort of advocating on issues outside of renumeration board make up and stuff like that? [00:30:37][35.7]

Steven Mabb: [00:30:38] Yeah, look, it's a really good question. And at the moment, the E part of NSG is something that we're wrestling with, trying to come up with a position that is going to represent the majority of our members. And and it's going to be really difficult to keep everybody happy because there are so many polarized views on that. You know, the ethical of the environmental, you know, part of the investing world at the moment. I think on the S and the G, you know, like we've been great at helping improve governance or, you know, turning a spotlight on governance of the companies over the years. So that's something I think we've already got really good positions on and, you know, have done a good job over the years. But the ethical and the environmental part of it, as I say, that's something we're working on at the moment. And the position that we end up taking going forward will basically come about from consulting with our members and our policy committee, you know, working through that and trying to take a sensible, balanced position on those issues, knowing that you can't really have a super specific set of rules that you can apply to every different kind of company. You've got to come up with something that, you know, that applies to the majority of the companies that are listed. So, yeah, not finalized yet in that area, but we're working on that. And hopefully we'll have something soon to announce after we've been consulting and finalizing that with all of the members. [00:31:52][73.8]

Bryce Leske: [00:31:52] So, Stephen, you've spoken about areas of focus of the RSA and I guess what you're trying to achieve and some of the areas that you advocate for, are you able to give us maybe a notable success story where you've been able to convince the company to act in a way that is reflective of how your membership are thinking? [00:32:11][18.2]

Steven Mabb: [00:32:11] Yeah, look, I can give you some personal example. There's a few companies that I monitor personally that are based in Brisbane where I am, you know, so I've had some firsthand experience with Jumbo Interactive, for example. I'm sure some of the some of the folks out there were no jumbo and they've had a terrific five year run, as you know, growing the business and growing shareholder returns, growing from a very small company five years ago into an ASX 300 company now. So we engage with them for the first time this year and they've appointed a new chair a few months ago. So this was a great opportunity to kind of sit down with her and the company for the first time and just, you know, go through a lot of those issues we just talked about that are important to retail shareholders. And she was incredibly receptive. She really you know, Linda and I thought and was very keen to particularly improve the clarity of the communication in next year's annual report and AGM. So it bad this year. I think that there were just some areas where we thought they could make things clearer and easier to understand for investors when they were reading how they were remunerating or incentivizing the team, how they were laying things out in the annual report. And I'm very confident that next year, you know, we'll see those improvements and it'll be even easier for the shareholders of Shambo to kind of figure out what's going on and determine whether they stay in or stay out of the company, for example. So, yeah, that's a good personal experience, experiences from the last couple of months that I could share. [00:33:36][85.1]

Alec Renehan: [00:33:37] Speaking of your personal experience, so as as well as being a director for the association, you are also a company monitor monitoring for companies this year. Correct me if I'm wrong, but I believe they're Collins Foods, Amole payments, jumbo interactive and technology one. So I guess sort of two questions. Their first one, the role of the company monitor. Can you tell us a little bit about what you do in that role and then specifically for those four companies, were they randomly chosen or was there something specific about those four companies that led you to monitor them? [00:34:10][32.5]

Steven Mabb: [00:34:10] I was a little bit biased in that. Those were all four companies that I either held or I was interested in. So and we weren't covering them. So, you know, I was like, well, these are all, you know, ASX 200, 300 companies that we're not yet covering. This is a great opportunity, you know, for me to learn a bit more about them, but also be able to provide information to members around the companies. And the other thing I should mention, too, is you don't have to be a member to have someone vote for you at the AGM either. So even though I was predominantly doing this for the same office, I mean, other people can allocate their proxies to ask you if you want us to vote for you on your behalf with these kind of companies. And yeah, basically what happens is, you know, the annual report, the interim report, they come out, you know, you read through all of those, you take in all the information that you can. And then you look at what the companies are proposing. You know, their resolutions aren't the terms of what they're proposing to vote on. And and the is then got some really, you know, clear, sensible guidelines around all the different things that companies will normally putting to shareholders at AGM that we then draft. Our voting intentions, and that's something that I haven't seen or I don't know that anyone else does, including the other big proxy guys, is they don't really give you a good explanation of why they're going to vote a certain way. Whereas with the ACA, our monitor will, you know, put together a several page document on why we're going to vote a certain way on each of the resolutions and explain it to you in easy to understand language. So you can read through that then and say, all right, well, that makes sense or it doesn't. And if you don't like the way that we were going to vote on a particular issue, you can take back your proxy at any time, too. So it's not like you want to give this a proxy. It's there forever. If you if you've got a different opinion, you can vote your own way. But if you're not going to do anything with it or you're happy with how they're voting and just let your proxy there and the monitor will then go to the AGM and vote on your behalf. So, yeah, that's really how the general process works. I think what was also really valuable is that we will go in and sit down with the board normally before the AGM and talk through it so that we can get their point of view or clarify anything that's not super clear before we put together the voting intention. So that gives the company a chance to explain things or to clarify things. And then sometimes we agree to disagree. So we try not to ambush the company. We you know, we explain to them why we're going to go in a certain way and share that with them. If we agree to disagree, that's OK as well. [00:36:28][138.2]

Alec Renehan: [00:36:29] It's an interesting one. You mentioned there the four companies you selected weren't being monitored. So I guess just how many companies do the Assaye monitor every year? [00:36:39][9.7]

Steven Mabb: [00:36:39] It's normally somewhere around 200. And to be honest, we'd love to monitor every company on the ASX, but it's a volunteer group and there's just not enough people, unfortunately, to cover every company. So we prioritize generally the ASX 200 and then any other large, slightly controversial companies potentially that are outside of that. But, you know, if we had more monitors, we would cover even more companies. You know, like any volunteer organization, it just comes down to how many people there are to cover all the work. [00:37:06][26.7]

Alec Renehan: [00:37:07] So does that mean any Equity Mates listening who are interested in becoming company monitors or is it just a matter of putting their hands up and then they can, I assume, maybe get a bit trained up, make sure that they're suitable to speak to management, but then they can go and speak to some of these company boards and monitor some of these companies? [00:37:22][15.5]

Steven Mabb: [00:37:23] Exactly. Yeah. So so first step would be obviously to become a member and then, yeah, we have a policy and advocacy manager that's based in our Sydney head office and she's very knowledgeable and a real expert in this area. So her and the state chairs would normally do some training with you and make sure that, you know, you really understand all the guidelines and, you know, dotting the I's and crossing the T's of how you would put a voting intention together and how you interpret the report. And there's always experienced monitors to help you with that when you're getting started as well. So you don't just kind of get thrown to the wolves and have to do it all yourself. There'll be someone there by your side when you're starting out to help you through the process. But it is a great way to get firsthand access to, you know, to some big and interesting companies that the normal shareholder doesn't normally wouldn't be able to get in front of. So if it is something that you're interested in, absolutely. We're always looking for, you know, more volunteers. And it's a great way to get, you know, get under the hood and see more about the company. And I've learned a tremendous amount just, you know, going through that process that I can now apply to every company I'm interested in, not just the ones that I personally monitor. [00:38:25][62.0]

Alec Renehan: [00:38:26] Yeah, yeah. It's it's an interesting opportunity. We often talk on Equity Mates, I guess, the disparity for retail investors in terms of access to management. You know, we speak to so many fund managers and they always talk about how management and people and culture is such an important part of good long term investments. And then it's but then for retail investors, it's how do you give them that access? So I think, yeah, more transparency that you can give to retail investors, the better. [00:38:52][26.0]

Bryce Leske: [00:38:52] Maybe we start the aside. [00:38:55][2.2]

Steven Mabb: [00:38:57] Let's get a bigger hold on. [00:38:58][1.1]

Bryce Leske: [00:39:01] take this off like, oh, [00:39:02][1.0]

Steven Mabb: [00:39:03] that's a great idea. But I can tell you of the four companies I monitor very different cultures from one to the next. And I didn't necessarily have that perception before I dug in and met with the boards. So as much as I held them all or I was interested in them all, I've got a much deeper understanding now of, you know, really the culture and the philosophy of the management teams and the boards now. And it isn't always good. You know, sometimes there's some stuff going on culturally or in terms of how they're applying their remuneration, for example, that may not be in your best interests. And it's good to have that information or to know that so that you're making a more informed judgment on whether this is a company that you do or don't want to be invested in. So, yes, as I've said, I've learned a lot personally, and now I'm kind of reading those reports of the other companies that I don't personally monitor to see what what the monitors have got to say from their engagements with the boards. [00:39:57][54.0]

Alec Renehan: [00:39:57] Yeah, it's a good one. If any A.S.A. members see Bryce application to be a company monitor, I would cast that one aside, though. I don't I wouldn't trust him, you know, ask questions of management. [00:40:07][9.2]

Steven Mabb: [00:40:08] We've got some pretty tight guidelines, so. [00:40:10][1.7]

Alec Renehan: [00:40:12] Equity Mates, we're going to pause here to hear from our sponsors again. So, Stephen, I think one area where the ACA does some really good work is around. You know, we've spoken about the proxy votes and, you know, Bryce talks about his personal experience, seeing the ACA ask questions of management at an AGM. And I think an AGM in general is probably a pretty underappreciated event for a lot of investors. It's sort of, you know, something that you get a bit of paperwork for that you, you know, ignore or you read and then you don't really do much with. I would hazard a guess that a lot of retail investors don't attend ATMs, especially when they're on a bloody 11 o'clock on a workday so difficult to access. How should retail investors think about ATMs and think about, I guess, the power of their vote at these ATMs? [00:40:59][47.2]

Steven Mabb: [00:41:00] Yeah, well, I think, you know, the first thing to I think to remember is as shareholders, you really own the company. So if you don't vote, you're not really, you know, sharing your voice with the board and the management team about how you feel about what they're proposing to do with your company at the end of the day. So, yeah, if you don't have the time or you're not inclined to read through reports and put together your own votes, I mean, that's fine. We totally understand. Lots of people don't want to do. The next best option is to really assign your votes to someone that the vast majority of the time is probably going to represent you well in the way that you would feel or the way that you'd want to vote on these issues. So I would say, you know, don't waste a proxy. If nothing else, allocate it to someone, like I say. And if you do decide to get more actively down the track and then you want to dig into the actual issues in more detail and vote yourself, that's great, too. I mean, we also encourage that. But don't let your vote go to waste. And it's particularly relevant to things like remuneration. So there's a rule in Australia basically where the company has to put their remuneration report to shareholders at every AGM and they need to vote on it. And while it's not a binding resolution in the sense that that doesn't mean that the company has to do something based on the vote, what does happen is you can have what's called a strike. So basically, if, let's say, 25 per cent of the shareholders or more vote against the remuneration report, that's called a first strike. And that would happen where the company was either really over remunerating their people versus the results they're delivering or they're, you know, potentially paying out big bonuses that, you know, that weren't achieved or weren't deserved. And at least 25 per cent of the shareholders would then vote against that if you get a second strike. So that's two strikes in two consecutive years that can actually lead to a spill of the board. So it's a very serious issue. And obviously, most boards do not want that to happen. So if you're really unhappy with the way that the management team or the company is remunerating people, you do have a lot of power with. You know, as I said, only up to 25 per cent or more of the shareholders having to vote against the remuneration report, which will likely lead to some, you know, some significant change in the following years so that the company avoids subsequent strikes. So that's that's, I think, a good example practically of how your voice could be heard and and make a difference. And again, we're not obviously wanting to go in there and vote against everyone's remuneration report all the time. We want our companies to do well and we understand that they know they need to remunerate their people well. And as long as they're doing it fairly and getting better results for their shareholders over time, we're not going to be going in and voting against every remuneration report. But when they're doing the wrong thing or they're doing something that's really unfair, that's when you have the power to really make a change. [00:43:43][163.0]

Bryce Leske: [00:43:44] So, Stephen, before we move to our final three questions to wrap up the interview, for those that are listening and keen to get involved, how does someone become a member of the A.S.A. or assign their proxy votes to the IOC? [00:43:56][12.5]

Steven Mabb: [00:43:57] Yes, they look really simple. You can just go to Australian shareholders from the review and join up. There's a whole bunch of really good free information on the website you can dig through first. And I think it's only about 130 bucks a year to be a member. And for that, you get access to all of the information to come along to the local meetings. You can watch the webinars, all of those kinds of different ways that, you know, we help share information and help educate. And in terms of the proxy part of it, if you're not a member, you can just write Australian Shareholders Association even as your proxy when you get the forms or when you get your email. If you are a member, there's some forms that you can do on a permanent basis as well. We've got something that, you know, you want to do. So, yeah, pretty easy way to get involved and to allocate your proxies. [00:44:40][42.6]

Alec Renehan: [00:44:41] If you want to be a member, it's the 130. If you want to allocate your proxies, you don't have to pay anything, though. That's correct. [00:44:46][5.7]

Steven Mabb: [00:44:47] That's right. You don't have to be a member to allocate your proxy. So if you just want to allocate your companies to the services, you think they're going to vote. You know, as I said, for the vast majority of time, the way that you would vote yourself if you got into it, you can just write Australian Shareholders Association in as your proxy. If you're doing a paper form or if you get the email, you just, you know, obviously type it in and send it back to the registry that's how you want your proxies to be allocated to instead of the chair of board. Normally, the chair of the meetings always going to vote in favor of every resolution that they put to. So if you don't want that to happen, then you write in the Australian Shareholders Association is the person or the group that you're nominating as your proxy? It's a really [00:45:23][36.8]

Alec Renehan: [00:45:24] interesting and it's a really valuable thing that the Shareholders Association does. You know, there's a lobby group out there looking after the interests of retail shareholders. So I'm glad we've got you on, Stephen. And we've sort of explored this and had this conversation. [00:45:35][11.8]

Steven Mabb: [00:45:37] Absolutely. And I really appreciate it. And as I said, there's lots of info on the website. And I'm sure there's you know, there's plenty of people that are more than happy to chat through any of this with you, too, if you'd like to find out more. [00:45:45][8.1]

Alec Renehan: [00:45:45] That's why I'm as Bryce mentioned there, we do like to end these interviews with the same final three questions. So we'll get stuck into those, the first of which is do you have any books that you consider must read and these can be investing or otherwise? [00:45:59][13.3]

Steven Mabb: [00:45:59] Yeah, I do. I've got a few actually that really left a mark on me. So the first one's the Little Book of Behavioral Investing by James Montay. And that was a really good read in terms of trying to get control of the emotions and the biases and all that kind of stuff that, you know, that all of us have. And as the name suggests, it's a little book. So it's a pretty quick, easy read. But I found that really helpful in terms of trying to find really big compounding stocks that can grow into, you know, really big investments over time. As a great book, I put 100 Daboll by Chris Mayer, which detailed how you could go about trying to identify those companies. And it's not just about finding the next Afterpay. There's there's lots of other ways that he outlines in the book that you can do that. So that was a great book. Enough by Jack Bogle, who was the founder of Vanguard. It's a really good read on both investing and also just managing your personal finances in your life. And by Jack Bhogle. And then I read a great book a few months ago called When All is Said and Done By Me, who I know you guys are AFL fans. You don't know. He was a great player for Essendon and then a coach at Melbourne. And he's, you know, is currently going through a pretty tough time health wise. But this book is just an awesome read about, you know, growing up in Australia, you know, playing footy and all the things that he's learned in life that I found really inspirational. So there are a few things that, yeah, I've enjoyed reading the paper. It's a [00:47:28][88.3]

Alec Renehan: [00:47:28] nice one. Yeah. One 100 pages to settle myself for a little while and I've never got around to opening it, so I'm going to prioritize that one after this conversation. [00:47:35][7.1]

Steven Mabb: [00:47:36] Yeah, it's interesting. It's not what you'd expect. It's not just about trying to find really Steketee. There's a good process in there. I thought, you know, and you know, again, he doesn't suggest that at least Occupy is going to be 100 bagger. But it's just some interesting ways on how you can potentially identify those kind of stocks. [00:47:52][15.4]

Alec Renehan: [00:47:52] Yeah, yeah. Nice one. So the second question that we like to ask is, what's your go to source for investing and financial information? [00:48:00][7.3]

Steven Mabb: [00:48:00] Yeah, well, of course, Equity Mates, I know every every week and I notice you guys have so many great guests on. I mean, I've learned a lot from listening to your interviews and particularly the way that you guys ask the questions and you try and simplify it all times. Time for people. It's it's fantastic. In all seriousness, Equity Mates a great resource. I also have made a rule for myself that I'm really only going to follow people or companies that have published market beating records because there is so much information out there and so many newsletters and experts that for the most part, talk a good game. But many of them don't have a published or market beating record. And I've just decided over time that, you know, I don't want to listen to or I don't have the time to listen to the folks that don't have market leading records. I'm going to hone in on those that do so. I know, for example, you know, you guys had Rudy, Phil, Dick Van Dike on a few weeks ago. And, you know, I really enjoyed the interview, but looking at Rudy's performance over the years, the portfolio kind of just tracks the market. So I listen to Rudy, but I'm not putting as much weight into, you know, some of his picks as I am. Some of the other services that I follow that, you know, have market beating record. So I've had a lot of success with Motley Fool. You know, The Motley Fool in Australia has some you know, some really good stock pickers, I think. And they published their record. And I've done well with a lot of their pick to, as I mentioned, which is a really good system for finding quality stocks at a value price. And then also your stock doctor, which is expensive. But it's a really great tool, I find, to kind of analyze stocks and dig into the fundamentals and chart. So they're my kind of go to sources because all of them had long term market beating records and and a great history of, you know, kind of beating the market. And to me, that seems like it's worth following some [00:49:44][103.8]

Alec Renehan: [00:49:44] good recommendations there. And then the final question, if you think back to, you know, your younger days, just starting out investing, taking that hot tip from a mate and losing all your money, what advice would you have for your younger self? [00:49:58][13.1]

Steven Mabb: [00:49:58] Yeah, look, I think the number one thing I think I've learned over the last five or ten years is just the power of compounding and, you know, getting started earlier in smart investments instead of someone with the stock makes a lot of difference, you know, towards the end of your investing career, obviously. Getting started earlier and investing in index funds or ETFs instead of residential property was probably something I think I would have told my younger self differently, you know, and, you know, I obviously learned from those experiences, but still, I think I'd be doing even better today if I hadn't got started in some, you know, some broad indexes earlier than that. I haven't watched it. So I am trying to share that with my kids and the younger folks that I know now that I've got a few dollars in savings, that it's a great place to invest in these really great low cost ETFs that we have available to us now. [00:50:46][47.5]

Bryce Leske: [00:50:46] Nice, Steven. Well, it has been a refreshing interview away from, I guess, the ins and outs of fund managers to learn about another part of the investing journey that is, I guess, equally as important and the role that the ISI are playing. So thank you very much for your time today. It's been a great interview and I'm sure many of our listeners and members of the community have learned something new. So we will discuss the Equity Mates chapter offline. But yeah, and I very much appreciate your time. Thanks for coming on. [00:51:15][28.5]

Steven Mabb: [00:51:15] Yeah. And I just want to say thanks very much to you guys, too, for the opportunity to speak today, but also all of the great information and, you know, ways that you are communicating and sharing your knowledge and the knowledge of your guests with all the retail and Equity Mates out there. It's been enjoyable for me to be listening to. And I really I'm sure lots of people out there appreciate it. So thanks for what you been doing. [00:51:15][0.0]

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