Expert Investor: Andrew Brown – Part 2

Alec: [00:01:37] Welcome to Episode six of Equity Mates, here we have the second half of our interview with Andrew Brown. If you haven't listened to the first half, I would encourage you to do that first. But here's Episode six where we talk about all things investing. So I guess now maybe we'll move into some of the more Karadi things that you'll absolutely want to get your opinion on some things that are happening at the moment. Yeah, absolutely. I guess by way of introduction to it or maybe do you want to tell us a little bit about what you're doing at the moment. [00:02:16][38.5]

Andrew: [00:02:17] East Seventy two is basically a company I, I found a company on the NSX. There are two stock exchanges in Australia. There's the ASX, which is obviously the main stock market. There is like a second stock market called the National Stock Exchange of Australia. It used to be called the Newcastle Stock Exchange because it is headquartered there. It's not anymore. It's in Sydney. And basically it's an exchange where the compliance regime is not as strong as the ASX. So and companies can raise smaller amounts of capital. You don't have to have as many shareholders. You don't have to publish a lot of the sort of corporate governance stuff that the ASX requires from you, but you're still subject to the Corporations Act. So I can't have accounts that are non-compliant with the Corporations Act. And so my accounts, in fact, pretty much every bit as good as an ASX set of accounts in terms of the financial accounts they are. But it doesn't have all that other stuff that the ASX requests from you that you'd find in a really big company. So and of course, there's a lot less liquidity, in other words, less share trading on the NSX, but they're actually starting to do something about that now. So the reason I did it was on the ASX. You are not allowed to have non-voting shares on the ASX. You are. So you can have two classes of shares so people people can have an economic interest in the company, but they may not have a vote. Yeah, in the case of these 72, we haven't used that yet. And it's probably unlikely we will, given that we've just raised a little bit of money from a variety of people. I found what's called a shell company. A shell company. Just for your listeners, these are companies listed on the stock market. There's nothing in it. It just has a listing. That's its sole asset. And I found a company that sold its major business, which was a subsidiary. So it's just a company that had no money and the costs of its listing. So listing fees, having it audited, running a share registry and things like that were being met by the directors out of their own pocket because they were looking for a business to be sold into it in exchange for its shares. And I came along in the attraction to me of doing that was it had it had a significant quantum of franking credits in it or franking credits, the tax credits that are attached to dividends, which are based on obviously tax that the company has paid. And obviously my superannuation fund invested a great idea. So I think a lot of franking credits in. So my lovely wife and I ended up putting some money in. And Wendy, because it was very small, we ended up with 69 percent of it. And we've since diluted that down by issuing shares to other people, as well as putting more money into twenty three per cent. What do we do? We are what's called a global long, short investor and global. We invest outside of Australia as well as in Australia, long, short. We buy long positions. In other words, we buy shares in companies, but we also short sell. In other words, we short sell companies that are overvalued in our opinion or have fraud attached to them, which is a bit rare, where cash flow and profit don't line up and where the companies, you know, basically going to have to take on more debt or where we think the industry change is going to be acute and, you know, take down the business in, you know, in various ways or in some cases they just so plainly overblown in valuation. It's not funny. So we also do short sell indices. In other words, the Standard and Poor's 200, the US Standard Poor's 500 to regulate our exposures. And we do use financial gearing. In other words, debt. Yeah. And by using futures as well, then obviously we're taking on what's called synthetic gearing because obviously if you buy now, if you buy a thousand dollars worth of futures, you actually gain exposure to much more than that. So so that's what we do. And we've done reasonably well since we really started this. This thing in May last year. I returned through February is about fifty one per cent. Wow. Before expenses in this. [00:06:36][258.9]

Alec: [00:06:36] Financially, yes. Yeah. It's that clear to the listeners over 50 percent or half of financial year. [00:06:43][7.1]

Andrew: [00:06:43] Yeah, our second largest position had a takeover offer logged on it three weeks ago, which we're very happy about, which is a US investment company called Fortress Investment Group. So we were buying the stock at about four Dollars 80 and the takeover offers eight point three. So quite. Yeah. [00:07:00][16.4]

Alec: [00:07:02] So we were having a look at your website before this interview. It's one thing that did catch our eye was you hold a short position in Apple. Yes. And now Apple is a company that most of our listeners will have, obviously hurdle. Absolutely. And in our podcast last week, we talked about how it has two hundred and thirty billion dollars sitting offshore at the moment in cash. So in cash. So, yeah. Why why the short position? [00:07:27][25.6]

Andrew: [00:07:28] OK, a couple of reasons why [00:07:30][2.6]

Alec: [00:07:33] Apple Apple's [00:07:33][0.5]

Andrew: [00:07:34] had a fantastic run as a stock. OK, and it's moved to a stage where I think it is more than fairly valued. OK, now the reason I say that is in the past and I'll come on to why the past is different to the future. If you look in the past, every company that relied on a device as its key entree near as damn it went broke the BlackBerry, [00:08:00][26.7]

Alec: [00:08:02] Nokia, OK, [00:08:03][1.4]

Andrew: [00:08:05] to two to our two really good examples. Now, the bull or positive case for Apple is that devices are doing more than that because devices are an entree to an ecosystem whereby they create an annuity income stream and annuity income stream is basically something like a monthly subscription. OK, so I believe that Apple's growth over the past 12 to 18 months has been aided by Samsung's woes, even though please don't forget it wasn't the Samsung phone, not not the core Galaxy seven phone. It was the Galaxy seven note, which is a bigger sort of version of the phone that was the problem child, but it quite clearly sullied Samsung's brand. If you don't think that Samsung are not going to come out all guns blazing with the Samsung Galaxy, you must live in another Galaxy. Okay, so I think that's going to it's going to really start to threaten Apple more. Apple is being threatened by all kinds of Chinese, not knockoffs, but Chinese devices. And I forget a lot of Apple's chrispin in China because the brand awareness now the other side to it is the ecosystem. Apple is really quite a closed system, as you well know. You know, use iOS on the laptop, you use on us on an Apple phone. And so, of course, you know, you then go into iCloud as well, whereas, you know, there are many more devices that are basically in the Android sphere. And don't forget who created Android, you know, the mighty Google. And basically, it's my contention that that people will gradually find the Google sphere, if you want to call it that, in the Android sphere. And whether it's, you know, just using G drives and using other other forms of cloud are actually is gradually going to basically double Apple's growth down. And as far as I can see, everybody in the world bullish about Apple seems to own the stock right now, including the man. And he says he doesn't understand technology. Mr. Warren Buffett over Bryce. So, you know, basically, you know, my my view is, you know, my view is that all that sort of pretty well in the price and that Apple's real growth is come when they when they've introduced sort of just knock you out product. Yeah. You know, the original iPod, which changed the nature of music streaming, will change the nature of music. Full stop the iPhone, which obviously was really the starting point to the devices we have now. You know, is there more of that to come? Well, we can't categorically ever say no. But basically, I think it's going to be a lot harder for them to create new things. And you've seen that because the new innovations in recent years have tended to be a bit more of a struggle. Yeah, watch. And most obviously. Yeah, and tablet. I love tablets, but I've got to accept that I'm probably in a minority. [00:11:15][189.8]

Bryce: [00:11:16] And so so there's been a lot of chatter sort of at the moment about a lot of markets being overvalued both domestically and overseas, and you being an investor who loves an undervalued market. Yep. Where does that sort of hold you at the moment in terms of. Cash position for 872 and also your activity in trading. [00:11:40][23.8]

Andrew: [00:11:41] We have, despite basically we've pretty much hedged all our capital, so we actually have pretty much zero exposure to markets. And when I say zero, sorry, is there a net exposure to markets, which means that the money that we have invested long, in other words, the shares that we own, OK, we've actually offset that with short positions in the index or other shares. Now, to give you an idea, when Brexit happened towards the end of June in 1872 is in its infancy, so we had about 140 per cent exposure. And so what that means is that net exposure, we actually had our capital and borrowed 40 per cent more than shares were cheap. If you go back and everybody talks about Brexit going back a year. Go back to the Olympics in February 2016, and you find that coincided with markets around the world roughly having fallen 15 percent over the space of six weeks. OK, that's a fair correction by any stretch of the imagination. And what that did was it left some shares extraordinarily cheap on any basis. Let's give you an idea. In my private accounts, I had four times geering. In other words, I took a dollar of capital and then had another three dollars of debt piled on top of it because I was the proverbial kid in a candy shop. OK, you were able to buy things like, OK, and this is what this is where the value, you know, give you an idea of staying up all night of twice a week. OK, buying Bank of America stock at 11 Dollars 80. It's currently 25 and 11 Dollars. It was like a 30 per cent plus discount to its book value. I was buying Morgan Stanley stock at 23 and their book value is sort of like 30 plus. You could have bought you could have bought what some people think is the most evil company in the world. I love it. Goldman Sachs. You could have bought those below net tangible asset backing. In other words, all these people that do all this amazing work for Goldman's, you get a name for nothing. And there were heaps and heaps of examples around the world where you could buy investment companies a 30 plus per cent discount to relatively easily realisable net asset backing. Why? Because people say, oh, China is slowing, the world's ending, oil is at twenty or Dollars, you know. Yeah, yeah. No, don't ever forget markets. Markets, you know, markets go, you know, mad at times. You know, people go absolutely crazy, but they go crazy both ways. They got crazy thinking markets are never going to stop going up. And they also got crazy thinking markets are never going to stop going down. And so all we'll say is the the Standard and Poor's 200 in Australia last February was forty six hundred. It's now kind of fifty seven fifty, OK. You know, the Dow the Dow Jones is up somewhere in the order of 35 percent plus since then. In a year. Yeah, well, if I had to live here 35 per cent in one year from a level which don't forget was, you know, what's the market come off 15 per cent. You know, what you've noticed is always buying cheap financial stocks. If you have a look at Amazon around that time, you'll find this Web site, Bryce. It was a year ago, right? So, yeah, it's say it's certain parts of the market that were very, very cheap. And so, you know, that's one of the reasons my returns have been really good, is that I captured at least a good part of that in a 72. And returns in my private accounts are obviously pretty, pretty similar. [00:15:44][243.6]

Bryce: [00:15:45] So you don't think there's that much undervalued? [00:15:46][1.7]

Andrew: [00:15:48] No, it's fine. It's it's it is a lot harder to get at Bryce. It's a lot harder to find it. It's I have to say, at the peak of any bull market, there's always some undervalued shares. And at the bottom of every bear market, there's still some overvalued shares. But it's getting a lot harder to find, really. But keeping value in my eyes, I can find some and I'm not even sure what to do with it. [00:16:15][27.1]

Bryce: [00:16:16] Yeah. So as the plan to sit and wait, then [00:16:20][3.6]

Andrew: [00:16:21] now the plan is basically to try and you know, if markets do correct. I mean, I'm hoping to make money out of securities that I think are overpriced and make money as they come down. I do obviously have a core holding of some stocks. I don't you know, I don't want to give anybody the impression I sit there trading frantically day in, day out, because I don't, you know, but certainly, you know, I'm holding onto my core stocks, which, you know, I still have a number that I think have got a decent upside. But I've done a lot of hedging because I think overall, when you look at the overall market indices, I think it's fully priced. You know, when you aggregate up the values or the earnings of each of the companies that make up those indices are interesting. [00:17:06][45.3]

Bryce: [00:17:09] Also, I guess something that maybe in terms of this is of the question, but just for a bit of a more basic understanding, what would be some advice for people who don't really have the option to hedge as much in a market like this? Yeah, what would be what was just being be [00:17:27][18.5]

Andrew: [00:17:28] in a market like this where you don't have the scope to hedge? I mean, first of all, don't get panicked out of the market just because then your brand thinks market indices are fully valued. If you've got a good portfolio of stocks, you know, then if you're doing what I've said to do, keep interrogating the thesis. OK, then there's no change to that. OK, and so if you believe that your security is still, you know, reasonably undervalued, they go upside the management, keep doing the right things, then don't get panicked out of them. And of course, what you should do is if the market were to fall 20 percent and your shares were to fall 20 percent, then you know, obviously what you try and do, if that takes them to well under what you think they're worth and you cost more or cross your portfolio. I remember Warren Buffett said voice, you know, I mean, he's a little bit extreme, you know. But basically, you know, if the stock market were to close for 10 years, it shouldn't worry you because you have you have a claim or stake in a really good business. So I can assure you, I mean, one of the things that really spooks young investors is the fact that there is a market. Now, imagine you owned a house. And every day I came along and gave you a price for your house. What would you do? You would be you would you would be prone to transacting. [00:18:51][83.0]

Alec: [00:18:52] Yeah. Yeah. [00:18:53][0.5]

Andrew: [00:18:53] You know, and that's that that's the you know, that's the quote on your website. You know, in the short term, the market's a voting machine. In the long term, it's a way in which you try and say you mustn't get panicked into or out of stocks just because there's a quoted price for them every day, particularly if you're a small investor. Focus on the company, focus on why you're there. Is it still is that still happening? And then if you get it, you know, if you've got a bit of spare cash and you've got a chance to buy more at a very cheap price because markets come down, do it. Let's just put it this way. I don't get excited by markets going up and up and up. I get really excited by markets going down and down and down. And all I'll say to you is if the price of toilet paper in Woolworths and Coles was five dollars a bottle, would you be running off to buy it? Or would you get really excited when the price of toilet paper at Woolworths and Coles was five dollars for a 50 pack? You know, you want it to be five dollars for a 15 pack. And yeah, it's crazy. You find so many people, so many individual investors get really excited and want to buy into the market when it's going up and up and up. Yeah. And, you know, it's funny, my fear of missing out, OK, whereas what they should be doing is when they see in the paper market crashing and everything else, that's when they should be, you know, getting getting the calculators and the computers out and working out what I want to buy. [00:20:24][91.1]

Alec: [00:22:25] so something that Bryce and I are interested in and we both hold stock in. Yeah, and we know from your background that you have some experience in the agricultural sector. Sure. And so you for 13 years were a director for the Australian Rural Capital. Yeah. Australian Rural Capital. Yeah. What do you think the prospects are for Australian agriculture? [00:22:50][24.9]

Andrew: [00:22:51] It was only part of that period of time. The company focussed on on on agri investing. But the prospects are really interesting. You've got to remember, I mean, agriculture is just it's a multitude of different industries, not only different commodities and products. So I think it's a fair comment to make that the global outlook for sugar might be a little bit different to the global outlook for beef, and it should be a bit different to the global output for wheat, grains and things like that. So that's the first thing you have to just invest in the land or the ground. One of the things one of the things in Australian rural capital is we have big investment in a piece of what we called ag restructure, which is the infrastructure behind agriculture. So sorry, rural capital. Only 11 and a half per cent of a company called Namoi Cotton Co-operative and Namoi Cotton is the biggest cotton gin in Australia. So what drives Namoa is not the cotton price. What drives Gnomon is the volume of cotton. It goes through its gin. So if there's a drought, don't get much cotton through. If the weather's been good, then the cotton crops are really good and it gins a whole lot of stuff and makes a bunch of money. So you've got to really focus on agriculture, not only in the different areas. So in the beef processor has recently been extraordinarily high and it's probably going to start coming back. You might ask the question, the sugar have a major health issue over it. Questionmark in the long term and then, you know, certainly grains and certainly protein. You know, generally we know that there's a global shortage. And so Australia is a gross generalisation is really well placed because we grow this stuff well, we grow it relatively cheaply and everything else where Australia, where a lot of the gains, I think had to be made and unfortunately are not very many investments on the stock exchange like this is in the next step down, which is the processing and the infrastructure. So companies like GrainCorp are having a bonanza this year. Now, as we've said in Namoi, you've got a very specific restructuring taking place to free up the share register and try to look for companies like that that are either processes or involved in the infrastructure. Unfortunately, that might have taken you into something like the Murray Goulburn Co-operative disaster if it did. But it's not just about growing because you've got to remember basically the the value of land goes up over time, but it tends to be quite slow. And obviously, if you were a farmer, imagine you just invested in the farmer, then the value is Lansac over time, but you do unfortunate feast and famine, you know, with droughts and everything else. And there really was a couple of stocks. Australian agriculture company and elders and certainly elders is regenerated itself quite brilliantly over the past two or three years to service, you know, to service the sector. There are some others like rural Covid as well, which supply their basically basic suppliers of fertiliser and everything else. So it tells you I mean, it's not just the sort of cool thing. It's kind of like who provides the services to it. And if Agri is going to grow, are they going to grow with it? [00:26:17][206.1]

Alec: [00:26:18] So with the Australian Agricultural Company that they recently vertically integrated into our own everything from growing the cattle to exporting the cattle. Yeah. Do you think that those vertically integrated companies are a good way to get exposure to the processing or [00:26:32][14.6]

Andrew: [00:26:33] Pentium where they're integrated? Typically, yes, because they should be some value down the chain. So on issue, the Australian Agricultural Company is basically is a control company, is basically a UK Bermudan based guy. John Lewis actually effectively controls Australian Agricultural Company. So they'll be satisfied that you're happy with Joe's treatment of minority shareholders. [00:26:57][24.1]

Alec: [00:26:59] What do you what do you think of Joe? [00:27:00][1.2]

Andrew: [00:27:01] Oh, Joe is extraordinarily astute, except in one respect, which, of course, is one of the main aims of Tottenham Hotspur. Casey must have gone off the rails, you know, very smart. So. Yeah, but you've got to ride along with him. Yeah. That may not be the easiest ride, let's put it that way. Yeah, I have positions. I have positions in two companies in the. Agri Space One is Namoi, obviously, and the other one is one of the most horrendous flights of not last year, the year before called, well, the WHL Island and well, by far and away the biggest transporter of live sheep and cattle from Australia to the rest of the world. So if you don't have an ethical problem, it [00:27:47][45.6]

Alec: [00:27:47] a live export. [00:27:48][0.8]

Andrew: [00:27:48] It is live exports. They provide ships that have five they have five boats. And these things give you an idea, the lightest by sea in the course of commission. It costs ninety million bucks. They're not. You know [00:28:01][12.8]

Alec: [00:28:01] that. And it would be it's a pretty specialised it's [00:28:04][2.8]

Andrew: [00:28:04] a very specialised industry. [00:28:05][1.0]

Alec: [00:28:06] They do. They have a pretty high market share. [00:28:08][1.9]

Andrew: [00:28:08] Yes, they do. But I mean, the problem was the stock was floated at dollar 80 and it recently got as low as 17 cents. And then the last of the stock overhang, a group had about eight percent of it that they were trying to sell. And Robert Holmes, of course, son, has actually bought that eight percent. And so the stock's now 25, but relative to the dollar float companies and preachiness banking covenants at the moment as well. But, you know, it's it's an industry. It's very volatile. You'd all be familiar with the fact that Indonesia does keep turning the tap on and off to live cattle exports from Australia. But a lot [00:28:51][42.6]

Bryce: [00:28:51] of it is along the lines of volatility. Do you think it's an industry that is also susceptible to disruption? [00:28:59][7.7]

Andrew: [00:29:01] It's not easy to disrupt, to be quite blunt, in the way that we spoke about the cab industry being disrupted and everything else, it's pretty difficult to disrupt the agricultural industry because at the end of the day, you've actually got to grow this stuff [00:29:14][13.3]

Alec: [00:29:15] and very good for live cattle. Yeah, well, [00:29:18][2.2]

Bryce: [00:29:18] I think you hear a hear of this Japanese growing hydro lettuce and. Oh, yeah. So stuff. So you think like it's not something that we're [00:29:27][8.7]

Andrew: [00:29:27] looking at, if you think about it. I mean, one of the great disruptions in agriculture has actually occurred in Australia in aquaculture, you know, because obviously three of the largest companies in the world and in seven you are all based not just in Australia but in Tasmania. Two of them are listed here. And this is the small on Tassal, which is the Big Apple. Yeah. I mean, they've they've obviously created this huge market for salmon. And I mean, that's disruption because it's basically farmed salmon, you know, which some people have issues with. And there are some issues if you watch the ABC Four Corners programme about the waste and everything else, but yeah, they're they're the kind of things I mean, technology plays a role in agriculture. I mean, just just merely, you know, tracking of animals, you know, things like that. And so technology's got a huge role and can certainly make things a lot more efficient than it has been, really. But in terms of actually the sort of newbauer coming in. No. [00:30:26][59.4]

Alec: [00:30:27] Yeah, no. Yeah. Technology is going to according to Monsanto, it's going to play a huge role in the next generation of agriculture. Yes. Well, the Internet of Things is going to change. [00:30:37][9.7]

Andrew: [00:30:37] It will try. You know, it's a matter of, you know, like how you use it in agriculture. And please don't forget, you know, Monsanto, obviously, you know, the world's pre-eminent company, genetic modification. Yeah. And, you know, certainly where I go, there's a big, big, big move back to organic and, you know, organic and GM are not the same. You know, in a sense, you can have the same because it's a matter of striking you. But, you know, it sort of started to become an interesting issue. [00:31:09][31.5]

Alec: [00:31:09] Yeah. Yeah. [00:31:10][0.6]

Bryce: [00:31:11] Oh, well, we've we've covered the last question, which was why you decided to go. Yeah. Otherwise than. Yeah, absolutely. [00:31:18][7.0]

Andrew: [00:31:19] So do you you want to speak. I think, I think you probably wanted some. I don't give stock. [00:31:24][4.9]

Bryce: [00:31:25] I was just going to say we should we should be burning desire [00:31:27][2.4]

Alec: [00:31:30] if you were to [00:31:30][0.5]

Andrew: [00:31:31] have said it just just to give you an idea obviously because I've done this for a long time. I mean, I've had friends sort of ask for stock tips and I never give them the many stock tips. But well, what we've done instead is we've asked friends to pool their money with mine. And then obviously I get the benefit of the whole portfolio. I start with that huge caveat. I then the type of things I mean, it's it's sort of public knowledge because we're a public company or a seventy two is a public company is the sort of some of the sort of positions we have. But just to give you a little bit of sort of out of the box thinking and I'll restrict this to Australian companies, even though it's actually pretty easy to buy overseas companies. Do you think that. We'll stick to Australian companies in this one. Companies are recently been buying his Megraw Holdings, which is a real estate agent, Megraw was floated last year at about two bucks a share and the current share price is sixty six cents. [00:32:38][67.2]

Alec: [00:32:39] Yeah, it was such a bad float that he had to drop out of Shark Tank. It was, yes. Getting slammed. Yeah. [00:32:45][6.2]

Andrew: [00:32:45] Yeah, it's. Why is that? And people people maybe be bought into it on two counts. First of all, John McGrath is an extremely talented individuals, obviously, during the accountancy firm from its commencement. But secondly, the property market's going up. The proving that going up has next to no influence on McGrath. It has a secondary influence on them. But the primary influence on McGrath is the number of houses they sell for other people units. So listings and you'd be well aware that listing volumes have absolutely collapsed until recently where they're showing signs of picking up. And so it's that problem that McGrath had. Now there's usually a relationship between listings and price because this particular property market's been so absurd. What you had was you had masses of listings until about the sort of middle to late 2015 and then listings fell off in 2016. And of course, Megraw flooded right into 2015. [00:33:52][66.9]

Alec: [00:33:53] Well done. So. [00:33:54][0.7]

Andrew: [00:33:57] So what I'm hoping for is that basically there'll be more listings that the market's going to free up a bit. And so if that happens and because Megraw are expanding away from the areas that some of your audience will understand, like the eastern suburbs of Sydney, and yeah, they're going to be a much wider area. So they're actually growing the business. They're becoming less reliant on things. And they've got a mixture of both companies, company branches and and franchises. I think that basically, you know, the shares are relatively cheap versus what they're capable of earning in a property market that will be more normalised once they've grown a little bit. So in a sense. They're actually, if you believe that the property market's disgustingly overvalued and it's going to collapse and cause mayhem. Well, it's a pretty good play on that because they're going to get a whole lot of distressed properties to sell, one hopes so. I think that's quite interesting. I think that's quite interesting. I do stress and all these things you need to take sort of, you know, two to five year views on these things. And if you happen to get lucky before then, well, that's not ideal. The other interesting stocks, because I think it's trading way below what it's worth is News Corp, OK, News Corp. News Corp is it's a great example of why I do what I do, which is break companies down into their individual bits. It's the largest shareholder and 60 per cent of real estate dot com. He owns 80 percent of the thing in the US called Move. It owns half of Foxtel and owns all of Fox Sports. If you take news, the value of news is staking out a group of value of move, a sensible value of Fox Sports, a sensible value of its half share in Foxtel, plus its two shareholdings in Australian provincial newspapers or APN and Seek Asia. It's my considered opinion that you get the rest of News Corp for nothing and the rest of News Corp is HarperCollins Books and all the newspaper and related digital business, which the newspapers, The Wall Street Journal, The New York Post, Barron's, which is the financial thing that well-known organ of public record of The Daily Telegraph in Sydney, The Australian, and of course, The Times and the Sun in the UK, amongst other things. And if you're in Brisbane listening to this that August publication, The Courier Mail. So I think the stock's relatively cheap. Obviously, Rupert Murdoch's not getting any younger, but both his sons are now in the business. And it's it's got no debt. It's got net cash. Yeah. So it's not going out of business any time soon. Like he like it nearly did in the 1990s. So I think the stock's really, really cheap. And I acknowledge that some of the industries and businesses are not growing at all. But, you know, some of these very you know, they're very, very good at seeking a return out of out of those. So I think that stocks pretty cheap. [00:37:15][197.8]

Alec: [00:37:15] And I guess I guess that's, again, illustrates your philosophy. Like you're not worrying about their growth down the line. Like if it's a good value investment, then. That's right. Probably the third. [00:37:26][10.3]

Andrew: [00:37:26] If I gave three stocks, I think. [00:37:28][1.8]

Alec: [00:37:30] Yeah. [00:37:30][0.0]

Andrew: [00:37:33] The third one, I think is really interesting, again, because it sort of exhibits the sort of style that I like to exhibit. The company's called it's called PM Capital Global Opportunities Fund. The stock is PGF. It's a what's called a listed investment company. So it's companies that invest in other companies. It's basically about a four hundred million dollar listed investment company. It was set up in 2014. It was run by paying capital. PM is Paul Moore. Paul's a very, very smart guy. He was part of the amazing group of people that were at Bankers Trust or BT in the late 1980s. And those people bought you Kerr Neilson, his platinum Chris Corrigan. He obviously was heavily involved in the stevedoring dispute and many others. So Paul's portfolio is it's a global portfolio. It's chock full of global banks, which I still think is very cheap, is chock full of global alternative asset managers. In other words, people that manage things like private equity and hedge funds and things like that. And you can actually buy this. It has a net tangible asset backing before it's tax liabilities of about a dollar. Seventeen a share and you can buy it for about ninety six cents on the market. Well, so it's about it, it's roughly about a seventeen plus per cent discount with pre-tax NTI. That's pretty wide by the standards of Australian listed investment companies. Why is it a discount? Well, its first year was pretty ordinary. It just got off to a pretty bad start. But Paul's a long term investor. He has an exceptional track record. And so, you know, my feeling is that I can buy a portfolio of stocks that, in my opinion, I love, you know, at 70 per cent cheaper than their accumulated public market price. So why wouldn't I? Yeah, so I think that's really good. I'd love to see Paul buying his own buying their own shares back. I think that will be a great use of their money. Yeah. And I hope that they will to do that and close down the discount. So. I think that particularly if you don't have a lot of money and you don't feel inclined to want to just dip your toes yet into individual companies, if you want something that's going to reflect global stock markets and particularly Paul's view of them, then, you know, that's that's quite a nice investment. And at the cheapest price, relative to the cheapest share price, relative to the net tangible asset backing that's being listed [00:40:20][167.0]

Bryce: [00:40:21] Bryce three very diverse, different businesses. [00:40:24][2.8]

Andrew: [00:40:25] So you got to remember, News Corp is a bit influenced by real estate. Yes. So, I mean, the idea behind real estate is and I hope I mean, some of the examples have given you, particularly Cabcharge, which I think was the ultimate. But think outside the box a bit. Think about how you can get exposures to things in a slightly different way. Is is always a bit of a you know, it means that your thought process is a bit thorough and, you know, it's a bit more intellectual than the average. Well, it's good news. A lot of people outside the shop, it's going up. [00:40:59][34.2]

Alec: [00:41:00] Yeah. Yeah. [00:41:01][0.4]

Bryce: [00:41:02] Well, Andrew, I think we'll wrap it up there. No worries. Thanks for your [00:41:05][2.9]

Andrew: [00:41:05] time. My pleasure, guys. And seriously, good luck with everything. I think it's really important. I mean, one of the biggest one of the biggest things missing in Australia is advice. And as we well know, the advice given by a number of major supposedly financial advisory groups is pretty ordinary. And the more work you can do yourself so that if you do have a financial planner or adviser, you can quiz them and you can interrogate them better. And of course, the more you can do yourself and invest your own money because it's so much easier to do it and so much cheaper to do it than it's ever been, the better. And anything that adds to that is good. And anything that adds to that for particularly younger people, it's really important because, you know, don't forget, if you start at age 24, then you've got a year's earnings by the time you're twenty five. And and as Chanes is reputed to have said, but nobody can actually find it anywhere. Of course, the eighth wonder of the world is compound interest. [00:42:09][63.6]

Bryce: [00:42:12] Yeah. I mean you've certainly given us a lot of advice for people that are starting out all the way through to expert level. So I really appreciate your time. [00:42:20][7.9]

Andrew: [00:42:20] No problems at all. Good luck with everything. And any time you want to come back, I'm more than happy. [00:42:24][4.2]

Alec: [00:42:25] Thank you. [00:42:25][0.0]

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