Investing is a lifelong journey… so we got mentors

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

Alec: [00:00:34] I'm very good, Bryce. Good to be here. Excited for this episode, we are launching a new segment. We're calling it Mentor It. And every time we call it mentor, we say we need to change the name because Mark poor us, or he has a podcast by that name. But we've managed to get in the studio and start recording and we haven't come up with another name. 

Bryce: [00:00:55] Well, the technicalities is that his podcast is the mentor. 

Alec: [00:01:01] So should we call this the mentor? Duh.

Bryce: [00:01:04] Yeah. Offshoots.

Alec: [00:01:06] Well, I feel like it's too late now. We're going with it. 

Bryce: [00:01:09] We're going with it. Mentor. 

Alec: [00:01:11] Mark doesn't listen to this anyway. 

Bryce: [00:01:15] It's not like he's trademarked the mentor. 

Alec: [00:01:18] He actually might have. That's true. He's a pretty savvy Bismark. So. We're going to hit Mentor. Then we're going to do another uncovered, an Australian company in the sports world that is extremely topical at the moment. And then we're going to close out with some things we've learnt from a few books we've read recently. So jam packed episode, but Bryce, I can say before we get into it, there's two things in bold at the top of our Google doc. Mm hmm. And the first one is that the bombers and swans are on top of the tiger. 

Bryce: [00:01:51] Oh, yeah. Oh yeah. In fact, at the end of round one, they were literally both on top. 

Alec: [00:01:58] Well, at the end of round two the Swans are literally on top. 

Bryce: [00:02:02] Essendon sitting in third place but just wanted to get it in the notes because it might not last forever, particularly with the bombers. Swans are looking great. 

Alec: [00:02:13] Two relatively easy games. The next four weeks are Melbourne, Port Adelaide, Geelong and another good time. So this will be the test.

Bryce: [00:02:25] Where you've got a string of, I would say, easier games. I think we've got Saints though this weekend, so 2v3 Rosslyn versus Scott. [00:02:32][6.9]

Alec: [00:02:35] You forgot your coach. Anyway, that's enough footy chat, We'll save it for the footy podcast. I think we should do it some quite. But the other Thing in bold at the top of the doc is that after months and months of careful research trips to Milan to get the latest fashion and to try and understand the latest in manufacturing technology, we're finally able to announce our latest merch line. 

Bryce: [00:03:02] That's it Ren. Move over Chanel, Coco Chanel and Pharrell Williams. Where is he now? Louis Vuitton. Louis Vuitton Equity Mates merch line is here. We've got three brand new t-shirts available at our equitymates.com/merchshop. 

Alec: [00:03:21] No, no, no. equitymates.com/shop. 

Bryce: [00:03:23] Say it. equitymates.com/shop. So the three options we now have available for limited release pre-orders are now open. We have a premium embroidered Equity Mates logo on a white tee. The logo is in our navy blue and red, so make sure you have a look at that. It is the premium option. Then we've got the FinFest unicorn with a guy drinking a beer on it in the left pocket on a white tee, and we've got the O.G. Equity Mates logo also on the left pocket in black and white with red and I riding the Wall Street ball takes us back down memory lane Ren, but all available for pre-orders now, so make sure you get over there. It is for a limited time and for the first 50 orders, you're also going to get a very high quality Equity Mates tote bag. And I don't say high quality in jest. It is high quality.

Alec: [00:04:20] I mean, it does sound like you're protesting too much, but they are actually good bags. 

Bryce: [00:04:26] equitymates.com/shop limited time for pre-orders, so check it out. 

Alec: [00:04:31] All right so Bryce, let's get into it. Mentor working title. What is it? Why are we doing it?

Bryce: [00:04:37] I'm super excited about this. Equity Mates was was formed as you and I went on the journey of learning to invest When we were listening to podcasts over in America that weren't really speaking to beginner investors and we felt that we could try and publicly learn and we we got to the point at the start of this year and thought, how can we continue that journey of learning publicly? How can we bring people on the journey as we refine our toolkit of investing skills? And we figured that one way to do that is to partner or pair up with an expert in the industry to ask. We learn from them? So we've. We've found a mentor each and over the next 12 months or so, we're going to embark on a journey of learning. 

Alec: [00:05:25] Yeah. Yeah, well, maybe forever. And we'll just keep finding new mentors and keep making podcasts and hopefully make some money investing as well. But, you know, we're big believers in learning in public. And, you know, we didn't start Equity Mates with any grand plan. But I think part of what worked with Equity Mates was we were really learning in public. I remember the first episode, we didn't know the difference between an ETF and an ally. So I'm so happy to say one.

Bryce: [00:05:54] Way to tackle that in the first episode. 

Alec: [00:05:56] I think so, yeah. I'm surprised people listened. The journey of learning and asking the dumb questions and making mistakes and hopefully getting a little bit better was something that we really enjoyed and it's something that we don't want to lose. And so now that we're lucky enough to be in a position where we can get great mentors, we want to keep learning in public and we want to keep asking the dumb questions. And so that's what this is going to be all about. There is a competitive element to it. Always, always you and I are going to go head to head. We're going to invest not with real money, with hypothetical money, okay, paper trade, but we're going to make investment decisions. Buying and selling. Yes. There was talk that you kind of try and date, right? At one. 

Bryce: [00:06:46] I did want to. Yeah. Yeah. We'll stick to that. We'll get to that. Yes. 

Alec: [00:06:51] And we're going to go head to head. We're going to see how each of us goes. Hopefully it's not like Stock of the Year, but it should be a bit of fun, a bit of competition. But ultimately, hopefully we learn a lot. Yeah. And hopefully learning in public means that everyone listening can learn from our mistakes. Yes. 

Bryce: [00:07:08] Now you mentioned Stock of the Year. The massive difference here is a, we've got a mentor, but but we're going to be recording every conversation we have with our mentor. Being at the pub, beat at their house, paid it at the office, wherever it is, whenever we're learning, whatever our thoughts are, we're going to be recording it and bringing it to you over the next year or so, whatever the time period is. We haven't actually figured It out yet, but yeah, right. 

Alec: [00:07:31] In that spirit, Bryce. when we decided to reach out to mentors, we had to record the Call we Did And hoped we wouldn't get rejected. 

Bryce: [00:07:41] Yes. So this call, these two calls are us, Ren and I putting ourselves on the line. We're going to be very vulnerable throughout this process. And we gave our mentors a call to hopefully say if they would say yes. Alrighty, here we go. About to give my mentor, Henry Jennings. Well, hopefully my mentor. I haven't actually asked him yet. That is the purpose of this call to see if Henry Jennings from Marcus today, not sponsored, will be my mentor, coach, guru, whatever you want to call It. Over the next little while to help me beat Ren. 

Henry: [00:08:21] Hello, young Bryce.

Bryce: [00:08:22] Henry, How are you?

Henry: [00:08:24] I'm very well. How are you? 

Bryce: [00:08:25] I am also very well. It's so. I guess the first question is, Henry, will you be my mentor? 

Henry: [00:08:32] Bryce, I would love to be a mentor, although I do. I'm already feeling the pressure.

Bryce: [00:08:37] There's no pressure. There's no pressure.

Henry: [00:08:40] Who did Ren choose to be.

Bryce: [00:08:42] So Ren has gone with Andrew Page.

Henry: [00:08:45] Oh, good choice. 

Bryce: [00:08:47] Yeah. Do you want to be called a mentor. Coach, Guru. Or just H.J.? Do you have any? Nickname.

Henry: [00:08:56] I hate to say it? It's like I still get to proclaim. 

Andrew: [00:09:05] Hello? Andrew speaking.

Alec: [00:09:06] Hi, Andrew. It's Alec from Equity Mates. How you going? 

Andrew: [00:09:09] I'm good, Alec. How are things? 

Alec: [00:09:11] Good, Good. Have I call you in an hour at time? 

Henry: [00:09:14] Yeah, totally. Yeah, I'm just going for a one day, so as long as you can hear me. All right on the headset. I'm good to go. 

Alec: [00:09:18] Andrew Paige, will you be my mentor? 

Henry: [00:09:22] Dude, I'm very flattered and humbled. I would love to be. Love to be. 

Alec: [00:09:26] Great. 

Bryce: [00:09:27] So, Ren, as you heard in my call, we congratulations on landing Andrew Page. He's been on the show a number of times. We chatted to him on Usb-c, came to FinFest. He is a great investor. And formidable opponents for Henry and I. 

Alec: [00:09:43] Interesting that Henry's already shaking in his pockets. 

Bryce: [00:09:47] He's not. He's not fit. So. So why Andrew? 

Alec: [00:09:51] So I think Andrew, for me, embodies the kind of investor I want to be. 

Bryce: [00:09:56] Oh, that's nice. 

Alec: [00:09:59] Very agnostic to what the market's doing day to day. Not worried about momentum very much like a bottom up stock picker, company analysis, like all of that stuff that we talk about on the show. Long term, looking for compounders, looking for those few really high quality companies. So yeah, that's why. Why, Henry? 

Bryce: [00:10:23] A couple of reasons. So firstly, it's just going to guarantee a good vibe every time we chat to Henry. It's just an enjoyable conversation. But I think what, what came for me is that he, he often plays in an area of the market and I think similar to Andrew as well in in the small to mid-cap space and comes across really interesting companies and seems to just have a pretty decent grip on on what is what is going on and his investment sort of approach as we'll jump into next time we chat with him. But it is really born from sort of catalyst and narrative and I want to really sort of bring that into my investing approach to shine a light in what I'm talking about. When I did ask Henry in our conversation if he could just give me a bit of an indication on how he's seeing the market at the moment. So let's pick it up at that point in the conversation. How are you generally saying the market at the moment, like in terms of your set of opportunities, how is it kind of faring to say 12 months ago and what's your general outlook for the next sort of 12 months?

Henry: [00:11:35] I have to say it is a confusing time in the market. However, there are a few things that stand out, and I do get the feeling that while interest rates have peaked, but I'm not in the we're going to be cutting soon, Ken, because if you look back over history, interest rates around four, four and a half percent is kind of where they've been for a long, long time up till the GFC, which changed the game. So if we take the GFC out of it and suggest that maybe that was an anomaly, that maybe we're going back to four, four and a half percent. So I think we're going to be on pause for a long time, higher for longer, but more like average. I actually a relatively slow are slightly bullish on the Australian market short term. I think there are a number of issues that we have to get through. One is the May budget. Secondly is the June textile showing period in the southern main go away? We saw a pretty horrible market last June as people just ticks everything out. So that will present an opportunity in July. What has given me cause for positivity, I must admit, is corporates are slinging money at stuff like there's no tomorrow and we're not talking about little takeovers. We aren't talking about big earth shattering takeovers. Now, it may be that analysts and brokers are all down in the dumps about things, but you look at Brookfield lobbying for Origin, you look at all the moral lobbying for lions and you look at the Maltesers lobbying for United Malt Group. You look at there's a whole bunch of them out there. I see, you know, Invacare, you've got cancer still in play with Alliance Aviation. So there is a heap of money being chopped at this by people who are either way too optimistic and just being silly or they know something that the market doesn't, or they're just using this as a really good opportunity when things are so negative because of this noise about interest rates and inflation and the US banks, etc., and European banks to make these long term strategic acquisitions. And that kind of gives me hope that there is hope out there. I think the market does look in places. I think you've got to be very selective in the stocks and you've got to do your homework. But without question, I think there's some great opportunities at the moment and there will be, especially if we do see a further sell off in May, June. But at the moment, I just feel we've got a little April could be a better month. 

Alec: [00:14:14] Henry Jennings always got his finger on the pulse. 

Bryce: [00:14:17] Absolutely. 

Alec: [00:14:17] Always got an angle that he's thinking about. So I feel like you're going to have some really interesting stocks, maybe some out of left field ones. Hopefully. Andrew And I didn't get so much into what's going on in markets, but it was interesting to hear Andrew's thoughts on why he and I assume Henry as well would agree to be our mentors because we do really appreciate them making the time and sharing their knowledge and especially doing it on Mike. There's a bit of risk for these guys at times. Like if we Saw. It shouldn't reflect poorly on them, but you know, we could let them down. 

Bryce: [00:14:57] I know. If this paid as out, you'll know why. 

Alec: [00:15:00] It won't, pay us out. But yeah, Andrew explained why he was excited too, to be a mentor. 

Andrew: [00:15:08] I'm excited about it because I think selfishly, it's also a great chance. To gain more experience for myself, you know, like. One of the best ways to learn is to teach, so to speak. And I think when you're sort of forced to try and convey ideas and express them with more clarity, it helps your own thinking, right? Helps. It helps. And your responses to that, your experiences with that is really valuable feedback. So I'm hoping to get as much out of it as you do, frankly. 

Alec: [00:15:37] Great. Great. As long as you don't hope to learn how to become a better investor, because I don't know if I've got a lot to teach you. 

Andrew: [00:15:44] You know what, though? It's that learn to be a better investor is a process that never stops. You can learn to juggle to a certain capability, and I've already done that. Or even with this investing, it's just like it really. I know it's a bit hackneyed and corny, but it is a journey that never ends. 

Bryce: [00:16:02] I love that, Ren. It's something that we learn at uni. Teaching others helps teach yourself and understand, solidifies your understanding of things. So I'm really looking forward to listening to the progress that you to make over the next little while as well. I think you've got a great mentor there in Andrew, so that's kind of where we're at the next week. We're going to pick it up with conversations from our very first session with our mentors. We're going to be really unpacking what the next little period is going to be like and the approach that we're going to take and who knows where this is going to go. But I'm super pumped. We will be transparent if we do make any actual investments through this. Otherwise, as you said, it will be all paper, hypothetical trading. We're going to track how we're going on our website along with the Equity Mates portfolio. It's all kind of going to get wrapped up into one and may the best man win. 

Alec: [00:16:58] Yes. Yeah. Well, may we both learn a lot. But you said I'm not sure where this is going to go. I have an inkling where it's going to. 

Bryce: [00:17:07] Where is that? 

Alec: [00:17:08] Because we have done another uncovered article on a company and the first thing you said was, I'm going to take this to Henry next. 

Bryce: [00:17:21] Yeah, well because, I mean, Henry said like, he's looking for this or he's looking at this opportunity to to get new ideas himself and like, take us take his approach through what we kind of bring to him. 

Alec: [00:17:34] So what you said was I rented an uncovered article of a company. I'm going to take that idea. 

Bryce: [00:17:40] Hey, there's no new ideas in investing. 

Alec: [00:17:43] There's no points for originality. 

Bryce: [00:17:45] Yeah, Yeah, exactly.

Alec: [00:17:46] So now let let's get to this uncovered because it's a fascinating company. And full disclosure, I do own some of it. 

Bryce: [00:17:53] And for those that have just joined, welcome to the Equity Mates Community Uncovered is a series that we do where we shine a light on companies that are not covered as much as some of the bigger companies in Australia and around the world. There are some fascinating companies with awesome stories and we're going to do our best to bring them to you. 

Alec: [00:18:11] So Bryce, we mentioned at the top that the AFL season is back on, the rugby league season is back on. We're loving getting into the sport, your love and getting into the sports betting. There's no doubt one of the biggest stories of the year is concussions and head injuries. A class action of more than 60 former AFL players seeking compensation. A second AFL class action has also been launched. The NRL changed their rules to require players to take more time out after getting a concussion. A parliamentary Senate inquiry has been launched into head trauma in contact sport and the AFL has pledged $25 million to fund a study into the long term effects of concussions and head knocks on players. That's all been headlines of the past month or so. It's it's big. It's big, and it makes sense that it's big because the long term effects, the effects of CTA, which is like a degenerative brain disease. 

Bryce: [00:19:13] Traumatic. Encephalitis. 

Alec: [00:19:18] Encephalitis. Oh okay. Yeah, yeah. So given that this is all in the news, when Simon from the Equity Mates community suggested a company that was working on this problem for Uncovered, it felt like a natural fit. So shout out to Simon for suggesting the company a reminder to everyone else, If you want us to uncover a company, you can suggest it via email, contact@equitymates.com or on the Facebook discussion group or the website forum and Ren.

Bryce: [00:19:48] Just a clear reminder we will be incredibly transparent if we own these companies which Ren was at the top. Otherwise this is not a buy hold or sell recommendation in any way. We are just bringing you a company that is not covered for you to make your further decisions. So yeah, yeah. This is not a buy hold sell. 

Alec: [00:20:07] That it is appropriately disclaimed, what is the company. 

Bryce: [00:20:11] Ren The company today is HitiQ, ASX ticker HIQ and it is very much playing in the space of concussions or not preventing, but being able to provide more data to athletes to help them better manage concussions. 

Alec: [00:20:33] Now here's a stat for you. According to HitiQ. The average football player sustained an average of 13 head impacts per game in 2022. 

Bryce: [00:20:45] Wow. Yeah.

Alec: [00:20:46] How do they know that? Well, that leads to the key product. A smart mouthguard. 

Bryce: [00:20:52] A smart mouthguard. So Ren, you've played footy Well, I've played footy Better. We've both worn mouth guards, traditionally mouth guards. Just protect your teeth. There's nothing. There's nothing. There's nothing more involved. But the hit I accuse mouth guard is just your traditional mouth guard, but with sensors in it to monitor any head impacts and the monitoring of any head impact is particularly relevant because according to HitiQ, 50% of concussions go undetected and unmanaged. And so, yeah, it is scary. And I think it's probably worth calling out. Like as a child I thought a concussion was you had to be knocked out. But it's fast becoming obvious that that is not the definition of a concussion. You can be concussed multiple times a game and still play on and not be knocked out and dragged off on a stretcher. And so that's the damage that is coming to light. It's repeated head knocks that aren't sort of like, oh my gosh, I'm concussed right now. I need to go off. Do you know what I mean? 

Alec: [00:22:02] Yeah. Were you ever concussed? 

Bryce: [00:22:04] Once? 

Alec: [00:22:05] Really?

Bryce: [00:22:06] Yeah. But I blacked out on the field for, like, 2 seconds, and then came good and kept playing. 

Alec: [00:22:12] Didn't. Didn't get stretched. 

Bryce: [00:22:13] No stretcher. But I did walk off because as a result of being cast, I also got a massive Corki. And cause when I got hit, his knee went into my thigh and I was hobbled off. So pretty weak from me. 

Alec: [00:22:27] And then what? Then head clash as well? 

Bryce: [00:22:29] Yeah, head clash. And he just got this unbelievable hip and shoulder out of nowhere. Yeah. If that's the only time I've been tackled in football.

Alec: [00:22:38] I was like. Fair enough. So HitiQ. They've been kicking around for a few years. In 2019, they were testing their mouthguard with a number of professional footy players. In the write out that we've posted on the website, we've actually embedded a video of a hit between Fremantle's Nat Fyfe and St Kilda's Josh Battle. Battle happened to be wearing a HitiQ mouthguard. So they've actually got data on how big the hit was. And Nat Fyfe got knocked out from this hit battle and absorbed a force of nearly 54 G's. Now, that number didn't really mean anything to me, but you were doing some research. [00:23:26][48.4]

Bryce: [00:23:27] That number blows me away because I don't know if you've seen Top Gun, the most recent one in the fighter jets or. [00:23:34][6.5]

Alec: [00:23:34] I haven't seen the most recent. 

Bryce: [00:23:35] Okay. But most people know that fighter pilots experience a lot of G-forces when they're ripping around and doing loops and in dog dogfights. On average, they experience nine GS. Wow, up to nine GS. And that's when they like, you know, they've got pressure clothes and they're holding on for dear life. So 54 GS as a concussion is like that. That is incredibly. That's incredible.

Alec: [00:24:01] Can you give me like what is a 54 G equivalent? Is it like getting I mean, run over by a car?

Bryce: [00:24:07] Like when you're taking off in a rocket up to space, you're experiencing only three and a half GS. 

Alec: [00:24:13] But you're saying like a fighter pilot is nine, but a rocket taking off is three. 

Bryce: [00:24:18] That's what I'm getting. 

Alec: [00:24:19] Does this scale inverse? Is it like golf? 

Bryce: [00:24:22] And the other one that's experienced a lot time and time again is Formula One drivers. So Formula One drivers experience about six G on average.

Alec: [00:24:31] I've just looked up how many G's of force getting hit by a car. According to the first website that I found, wearing a seatbelt and travelling 30 miles an hour and getting in a front end collision with a fixed object. 30 Gs of force. 

Bryce: [00:24:49] Yeah. Okay. Wow. 

Alec: [00:24:50] So almost. 

Bryce: [00:24:51] Double that. It's incredible.

Alec: [00:24:52] So we've probably done enough on Gs 

Bryce: [00:24:56] All right, Ren. So bringing it back on track after our comparisons of Gs, what a heroic thing you have done now is actually develop a consumer product for you. You and I average players out in the footy field, which launched in early 2023, but now every day athletes are able to purchase. One of their smart mouth cards from their website for $209 a pop. 

Alec: [00:25:20] Which feels kind of cheap. 

Bryce: [00:25:21] I agree.

Alec: [00:25:22] Because. I reckon if you went to a dentist and got a moulded mouthguard, not like Rebel Sport where you have to bite down on it for a while, but if you get like a proper moulded one at the dentist, I reckon you're paying a few hundred bucks easy, but maybe you have to buy the hit IQ thing and then you paid a few. 

Bryce: [00:25:40] Hundred actually says athletes then need to go to a dentist to get the mouth guard. It moulded to their teeth. 

Alec: [00:25:45] That is great due diligence. 

Bryce: [00:25:47] You're right. 

Alec: [00:25:48] It's still a couple of extra hundred bucks to be able to track head knocks. You can understand how this technology works and that's the big if at this point every parent would be doing it. 

Bryce: [00:25:59] Yeah yeah well in good news HitiQ have also partnered with BUPA to make their mouth guards available to patients of people at their dentists. I'm not with Fitbit added bonus. So all it really does at this stage Ren is it just gives you information on I guess on the severity of the hit. Yeah. It lets you know you've been hit and this is. 

Alec: [00:26:20] The amount, a full. 

Bryce: [00:26:20] Amount of force, how hard you've been hit. I did ask the question when we were doing the research on this. Does it then go to the next stage and kind of help you understand how to prevent the long term effect of concussions? CTE and. 

Alec: [00:26:34] Well, those two are different. 

Bryce: [00:26:36] Yeah. Yeah. And at this stage, it's not saying, hey, you need to stop playing footy now. You've had too many hits. It's just letting you know, hey, you have been hit, which is on the path to being able to, I guess, manage it. 

Alec: [00:26:47] Yeah. And that might be a bit of an impossible task because I feel like no one quite knows the answer to that. Like how many head knocks do you need before you start to develop symptoms like this, start to develop CTE because it emerged so much later. But even just how many concussions is too many concussions? If anyone is going to have the data to start to be able to really make those determinations, it's going to be companies like this. And that's probably the key call out. Companies like this, like what they're doing is cool. But when I was looking at this company, it did make me think, Is there anything stopping other companies from getting into this game? 

Bryce: [00:27:26] I mean. 

Alec: [00:27:28] I mean, you can say that with a lot of companies. Yeah, but like if we're talking about it as investors, that's probably a key thing I would think about. 

Bryce: [00:27:34] I mean, they'd probably be a fair bit of R&D that goes into this, but.

Alec: [00:27:38] Definitely. 

Bryce: [00:27:38] Yeah, some patents and IP. 

Alec: [00:27:40] Yeah. They also do have a first mover advantage and they've got partnerships with a lot of big sporting leagues which we'll get to. 

Bryce: [00:27:47] So let's, let's take a look at the financials. The market cap at the moment is about $7 million. Okay. So it's quite small. They're very much listed on the small micro to small cap of area of the ASX, but they brought in two and a half million dollars for the final six months of 2022. And this was a big step up from 400,000 it brought in in the first month. 

Bryce: [00:28:08] So kudos. They're obviously not profitable. Just getting going. 

Alec: [00:28:13] Made a $1.6 million loss in the last six months of 2022. 

Bryce: [00:28:18] But like all things that we do on Uncovered, we try and actually unpack the numbers that matter. 

Alec: [00:28:24] Well, with this one, it felt a little bit hard, like it's almost too early to start looking at revenue growth rates or, you know, the amount of mouthguards out there and stuff like that. At this stage, it felt like the thing to really watch is the trials with professional sports teams, because where the professional players go, the amateurs will follow. So right now hit like you are trialling their methods with a number of sporting leagues around the world from, you know, some of the Australian teams we've spoken about. I think the Western Australian Football League just signed a deal to give all the waffle players those mouth guards, Scottish Rugby Union, a couple of college NFL teams in the US. You know, a bunch of different leagues around the world are trialling this technology and then HitiQ also. CSX is the business unit but it's a concussion assessment platform and so it helps medical officials at games figure out if players have concussions. I guess it's like baselines, you know, the answers to those cognitive questions. And then it allows them to input data when they play, gets taken off for a head injury assessment and stuff like that. It was trialled at the rugby league World Cup. The NRL are using it, the AFL using it, New Zealand, Rugby and Cricket are using it, English cricket are using it, The English Premier League are using it. So like all trials in different stages. And so for me the key question with all of this is do these trials get converted to, say, long term agreements and do they get converted into revenue? And so that for me is the game at this point. That's the question. And if. All of a sudden all of these players are using the heat IQ, smart mouth guard, you know that all of a sudden every parent will be doing the same because they're worried about their kids. And, you know, adult athletes will as well, because. Yeah. So for me, that is so early on this company. 

Bryce: [00:30:33] Very early 7 million market cap. 

Alec: [00:30:35] So, yeah.

Bryce: [00:30:36] It really relates to what is topical at the moment. Money is being poured in by leagues into the research and prevention of concussion as more and more litigation comes. It's something that sports are definitely putting a focus on. So whether or not hit IQ can play a part in the prevention of that. Time will tell. But love it. You can understand why. Now I'm going to take it to Henry. 

Alec: [00:30:59] Well, it'll be fascinating, because for all we know, Henry will be, like, just shred us for even bringing it to him.

Bryce: [00:31:05] Yeah, well, do you have to do it? 

Alec: [00:31:07] Shows how much we know. Yeah, do it. 

Bryce: [00:31:10] Okay, I'll take two and see what he says.

Alec: [00:31:11] The article on our website includes a lot of videos about how the mouthguard works and some of the sports highlights we were talking about earlier that then relate to what the mouthguard tracked, I guess, or collected. So head to equitymates.com if you want to write that. We'll put the link to the article in the show notes. And just a final shout out. Thank you to Simon for suggesting this company. We want to hear your suggestions. We want to uncover companies that you want to learn more about. So hit us up and let us know. 

Bryce: [00:31:42] So we're going to take a quick break. And then on the other side, when you call Disney CEO Bob Iger, you don't literally call him, but you call him a hypocrite. And I'm really interested to understand why, because he's quite a bit of an idol for me. So on the other side of this Ren calls Disney CEO Bob Iger a hypocrite. All right. Well, welcome back. We've just covered, mentored and uncovered two series that will continue throughout 2023. Two that we're super, super keen on as well. And we're introducing not a new segment, but we're reviving one Ren and that is book club. 

Alec: [00:32:20] Yeah, is that what we're calling it?

Bryce: [00:32:22] I guess so.

Alec: [00:32:25] Now, for longtime listeners of Equity Mates, they may remember we used to do a book club every month. Bryce managed to kill that segment by choosing a 700 page book on John de Rockefeller that you then didn't read. 

Bryce: [00:32:43] Yes.

Alec: [00:32:46] And after that, it all felt a little bit too hot. But we love reading books, business books, investing books. We find that in terms of what has delivered the most value in us becoming better investors, the just the long term nature of books certainly helps more than the short term nature of financial media. And there's a lot of the best investors in the world. The best business leaders in the world have taken the time to share their knowledge in books, and it's worth writing about it. So two books that I've read recently that I wanted to talk about. And one is your go to in terms of recommendations, I think it's fair to say.

Bryce: [00:33:33] Yeah, I read it a while ago and have recommended it to a lot of people. A lot of people have read it and recommended it themselves. And I think what's great about this book, as well as the people that I've recommended it to, are not big readers of business and finance books, and I thoroughly enjoyed it. 

Alec: [00:33:48] Yeah. So the book is Ride of a Lifetime, the Disney book by Bob Iger. Not a new book by any stretch, but I just never got around to writing it. It's sat in my Kindle library for ages, finally got around to reading it. And as you said, Bryce. I think Bob Iger is a hypocrite. 

Bryce: [00:34:08] Yeah, well, talk us through it. 

Alec: [00:34:10] Well. Towards the end, he writes about leadership. He writes about leadership throughout. But towards the end, he talks about how leaders hang on for too long. And he implies I don't think he says it explicitly, but he implies that Michael Eisner, the Disney CEO before him, hung on too long and that a lot of Eisner is like big wins in the early days, like Disney animation in the 1990s. Over time, it kind of atrophied under Eisner and they centralised a lot of power in that strategic planning unit. And Disney as a company struggled. And then Bob Iger in 2022 turns around and boots the Disney CEO out of his job and takes it back. 

Bryce: [00:34:58] Yeah, ironic. 

Alec: [00:34:59] Just the ultimate act of hypocrisy. CEOs stay on for too long. [

Bryce: [00:35:04] Well, what are you doing? 

Bryce: [00:35:05] I'm coming Back. I mean, he did a very good job, and I still question whether or not they let Bob have a proper crack at it. 

Alec: [00:35:14] Like Bob Chapek. 

Bryce: [00:35:15] Yeah, he was under pressure pretty much from the get go, and. 

Alec: [00:35:19] He came in like a month before Covid Or even less. Yeah, like early 2020. 

Bryce: [00:35:24] It's Like give the guy a bit of time. But anyway, shareholders weren't happy and there was a big block with the board from memory. 

Alec: [00:35:31] And Ron DeSantis. 

Bryce: [00:35:33] And Ron DeSantis. Yeah. And, Bob is back. I reckon it's a rookie move from him. I don't, I don't think it's going to improve his legacy. 

Alec: [00:35:42] Bob Iger. Well It depends what he does. 

Bryce: [00:35:45] Yeah. I just, I don't know, I.

Alec: [00:35:47] I thought he was your hero.

Bryce: [00:35:52] Was. 

Alec: [00:35:53] Well, fair enough. 

Bryce: [00:35:53] He's lost. I mean, he's lost. Yeah, yeah, yeah. I mean, I, I like amazing business leaders, I think. And, and that really came through in the book. What he did at Disney was pretty impressive. What he bought at Disney was pretty impressive. 

Alec: [00:36:07] There we go. I did. That was my biggest takeaway from the book. There was everything. All of his big moments were about acquisitions, and there's nothing wrong with that. But I thought it was notable. It was Pixar, then it was Marvel, then it was Lucasfilm, then 21st Century Fox and then Bamtech, which is the technology underpinning Disney plus the streaming service. 

Bryce: [00:36:32] I mean, all very, very successful acquisitions. So he did do well on that front. And even getting insight into his conversations with the late Steve Jobs at Apple was fascinating and how, you know, getting insight into how Steve thought and worked as well was was really interesting. So yeah yeah definitely recommend this book.

Alec: [00:36:55] Yeah I mean the investing takeaway for me and this isn't new news but Disney's ability to monetise IP unlike the long. Tale of monetisation opportunities is just unmatched, like they create good IP or in Bob Iger's case, he buys good IP from Pixar, Marvel, Lucasfilm, 21st Century Fox. And then it's not just the movie that they make, but it's the toys and games. It's the theme park ride, it's the Disney Cruise and Disney on Ice show. It's the, you know, whatever else. They've just got so many ways to monetise IP. It's pretty impressive. And it does make me wonder why, you know, the other big like houses of IP, like Warner Brothers Discovery aren't doing more of that. Like I'm sure they're trying, but yeah, it's pretty fascinating. 

Bryce: [00:37:48] Yeah. Yeah. All right. Ren So your second book that you want to bring to Light is Lights Out Pride, Delusion and the Fall of General Electric.

Alec: [00:37:57] Yes. So this one was the opposite of most business books. A lot of business books will memorialise How Well a Company Did Ride of a Lifetime about Disney, Shoe Dog, about Nike. But this one is the opposite. It's about the fall of Jay and to contextualise just how so Jay was the biggest company in America like by market cap in 2000. It had just gone through 20 years of Jack Welch as CEO, and he had introduced all those business management practices that strategy teams love, you know, Six Sigma and all of that stuff. You would have a belt, Six Sigma belt. Is that what they call it? 

Bryce: [00:38:39] No, you can get that. But I don't have one.

Alec: [00:38:42] But you want one.

Bryce: [00:38:44] No, I don't. That is true process driven for sure. 

Alec: [00:38:46] We put you through the course.

Bryce: [00:38:47] That is like the ultimate process. 

Alec: [00:38:49] Ultimate. 

Bryce: [00:38:50] Are like. Yeah that's you've got to obsess over the process. 

Alec: [00:38:55] I feel like you do.

Bryce: [00:38:58] No. 

Alec: [00:38:59] But so in 2000 top of the world and then 20 years later it's a shell of its former self. So it's a really interesting company to look at why it fell. And the biggest takeaway for me and a real reminder for everyone that invests in individual stocks, the importance of accounting. Not sexy, but really important here, and two real examples that illustrate that throughout the book, Jay massaged their numbers, didn't do anything illegal at the time but massaged their numbers pre to thousand eight GE had a finance division and it was originally set up to help the big guy help customers buy their products. You know if you need to buy a power turbine or a you know, a massive x ray machine from GE medical you might need help financing that and so Jay created a finance arm to help that but over time they really used it to massage their profitability numbers. And what they would do is at the end of each quarter, if they weren't going to deliver their numbers, Jay Finance would buy something from a Jay business unit. So that Jay business unit could then recognise it as profit and then, you know, then lease it back and stuff like that. So as a lot of like moving things around within the company and Jay Financial got bigger and bigger after. So Welch did a little bit, but after Jeff Immelt took over, it happened more and more and that was a real way that Jay was delivering just consistent, super consistent growth. You know, investors loved that because it was predictable. But then in 2008, the global financial crisis happened and GE Financial really suffered I think around that time as well. There was obviously a big crackdown on accounting with like Enron and WorldCom and a bunch of those companies. And so they couldn't do that as much. But accounting still played a major role in Jay's life after that, because post 2008, they found another way to massage the numbers. Again, not do anything that was illegal, but certainly massaged. Jay would sell a big piece of industrial equipment like a medical device or a power turbine or a jet engine and then have service contracts. A lot of the time they actually didn't make a lot of money selling the big piece of equipment. They made a lot of money on the service contract, the way that they delivered their profits when they needed to massage the numbers was if you change the assumptions in the service contract, you can change the profitability of that contract. And so what I mean is, let's say over the next 20 years, Boeing agrees to spend $100 million with us to service the jet engines, but we assume that we're going to incur like $90 million worth of. Cost to deliver that contract. Then there's like $10 million of profit left on the contract. But if we just change the assumptions and we change and we assume that all, we're actually only going to need to spend $80 million over the next 20 years to deliver that contract, all of a sudden that's an extra $10 million worth of profit. And so that's like a very basic example. But ruff, ruff. That's what they were doing. 

Bryce: [00:42:26] Yeah, dodgy, dodgy. 

Alec: [00:42:27] But it was just a real reminder for me the importance of accounting and just it's not sexy, it's not glamorous. It's often a grind, but doing the work to understand the numbers and how the numbers flow into what what is happening at the company is so important.

Bryce: [00:42:44] Did anyone actually pick it up though? That's the question. Or was it in hindsight that it was sort of. 

Alec: [00:42:49] Well, I Think a lot of it well. 

Bryce: [00:42:52] did anyone come out with a big short. 

Alec: [00:42:54] Good question. They didn't really write about that. I mean it was a lot more about what was happening inside the company than out of it. 

Bryce: [00:43:02] But another good reminder, I think, is that, you know, we've spoken about this on the show before, that companies die. As you said, in 2000, it was the biggest company listed. Now it's somewhat down in the sixties or thereabouts, but indexes are forever. Meaning that if you'd bought GE, you'd obviously now lost a fair bit of your value. But if you'd held the index then you would have had the biggest companies that exist now rise to the top. Yeah. And that index just keeps on growing. 

Alec: [00:43:32] Yeah. In 1980, IBM was the biggest company in the S&P 500. In 2000, GE was the biggest company in the index. In 2020, apple, obviously. And those individual companies' fortunes may change. And while it may not feel like it now, at some point, Apple will get booted off the top of the index and their fortunes will change. But the index will keep grinding higher, driven by new companies, new technologies, new business models and new entrepreneurs. 

Bryce: [00:44:03] So Ren, just to quickly close out, what are you reading now? 

Alec: [00:44:06] The Caesars Palace coup, How a billionaire brawl over the famous casino exposed the power and greed of Wall Street. 

Bryce: [00:44:14] Is this Trump? 

Alec: [00:44:15] Pretty enticing. Now it's about Caesars Palace, You know, the big casino. 

Bryce: [00:44:18] Yeah. Yeah. And then they were involved in that.

Alec: [00:44:20] I don't think it was about Trump. I think Trump's casinos were in Atlantic City.

Bryce: [00:44:25] That's right. And they all went bankrupt. That's right. Yeah. They went bust. 

Alec: [00:44:28] Yeah. Not surprising. 

Bryce: [00:44:29] Not surprising. So I'm reading one that's just been released, Ren. The Millionaire's Factory. 

Alec: [00:44:34] The Macquarie Book. 

Bryce: [00:44:35] Yeah, The inside story of how Macquarie Bank became a global giant. So that's my non-fiction. But then fiction, I'm still working through it slowly. I actually just keep passing out when I go to sleep reading it, which is a good thing. I do that intentionally, but it's over my dead body. A classic Jeffrey Archer murder mystery. 

Alec: [00:44:53] Okay. You love a murder mystery. 

Bryce: [00:44:54] I do. I do, I don't mind a bit of fiction just before bed, but anyway, Ren. That brings us to the end of our episode. Please send the podcast to a friend if you can. One of the best ways for a podcast to grow is through word of mouth, and we would really appreciate it if you could just let anyone in your network know about Equity Mates. And thanks for the great feedback regarding our Chris Joy episode. If you haven't listened to it already, we released it on Monday last week and he has some pretty interesting comments on where he thinks the market is going over the next 12 months. And Bay, where the property market specifically is also going over the next 12 months. But we'll pick it up next week with a continuation of Mentor Ward, which we're really excited about, but otherwise Ren, always great to chat with and I'll pick it up next week. 

Alec: [00:45:40] Sounds good.