Ren talks Resmed + GQG Partners, UFC and WWE are merging, & trying to perfect DCA investing

Bryce: [00:00:14] Welcome back to another episode of Equity Mates, or should I say. Welcome to another episode of Equity Mates, a podcast that follows our journey of investing. Whether you're an absolute beginner or approaching Warren Buffett status, I aim is to break down your barriers from beginning to dividend. If you're just joining us for the first time, welcome. While we're licensed, we're not aware of your financial circumstances. Any information is for entertainment and general advice only. What do you reckon? 

Alec: [00:00:41] Well, us brother Bruce joins us tonight. 

Bryce: [00:00:49] AI Voice, Yes. So if you've just joined us, I've been using chat shaped to help with some of my intros, and we've taken it one step further. Producer Sasha has taken to the cloning tools and thrown in my voice and asked it to then do the Equity Mates intro that I've been doing for years, and that's what it spat out. I reckon It sounds like the guy who does case file.

Alec: [00:01:10] Have you listened to that? Yeah, I have, but not well enough that I could place the voice. It's. It's reassuring to know that I can't quite come for our job yet. 

Bryce: [00:01:19] Yes. Although there is another one that Alf was shy, another Team-mate and colleague in our office, and it was like, super realistic. So, Sascha, maybe we'll throw it into his.

Alec: [00:01:28] You know, the. Anthony Bourdain story. For people unfamiliar. Anthony Bourdain died halfway through narrating a travel documentary, what he was known for, and the family agreed with the production company that they could use AI trainer on his voice and then finish the narration. And apparently it was seamless.

Bryce: [00:01:48] It's pretty crazy. But I did have the same sort of take away, if that's where my voice sat. Now, at least I'm not going to get done soon for saying something that I didn't say. That's my biggest worry about deepfakes. Deepfakes? Yeah. Like it's going to cause a lot of litigation down the track.

Alec: [00:02:02] I reckon. Like there will be billions of dollars in Verify and all of that and someone smarter than us, more technically savvy than us will figure it out. It's like the cybersecurity industry. It's like every new threat creates a new business opportunity. And yeah, yeah, you just don't want to be the test case where people realise, Oh, this is something that. 

Bryce: [00:02:23] That's what I like. This is. Yeah, exactly. 

Alec: [00:02:25] When only big enough to be a target. 

Bryce: [00:02:29] Not true. But yes, if you have joined us, my name is Bryce and on the other side here I've got Ren and this podcast is all about following our journey of investing. I should say the disclaimer probably said that any information on this show is general advice only. We do not know your financial circumstances, so please take everything we say with a grain of salt. Now, Ren, today we've got a listener call coming in from Aland. Very excited to get to that. We're having a look at the merge between the UFC and WWE and the new company that is just listed off the back of that. But to kick off news portfolios, it's all happening. I did a bit of an update on my portfolio last week. You've got an update on yours this week, but has anything caught your attention outside of that? 

Alec: [00:03:13] Well, before. We get into the investing stuff, just something I learnt that I found interesting. It was from a study in the nineties, so this isn't new information, but it was new for me. Did you know that if all cancers were cured tomorrow, like we just cured cancer completely, the average Americans life expectancy would only increase by three years. 

Bryce: [00:03:36] I did not know that. That is surprising.

Alec: [00:03:39] Well, just like how devastating cancer is. So you think there would be a greater impact on life expectancy if we solved it? 

Bryce: [00:03:46] Yeah, I guess it goes to show all of the other things that you do to your body that don't result in cancer, but. 

Alec: [00:03:52] Well, yeah. Yeah. Like, I think it's more like as you get older, if cancer doesn't get you something else will. 

Bryce: [00:04:00] Fascinating. So what, what's the take out there? 

Alec: [00:04:03] I don't know. I just found it interesting, you should see, our producer Sascha is making a face at us. Just like, What are you guys talking about? So with that in mind. Let's get to investing stuff. So I think what I want to talk about today is there are two companies that have caught my eye, one that I have recently bought and one that I would never buy but is quite interesting. So I'll get to that. The clear caveat being here that these are decisions that I have made for my portfolio with my investing goals and my risk tolerance and my often faulty analysis. So do your own research and don't take what we're talking about as personal advice for your own portfolio. But with that said, I think the starting point here is I feel like really rock solid with my core portfolio advice and my core generally. Like we literally just wrote the book on it. Yeah, don't stress, just invest wherever you buy books. And so for me like that is automated. That's ticking away. There's not much to talk about there and it's good. Yeah. And so now I'm really taking the time and. Applying what I've been working on with my mentor, Andrew Page, and really just trying to find high quality long term compounders and then trying to do a bit of valuation work and get into that. So Brice, a company that I've bought recently. And by recently I mean in the last few weeks. 

Bryce: [00:05:30] ResMed sleep apnoea. 

Alec: [00:05:32] Sleep apnoea.

Bryce: [00:05:33] Did an. Episode on it for last year's summer series or the year before. I remember when we were at the WeWork office.

Alec: [00:05:40] Fascinating company. Yeah. Now, for people unfamiliar with sleep apnoea it's when you have obstructed airways, when you're sleeping, it's often it will go undiagnosed and people would just snore their way through life having poor sleep. I actually did a sleep test earlier this year. My dad has sleep apnoea and so I did a slight test. Apparently I stopped breathing an average of ten times an hour when I'm sleeping, which doesn't sound great, but apparently it's like mild sleep apnoea. So I've got it. Did a test with the sleep machine, haven't done anything more. Anyway, just a little insight. 

Bryce: [00:06:18] I thought you took that back.

Alec: [00:06:19] I did take it back. 

Bryce: [00:06:21] So they don't need it. 

Alec: [00:06:23] What they would say I need it. I'll get one eventually. Just got to get them.

Bryce: [00:06:26] Oh, so they did say you should take this. Yeah, right. But you were like, Nah.

Alec: [00:06:30] Oh, they just, like, started really giving me the hard sell. And it all got a little bit too much. Yeah, like, just like you have to have this one. And it was like I didn't get the choice of options. Didn't get just ask questions. And I was Like I'm just going to, like. Do my research and. Yeah, yeah. Kick the can down the road. But yeah, it's in my future anyway. It's estimated these are American starts, but it's estimated that 20% of the American adult population have sleep apnoea and that 90% of people that have sleep apnoea are undiagnosed. So that's sort of the state of it. ResMed is an Australian company, one of the the great Australian health tech companies, along with CSL and Cochlear that have really taken on the world in this space. And ResMed is now based over in the States and they make CPAP machines and ResMed for years has been a market darling. So for most people listening to this, they're probably familiar with the company. But the reason that I bought it is because it fell a third in the last month. Its share price fell a little over 3%. 

Bryce: [00:07:34] Yeah, it's been hammered. Yeah. So from the 3rd of August, we're recording this on the 14th of September. So 3rd of August it was at 3.85. It is now trading at 23.25, down 31%.

Alec: [00:07:51] Hmm. Now, in the last month, it reported its earnings. For the year, it reported an 11% increase in profit. Why didn't it fall 30%? 

Bryce: [00:08:04] It fell 30%. Wren Because of the craziness that is coming out of Europe and the drug that is taking on the world. Ozempic, which is a drug that is created by a company called Novo Nordisk. And investors obviously see this as a major threat to ResMed. The reason being that there's the perception that largely sleep apnoea is driven by obesity. Well, not a perception, but a lot of obese people have sleep apnoea and ozempic is a drug that contributes to significant weight loss. And so by curing or getting rid of the obesity, then there's not going to be a market or as big a market for ResMed. So that's the theory. 

Alec: [00:08:54] Yeah. So a lot of these stocks that have that benefit from the trend of more and more obese people are getting a hit because of Novo Nordisk. Novo Nordisk, a Danish company now more valuable than Denmark's GDP. 

Bryce: [00:09:14] The wonders of pharmaceuticals. 

Alec: [00:09:16] Yeah. So that's the thesis. That's why a lot of the market is selling ResMed, because it's. 

Bryce: [00:09:24] The market's.

Alec: [00:09:25] Going smaller market, it's more total addressable market. I think those fears are misplaced and I think the valuation is compelling. That's why I bought it. For me, it's like maybe I'm missing the magnitude of Ozempic, but it's the number of obese people and the trend. Novo Nordisk might slow the growth and I think it's going to reverse the trend. And even if it does like the the opportunity for ResMed and for Fisher Paykel health and I think Philips also makes CPAP machines like these players that are working on sleep apnoea is to get the 80 to 90% of people that have obstructive sleep apnoea today and are undiagnosed to a doctor and to a slight test. And. Getting them diagnosed rather than worrying, you know, like if that becomes 60% of people that are undiagnosed because the market gets smaller, that's still like there's a lot of green fields, the blue sky, green fields, whatever. And so for me, it's like the concern about a shrinking total addressable market when like the market is so untapped at the moment feels over exaggerated. 

Bryce: [00:10:36] Yeah, well, this this reminds me of that conversation we had with Ricky Sandler last year leading into Sohn Hearts and Minds, where he kind of looks for these opportunities, where the market over sells or overestimates what the negative impact on our businesses and as a result you know, probably oversell. 

Alec: [00:10:58] It reminds me of Simon in office he and I bought Metta Facebook in November last year when it was just like a stupidly cheap level. So we're pretty, pretty happy about that and continue to remind you guys. So working with Andrew Page, my mentor, he does like this back of the envelope, quick valuation methodology, sort of finger in the air to get a to get a sense of what would have to be true for a share price to be compelling at the moment. So I did that with ResMed. So let me just talk you through it. Now. I use ticker for this data ticker, tikr.com/equitymates, if you want to check it out. They have the US data for ResMed. So these are US numbers. So the share price, $149, the earnings per share 6.44 last year grew 11%. Those earnings over the last five years it's grown at an average of 13% a year. So with those numbers sort of modelled out two scenarios, let's say the 6.44 in earnings per share continues growing 13% over the next five years. That'll mean $11.87 in earnings. So it just continues doing what it's done recently and you give it a 20 price to earnings ratio. Right now it's bit over that. So you say the price to earnings ratio comes back in a little bit. That'd almost double its share price. $298, sounds pretty good. But what about if all of these people worried about his empire? Right. And ResMed growth really starts to slow because all of these people that have sleep apnoea get fit, get skinny, don't have obstructive airways anymore, and throw the sleep up machine in the bin. Let's say it just grows a bit over inflation. Let's say it grows at 5% for the next five years. That takes 6.44 to 8.22 in earnings per share. And let's say because the market hates, it's like this company isn't growing, it's getting smashed by all these hot fit people running around, not with obstructive airways anymore. And it gives it like a fifth day in price to earnings, which is like what you give a slow growing company mature, a company that gives it $164 share price. So around about what it is today, a little bit higher than what it is today. So for me, like if that range of outcomes is compelling and that's why I bought it.

Bryce: [00:13:22] Nice, is the Bear case compelling for me? 

Alec: [00:13:25] Everyone that is currently using a sleep up machine I think is very unlikely to stop using a sleep apnoea. So it's like I don't see a world where it goes backwards. Yeah, it's just like maybe the world is. They stop getting new patients and all they're doing is just selling masks and consumables to people that already have the machines. And I could be wrong, I have got plenty wrong, but for me it was like that's interesting enough that I put some money into it.

Bryce: [00:13:56] So how do you think about weightings with this stuff? 

Alec: [00:13:58] Small percentage of my overall portfolio. [00:14:00][1.8]

Bryce: [00:14:01] But like, do you, do you actually think about it or do you just go? I've got some of this cash. I'm going to put half of what I've got available. Or what do you actually like? Do you do the maths on it? [00:14:13][12.8]

Alec: [00:14:14] Like, I'm not worried if it's like five or 10% of my portfolio, but I don't have a heap of lines of stocks. Instead, what I try and do is put more into existing ideas that I think are still compelling. So, you know, I've put some into this. If I think it's still compelling, if the thesis is playing out and it doesn't get too expensive, I'll put more in sort of and build a position over time. I mean, my biggest individual stock holding might be like 10% of my portfolio. What I have done recently though is cleared out some of the tail of just stuff where it was like, Yeah. 

Bryce: [00:14:51] 500 bucks here. 

Alec: [00:14:53] And it's like, is this going to even if. 

Bryce: [00:14:55] What's the point?

Alec: [00:14:55] Exactly. I mean, the point is, if you believe in it and you want to build a position over time. 

Bryce: [00:15:02] Yeah, I think that's the key thing and kind of what I'm trying to get out here, it's if the bull case does kind of play out, then there's still a lot of opportunity for this thing to grow, and you want to make the most of it. So in my mind, when I'm doing these satellite positions, it's important to be like, I've got this money available now, but this shouldn't just be the one stop. I'm just going to put it all in, because if you had to put a grand or two or whatever it goes from 149 to 164. 

Alec: [00:15:29] Yeah. Yeah. But that's for me, that was the bad situation. 

Bryce: [00:15:33] I know. 

Alec: [00:15:36] So yeah, I mean look, it's a company that a lot of people know about and it just feels like the recent sell off. If you don't believe the Novo Nordisk hype and all of that stuff, potentially an opportunity. So anyway, that's one company that I have bought. I said there was a second company that I think is compelling, but I'm not going to buy. Yeah, and that is. GQG Partners. Does that name ring a bell? 

Bryce: [00:15:59] It does. We've had the CEO and founder on the name escapes me but again we had him last year. 

Alec: [00:16:06] Tim Carver So we spoke to him and we'll include the link to that interview in the show notes if you want to listen to it. 

Bryce: [00:16:12] The US based Global Fundie.

Alec: [00:16:14] Yeah, so US based fundie listed in Australia and has thi at the end of 2017 they had $10 billion under management. Fast forward what, five and a bit years, $92 billion under management. And we know when we're talking about funds management businesses, they make money in two ways. First of all, by growing their assets under management, they take a management fee. And then secondly, by outperforming the market and getting a performance fee and growing your assets under management from 10 billion to 92 billion in five years is pretty compelling. 

Bryce: [00:16:55] It is compelling. But then you look at their stock price over the last five years and it's down 27%. What the hell? 

Alec: [00:17:03] There's a reason that I haven't done any more DD than this Do wanna guess the reason why.

Bryce: [00:17:09] Magellan. Yeah

Alec: [00:17:09] Magellan. Oh, I don't want to speak for you, but I got so burnt on them. 

Bryce: [00:17:14] From investing in the company. 

Alec: [00:17:16] Yeah, So I invested in Magellan, the parent company. The funds keep doing well, but the parent company. Then, as much as these fund managers have really compelling stories as they're growing their assets under management base, it goes the other way very quickly as well. When they start losing assets under management. And Magellan lost a mandate from a big UK based fund or asset manager, and that lost tens of billions of dollars from their fund. And I think they've gone from what, over 100 billion under management to like 60 or something new. 

Bryce: [00:17:49] Something like that. 

Alec: [00:17:50] Yeah, rough, rough. Don't have the numbers in front of me. But that for me has made me very nervous about companies where your revenue driver can be taken away with factors outside of your control. Very quickly, if that makes sense. 

Bryce: [00:18:04] My biggest learning with that whole scenario was that I just didn't act anywhere near quick enough. As soon as we knew the thesis was broken, like we spoke about the thesis for that time and time again. And then as soon as it was broken, I was like that should be right. Yeah, you can't do it and it was just a big learning. Yeah, learning. But it's fascinating to see, you know, when Magellan were going through that phase of Hamish Douglass out there buying the, you know, the Australian Warren Buffett and conferences and funds were flowing in at an extraordinary right. And I would, you know, similar to what GQG were doing with funds under management increasing rapidly, their share price reflected that went from I think it hit highs of about 60 bucks. Really interesting to see that that hasn't played out with GQG. The market obviously thinks something's not quite right. Given that they've been able to almost ten times their farm and it's down 27%.

Alec: [00:19:03] But to be clear it. Only listed in October 2021. 

Bryce: [00:19:08] I think was when we spoke. 

Alec: [00:19:10] With him, we spoke to Tim pretty early. Yeah. Yeah. So anyway, two companies that have been on my mind recently, GQG Partners and ResMed, one stat that I didn't say about ResMed. So the sleep apnoea addressable market is estimated globally to be approximately 900 million people, which is crazy when you think the world is what, 8 billion? Yeah. So 900 million people are estimated to have sleep apnoea currently across all providers of CPAP machines. Only 16 million people are on sleep up devices. So when I was talking about the green fields earlier, blue sky, whatever you want to call it, that's it. And if Ozempic takes that 900 million and makes it 500 million halves, the number of people, because everyone's fit and hot and taking weight loss drugs. Investment is epic, sure, but that's still the growth opportunity. From 6 to 9 million people and sleep up to hundreds of millions is huge. So everyone goes and get sleep tests and then get a ResMed device. Thank you. 

Bryce: [00:20:15] Resmed just needs to engage in a public education program. 

Alec: [00:20:19] I reckon they would do a lot of that.

Bryce: [00:20:22] I've never seen it have you.

Alec: [00:20:25] No, I was about to say I'm not the target market, but I should be that ResMed should pay us to do. A PR campaign for them. But anyway, yeah, look, I think two interesting companies, two to put on your watch list and do your own research on. But I think I'd waffle enough price. 

Bryce: [00:20:41] Huh? Feel free to keep going.

Alec: [00:20:44] All right, Bryce. Well, there has been some big news in the business world that relates to sport, and that is a new company has listed on the share market that we want to talk about because it's been a real trend the last couple of years. The number of sports related businesses that are listing on the share market is growing, which is really exciting because sports as an asset class has just outperformed everything else.

Bryce: [00:21:10] I know, Ren.

Alec: [00:21:11] And you say that so since. 

Bryce: [00:21:14] It's just one of those like, you know, we spend our time trying to figure out how we can get access to parts of the market that are unacceptable for retail investors, for us. And you see all these news headlines of it's a billionaire's playground. 

Alec: [00:21:31] Yeah, but yeah, yeah. Like, obviously the way to get access to this asset class is by the Dallas Cowboys.

Bryce: [00:21:37] Exactly. 

Alec: [00:21:39] The good news is changing. Yeah, it's changing. 

Bryce: [00:21:42] It's changing more and more listing opportunities. 

Alec: [00:21:44] Yeah, yeah, yeah. And you've been slowly acquiring a position in the Brisbane Broncos. 

Bryce: [00:21:49] Slowly acquiring. I own half of that thing when. 

Alec: [00:21:51] News Corp owned the other half. So. So for people unfamiliar, the Brisbane Broncos, Australia's largest rugby league team probably or maybe one of the largest rugby league teams, they are listed ASX BBL, they've almost doubled their share price in the past five years. 

Bryce: [00:22:08] So that's because of my large positions that keep going and run well. 

Alec: [00:22:11] I always thought that they had a reputation as just like a nothing store. 

Bryce: [00:22:15] Well, I guess when we looked at it probably five years ago when we remember we did the industry data on Sports Day, the performance wasn't great, but kudos to them. 

Alec: [00:22:24] Yeah. Anyway, we're not here to talk about the Brisbane Broncos, although I am backing them to Win the premiership this year. 

Bryce: [00:22:31] Okay. Over the Panthers. 

Alec: [00:22:33] Yeah. Panthers Broncos final. You almost lock that in. Write that in stone. Um, I mean the three peat for the Panthers would be interesting. 

Bryce: [00:22:42] It'll happen. The loser has to come on and sing the theme song. For the losing team. Do they have. I don't know rugby have songs. I've never seen them I think.

Alec: [00:23:04] Let's keep going. No one cares about our bet. But over in the US, a big sports merger, a new listing has taken place so we wanted to touch on TKO is the ticker. It is the merger of the UFC and the WWE. 

Bryce: [00:23:19] Yes, World Wrestling Entertainment. 

Alec: [00:23:20] Fake fighting and real fighting have come together. TKO, you get the ticker as well. Yes. Yes. Now let's talk about how it came about and the company. 

Bryce: [00:23:32] So it listed in New York. As you said, it's controlled by a company called Endeavour Group, which is controlled by a guy called 

Alec: [00:23:38] Not the Australian. 

Bryce: [00:23:40] Drinks Company. Which I did sell during the week. I think I told you I was going to do that in my update last week. Get rid of it. It's in my portfolio. I got rid of it now. So Ari Emanuel. 

Alec: [00:23:50] Does the neighbouring Adelphia.

Bryce: [00:23:52] Ari Emanuel Yeah, no. 

Alec: [00:23:54] So have you watched Entourage?

Bryce: [00:23:55] Yes, Yes. Ari

Alec: [00:23:57] Ari Gold. Ari Gold. Based on Ari Emanuel. Oh, like a high flying Hollywood super agent. Temper all that stuff. And then Ari Emanuel's brother, Rahm Emanuel, was senior adviser to Barack Obama and then became the mayor of Chicago. So the Emanuel family have done pretty well. [00:24:16][19.5]

Bryce: [00:24:17] Pretty well. Wow. Now, that makes sense. So they formed TKO, which, as you said, is WWE and UFC together. They're going to be putting on 350 live events worldwide, reaching over a billion fans. And it's really positioned to capitalise on the growing demand for premium sports content and live events. And there's big money as everything goes to streaming and this is something we've spoken about offline as everything goes to streaming. The one thing that remains in terms of like TV is live sports. 

Alec: [00:24:53] Yeah, although that's going to streaming as well now. Like ESPN had that big fight with Charter Communications last week because they're doing direct to consumer. The NFL, which has had direct to consumer outside of America for ages now, have NFL plus all these streaming services just putting plus on the end of their names, Kayo was selling the UFC as even before the paywall that you could just buy at one off like even sport is now leaving the pay TV world. True. And that's why cable is just done. Like, what have they got? Sport was the only thing they had.

Bryce: [00:25:28] So the WWE signed a $1 billion rights agreement with NBC's Peacock streaming back in 2021, which will be up for renewal in 2026. And this company is expected to, I guess, pulling significant TV rights deals. They expect the merged company now to generate more than $1,000,000,000 in annual earnings. So it's a pretty interesting merger and I think an opportunistic one from Ari.

Alec: [00:25:56] It's only eight and a half billion dollar market cap at the moment. So if it can generate more than $1,000,000,000 in earnings, I assume that's over time, not this year. That some growth is significant. Yeah, yeah, yeah. The UFC was in Sydney recently and it's like a global phenomenon. Like, I don't think either of us are super into fighting.

Bryce: [00:26:17] Like, no, I don't engage with the UFC or WWE at all. 

Alec: [00:26:21] Yeah, but like more and more of our mates messaging us on group chats about it and it's growing. 

Bryce: [00:26:27] Hmm. Yeah. Here's an interesting one from Ari about why he's done the deal. He says, We think the world is going to have more free time than ever with A.I., so thinks that the weekends are going to be like in college. It starts on Thursday night and you need experiences and reckons that through his company is going to be providing experiences. The UFC has been a cash spinner for Endeavour, the controlling company of TKO. It has an estimated stand alone enterprise value of $12 billion and after Formula One UFC has experienced the highest growth in attendance of any sport over the past five years, according to Morgan Stanley. 

Alec: [00:27:09] I mean. The idea that like the Idea we're going to have more time because of AI and that's going to unlock sport as a pastime. It's like sport. Sport has been the one constant, regardless of how much we worked when we worked seven days a week and there was no such thing as a five day workweek or an eight hour workday, sport was still a constant in everyone's lives. I mean, I guess we'll have more capacity for sport. But anyway, I think the investment thesis for Tokyo, if you're going to invest, should be more about the growth of these sports. Yeah. And what they will be displacing rather than A.I. related. So that's a really interesting listing. But the interesting thing is it's one of many mergers and listings that we're seeing in the sports space that for people who are interested in investing in it, it's worth paying attention to. And the next one is one that I know is close to your heart and one that we have frequented, which is Callaway The golf brand merged with Topgolf. Mm. And they are now a listed company together. 

Bryce: [00:28:18] Callaway Golf. As what supply as

Alec: [00:28:21] As like a golfing giant. So there you go before you, before you start criticising it. Do you wanna just explain what top golf is for people.

Bryce: [00:28:32] TopGolf is once you start, you never stop. 

Alec: [00:28:34] Driving Range of the future. 

Bryce: [00:28:36] Oh yeah. So it's taking the driving range to the next level. Traditional driving ranges have nothing but an open grass field in front of you with distance markers. Topgolf is now designed for, I would say for your non golfers, where you play a lot of virtual games. There's still a driving range, but you hit the ball, it will track the ball and you can play different types of games with your mates. Then they include deejays, they include food and drinks. It's just a great social way to enjoy a night on the driving range. Now they do have. 

Alec: [00:29:11] Perfect Date night spot, Bryce is trying to convince his wife. 

Bryce: [00:29:16] Well, unfortunately, Ren, there is not one here in Sydney that is accessible, if at all. We were lucky enough to play a few over in the States when we went and it was a lot of fun. 

Alec: [00:29:25] Although if we had a deep pocketed private equity backer, we often talk about buying the mall park driving range and turning it into Topgolf would just go off. 

Bryce: [00:29:36] It would print cash. It is an expensive thing to do when we're in the States. I think it was 60 USD an hour that could be split between up to six people, but still. And then the food and drink on top. I remember walking out thinking it was pretty expensive, but if there was one here in the middle of Sydney, it would be a money spinner, It would be money. It would be a money spinner. Anyway, so that's what Topgolf is . You know, you've probably seen it on Tiktok or Instagram, people getting drunk and falling into the nets and those sorts of things. Have you seen the. 

Alec: [00:30:06] TikTok algorithms are quite different. I think you. Get a lot of golf content.

Bryce: [00:30:12] I have them. I don't think they've merged with Callaway. I think it's a partnership. 

Alec: [00:30:16] Yeah, they've merged. The merged company is called Topgolf. Callaway Well, talk golf, Callaway Brands Callaway has actually been on a bit of an acquisition streak. Is that what you call it, an acquisition? They've done multiple acquisitions over the last few years. We did a write up in our Thought starters email and we'll include the link in the show notes here if you want to read more about it. But I think it was something like five acquisitions over the last five years and Topgolf being the biggest of them. [00:30:43][27.3]

Bryce: [00:30:43] So Topgolf Callaway Brands is the listed vehicle,MODG, which has underneath it Topgolf and all things Callaway. 

Alec: [00:30:55] And a few other companies. Yeah, yeah, yeah. They're the main two. 

Bryce: [00:30:58] I wonder why they kept Topgolf in the name. 

Alec: [00:31:00] Because it's the hype. It's hot. Yeah, yeah, yeah. Speaking of sporting tournaments and broadcast rights, aren't golf doing a golf game like A Golf competition? 

Bryce: [00:31:14] I don't actually know if it's at Topgolf, but they're doing there is a driving range ESC virtual golf competition that is called Future Golf or something like that, led by Rory and Tiger Woods. I reckon they're going to regret this. Okay, because it seemed like it was a rash decision made at the time where live golf was picking up steam and there was a lot of frustration around, you know, the fact that the traditional golf wasn't attracting younger members. And so they came up with this concept of standing in a driving range and some of the big, big hitters coming in and competing against each other. But I just don't find it hard to see how it will be that engaging to watch. But we'll have to find out. I think it's launching next year.

Alec: [00:32:04] I'm just trying to Google it and I can't find anything. But if you're interested in writing more and maybe correcting some of our stuff, here they are. The write up in the.

Bryce: [00:32:16] It's called TGL, A golf league. Yeah, it looks so lame. Anyway, Anyway. 

Alec: [00:32:24] Fair enough. Well, Bryce will not be in not watching that so I think. Yeah. Look, it's an exciting time to be interested in a sport space, a cup, a new merge, or a kind of recent merger with top Golf Callaway, a new listing with Tokyo Group. And then there's obviously all the existing listed vehicles. Formula One as a competition is listed through Liberty Media, That incredibly complex structure. There are the teams, the Brisbane Broncos we mentioned Manchester United is listed over in the UK, although if it gets bought it might become de-listed. But right now it is listed and then there's even stadiums like Madison Square Garden as a stadium. So there's heaps of opportunities in the sports space. I haven't invested a lot in it, but I'm very interested in watching it.

Bryce: [00:33:16] Yeah. Will excite equity mates one day and buy a sports team. 

Alec: [00:33:20] My dream in life is to be Geoffrey Edelsten and not. Not because I want to be just a disgraced doctor. But because he owned the Sydney Swans in the, I think in the nineties he bought the Swans from the AFL and then eventually he was disgraced and he had to sell it back or something. But my dream in life would be to own the Sydney Swans. Franchise value a little bit like the Dallas Cowboys of Australia and I would. 

Bryce: [00:33:51] Anyway, wait, we'll. Take a quick break. And on the other side of this we're going to give Alan a call, one of the equity mates community members to to discuss fractionalisation, I mean dollar cost averaging. 

Bryce: [00:34:13] Hello, Alan.

Alec: [00:34:14] Alan, I'm also here. This is Ren. How's it going? 

Alan: [00:34:17] Good. How are you? The myth. The legend. That is the equity, my boys.

Bryce: [00:34:22] Not much of a myth. 

Alec: [00:34:23] Yeah, I know. Certainly not legends, but. Good to chat. 

Alan: [00:34:26] Definitely legends.

Bryce: [00:34:28] So. Got a couple of questions from you. The second is around the dollar cost average. So talk to us. What's the barrier? 

Alan: [00:34:34] I'm a big fan of dollar cost averaging, and all the statistics sort of suggest that, you know, the experts, most of them can't beat just the regular, all encompassing market. So why try to beat the market when you can just simply, you know, sit on a wide, all encompassing ETF and get the market return. But looking at different ETFs, you can buy like the A200 ETF for the top 200 in the ASX. It is at the moment around about $120 per share of the ETF. So for a regular mere mortal like myself, if you wanted to say dollar cost average, maybe say 200 bucks a week or a month or something sort of like that for a regular person, it kind of means each time, say 200 bucks, even 200 bucks a week at that price point of around $120, you're only able to buy one share and then you're getting a lot of change left over. And so really, whilst you might maybe, you know, one week you buy it at $120, maybe the next week you buy it at 119 point, the next week you buy it at 121 point. I mean, there's a slight up and down there, but really you just getting one share at around the same price with a bit of change left over. And so I feel like that's not really getting the full experience of dollar cost averaging where you really want to be spending the whole $200. And so at one week when it's more expensive, you're buying less of it. And then on the weeks where it's maybe a bit cheaper, you're buying more of it and your $200 is getting is getting employed every week rather than buying one whole share with a slight difference in the price going up and down each week, which brings in either you have to spend a large amount of money to be buying more shares when it's cheaper and less shares when it's more expensive, or to get the full effect of dollar cost averaging. I feel like you need a broker that's offering fractional shares so that every week you're full. $200 is getting employed and you're getting that full benefit of buying more when it's cheaper and buying less when it's more expensive. And from what I can find shares, these is the only sort of Aussie broker that now does fractional buying. And I feel like fractional buying, especially, you know, on to an ETF that's at a higher price point is is really key to get the full effect of dollar cost averaging. So again you're buying less when it's more expensive and you're buying more when it's cheaper. 

Bryce: [00:37:24] Yeah, it's a great question and one that, you know, I have this problem as well with the set up that I've got through super hero. It's not fractional. And so every time I'm putting money in and you know I'm definitely not fully investing the amount because of this, you know and you are left with change. And then I make a conscious decision every month to then go and invest that change. So you're never going to get it perfect unless you do too fractional. 

Alec: [00:37:52] The other thing is as you go up the dollar amount, like the problem still exists. 

Alan: [00:37:58] Yeah. And unless you're in like big, big amounts, but. 

Alec: [00:38:01] You're still going to have you're still going to have stuff left.

Bryce: [00:38:03] Over. Perfect. Yeah.

Alec: [00:38:05] Like potentially it means you're buying more When the prices are buying less, when the price is down, then you're faced with this dilemma. Do you get the imperfect dollar cost averaging? No brokerage like a superhero? Or do you pay to get it perfect with the sharesies? 

Alan: [00:38:21] Yeah, exactly. Yeah. Superhero is great because there's no commission on on ETFs, which is, which is great. But then yet again, each time you're only buying whole shares and having that change left over. And then you've got to try and do try and time the market when you buy your extra one every couple of weeks with the change you get, and then you're kind of going against the sort of perfect dollar cost averaging thing because you're having a time to buy with the change. Or then, yeah, you pay a little bit, but with shares as you get the fractional and you get your full allotment invested every week. So I've been with superhero for, for a couple of years now and have been just dollar cost averaging that with the no brokerage. But I've actually set up shares these in the last few weeks just to experiment and give their fractional buying their auto investing a go and. And see the difference, you know, and see if over time it sort of works out better, even though there is a small broker just I think it's I'm just doing five bucks a month that gives you up to $1,000 of auto investing, which is which is plenty for me anyway a month. So that small price to pay. I feel more confident, better knowing that I'm getting true dollar cost averaging and getting my, you know, my $4,000 a month broken up into 250 lots a week fully invested. 

Bryce: [00:39:41] Here's a strategy that has tax implications. But it could also work. Depending on what you're investing in. That's maybe outside of the ASX 200, although I'm sure there are listed products in America that give you access to 200. Like you could go through. You could go through. The like stake, for example. Not fractional though in the US. 

Bryce: [00:40:08] I don't know. I'm not sure.

Alec: [00:40:09] Is that where you're going with it? 

Bryce: [00:40:10] Yeah. So I'm saying like if you go through steak for example, buy us listed ETFs, which gives you zero commission and can be fractional and you're going to get the same like if you're doing into a S&P 500, if you're doing it into a European markets, if you're doing it into Asia, they're all going to be listed on US markets. So you could dollar cost average that way into a.

Alec: [00:40:34] You wouldn't do state because it's not auto invest so. 

Bryce: [00:40:38] They don't have auto invest. Yes. You're also going. 

Alan: [00:40:41] To have whatever but stake has fractional. 

Bryce: [00:40:44] Definitely. Fractional for the Us not for Australia. 

Alec: [00:40:47] I think only sharesies does fractional in Australia. I haven't. Looked at like this. The etoro's of the world and stuff like that. But price your strategy then you just got the currency stuff. 

Bryce: [00:40:59] Yeah. As I said it comes with I'm, I'm not against the currency stuff at the moment like this Aussie dollar is pretty damn weak. 

Alan: [00:41:05] So yeah. And if it's over long term currency. 

Bryce: [00:41:09] Buying into it obviously getting less. But yeah, I think, I think though that if someone's listening here and then is kind of getting pulled off the idea of DCA because it's not going to be the perfect solution. I think the key message really from us is that at a minimum, if you're getting sort of the 90% of it right, which is automating from your bank account into a broker and then automating a consistent investment over every week or fortnight or month, like that's the behaviour you want to build, that's at least that means you're, you're buying at a consistent rate. Well, whilst it's probably not theoretically the true dollar cost average, when Ren and I were talking about DCA five years ago, like it, it was further away from what it is now because of we didn't even have automation back then and you had to pay brokerage and, and so yeah, and it.

Alan: [00:42:03] Just sort of killed profits with. 

Bryce: [00:42:06] Exactly 20 bucks through CBA. 

Bryce: [00:42:08] Yeah. So upon a Yeah, yeah. So I'll tell you. 

Alec: [00:42:12] You how I do my the ETF. What I really feel is the Vanguard Footsie Asia ex-Japan because I try and put 100 bucks into that every pay cycle and its share price is $69, so about 70 bucks. And so every time it's like 30 bucks, it's just sitting there that gets annoying. So then every now and then I'll go into it and I'll rebalance. So if the Asia one is far less than some of my other geographic ones, I'll top up the Asian one knowing that like, you know, you've kind of screwed up the perfect timing of DCA. But for me it's like, you know, we're looking decades ahead now that the main thing is just having sort of equal exposure to different parts of the world. Yeah, but what I'll also do is the money that gets left over in my superhero account. I'll then treat that as the money that I can put into thematic ETFs. I've put some into Hack recently and stuff like that, but it's like that's not part of my regular DCA plan. I just use that as extra money to either top up or to invest in other things.

Alan: [00:43:18] You're always got like a mini mini corn satellite going on. It's like that. I get to invest this into something that I want to invest in or that I think is interesting. That's outside my just consistent automated DCA plan. But you know, like a perfect world, all of these brokers in a couple of years introduce fractional Aussie and I wouldn't be surprised if they do.

Alan: [00:43:42] Yeah, it's pretty competitive but yeah like you say, I think for most people it's just about getting into the habit. Or if you're bad at getting into a habit, putting it on auto, invest in auto trades, you know your money across from your bank account into your brokerage account every month so that it's all automated enough to think about it. Even after you have run the risk of like, you know, skipping out and being like, oh, actually you know what? I'll use that money this week for a holiday instead of going into my DCA. So like. Getting it automated. It just takes away in the background. Any of those? Yeah. Any of those minor technicalities on a true perfect day, a kind of irrelevant over a long term? 

Alec: [00:44:22] The problem you're facing, you're doing a lot, right? 

Bryce: [00:44:29] And I bet I just like we've seen change over the last five years, as you said, Alan, like, these brokers are always improving and creating new products. And so, you know, auto invest wasn't even a thing two years ago, two and a half years ago, or as prolific as it is now, one does it they all do it because of the competition. I wouldn't be surprised if at some point we start seeing auto-investment and fractionalisation of OSI at some point, like, you know, as technology improves and then we can all really sit back and know we've nailed true DCA. 

Alan: [00:45:04] Yeah, definitely. Don't a lot of competition with the brokers? I mean, I mean, if they fall in line of going from, you know, Commonwealth to Westpac to self rolls to Severo and now to shares these and they're like, when's this guy finally. 

Bryce: [00:45:16] I know that's actually kind of my journey. 

Bryce: [00:45:18] I was like CommSec I had and then I went self wealth because they were the first to really go low brokerage and then yeah, the Stake, Superhero. Get them all, don't use them all but collectable. Well keep us posted. I feel like I was speaking to someone last week about shares in their fractional offer, so obviously something that a number of active people in the Equity Mates community are looking for. So yeah, keep us posted. We'd love to. We'd love to hear how it goes and share it with the community. And I think everyone is out of benefit. 

Alan: [00:45:51] Keep up the good work. We love the podcast. 

Alec: [00:45:53] Appreciate it. 

Bryce: [00:45:54] Thank you for your support.

Alan: [00:45:55] Take care gents. Thank you. Bye bye. 

Bryce: [00:45:57] It was great chatting with Alan and we love chatting with our community here at Equity Mates. If you'd like to submit a question, you can hit us up at contact@equitymates.com. All Ren, well, before we go, we have an awesome interview coming up this Thursday with Saurabh Mukherjea from Marcellus. 

Bryce: [00:46:13] Yeah.

Bryce: [00:46:13] About all things India. 

Alec: [00:46:15] Yeah. Got us so excited about investing in India. He's over there and just telling us what's going on in the ground and the pace of development and the companies that are emerging and some of the stuff that they're doing. Yeah, it changed my perception on India. And I think I went home and it was like my next trip is going to be to India. If that conviction holds. But yeah, really exciting and inspiring to me. 

Bryce: [00:46:43] Yeah, on Friday as well, we do a deep dive on all things bonds with Dr. Christian Baylis. So if you're interested in that asset class that has been forgotten for the last decade but is now roaring back to life make sure you tune in. Ren, as always, we'll leave it there and pick it up on Thursday.

Alec: [00:46:57] Sounds good.