Speccy Magee Returns & A Deep Dive on Two Small Caps: Atomos and Family Zone

HOSTS Alec Renehan & Bryce Leske|6 September, 2021

Meet your hosts

  • Alec Renehan

    Alec developed an interest in investing after realising he was spending all that he was earning. Investing became his form of 'forced saving'. While his first investment, Slater and Gordon (SGH), was a resounding failure, he learnt a lot from that experience. He hopes to share those lessons amongst others through the podcast and help people realise that if he can make money investing, anyone can.
  • Bryce Leske

    Bryce has had an interest in the stock market since his parents encouraged him to save 50c a fortnight from the age of 5. Once he had saved $500 he bought his first stock - BKI - a Listed Investment Company (LIC), and since then hasn't stopped. He hopes that Equity Mates can help make investing understandable and accessible. He loves the Essendon Football Club, and lives in Sydney.

Lots happening this episode! First Alec and Bryce chat about what they’ve been reading and looking at in the last few months. Then they’re given a visit by Speccy Magee, who drops in with his latest pitch, and finally, they welcome our newest hosts – Felicity and Candice to the show, who pitch two small caps – Atomos and Family Zone. A taste of what to expect in our newest podcast, Talk Money To Me.

If you want to let Alec or Bryce know what you think of an episode, write to them here

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Bryce: [00:00:16] 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, our aim is to help break down your barriers from beginning to dividend. My name is Bryce and as always, I'm joined by my Equity Mates Ren. How's it going? [00:00:30][14.3]

Alec: [00:00:31] I'm very good. Bryce good to be back for another episode. It feels like it's been a while since we've just carved out some time to just chat. [00:00:40][9.6]

Bryce: [00:00:41] It will reach out to us the way it's been. [00:00:44][2.4]

Alec: [00:00:44] It's been a very busy few months here at Equity Mates and crazy, crazy. It's there's a lot of exciting stuff happening. You've set the target of interviewing every CEO in Australia. [00:00:54][10.0]

Bryce: [00:00:56] Well, we wouldn't go that far, but yes, all 200 of the top 200. [00:00:59][3.1]

Alec: [00:01:00] Yeah. And, you know, obviously a lot happening with the book and all of that. But in this episode, I think it's worth us just taking a breath, pausing for a moment and catching up on things we've been reading, stocks we've been watching. But then the content train rolls on and we're going to be joined by Specky Miggy. And then we're launching a new show and we're going to be joined by the hosts of Talk Money to Me. [00:01:27][27.1]

Bryce: [00:01:27] Absolutely. As always, a lot going on at Equity Mates. Tik-tok Money to Me launched last Friday. So looking forward to introducing you all to Candace and Felicity to financial advisor experts who are hosting that show. [00:01:41][14.2]

Alec: [00:01:42] Yeah, it's a great show. The first three episodes are now live. And in this episode, Candace and Felicity have both brought a stock that's on their watch list or on their order pad that they're going to be talking through. So stick around to hear two stocks that our latest hosts, both financial advisors, are looking at at the moment. [00:02:05][22.8]

Bryce: [00:02:05] And who doesn't love this topic? [00:02:06][0.8]

Bryce: [00:02:07] I love you. [00:02:09][1.6]

Alec: [00:02:09] Love what tip that you were telling me that the only reason you want pubs to reopen is so you can get a hot tip from a mate at the pub. [00:02:18][8.4]

Bryce: [00:02:19] You know, it's so I can throw out a hot tip. [00:02:20][1.9]

Bryce: [00:02:24] All right, Ren. Well, let's kick off a bit of a catch up between you and I. What we've been watching, rating, buying. It's just going to be short and sharp, but it's just a nice way. I don't think we've caught up on this level before because everything that's going on. So what are you going to do? [00:02:38][14.2]

Bryce: [00:02:39] Yeah, well, we've [00:02:40][1.6]

Alec: [00:02:41] lockdown's and we hope everyone is going okay with Lockdown's. I mean, the the faint, faint silver lining is when I can slack off and pretend that I'm working and tell you that [00:02:53][12.5]

Bryce: [00:02:55] it [00:02:55][0.0]

Alec: [00:02:56] gives us a lot more time to, I guess, consume content and look at stocks and invest. So there's been a lot happening. I think. Let's start let's start with what we've been reading. So I've read two books recently that I want to add to, I guess, your reading list. And yeah, we should also give a shout out here that if people may not have noticed, we've updated our website and we're now pulling out all book recommendations and putting them on the website so people can jump over there if they want to say books that have been recommended by experts, but to books. First one, The Hard Thing About Hard Things by Ben Horowitz. Yeah. Have you read it? [00:03:38][42.2]

Bryce: [00:03:38] No, but you have been harping on about it for a long time. And I feel like if I don't read it soon, I mean, Ren a lot of trouble, so I'm definitely going to get that on the watch list. [00:03:47][8.2]

Alec: [00:03:47] Really interesting book. So Ben Horowitz, now one half of the superstar venture capital firm, Andreessen Horowitz. But the book, it really centres around his time privacy when he was leading a couple of different companies. And really it was in sort of the the early days of, well, not the early days of Silicon Valley, but the late 90s and early 2000s. And it's just a fascinating read for a number of reasons. But the thing that really stands out to me is they were trying to commercialise cloud computing and basically make cloud computing a thing. And obviously we look at it today and we're like, well, cloud computing is everywhere. Amazon and Google and Microsoft are all, you know, making so much money from from cloud computing. But these guys were too well. And as I read it and, you know, read how the business struggled and didn't really succeed, it was just such a stark reminder to me that a lot of these themes that we're talking about today, you know, there was the medical marijuana boom, there was the lithium boom, although that one is still still going. There's all there was the gambling boom where it looked like America was America was slowly creeping towards legalisation like all of these stock. Market booms happen because it's like there's a trend that makes sense, but you can be too early and companies can be too early and reading this just was like really stock how the best operators with great ideas can just be at the wrong time. [00:05:33][106.1]

Bryce: [00:05:34] Yeah, unfortunately, sometimes timing is everything. And unlike trying to time the market when it comes to getting businesses off the ground and or getting big ideas that are innovative and transformational off the ground, you're right, you could have it. But if you can execute it at the right time, then someone else might get it a bit further down the track. [00:05:55][21.0]

Alec: [00:05:55] Yeah, yeah. The other book that I've been reading, I think this was recommended to us by I can't remember the expert. This is where the new website would really come in handy. I just don't have it in front of me. So I'm not going to try and guess who it was. But it's it's coastland that you've probably heard of, the Koch brothers, Charles and David Koch, and they, I guess, are famous for funding right wing politicians and for basically astroturfing US politics and creating like fake grassroots organisations to, like, push their political agendas. And that's all I really knew about them. And and I didn't really want to know anything more about them. But when it was recommended to us, I was like, oh, I'll give this a go. It sounds interesting and it's fascinating. It's fascinating to read how it really it was more Charles than David, but how they built this business and how they made all their money. And this business is just in everything like it is. Yeah. They basically just found industries that people didn't think about or there weren't any big players or the big players weren't known but were just critical to global supply chains. And they just dominated these markets. It was, and I imagine still is, the largest privately held company in America. And it's a fascinating business story. You have to put the ethics of how they spent their money to one side. [00:07:26][90.6]

Bryce: [00:07:27] Did they did they mention it or why they didn't ever go public? [00:07:29][2.5]

Alec: [00:07:30] They didn't want, like, public control, like Charles. It was actually like a it's really interesting. Like, so there were three brothers and one of the brothers sued the other two brothers and then did this whole, like, smear campaign in public. And it dragged on for years and years and years because, yeah, basically one of the brothers wanted them to go public or wanted more money out of them. And all these investment bankers tried to get them to go public. But Charles was just like, no, not having it. [00:07:58][28.2]

Bryce: [00:07:59] Mm hmm. But really, the [00:08:00][1.7]

Alec: [00:08:01] big takeaway for me for that book amongst a number of really interesting stories was that you often hear about like the financialization of the US economy especially, and how, like, everything really ended up in financial markets and like so much wealth, so much knowledge, so much talent and so much the economy eventually got centred around financial markets. And this story that starts in like the 50s and the 60s and goes all the way to the present day, it really follows that arc. And it really shows just like how much money got centred away from, like the real economy that was making goods and services and instead got centred around financial markets where, you know, you make money, I guess, like trading rather than creating just a fascinating business story. So another one that I'd highly recommend, [00:08:57][56.0]

Bryce: [00:08:58] that was Coke land. Yeah. Cayo C h. Yeah. Kirkland All right, Ren. Well, I'll add both of those to my list because you have been talking about them for a while, so I'll make sure I check them out. They should be on our website if people are interested, but if not, we can add them in there because now we've got a new website. We can do it [00:09:15][17.5]

Bryce: [00:09:16] and we've got to use it now. Everybody is nice. [00:09:21][5.3]

Alec: [00:09:22] What about anything you've been reading? [00:09:23][1.3]

Bryce: [00:09:24] I've been reading a lot of fiction. I find that it's a good way for me to unwind after at the end of the day. So whilst I have a few books on order also based on your recommendations on Amazon that are delayed because of what's going on in supply chains at the moment, but we've been fortunate enough to have been sent to buy now pay later book by our mate over at the AFA, Jonathan Shapiro. So obviously being a shareholder of a Afterpay, I've enjoyed reading that. So you were a [00:09:53][29.6]

Alec: [00:09:53] shareholder before it was IAPT [00:09:55][1.6]

Bryce: [00:09:57] true? Yeah. [00:09:57][0.8]

Alec: [00:10:00] Do you remember what it was before that? [00:10:01][1.6]

Bryce: [00:10:03] No, no, I should and I Afterpay touch. Maybe I was just IPY. [00:10:07][4.4]

Alec: [00:10:08] Yeah that sounds right. Yeah. [00:10:10][1.5]

Bryce: [00:10:10] IPY, yeah. And then I went to APJ Afterpay touch. But anyway it's an interesting read. I think I'm. The one thing I'm really enjoying about it is not is getting a bit of a history of Australian markets and business as well, you know, it's not just about Afterpay you get a real sense of what it's been like over the last sort of 10 years or so. And I'm really enjoying that. But outside of reading, I've actually been looking at an ETF and I feel like you'd have some insight on this. I'd be great to get your opinion, but one of our mates has been talking about an ETF called Krein Shares Global Carbon ETF, Caiabi End. And as we say on the show, nothing wrong with taking a stock tip or having a look. But you must do research. You must do research yourself. And so I've spent the last couple of weeks actually digging into this a bit and I'm trying to understand the bigger picture. And so I guess at a high level, this ETF tracks the carbon price through carbon credit future contracts, which then leads to a conversation around, well, how do we think the carbon price is going to act when perform over the next 10, 20 years? Because it's obviously playing a pretty important part in the decarbonisation of of the world at the moment. And we know that there are a lot of companies now saying that they're going to be going to net zero emissions and governments committing to net zero as well by sort of 2030 onwards. And for me, this seems like a good way of investing in that change. Yeah, it [00:11:50][99.4]

Alec: [00:11:50] also makes a lot of sense for you because investing in the price of carbon is a good way to hedge the risk in your fossil fuel heavy portfolio. [00:11:57][7.6]

Bryce: [00:12:01] That is just not true. [00:12:02][0.8]

Bryce: [00:12:04] The second part of this conversation is that after having a few conversations around RSJ of Light, I did a portfolio review to see how carbon intensive my portfolio was. [00:12:13][9.0]

Bryce: [00:12:14] And I'm happy [00:12:15][0.4]

Bryce: [00:12:15] to report that I'm not all cigarettes, gambling or oil and mining. OK, but that aside, that aside. So this led to me trying to understanding the role that carbon credits and the carbon price has to play when it comes to companies actually reaching these net emissions. And as I understand it, one way they can do it is by buying carbon credits and that's how they get to the net. So essentially, they say we'll buy these credits and then still be able to offload X amount of carbon or whatever it is. But the this this then becomes a supply and demand play with the supply of these credits less than the demand from these companies. As such, the price of these credits is going to continue to rise. That's one way to kind of look at it. Yeah, and that's the thesis, I guess, which is why I think this is an ETF that I'm pretty keen on. [00:13:12][57.0]

Alec: [00:13:13] Yeah. I mean, you have to look at the regulatory environments in each country because there are different ways that credits can be created. So in some countries, it may be that the government issues credits and there's like a fixed number of credits that can be traded. And if supply is fixed and demand increases, then you're sure that that logic makes sense the other way that it could work and the way that it works in Australia with certificates is you create certificates and then other companies have to buy certificates. And so as more renewables come online, more certs are created, the rate at which companies are making these net zero emissions pledges. I would agree that demand is probably outstripping supply at the moment. But yeah, like, you know, when when I worked at Coles, we had to buy shirts. And then if you want to go, Netzer, you have to buy even more or you have to put a whole bunch of solar panels on roofs and enter into a whole bunch of power purchase agreements and build like large scale solar or wind. So, yeah, it's a really interesting faces, not one that I've had a look at too closely, but it's a curious one. But I think you coal out there around companies saying they're net zero and how they achieve that is worth highlighting. It's great. Like, don't get me wrong, it's great because if a company is going to buy carbon credits or certificates, then they're creating a market for those credits and they're incentivising more renewable energy to come online to supply those credits. That's great. That's that's the market operating. But Telstra is saying that net zero or, you know, like all these companies saying that net zero, that doesn't mean they're not emitting [00:15:04][110.9]

Bryce: [00:15:05] the net is the key [00:15:06][0.8]

Alec: [00:15:06] word that does it. But it doesn't sound like everyone understands that. But it doesn't even mean that they're reducing emissions. Gross emissions, it just means that offsetting that they should [00:15:18][11.3]

Bryce: [00:15:18] be offset offset zero. [00:15:19][1.2]

Bryce: [00:15:20] Well, that's why [00:15:21][0.4]

Alec: [00:15:21] that's why when you see a company say they're going net zero, also see if they're actually reducing their emissions as well. And Telstra, to their credit, have come out and said we are net zero and we're continuing to like to put all these projects in place to reduce our total emissions as well. So, yeah, that's that is an interesting one. I think you can do the maths and like if you buy, like, the cheapest, worst credits globally, it's really not that expensive for most companies to go. Nazare. [00:15:55][33.4]

Bryce: [00:15:56] Interesting. There you go. [00:15:57][0.9]

Alec: [00:15:58] If you buy like if you buy credits like certs in Australia and stuff like that, it is more expensive but. Mhm. Yeah. And like we, we did that episode on um we've Corde where we listen to earnings calls every say we listen to talk about this. [00:16:15][16.8]

Bryce: [00:16:15] Yeah it's. Yeah it's everywhere. [00:16:16][1.6]

Alec: [00:16:17] Now the Australian investing community is, is holding these companies accountable for it. [00:16:23][5.7]

Bryce: [00:16:23] Mm hmm. [00:16:23][0.5]

Bryce: [00:16:24] Well this is one way in which I'm sort of dipping my toe into that, that marketplace, I guess, and I'll continue to do a bit of research on it. But so far so good. I think I'm going to drip into it a little. So for those interested at home, KPN is the ticker. It's listed on the New York Stock Exchange. Check it out. [00:16:42][18.1]

Alec: [00:16:43] Really interesting theme there, Bryce. Definitely one that is getting a lot more, I guess, er time a lot more news focus. And I think it's an it's going to be an interesting ETF to watch so it could one to bring to the table. Let's take a quick break to hear from our sponsors and then we are joined by an Equity Mates favourite, someone who's been desperate to come back on the show. He says he's got big things for us. After this, we're going to be joined by Specky Margay. So Bryce, it's about that time, the time we've all been waiting for, let's call the speccy hotline. [00:17:24][41.1]

Bryce: [00:17:25] Let's do due to start position in one of your blue horseshoe love four Star Airlines when you reach the speccy hotline. [00:17:36][11.3]

Bryce: [00:17:38] Great to hear from you too, Specky. We are looking forward to this one. [00:17:40][2.7]

Alec: [00:17:41] The number still works. It's been a while. [00:17:42][1.2]

Speccy Magee: [00:17:42] Yeah, I know. And given some of my recent performances, I'm struggling to pay the bill, but I'm still keeping it alive, so I thank you. [00:17:50][8.0]

Bryce: [00:17:50] Oh well you've been hopping on for a while about coming back on the show with some Big Specky tips. And I know that the Equity Mates audience have also been peppering us knowing when spek is coming back on. So we're going to throw it over to you to give us the update on what's happening in the world. Espec is of course, this is not a buy, hold or sell recommendation because we all know you do absolutely no due diligence. But we're going to throw it to you to let it let us know what's the latest in the world of Specky. [00:18:19][28.7]

Speccy Magee: [00:18:20] Thanks, Bryce. Speaking of the lack of Day-Day, I had a reflection recently that what I want to do instead of doing the dating myself, I'm going to outsource it. So I've paid someone on Fiverr to give me a recommendation, which I'm going to pass on to you guys. Okay, so I'm going to I'm going to play that. [00:18:42][21.9]

Bryce: [00:18:45] All right. So nice. So you've done nothing [00:18:49][3.7]

Speccy Magee: [00:18:49] here to keep it interesting, because I got this done two months ago and I've been I've been asking you guys on this show for two months, but you've been ignoring me. [00:18:59][10.0]

Bryce: [00:19:00] So I actually know what [00:19:02][2.5]

Speccy Magee: [00:19:02] has happened to these two picks since then. So there's two things. That's how you can [00:19:10][7.1]

Bryce: [00:19:12] how I try to [00:19:15][3.3]

Speccy Magee: [00:19:15] keep it interesting of those playing at home. I'm going to play the two recommendations and then you guys need to tell me whether you would buy one of them, which one or both of them or neither of them based on the tip. All right. All right. [00:19:31][15.5]

Bryce: [00:19:31] I promise. [00:19:32][0.5]

Speccy Magee: [00:19:32] Think anything related to that? No, Joe. [00:19:36][3.5]

Bryce: [00:19:37] Sure. Yeah. [00:19:37][0.4]

Speccy Magee: [00:19:38] Hello, everyone. This is Rick. And on behalf of Specking McGee, I'd like to provide a quick analysis of one stock and one krypto. First, I am not a financial adviser, and this is not financial advice ticker symbol, I am why I am bullish one eminent FDA approval for their urinary tract infection or UTI drug. It's not because it will be the most effective oral notification of this type of infection to the CEO, about three hundred twenty two thousand shares of his own company's stock two months ago. Always a good sign, as well as the medical director who bought two hundred fifty six thousand shares at the same time almost two months ago to the day LinkedIn posed by Wrangle over announcing a partnership to launch eponyms drug solar panel. So with those indications, I think that FDA approval is eminent and the stock will go up from the second is a crypto symbol are for cellular network. I am bullish on their product. Seabridge is main that will be live by the end of next month. They're layer to finance test that should be concluded by the end of next month as well. And if no issues are found, that will also likely be ready to roll out. Number two, one has to only look at what Polygon did with their large scale programme to know what the potential is here, trade safe and trade happy. [00:21:04][86.5]

Speccy Magee: [00:21:06] Okay, boy. So we've got to do that. What do you think about [00:21:10][3.8]

Bryce: [00:21:12] to outsource tips? [00:21:13][0.7]

Alec: [00:21:13] Honestly, that analysis was better than I would have expected from Specky McGee. I think we need to get this guy to be our new speculatory. [00:21:20][7.0]

Speccy Magee: [00:21:22] And he lost me at iminent approval today. But what are you talking about? All right, so you've Ren the Utah drug company and then you've got cedella cryptocurrency good seller. So Bryce. Do you like either of them? Neither of them or what do you thinking? [00:21:44][22.1]

Bryce: [00:21:45] Look, I got totally lost on Sela, to be honest. I kind of didn't catch what he was saying. But also to date, for me, I think I can get my head around it from the UTI drug FDA approval impending. So TABC on whether or not that did get across the line, I'm assuming if it did, then it probably would have gone gangbusters. I like the fact that they had skin in the game from a management point of view. If I was to lean one way, it'd probably be that way. But I also know that Krypto has bounced in the time over the last two months. So I'm just going to go yellow and say I'll take both hedge my bets. [00:22:21][35.9]

Speccy Magee: [00:22:22] Both. I like it. Okay, cool. All right. Of the results. Right. [00:22:25][3.6]

Alec: [00:22:27] Well, in the interests of this game, I think I have to go different to Bryce. So I'm going to say they didn't get FDA approval and who the hell knows what's going on with crypto? So I'm going to say, Nather, I'm going to stay in cash. [00:22:41][14.9]

Speccy Magee: [00:22:42] OK, interesting. All right. So Ren assuming a return of zero on the cash. You you haven't made any you haven't lost any good marks. And Bryce is up 12 percent. So interestingly. The cryptocurrency went up 95 percent. So this is two months ago. All right. So if if I were to give those tips when I asked you to have me on the show, your listeners may be up 95 percent now [00:23:15][33.2]

Bryce: [00:23:17] because I know you're not by yourself [00:23:18][1.0]

Bryce: [00:23:19] and it's not even your tip. [00:23:20][0.9]

Bryce: [00:23:20] It's not going to be [00:23:23][2.8]

Alec: [00:23:23] thrown about how he doesn't get on the [00:23:25][1.9]

Bryce: [00:23:25] show, OK? [00:23:27][1.4]

Speccy Magee: [00:23:27] But perhaps even more interestingly, yttrium is down 67 percent since that tip. [00:23:35][7.2]

Bryce: [00:23:35] I'm assuming they didn't get approval. [00:23:37][1.1]

Alec: [00:23:37] No FDA approval. [00:23:38][0.7]

Speccy Magee: [00:23:38] You're not out or [00:23:40][1.8]

Bryce: [00:23:40] you have to get the five flavour. Going to give us an update. [00:23:46][5.9]

Speccy Magee: [00:23:48] Now, if you if you actually Google the company, there is a class action against them for the executives making false and misleading statements. [00:23:57][9.2]

Alec: [00:23:58] Oh, no. Yeah. Chase Now, have you had a chat to your analyst about his his picks? [00:24:05][7.2]

Speccy Magee: [00:24:06] So, yeah, there's a class action against them, false and misleading statements. So, I mean, I guess the listeners could join the class action to. I don't know. [00:24:15][9.0]

Bryce: [00:24:16] So I guess to kind of I [00:24:18][1.6]

Bryce: [00:24:18] guess the common [00:24:18][0.3]

Bryce: [00:24:19] is that then. [00:24:20][0.5]

Bryce: [00:24:22] Well, I think takeaway here that he doesn't know [00:24:25][3.3]

Speccy Magee: [00:24:26] how you Bryce. Excellent question. I think you guys can read between the lines here. Don't go to five per specky recommendations [00:24:34][8.2]

Bryce: [00:24:39] or go [00:24:39][0.3]

Speccy Magee: [00:24:40] to five. It's not bad, it's got to be overall 12 percent over two months. So, yeah, thanks, guys. [00:24:47][7.2]

Bryce: [00:24:48] Well, let us know next time you go on five or how about next time you come back on, you bring another form of D-Day that doesn't involve fibre but perhaps doesn't involve your level of detail either, but is another form of data. [00:25:00][11.9]

Bryce: [00:25:02] That's not bad. That's not [00:25:03][1.1]

Alec: [00:25:03] bad. I would like some I would like you to do some street surveys like some vox pops and get to St. Little. [00:25:10][7.5]

Speccy Magee: [00:25:11] Okay. And where do I send the invoice? [00:25:12][1.5]

Bryce: [00:25:19] All right. All right. We will we will have to leave it there. [00:25:22][3.4]

Bryce: [00:25:22] But thank you for coming on, sharing the tips. That was it. R.M. down 65 percent and eight up 95 percent. Nine. [00:25:31][8.7]

Speccy Magee: [00:25:31] So thanks, guys. Can't come back on soon. I've got to say, next time I'm on, dig it out and say, [00:25:40][8.6]

Bryce: [00:25:40] OK, good. [00:25:42][2.0]

Alec: [00:25:43] All right. We'll see you in two months. [00:25:44][1.2]

Bryce: [00:25:47] All right. [00:25:47][0.2]

Bryce: [00:25:48] We'll chat soon. Speccy. [00:25:48][0.7]

Speccy Magee: [00:25:50] All right, thanks, guys. [00:25:50][0.6]

Bryce: [00:25:51] Well, Ren, as always, it's very chaotic when we chat to Specky, hard to get a bit of a grasp on what's actually going on in the world of Specky stocks. [00:25:58][7.4]

Bryce: [00:25:59] But that's just me, because I imagine pretty crazy world out there. [00:26:02][3.3]

Alec: [00:26:03] I feel no more educated about the specky side of the market than 10 minutes ago, but it's classic. [00:26:09][6.1]

Bryce: [00:26:10] But anyway, full credit to doing no D-Day on that. So Ren from absolutely no D-Day with Specky to a lot more D-Day and some actual thought and consideration when it comes to investment ideas and wealth building strategies. And that is coming from our two amazing hosts of our new show, Talk Money to Me, Candace and Felicity. So we're excited for this show. And here they are chatting about what to expect and two of their favourite stocks at the moment. So Ren, as we said at the start of the show, we are super excited because we have launched a brand new show here at Equity Mates. Equity Mates continues to grow and give new voices to the finance and investing community and talk money to me with our amazing hosts, Felicity Thomas and Candace. Burke is now live. And we are super, super excited. [00:26:58][48.8]

Alec: [00:26:59] That's right. We for years have said we are not experts and we're not financial advisers. Finally, we have some experts here at Equity Mates [00:27:07][7.6]

Bryce: [00:27:09] for you bringing some credibility [00:27:10][1.3]

Bryce: [00:27:11] to the party. But we have them with us on the show today to actually talk through what talk money to me is all about and then to give a bit of a taste as to what you can expect on the episodes with one of their formats, Order Pad, which I'm really excited about, where they essentially going to say great investment ideas so they're not by. So we'll touch on that in a second. But let's start at the top. Candace, are you able to introduce yourselves? [00:27:33][22.8]

Candice: [00:27:36] Yeah, definitely. We'll be back straightaway, you've set the fact that we are the experts in the room, that's that makes me feel good. So as you said, you know, I'm Candace book and I'm a senior investment adviser at Suran Partners. And I've been in the industry providing financial advice and investment advice for over six years now. I work closely with my work wife, Felicity Thomas, and essentially we deliver holistic financial and investment advice to all of our clients. You know, we cover lots of different areas of of advice being investments, superannuation, insurance, estate planning. The list goes on and on. And essentially our role as advisors, we break it down by three key points. Firstly, we understand our clients goals and objectives. Once we know those, we interpret their goals and objectives really into the right financial strategy and then we just deliver the advice from [00:28:31][54.4]

Felicity: [00:28:31] there and so on. The other part of this dynamic duo, Felicity Thomas, I'm a senior private wealth adviser at Shaw and Partners and I've been providing holistic financial advice for over nine years now. Makes me feel a little bit old now. People close to me would actually describe me as a problem solver. So there's usually not a problem that can't be solved. And I'm definitely a glass half full kind of girl. Now, along with everything Candace just mentioned, they are also big advocates for financial literacy, in particular financial literacy for women. So together we co-founded her financial network at the end of 2020 to connect women and men, but particularly women, to trusted advice professionals. [00:29:09][38.1]

Alec: [00:29:10] Now, as we said, you guys are experts and you've helped Australians of all income levels get on top of their finances and get ahead in their finances. But we want to learn from your experience in this episode and I'm sure in future episodes as well. What are some of the most common mistakes you're saying Australians making when it comes to their money? [00:29:31][21.1]

Candice: [00:29:31] I think that's a really interesting question, because for me personally, what I guess frustrates me or might be an era that we commonly say is an initial poor advice that I may have received in the past. So, you know, for example, there might be in their peak earning period, like in their 30s, 50s. And someone in the past has said you should just, you know, buy this investment property in your personal name or start investing in the markets in your personal name. But when you are thinking holistic and a broader approach, which is what I do, that's not necessarily the best approach. You know, could we be thinking maybe we can invest in a company structure, a family trust? Can we somehow capitalise and utilise the superannuation environment, you know, particularly if you're getting close to 60, 65, like that's the best vehicle. Right. So I guess, you know, when it comes to learning and what we continually do on a day to day basis with our clients is just educate and broaden its horizons on the different possibilities. Right. Of your financial landscape. [00:30:36][65.1]

Felicity: [00:30:37] Yeah. I mean, I think it's also a really good question that you asked. I mean, really, it's like how long do we have? For me? [00:30:43][5.8]

Bryce: [00:30:43] This is a this is a very fun Felicity to go [00:30:49][5.2]

Felicity: [00:30:49] see it for me. It's clients not seeking advice in general. Right. So you're never too young or never too old to seek professional financial advice. Yes. You need to pay for good advice, but it actually usually pays for itself. After a few years as an adviser, we do value our time and expertise and we charge accordingly. But it's not a bad thing. It means you should be getting quality advice if advice was free. Do you really think that your advisor has spent the time, you know, analysing your individual circumstances and giving you the very best advice? Another common mistake is not actually knowing where you're invested or understanding your own behavioural biases, as you know, and how that can actually impact your investment decisions. You honestly don't want to know how many clients we had to convince not to sell their portfolios during the Covid crash of 2020. I mean, they really [00:31:37][48.5]

Bryce: [00:31:39] I'd [00:31:39][0.0]

Bryce: [00:31:39] love to hear that that was your approach as well. If you'd both turned around and said we told our clients to sell, then I think we'd have to be having a conversation more broadly about the podcast. But you've both raised some really key points there and some that I'm already thinking about. And so I'm very much looking forward to hearing the content that you guys are going to be pushing out through this podcast. There's no doubt that you do have an amazing chemistry and have spent a lot of time working together in this space. And I think you are going to provide a lot of value. So are you able to elaborate a bit more on the podcast specifically and and what was the idea behind this? And really what can we, I guess, expect over the next few months, years, decades with this podcast? [00:32:20][40.4]

Bryce: [00:32:21] Yeah, yeah, yeah. [00:32:26][4.8]

Candice: [00:32:27] Well, like you kind of indicated, we as you can tell, we love our jobs with super passionate. We love helping people, you know, and I think I personally get a lot of satisfied. Action out of educating, empowering clients to find out different strategies, like I mentioned earlier. So we just essentially wanted to share these insights, learnings and lessons with a wider audience, not just keep it to our clients. You know, my close friends would say that in my past life, I must have been a doctor or nurse because I just love helping people. And I put it down to this. A financial adviser like what we do for our clients essentially has the same duty of care as a doctor in terms of their financial well-being. So we can really make a powerful impact or a negative impact if you get poor financial advice to a client. So we take the duty of care very seriously. So we set out six years ago when we started working together thinking how can we grow the business? What else can we do rather than just provide financial advice to our clients? We talked about a book launch and you guys just went down that route. We always were talking about a podcast like, you know, this is the time that we live in these days is super exciting because you can really share your insights to the broader to the broader world. [00:33:44][77.3]

Felicity: [00:33:44] And I think another reason why we wanted to put this together is because there's a lot of wealth podcasts out there and a lot are available, but there's not a lot that I would listen to personally. I mean, we want it to be that wealth podcast that took our insights to the next level and one that really drives a little bit deeper into financial concepts and strategies. Don't expect investing one on one premise or what a savings account is on our podcast. It's just not what we're about. We are assuming that our listeners have the knowledge and are ready to take things to the next level. [00:34:13][28.4]

Alec: [00:34:13] Yeah, I'm particularly excited about that element. You know, we've done a lot of investing content here at Equity Mates and some of the other podcasts we have at Equity Mates media. But your podcast is going to be a lot more holistic than that. It's going to talk about all aspects of wealth creation. And I'm excited to listen, but I'm also excited to steal all of your best ideas and implement them in my personal finance. So we are an investing show. So we are going to focus on, I guess, some of the investing related content that you guys will be creating in this little segment today. One type of episode that you'll be producing is called Orthopod, where you share stock ideas that you're talking about with your clients. Perhaps you're even buying for your clients and you've brought a stock that's on your order pad today to talk about. So we'd love to unpack them before we do. It's just important to stress that while you guys are licence financial advisors, you're on a podcast and you're not aware of anyone's personal financial circumstances who are listening. So this is added to your watch list. Do your own research and consider it yourself. This is not a buy, hold or sell recommendation. But in but in saying that, we're excited to hear about these companies today. So, Felicity, why don't we start with you. You've brought the company families own ASX Ticker FZ. Oh, so can you tell us about the company and why it's on your old iPad? [00:35:43][89.8]

Felicity: [00:35:44] Yeah, definitely. So it's a 510 million market cap, which makes it a small cap. It can be found on the Australian Technology Index. Now, family's own cybersecurity actually engages in the development of parental control platforms. It's created a single system that manages the majority of the parental control functions in a cloud based application. Now, this singular approach enables schools, parent cyber safety experts to collaborate, to keep children safe anywhere at any time and on any device or network. Now, the company was actually founded by Tim Levy, Ben Trigger and Paul Robinson and Crispin Swan in 2014, and it's actually headquartered in Western Australia. So the reason that we like this company and we have been buying it for our clients since late last year, it's actually also one of Shaw's analyst top buys. And we recently participated in the rights issue at 55 cents because we think this company is exactly in the right sector being tech and the theme family cyber security. So it's got a lot going for it. I mean, I believe there is a 200 billion dollar growth opportunity in cloud cyber security over the next five years. Now, you probably would have noticed this, but there's a global shift towards digital SAS model businesses. And we saw that acceleration last year during covid. And now this year with the extended covid Lockdown's family zone has the scalability, the ease of deployment and the consumer relevance. So it's experienced high growth that, in my view, is proving to be sustainable into the future. I mean, online children are likely to be exposed to adult content, cyber bullying, privacy issues, sleep disturbances if their usage is not monitored and tailored for control. You know, FZ control solutions were actually developed to address these issues, creating digital environments where children can thrive. I mean, last time I actually pitched Family Zone, I think it was on Ausbil and we also. Posted on her financial network. It had two and a half percent market share in the U.S., it's now got seven per cent of market share in the U.S. whilst building an international firewall. If you want to look at probably the financial metrics and a recent catalyst, our family zone last month agreed to purchase Smoothbore, which is a UK based provider of K to 12 digital solutions for 142 million, which is why they recently raised 146 million dollars. Now, on a combined basis, families owned business will now serve nine million students, 18000 schools and have an annual reoccurring revenue run rate of around 44 million, which has essentially tripled its reoccurring revenue. Now, after the acquisition, families own should have around 33 million left in cash. So for ongoing working capital, which is important, and then on a pro forma basis, the business will deliver an F y 21, a bit of a loss of twelve point seven million, been an assumed a loss of nineteen point seven million for family zone in FY 21, less than seven million in EBITDA from Smithville. But this should drop to the loss of five point three million 22 and then it actually should be about positive by 523 with twelve point one million. So for me, the upside is actually really endless with this business and it could be very meaningful if they reach seventeen point five per cent penetration in the US and UK, that would actually net an additional 92 million in annual recurring revenue by EFSI 25 or in a bit positive of thirty six point five million of it. Now, because we helped raise capital, Shorris still restricted in providing an updated 12 month price target. And it's kind of already trading around that level around 77 cents. However, consensus price target for the smooth wall acquisition is around a dollar 20 to a dollar 25. So I actually expect by the time this podcast is released, our price target would be similar. So, you know, for your listeners, upside up around these current levels is about 66 per cent. That's it. It's good. It's a good company for long term [00:39:42][238.0]

Bryce: [00:39:42] growth, not Felicity. Well, I love listening to that. And no doubt that certainly excites me for for the rest of these audio episodes. However, there is still half of talk money to me to go Candace you have you have the floor. You're pitching a stock that we've spoken about on the show a couple of years ago from memory atomistic a mess. But I'm sure you're going to come at this with a level of rigour that we perhaps didn't. [00:40:08][25.2]

Bryce: [00:40:08] So I'm looking forward to hearing this on. [00:40:10][1.9]

Candice: [00:40:11] So the company today that I'm going to pitch is AMS. Like you mentioned, it's considered a small microcap, right? Because it's only really 330 ML is a market cap right now and it falls under, obviously, the tech sector of the ASX. I found this stock for the first time back in the beginning of the pandemic all that time ago in March 2020, because I was actually quickly realising, you know, we can't go to the office. I've got to quickly get all my home office set up. And atomos does exactly that. Right. It's a video technology company which enhances video content creation, you know, to help existing products like Zoom Squad, Kossak. We're on, you know, all the digital media tools that we use in the pandemic world is really where atomos plays in that space. So Designs develops and commercialises the monitor recording products to ensure that content creators of all kinds are constantly accessing the latest video monitoring technology out there. The company has been around for a while, which is always something that I look for. I don't want to necessarily always jump into a very new company because maybe it's still an idea, for example. So it's been around since 2010, founded by Jeremy Young and the headquarters is here in Australia, another to my box. So why I like the company is, you know, our research indicates that AMS is a global leader in the monitoring recording space and it's got the potential to really deliver those significant returns in the long run. In the video Digital Age we live in, in our view, AMS deserves and commands a higher EV sales module than what the market's currently offering. I say that because AMS has a high and stable gross margin business they reported recently. Forty eight per cent Nephi twenty one. That's impressive numbers and massive upside potential in this software sales. Hundred percent gross margin. This is what this business is running. AMS has significant operating leverage to offer the market with leading products and they've only really scratched the surface of penetrating the global markets in the U.S., Europe and Asia. They just also recently announced significant and meaningful partnerships with the global technology companies such as Apple and Adobe. So the company's well primed for growth and large product development. I also like the fact that atomos plays in the gaming space. No pun intended here. We know that the gaming industry has the potential to have super significant returns in the next five to 10 years, AMS has the platform and the core technology already developed to layer across the gaming industry to produce more exceptional market leading products. The latest numbers out there on stream, and this is sitting around nine and a half million as of Fab 20 21. I think that trend is going to keep going up right, because we're not coming out of the pandemic world anytime soon, unfortunately. So assuming that atomos just penetrates only one percent of this gaming market, they're going to hit revenues of like 600 million plus. And this is a huge addressable market because the upside of 50 percent is what the company is forecasting. Nephi twenty three. So that's just one gaming platform that we're looking at. We haven't even thought about, you know, YouTube, Facebook, the list goes on. So assumptions that we see the company growing as really just based on one platform providers are pretty conservative. And as recently, the company reported in the midst of reporting season, like I mentioned earlier, revenues was super impressive, up 77 percent year on year gross profit up one hundred thirty three percent. One hundred and thirty three percent want to see you. That's massive. That's a year on year margins, 50 percent EBITA love a profitable tech business like Ravasi eBid out of eight million. Call me old fashioned, but I invest in profitable businesses and the result was well ahead of expectations. And as we see every day, Flamini, when a company sets the bar and they beat on expectations, even if it's one dollar, they get rewarded massively in the market. So, you know, since they reported they're up about the last 30 days, the share price is down a 30 percent rally or so. Love that in terms of recommendations and long term price targets. And when I say long term, you got to think at least 12 months. That's how the analysts put the price target on there. It's Sean Partners is sitting in a two dollar share price and the market consensus about a dollar ninety three. So we're talking significant upside on current levels. That's why, you know, again, I'm a user of the outermost products. I think it's in the right sector. It's a really strong business with lots of growth lags. Well run, great balance sheet. I love it. [00:45:04][293.7]

Bryce: [00:45:05] Love it. [00:45:05][0.3]

Alec: [00:45:06] Nice. Well, I love that for two reasons. First of all, because it's that Peter Lynch style of investing, like invest in what you know, and it's a it's a company that you've used this to create. And that's that's where it really started. The other reason I love it is because Adam Moss was my Stock of the year in twenty twenty. Unfortunately, it fell thirty per cent, it fell more than that during covid and then never fully recovered. But I've just been having a look at its price chart. It's back to where it was when I picked it as my stock of the year [00:45:36][30.3]

Bryce: [00:45:36] and to keep holding on now, I think the growth is going well, especially after that. This is exactly [00:45:45][8.6]

Bryce: [00:45:47] well, Candace Felicity, it's been an absolute pleasure having you on. You've not only left us with a couple of questions to consider when it comes to thinking about wealth building that, I think, you know, it's only going to be more interesting is as you bring more of those questions to light over the course of this podcast, but to also really interesting stocks to think about as well. So for those listening through the Equity Mates community at the moment, Candace and Felicity will be doing a need to know episode where they're going to be deep diving on a strategy or thematic that is important and something that they believe is really important to know. Then there's going to be an interview component or an episode where they'll chat with experts within their network to help unpack that need to know. And then obviously this order pad, which I am sure is going to be a smash hit. So plenty of content coming on, talk money to me. And we are super excited to now have this as part of the Equity Mates media family. So girls, welcome and we can't wait to see this play out. [00:46:45][57.8]

Felicity: [00:46:46] Thank you. We're excited to be here. [00:46:47][1.5]

Alec: [00:46:48] So there we have Candace and Felicity from Talk Money to me are really excited to get this show launched. Well, it actually has launched first three episodes are currently live in your podcast app. Wherever you listen to podcast search, talk money to me and you can listen to their first three episodes and subscribe because they're going to be sharing a lot of good content. Pretty pumped for this one. So Bryce, that brings us to the end. A bit of a segmented episode. We had a bit of a chat and we were joined by Speccy and then we spoke to Felicity and Candace, really the full range of the investing universe from the absolute punter that is Specky McGee to some experts in that. Field in Felicity in Candace, so good episode and speak to you again on Thursday. Sounds good. [00:46:48][0.0]

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