We’re back with our Stock of the Year & Bold Predictions

Bryce: [00:00:15] Welcome to Equity Mates Investing, the podcast where we explore what's possible in the world of investing. My name is Bryce and today we're back in the studio for the first time in 2024, going through our bold predictions and stock of the year. And as always, I'm joined by my equity buddy, Ren. How are you? 

Alec: [00:00:30] I'm very good, Bryce. Good to be here. We have completely revamped our studio, so it feels strange. If people want to watch it on YouTube or on Instagram or TikTok, they'll see it. We've got these armchairs. 

Bryce: [00:00:47] Yeah. We are going hot on YouTube this year.

Alec: [00:00:49] Yeah. So come join. 

Bryce: [00:00:50] We're going to try and go hot on YouTube. 

Alec: [00:00:51] Yes. Yeah, yeah. But anyway, if you hear a different vibe, it's because we're in different, separate armchairs. Yeah. We've also got laptops on our knees, which isn't ideal. But anyway. 

Bryce: [00:01:02] We've got some work to do. 

Alec: [00:01:03] Work in progress. Yes. 

Bryce: [00:01:05] All right, so that's.

Alec: [00:01:06] Middle of February and we're back for the year. 

Bryce: [00:01:10] Yeah. Admittedly doing bold predictions in stock of the year when we're, what, six weeks into it. Markets are ripping. There's a lot going on. So we're going to have to kind of work around that with our boat predictions, but keen of get into it. However, there's some bigger news than what's going on in markets. You had a huge summer. 

Alec: [00:01:28] Yep. 

Bryce: [00:01:29] Yeah. Talk us through. 

Alec: [00:01:30] It. Nvidia is up. No. So I got engaged. 

Bryce: [00:01:37] Congratulations. 

Alec: [00:01:37] Thank you. Yeah. Very exciting. Yeah. Alice and I are getting married in December. 

Bryce: [00:01:44] Yeah. Locked in. 

Alec: [00:01:45] Yeah, yeah. Well, save the dates. Need to go out. Yes. So. 

Bryce: [00:01:50] But you've planned most of it. 

Alec: [00:01:51] Yeah. Yeah. Yeah, yeah. Got it all sorted. Music was, music was the big headache. But we got there. 

Bryce: [00:01:56] What did you end up deciding?

Alec: [00:01:57] There was a strong push towards DJI, but then we've come right back around and we're going band. 

Bryce: [00:02:02] Nice. Yeah. Nice. Nice nice. 

Alec: [00:02:04] Yeah. 

Bryce: [00:02:05] Well, congratulations. That's very exciting. And moved in. 

Alec: [00:02:09] Moved house. Yeah. Yeah, yeah. Settled and moved. So it's all happening. Life got very real. Yeah. You've also moved into your place? Yes. 

Bryce: [00:02:17] Yeah. I've had a big summer of DIY. 

Alec: [00:02:19] Yeah, yeah, yeah. Bunnings number one customer. 

Bryce: [00:02:21] Yes, I reckon I've been there 25 times in the last 6 to 8 weeks. 

Alec: [00:02:26] Nice. 

Bryce: [00:02:26] Yeah. Harriet, my wife as well, is now fully confident on where everything is. We've got to have. because it can be super overwhelming when you go. Definitely looking for one thing. Yeah. And it's like 75 aisles. Yeah. But once you get the hang of it, man, they literally have everything. I love that place. Yeah, yeah. 

Alec: [00:02:44] It's good. Yeah. 

Bryce: [00:02:45] So, I spent my summer, building things, trying to buying tools. 

Alec: [00:02:51] Yeah. 

Bryce: [00:02:52] Getting a toolbox. 

Alec: [00:02:53] Well, we we went. We had it. We went for a concert over the summer, and Bryce had everyone round to his place to, show them the house and to have some free drinks before we went. And you had built two benches. Yeah. Beautiful. And, like, you'd painted the courtyard. It was really nice. But then at one stage, one of the benches falls over. Yes. Luckily, no one's sitting on it.

Bryce: [00:03:14] I think they were.

Alec: [00:03:15] Oh, that was like. 

Bryce: [00:03:16] That was the issue, I think. What so what happened was I looked up the dimensions for a bench seat and thought when I started building it, I thought, that seems too big. And so I cut it back to what I thought looked like a good bench size. And in hindsight, I should have stuck with regulation bench. It's too unstable. 

Alec: [00:03:34] Yeah, yeah. So anyway, I've got a lot to do on the list. You know, I love that you're entering your handyman era. Yes. 

Bryce: [00:03:40] Yeah, I love it. 

Alec: [00:03:41] Yeah. So good. Good summer for both of us. Long summer, very self-indulgent summer series. And we come back. And a lot is happening in the world of the stock market as well.

Bryce: [00:03:52] Yeah, well, it feels like there's a lot more confidence in the air compared to where we left it at the end of last year. I think particularly here in Australia. I mean, the US, leading into last year was sort of pretty good inflation news, but, it feels like the vibe here in Australia is turning a little. You hearing my bold predictions and what I think about that. It feels like overall you know consumer sentiment markets are pricing in. Right. It's like there's a bit of a confident air for 2024. 

Alec: [00:04:25] Yeah. So if people only get their investing news from equity markets which I'm not sure is a good decision. But you know, way back in the S&P 500 over in the states is up like 5 or 6% already for 2024. So that's been a pretty incredible start to the year, really just driven by the big tech stocks. Except for Tesla. Tesla has fallen off, but the other big tech stocks are all doing incredibly well led by Nvidia. So that's the story over in the states here in Australia were pretty flat to start the year. But it feels like yeah, as you said there's some positive sentiment or some green shoots I guess. But yeah, the big story that we saw last week is American inflation is coming down. The 12 months to January 3.1%. 

Bryce: [00:05:15] And to put that into context, the Fed or most central banks globally have a target inflation rate of between 2 and 3%. 

Alec: [00:05:24] And so we're almost back in the target range. That 3.1% was down from 3.4% in the 12 months to December. So heading in the right direction, but more importantly, was down from about 9% a bit over a year ago. Sounds like good news, doesn't it? 

Bryce: [00:05:41] Sounds like great news. 

Alec: [00:05:42] Yeah, but the market freaked out. Market? The US market fell 1.5%. There were terrible headlines. What's going on? 

Bryce: [00:05:49] Well, this is going to be a story that plays out across this year. I think, markets have priced in pretty aggressive rate cuts for both the Fed and the RBA to the tune of I think up to six rate cuts. The market is pricing in America this year. Now the fed themselves have indicated it's likely to be about three. So if it's anything less than six the market's obviously going to, you know react unfavourably to any news that is outside of that. You know we're going to get six rate cuts this year. Yeah. 

Alec: [00:06:25] So this year's all going to be about expectations. The reason that the market fell when there was nominally good news is because the expectation was 2.9% inflation, and it came in at 3.1%. So even though it's heading down, even though the trend is good because expectations were in for even better news. Everything fell. Yeah. And so I think that's what we're going to be in for this year. Like everyone is thinking that we're out of the woods and things are good and there's going to be a heap of rate cuts and everything's going to be back. And like, if the economy doesn't do that, then the expectations are going to be ahead of the reality. So yeah. 

Bryce: [00:07:06] I do like what the RBA is doing, I don't, they're not as well. I think they're keeping a bit of a tight lip around what their actions are going to be this year. I think that's the right decision. 

Alec: [00:07:18] So about like September last year, I said, I've got a big call. There's not going to be any rate cuts in 2024. Every economist around the world thinks I'm wrong at this point, and I probably am. I have a habit of doing it. But I just don't think it's going to be as many rate cuts as people think. Like when you get in the target band, that's not when you start cutting rates. You start cutting rates when you go below the target band and you want to stimulate the economy. Now maybe we have a recession. Maybe consumer spending really does fall this year and we need the RBA to start stimulating the economy. That probably does happen. And then we see some rate cuts or we see inflation in the target band. The economy keeps taking along. Unemployment doesn't fall precipitously. Consumer spending is okay. And this year is a bit of a holding pattern here. And we don't see too many rate cuts or rate rises. And we just sort of say that everything is sort of coming back to where it should be. I kind of think it's going to be the latter. 

Bryce: [00:08:23] Yeah, definitely. Well, let's use that as a point to move to bold predictions Ren, because I'm sure a lot of this conversation will continue. But before we do, we just want to give you a bit of an update on how Equity Mates is going to change for, for the coming year and what to expect in your feed, because we've done a lot of work over the last sort of six months on figuring out what you guys really like, listening to the community surveys live, where we're getting feedback from you guys as well, and we're going to be releasing more episodes, but with a bit of a different thematic over a week period. 

Alec: [00:08:55] Yeah. So, last year we were releasing three episodes a week. We're moving to four episodes a week. We're going to the schedule on Monday. You and I are going to chat about what's going on, and then on Tuesday, we're going to have an interview, with an advisor or an expert, or we're going to be doing a buy or sell episode out of Kelly will be jumping behind the mic. And then on Thursday, we're going to do another episode where you and I chat about what's going on in the market. Then on Friday, we will have another interview. Yeah.

Bryce: [00:09:26] So more Ren and I Ask an Advisor, more Buy or Sell. 

Alec: [00:09:31] Just more. 

Bryce: [00:09:32] Just more. More of what we know you guys are really enjoying. So please keep the feedback coming in.

Alec: [00:09:36] Well, and that's a perfect segue to if you have feedback on that structure, if you have thoughts on what we should be doing, what content you want to hear, what content you don't want to hear, the community survey is, live now. The link is in the show notes or across all of our socials. This is your chance to tell us what you want and what you don't want for the year ahead. So please jump in and let us know. You also have a chance to win 500 bucks. If you can complete the survey. 

Bryce: [00:10:03] Nice. 

Alec: [00:10:05] All right, well, with that, let's take a deep breath and then get into our bold predictions. All right, Bryce, but we are seven years into the Equity Mate's journey, and every, I know, I know, all out. And every year we start the year with bold predictions. It seems to be a staple in the finance media industry. Everyone makes their predictions for the year ahead. Most people make them at the start of January, but we're doing them midway through February. And we want these to be bold. We don't. If you get all your predictions right, you haven't been bold enough. That's the rule of thumb here. So with that in mind, we've got five categories of predictions this year. And we're going to make one prediction in each category. So the categories are macro, Aussie stocks, international stocks, weird and wonderful and then as tradition dictates we always finish with an AFL prediction. So let's get into it. And let's start with the macro. It's been the big theme in 2022 and 2023. Inflation, interest rates. What's happening in the macro economy? What's your prediction for 2024? 

Bryce: [00:11:20] Wow. Okay. So I like that you set it up with it needs to be bold because to be one this one is very low probability but bold nonetheless. The headline that we will read is the markets have priced in hope rather than reality. And the RBA can't tame inflation. Talk is cheap. We have another rate rise in 2024. 

Alec: [00:11:43] Okay. Okay. 

Bryce: [00:11:45] Yeah. So I think there's a little bit behind this. I still think a lot of the effects of the rate rises are going to come through. Now that should obviously ease demand. But if you look in where inflation is still very sticky, there's still huge levels of demand and not enough supply, services, housing. Those are probably the two majors. Fuel is coming down, but I think that we are not in the same position that we are where the US is, which is close to a band of 2 to 3%. We're still in the fours, and the US had a five in front of their interest rates. We're at its peak. And so there's an argument that yes, we are slowly coming down, but is it going to be fast enough. Will the RBA have the patience and will they be able to withstand political pressure. We need to go up. Yeah. Again for them to then get to the point where we're on the same trajectory that the US is getting to. 

Alec: [00:12:47] Nice. Yeah. Love it. All right. So my bold prediction in the macro space. Aussie house prices fell 4.9% in 2022. This is according to Core logics national Home Value Index fell 4.9% in 2022, and then rose 8.1% in 2023. My bold prediction is 2024 will see house prices rise more than 2023. 

Bryce: [00:13:15] So more than 8%.

Alec: [00:13:17] 8.1%. 

Bryce: [00:13:19] Yeah. Well, here's a stat for you. There was a house around the corner from us, actually, on the same straight down the road, four bedroom, all been renovated and everything. And I think this was a tactic from the, from the real estate agent that he put it up for 2.2, which was just ridiculous. It just went for 3.60. So yeah. So like. Yeah. And the auction was huge. 

Alec: [00:13:43] And I can say this now as a, homeowner, it's unsustainable. And it's a bubble. And then there's the growing political pressure. Something has got to change. Yeah. 

Bryce: [00:13:56] Will it though? Will say this every year.

Alec: [00:13:58] There's a bit of pressure around negative gearing, but it's like you're going gonna lose the election if you mess with house price. 

Bryce: [00:14:04] Definitely, definitely. I saw on the news the other day that Sydney likes the 30 to 40 bracket, 30 and 40 year olds leaving in droves. 

Alec: [00:14:11] Yeah. 

Bryce: [00:14:12] Can't. Can't just. Yeah. Nate's like. 

Alec: [00:14:14] It's crazy. All right, well, that is a conversation that we will have throughout the year, but they are up predictions. Let's move to Aussie stocks. What are you predicting for 2024? 

Bryce: [00:14:25] So there's been a 90% drop in the lithium price in the last four months.

Alec: [00:14:29] 90. 

Bryce: [00:14:31] Yeah. Well yeah 90% drop in those lithium prices in 12 months. And just like, you know, it happens in commodities and resources when prices of commodities a high, everyone goes out and starts building in mines. And there are now a lot of mines that are absolutely in trouble. A lot. To the tune of, some of the big players are coming out asking for government bailouts to support these. So my prediction is that there's going to be a lot. We know that Gina Rinehart is sniffing around. She's also significantly underwater on her bids for Lion Town. She was buying at three bucks. It's now a dollar. So she's lost 60% on that or whatever it is? And we know that some of the big international players was sniffing around last year trying to buy. I reckon this year we're going to finally see a couple of major transactions or a roll up of a lot of the small time players in lithium. And potentially Gina will be involved in that. 

Alec: [00:15:28] I think Gina will definitely be involved in that. That's not the bulk part of the prediction, but I love it. Nice one. All right. So for me I am going to talk about another struggling part of the Aussie market. And that is free to air TV. The business model is just struggling. Seven West had the report recently, and they just show how much advertising revenue has left the free to air space. We've got three major networks here. We've got nine owned by nine, seven owned by seven West, and then, channel ten owned by American giant CBS. My prediction is we have a major transaction with at least one of the three free to air TV networks. It's not particularly bold because there's a lot of speculation that CBS is going to just cut ten. The bold prediction is, we see a major transaction with two of the three.

Bryce: [00:16:20] Oh, okay. And Channel Ten's playing kind of playing out now. 

Alec: [00:16:25] And that transaction isn't necessarily just a sale. Yeah, but it's like these, these are still valuable assets, but, like, they're de-leveraging quickly. Their cost base are too high for the amount of money they're bringing in. There's going to need to be some restructures there. 

Bryce: [00:16:39] Yeah. To double down and say the same for the right radio. 

Alec: [00:16:42] Radio seems to be doing a little bit better than free to air TV. 

Bryce: [00:16:46] So a lot of movement, though. Yeah. 

Alec: [00:16:47] Well, yeah, AR, the register or whichever way that happened. 

Bryce: [00:16:53] Okay, so, channel 710 and channel nine between the three, two major transactions of some description. 

Alec: [00:17:02] At least one. At least one. All right, let's move to the international stocks. Are you going to take us in the world and what have you got? 

Bryce: [00:17:11] Okay, so I had this one down at the end of last year over summer, and it's kind of playing out, but I'm just going to stick with it and maybe I'm going to juice it a bit to make it interesting. But it's the race to 1 trillion between Eli and Novo Nordisk. So Eli Lilly and Novo Nordisk at the time that I did this. And so both huge pharmaceutical companies, both in the game of weight loss drugs.

Alec: [00:17:37] Well, so Novo Nordisk is purely in that game really with Ozempic and now they're the largest company in Europe. Eli Lilly does have their weight loss drugs, but they also have a portfolio of other pharmaceuticals. And like some really interesting cutting edge stuff.Yeah.

Bryce: [00:17:55] And they're kind of outperforming Novo at the moment. But Novo are on a bit of a tear buying up. I think injection facilities so that they can keep up with the demand for production. But anyway, the bold prediction is that they both hit a $1 trillion market cap by the end of the year. Yeah, I could go far as to say, Eli, if this if we want to go bold gets to 1.5. When I wrote this Eli was it's a $600 billion market cap. It's now 700 and almost 720 billion. So it's not, in the grand scheme of things, far off. 

Alec: [00:18:31] And still it would still be a big year for them. 

Bryce: [00:18:32] Well, yeah, it needs to grow by sort of 40 odd percent. From here. Yeah. And then reasonable.

Alec: [00:18:38] Over the last 12 months set up like 120%. 

Bryce: [00:18:42] Yeah. I just look at what happened with Nvidia. And if you get in these constant upgrade earnings cycles the market just eats it up. And if these guys keep coming up. 

Alec: [00:18:51] Okay. One drugs have other use cases as well. Yeah. 

Bryce: [00:18:55] Well they just become more accessible and the like you can see that these companies. So bold prediction Eli Lilly and Novo Nordisk, both with a $1 trillion market cap by the end of the year. To put that in perspective, Novo Nordisk does almost need to double, that Eli Lilly has a little less to go. So let's go. Eli Lilly 1.5.

Alec: [00:19:15] Wow. Okay. Love it. I mean, they're both them and Pfizer. All three have different stages of clinical trials to have, like oral versions of the drug. So right now it's all injectable. And if it was like tablets instead. Yeah. Like something more accessible probably makes it cheaper. 

Bryce: [00:19:33] Just less. Yeah. More. 

Alec: [00:19:34] Also more and less invasive. 

Bryce: [00:19:36] Invasive. Yeah. Just the thought of giving yourself an injection is just kinda like. And I do own Novo Nordisk. I should point that out. 

Alec: [00:19:42] I own both of them. That's the beauty of being an investor. You don't have to pick a side. You can choose all sides. All right, my international prediction. I'm going to take you to stay in America and take you to Disney. So Bob Iger is back. And if you've read Ride of a Lifetime and followed Disney, he made his bones with acquisitions Marvel Lucas films and 21st Century Fox. My bold prediction is his second act will be marked by the opposite. Sales. The prediction is that a major division gets sold in 2024. Now the obvious one is ASPN, but I actually like moving into sports betting. But people thought they were doing that to fatten the pig before sale. Is that the same? But they've recently announced this big deal with Warner Discovery and one of the other networks, CBS or TNT. One of the big ones. Oh, no. No. Fox, Warner, Discovery and ESPN are now doing, combined sports streaming service. So we'll see what happens there. So Aspn is one, but I think less obviously the linear TV business, or the cable business or the whole company gets sold to a tech giant. Yeah. So, Disney, there's a major sale. A lot of my predictions are around sales in 2024.

Bryce: [00:21:06] I can't see the sale of the whole company, but that's the point of a bold prediction. 

Alec: [00:21:11] Yeah, like Apple or Amazon. Like you think about Disney, like, you know, a few hundred billion, like it's a massive company. But is it the scale that it needs to be to compete in this quickly rationalising new era of TV? Yeah. You like you know, like Apple buys them all the sudden. Apple TV is the number one streaming service. 

Bryce: [00:21:32] Yeah yeah yeah okay. So it's a sale of some description. Whole or assets.

Alec: [00:21:39] Yeah. Bob Iger's second act will be marked by selling. 

Bryce: [00:21:43] Yeah okay. Nice. 

Alec: [00:21:45] All right. We got two categories to go. 

Bryce: [00:21:47] Yeah. 

Alec: [00:21:47] Weird and wonderful.

Bryce: [00:21:48] Wonderful. Weird and wonderful. This is a quick one Elon loses the plot which is already happening. But I think he's no longer at Tesla. And because of that all the diehard Elon fans get out of Tesla and it halves in value. 

Alec: [00:22:03] Interesting. Yeah, it could almost be good for Tesla car sales to have a steady, like someone who's done like 30 years of. 

Bryce: [00:22:12] Bringing the GM guy. 

Alec: [00:22:13] Yeah, yeah yeah yeah yeah. Okay. 

Bryce: [00:22:16] So yeah, he's anyway. Enough said. Yeah, yeah. 

Alec: [00:22:19] Great. Yeah. My weird and wonderful. I actually don't think this is that bold, but I think it will happen. One of Trump or Biden has to pull out of the race due to health challenges before Election Day. 

Bryce: [00:22:31] Okay.

Alec: [00:22:32] Yeah. 

Bryce: [00:22:33] There's a I didn't yeah. There's a lot coming out about Trump and his health at the moment. Like obviously Biden's been it's yeah it's starting to creep in a bit more with Trump's. But just anyway I'm not going to be I'm not this isn't a political podcast. So who replaces either of them. If one pulls out. 

Alec: [00:22:51] I reckon there's a few on the Democratic side. You've got, Kamala obviously, but then Gavin Newsom or Gretchen Whitmer are probably the names to watch. Republican side. Who knows? Nikki Haley maybe, but probably Meatball Run. Yeah. I mean, the thing is, his favourables in the MAGA community are still really high, right? They like him. They just preferred it. 

Bryce: [00:23:15] So if you pull out of the race, you can come back in. 

Alec: [00:23:18] Yeah, I guess so. Yeah. Well, the thing is now because like delegates have started being allocated, it probably will have to be at the convention. Yeah. Anyway, Okay. One to watch. Now finally, Bryce, the last category that we always finish with is AFL.

Bryce: [00:23:31] Yeah. 

Alec: [00:23:32] So what's your prediction?

Bryce: [00:23:32] I got three, but I'm just going to go with one. I'm going to say the Hawks make the top eight. 

Alec: [00:23:37] Don't think that's bold. 

Bryce: [00:23:38] Really? They came 3rd last. 

Alec: [00:23:40] I don't know. They are young and pretty good. Nice. 

Bryce: [00:23:44] Kicks over 90 goals. 

Alec: [00:23:45] Okay. Nice okay. You tie both of them.

Bryce: [00:23:48] All right Melbourne doesn't make the eight. 

Alec: [00:23:50] Who? 

Bryce: [00:23:50] Melbourne. 

Alec: [00:23:51] Yeah okay I like not. 

Bryce: [00:23:53] Too much turmoil over some of. Yeah. Yeah. With. Clayton. 

Alec: [00:23:57] Yeah. 

Bryce: [00:23:59] Anyway I'm sticking with Hawks to make the top eight. Cool. What have you got?

Alec: [00:24:03] Okay, so mine's got a bit of a preamble to it. Oh, sorry. Since, the Adelaide Crows topped the ladder and made the grand final in 2017, their crosstown rival, Port Adelaide has finished above them on the ladder every year. So some years they've both been right at the tippy top. Other years they've been, neither of them are made the eight. But since Adelaide topped the ladder in 2017, ports have finished above them for six years straight. In 2024 that changes and Adelaide finishes above Port Adelaide. 

Bryce: [00:24:38] Okay, nice. Adelaide were decent last year. Port are on fire but they always kind of crumble when it comes to 

Alec: [00:24:46] Port always win the mid-season. Yeah they're always good to start. Yeah yeah. 

Bryce: [00:24:50] God I can't wait for it to kick off. 

Alec: [00:24:51] I know it's coming pretty soon. Sydney looking very good with Brodie Grundy 

Bryce: [00:24:56] Big time. Yeah. All right. Well those are the predictions. If you have a bold prediction, hit us up in our Facebook community. We'd love to hear from you. Join the conversation. Otherwise we're going to take a very quick break and we'll be right back with our stock of the year. Welcome back to Equity Mates. It is time for our stock of the year competition. If you've just joined us for the last five years or thereabouts. Ren and I each pitch a stock at the start of the year to go head to head to see whose stock will finish on top at the end. Ren finally took the crown at the end of last year. After three years of struggle. 

Alec: [00:25:32] I used to be the kiss of death. My companies would halve in value. 

Bryce: [00:25:35] Is this Adelaide? Port Adelaide? 

Alec: [00:25:38] Maybe. I don't know. So, yeah, we'll see how we go this year. Was that just an anomaly? Why don't you kick us off? 

Bryce: [00:25:46] Okay. 

Alec: [00:25:47] We should say, before we get started. This isn't financial advice. We don't know your personal circumstances. You know, do your own research, get professional advice if you need it. We're just talking about these stocks for education and entertainment purposes only. 

Bryce: [00:26:00] Yeah. Now. But obviously, based on bold predictions, there are a couple of stocks that I think, decent Eli Lilly and Co, but I thought I'd. I really found this one interesting. This is a company that I've used a fair bit over the last 12 months. And you may have as well. And I've found it super impressive no matter where I am in the world. In fact, it's changed the way that I used to do something, which was book accommodation. 

Alec: [00:26:25] Well, Airbnb.

Bryce: [00:26:26] I used to book everything. I used to go to Airbnb by first booking accommodation. Now I go without fail to Booking.com.

Alec: [00:26:35] Oh really? 

Bryce: [00:26:36] Yeah. Without fail. And that led me down the path of being like, who owns this company? Because I'm super impressed with the mobile app and just the simplicity of it all. And yeah, there's a great tech offer. And it's owned by a company called Booking Holdings. The ticker is BKNG, and it's listed on the Nasdaq. And it is a powerhouse in the travel industry. Okay. 

Alec: [00:27:01] Hit me with it. 

Bryce: [00:27:02] So it's a travel industry conglomerate and an absolute gorilla. It has a bunch of brands under its umbrella. It started in 1996 I guess is a holding company with a company called Priceline. And the idea of Priceline was that you could go on and bid your price for what you wanted to pay for a travel service, which started, you know, was obviously pretty innovative at the time. 

Alec: [00:27:27] Never heard of it. 

Bryce: [00:27:28] Yeah. Me either. I actually thought Priceline was the first. 

Alec: [00:27:31] Yeah yeah. 

Bryce: [00:27:32] Oh that's a weird place to start. Since then it's been a story of acquisitions. in 2005 they bought Booking.com in 2007. They bought a agoda.com. 2013 kayak Ecom 2014 OpenTable 2017 Momondo flight. 

Alec: [00:27:49] Yeah, that's my go to for flights. 

Bryce: [00:27:51] Yeah, I love it. And then in 2018 hotels combined. So the story has been acquisition and they now have a number of business offerings within the travel industry. But I just want to put some stats to how big they are in this industry. Airbnb had a total of 349 million nights booked in 2023. Booking and experiences booking Holdings had 850 million nights. 

Alec: [00:28:21] Wow. So much bigger. 

Bryce: [00:28:23] Yeah, it has 555 million monthly website hits. Well, compared to Airbnb's 83. It has 41% share of online travel agency gross bookings in 2022. So an incredibly strong agency network. And last year they booked 62 million car rentals, 23 million aeroplane tickets. And as I said, 896 million rooms of accommodation. So it is massive. And it's not just accommodation. So they have Booking.com, agoda and sort of rental cars for accommodation experiences, but they also have kayak and Momondo which are these metasearch companies that like aggregate other websites and give you the opportunity to find the best prices. And they do experiences and activities with OpenTable, which is that online reservation for you would if you were to book anywhere in Sydney or whatever. And then Hotel Combines and Fair Harbour. So they've been absolutely whacked during Covid, as you can imagine, but they are roaring back to life. $17 billion in revenue in 2022. $20 billion in revenue in 2023, $8 billion profit last year. Increasing earnings per share year on year. So this is a company that has low debt. They are a serious player in the market. And they I guess they're in this position at the moment where they're capturing market share and travel is rebounding. And they are an absolute dominant force. 

Alec: [00:29:57] Yeah, right.

Bryce: [00:29:58] So the one sort of bear case I think I take with this is that they've run hard. They are at all time highs right now. So you know where it goes from here. I would be hoping that they are going. To be going into an earnings upgrade cycle over the next 12 months. But if you choose, you know those companies that are the best in their field and absolutely leading, then this is one of those companies Booking.com. I also actually reached out to Adam Schwab, who's the founder of Luxury Escapes and a travel industry expert, and he said that, they have huge scale benefit. He loves them as a company and is actually, hates competing against them just because of how powerful they are.

Alec: [00:30:42] Nice. There you go. 

Bryce: [00:30:44] So something I do use if you don't use it, check it out. Booking.com. 

Alec: [00:30:48] That's good, I like that. Okay. Nice. interesting one. We'll track how that goes. So the one that I am going to bring. So, for context, I was going to pitch Spotify. I was, you know, I think now that they have cleared the decks on their podcasting spend, I think their financials are going to look better, a lot better. And now that they are just going to become a podcasting platform rather than, like, try and produce their own, I think they can work on their podcasting UI and make it a better experience, because I think that really holds them back from being an all in one audio. I think they have to have some success with audio books, and obviously that music is just incredibly powerful. But the perils of doing this in mid-February is Spotify is already up like 25% year to date. And so yeah, it was where are we measuring it from and what happens from here? So I started thinking about what other industries I want to play and where else I want to go. And, I'm doing an Australian company. So I guess the context here is that America's love affair with gambling is growing. First it was sports betting. That was the sort of last maybe five years since it started to be legalised. Now we're moving into the casino times. And a lot more states are allowing a lot more casinos. We saw Mark Cuban sell the majority stake in the Dallas Mavs recently to build a massive casino complex around the Mavs stadium. Like, that's sort of where we're trending, where the US is trending. And this Aussie company that I'm talking about is trying to ride that wave, and they're literally about to start launching their products with new casinos in Michigan and expect it to expand into new Jersey and Pennsylvania. Forget the idea that casinos are only in Las Vegas. America is going hard. The company I don't think you will have heard of. I'm hoping I can bring a new one to the table. It's called Light and Wonder. Never heard of it. Okay, so the ASX ticker LNW it's also listed on the Nasdaq. It's a gambling company, so people can make up their own minds around whether it's ethical or unethical. And when I say gambling, I do mean, large exposure to slot machines. So, yeah, they've got, their gaming division does slot machines, table games, shuffling machines and casino management systems. So it's really trying to ride this casino wave. It's also got i-gaming and, like a mobile games division, but like, I think 64% of its revenue and 73% of its profit comes from casino gambling. So that's what we're talking about here. now, why do I think it's an interesting company? So, up until April 2022, it was known as Scientific Games. Listed over in the states based in Las Vegas. It was a roll up. It had accumulated over 8 billion USD in debt. And it started to really struggle under the weight of that debt between sort of mid to late 2021 and mid to late 2022, as interest rates started to go up, its share price halved and its interest bill rose to more than $600 million. It just couldn't service its debt. And so it sold. The current CEO, his quote was it was like a Frankenstein accumulation of assets. We were trying to be the best lottery company, the best sports company, the best content, and ultimately a huge amount of debt. So it was unsustainable. It wasn't going well. So the major shareholders decided to sell, and they sold to a consortium of Australians, led by former executives of Aristocrat Leisure, Tony Cassano and Jamie Odell. I don't know either of them. But also backed by Aussie fund manager Caledonia. And so that's why it's now listed in Australia and the US, because it's become a very Australian led company. And when I say Australian led, I do mean Australian led, because one of the first things they did was poach about 80 of Aristocrat's stock. So it's now, the lead. Some of the investors are ex aristocrats, the CEO is ex aristocrat, and about 80 of the aristocrat staff have come across. So then they did a strategic review of the business. They rebranded from Scientific Games to Light and Wonder. They sold the sports betting and lotteries businesses. And they use that to reduce debt. So it's gone from about 8.5 billion to about 3.5 billion. And they've really become a pure gaming company. And like a casino gaming company. So why do I think it's interesting? Over the past 24 months, they've seen pretty remarkable market growth in America and Australia. But to just take Australia market share has gone from 8% to 30% in Australia. So they're winning market share. But they're also looking at I guess like different strategic partnerships. They've just signed a deal with Netflix to license a lot of Netflix's content into the gaming machines and stuff like that. And so you might start saying, you know, like Squid Games slot machines and stuff like that. But then thirdly, and I think most compellingly, is the late like the legalisation and rollout story really across the states. And if they can write that way. 

Bryce: [00:36:09] Big time. Yeah. Huge addressable market. 

Alec: [00:36:11] Yeah. Yeah. So, that's the company. And I think at its core it's also a turnaround story. It's this company that was struggling and now they've really tried to rationalise what they're doing, get new people in and what can they do. It has already run a bit. So. 

Bryce: [00:36:26] That's the name of the game. 

Alec: [00:36:28] Could be Priced in. But I figured, you know, if I'm going to lose stock of the year, I'm going to lose it with an interesting company. People haven't heard of

Bryce: [00:36:36] It's good. What was it? Light and wonder. Nice. All right, well, we will take the performance from when we record 15th of Feb. Yeah. And baseline it from there. May the best man win. Yeah.

Alec: [00:36:50] That sounds good. 

Bryce: [00:36:52] Well, that brings us to the end of our first episode back for 2024. If you've enjoyed it, please, if you can write and review in your podcast out, that would be much appreciated. And also come and join us in our Facebook community. But again, we'll leave it there. We'll be back on Thursday. 

Alec: [00:37:06] It's good to be back.