the call: Wednesday 23 September

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1:01We do it all in 60 minutes. Always a lot of fun. Always a lot of information as well. So stick around promises to be a very good episode today and two experts on the panel. Michael Gabel from Fairbont, equities, Michael. How are you sir? Good. Good. Is this a bit of a lull after earning season? Sort of fresh off it. Yeah, I think so. But also this week and next week we have a lot of dividends hitting bank accounts. So, right. You know, stay tuned. Maybe we finally see some buying in our market. Right. Okay. Peter Rogers from Team Invest also joins the panel. Peter, dividend season as Michael was saying, is this a time that you use dividends to sort of readjust portfolios or do you generally reinvest? Yeah, it's up to that the team investment members, I suppose David, what they do with the dividends. We've got people of all ages and all sort of parts of their working life.

2:01So some are happy to take those dividends and go and get stuck in the life and others are looking for opportunities. I think there are certainly some more opportunities in the businesses we follow than there has been in years gone by. So, you know, I think there's certainly ample opportunity to put some of those dividends to work. Hopefully, hopefully those opportunities are on our list today. So, we'll wait and see. Don't give it away. Don't give it away, Peter. We'll keep everyone hanging there. But I tell you what a stock of the day talking about dividends. My shareholders are not going to get one after reporting $4.1 billion in sales. Up 11.3% yet comparable sales rose just 0.3%. Underlying that profit fell 2.9%. With the real retailer also taking a hefty $280 million in payment charge on Goodwill, on brands, it stores no dividend has been declared.

3:08Mya says cost of leaving pressures higher interest rates, weaker consumer spending, hit business in the second half. Michelle Bullock, governor of the Reserve bank, take heed of those comments, Australian households tightening their belt. While warm, a winter weather also weighed on clothing sales. As I said, no final dividend. With Mya having already paid a fully franked interim dividend of 1.5 cents in May. Mya remains in a net cash position of $100 million, positive increase that's debt facilities to $200 million. And despite what looked like a pretty ordinary result. And shares up 5% today. Michael Gator, were you surprised with the result and why did the shares go up? Yeah, look, I think the shares went up because it was a bad result. It wasn't as bad as people were expecting. So just one of those situations that you get a bit of a bounce.

4:11But I think at one point this morning the shares were up 17%. Wow. I'm not surprised that they're starting to ease back because they're still trapped shareholders in there that bought the turnaround story at higher levels. They've given up and they're looking to sell into any strength. Yeah, look, I wish I could turn up with some sort of nugget of wisdom to say this is going to be a great opportunity. Have you got any interest in over at all? No, I mean, so when you say it was I surprised in some ways, no, because I wasn't even watching the stock. It's not one I'd even consider. Which is a bit sad, is that because a great brand and only 18 months ago, $1.29 down to 19. Yeah, and I mean, you covered it at the start in terms of the pressures that they're under. Interest rates, you know, we might end up in a recession. You know, just the economy, we could spend all day talking about how bad the economy is at the moment.

5:16You know, is it is all the, you know, bad stuff priced in and it's now an opportunity? You look, I don't think it's, we've got a situation where it's a well run business that's maybe just had a bit of a hiccup. And now it's been oversold an opportunity. It is a tough sector. I can't see it improving. It's not as though, you know, they're not even profitable at the moment. So just too hard basket, too hard at the moment. And I suppose, you know, if you have your portfolio of 20 stocks and you have exposure to retail, Myers probably not the retailer, but you would have exposure to it. Well, that's right. I mean, I wouldn't have exposure to any retail. Right. You're out of a moment. Yeah. And as you say, if it was time to dip the toe in the water, you know, you're looking at your JB High Fies and you're looking at stocks like that. And Myers, sort of at the bottom of the list, it's a bit too risky. Peter, are you like Michael just had not been following it?

6:16No interest whatsoever. Yeah, I agree with everything. Michael just said there, you know, Myers, it's a real shame. And I mean, for people of my generation grew up in, in, in out of my with family. And there's a lot of great memories there. But I'm not sure that I've ever stood fit in my with my young family. I just, I don't know who shops there anymore. Unfortunately, although I haven't said that they've still got $4 billion worth of, worth of sales through the group. So there's obviously some people still turning up. But yeah, as Michael said, it's, it's just too hard. This, this industry in general is, is very, very difficult. You know, I've got worries when I hear with, with the amount of debt that they've got, they've already just done a large share placement. And now stopping a dividend. And there's a lot of work to do for this business. Solomon Luke coming back on the board though. Biggest shareholder around 30%. Everyone sort of had been fanned. Lots of disciples of premier investments.

7:19Can he work his magic at my. Yeah, I mean, it remains to be said. I mean, he's obviously one of the one that print me in retail is in the country. He's been gifted. But you know, if you'll got to want any of the brands that the brands that you'd want is the smittle and Peter Alexander brands that stayed with premium investment. So I agree with Michael. It's too hard. If you get again, I'm too retail, you know, J.B. High Files. Probably the pick of the retailers. It's, it's on a pullback. I'm not not saying it's a buy, but certainly better, better than mine. Yeah, yeah. And Michael, is it sort of between doesn't quite know what it wants to be at the moment. Olivia Worth, Ren, Quantus Frequent Flyer, massive business within Quantus, probably valued up more than the airline itself, brought across to Meyer. Still has the old school sort of stores shopping centers. That sort of thing. Do they need just to get out of that? Because Meyer one has lots of members there. Their loyalty program doesn't.

8:27I have to admit, I did buy something from Meyer a couple of weeks ago, but it was online or online. But it was only because I had points on my credit card otherwise I wouldn't have considered it. And they signed me up to the buyer one, but I don't think that's really incentivizing me to do it while buying there. Yeah, a lot of stuff's done online. So, you know, like most people, you just look to get the cheapest thing, whether it's Meyer or David Jones or one of the brands directly. You know, the barrier to entry, just, you just go wherever it's cheaper. It doesn't matter if it's Meyer or not. No, it's at all. I mean, retail. All right, that's a no from both Peter and Michael for our stock of the day with Meyer. And let's look at the five stock cheerwaters to cover in this half hour. We're going to take a look at Cheryl Wants to take a look at Web travel group. Also be casting an eye over corporate travel management. Michael wants to have a look at that. Anthony wants to view zero surely a mass group and also remelius resources as well. All right.

9:32And Cheryl wants a view on web travel group. Peter, what do you think of web travel? Yeah, so just for the viewers following along on this is not to be confused with with Web jet or the spin off from Web jet. So this is the business to business section of that that travel group. They have had decent growth this year, especially in America. They seem to be growing sort of nightly. Nicely at this point certainly better than the other half of the business that was hived off. So but essentially it's a it's a new business. So very hard for team invest members to get in around it at the moment. Through even that sort of shows having had in many years of history really. There's only one year of history or less for this business as it as a current standard. So we prefer at least six years to get to know business and the management what the metrics of this business can achieve. Etc. Just having a look at it. The return on on capital of the new business over the past year is still just below our filters.

10:38It's sort of 8.6%. If you look at it on an underlying basis, you know, return on sort of capital inequity would be higher. But they're doing things like excluding share base payments from underlying earnings, which I know is fairly common practice. But team investment members take a pretty. Div view on that and we wouldn't consider that to be an underlying metric. If share base payments are expenses, then somebody just sort of needs to tell me what category they should belong in. Because I don't see them being anything else. If you own it, maybe you could hold this as the top one sort of seems to be growing. This business should scale well in terms of. It's it's margins should increase as the business grows. But just to answer for team investment members at the moment, so I'll call it a hold. Okay. Hold for you, Michael. What do you think of work travel? Yeah, look, I think, you know, if we try to see where it can go from here. I think, you know, similar to mine, there's a lot of headwinds for that.

11:40I think it's just another sector that is a little bit too hard at the moment. I guess the charts are very representative because of the way they split up the business. But we could see that on the right hand side. It did jump a little bit. You know, after the war in Iran broke out, they had an update in July. It looked like business was rebounding a bit better than the market expected. But I think that little rebound in the share prices over now. Yeah, just again, just looking at what's happening with fuel prices. And again, just confidence and interest rates. I just think that, you know, there's still a few more headwinds out there. And yeah, I think it's a hold. I mean, I'd even be tempted to sell it to move. I was going to say, would you take advantage of the bounce? Yeah, actually, I suppose at the end of the day, I'd probably just sell it to move into something else that's got a bit more upside at the moment. I think retail travel, there's a number of sectors like that, which I don't think you need to be in them at the moment.

12:45And splitting into three as Peter was saying, this is the business to business sort of part. Is that just confusing investors or is there a better side to the business? You should be looking at rather than this one. Oh, look, I think it's probably the better one. I mean, yeah, I mean, it can initially get a bit confusing, but ultimately, you know, they're done for the right reason. So you can value each business correctly, you know, the better performing business often. Yeah, it's sort of undervalued as part of the conglomerate. But once you spin that out, you get to better. And then, you know, the first split it all up via accommodation was sort of like the equivalent of booking.com is that what's saying? I believe Ferrari and the garage it was described. Has it turned out to be a Ferrari or more a fee it. I'm not even looking at the travels. The fix it again, Tony. Look, I'm not even looking at travel to be honest.

13:45I just think it's too early. Right. Michael corporate travel is up next a team invest darling for many years. You mentioned with web travel that your process is going through a number of filters corporate travel past a lot of those. What went wrong? And are they starting to pass some of the filters? Yeah, thank you. It's nice to have the kind of reputation where we get questions like this about what went wrong. Obviously, we've done well enough that this sort of stands out a little bit. But I guess team invests will be the first to clarify that we do work on getting some of them wrong, even on margin of safety. So I'll just clarify some of the wording there, because I know my members will will get stuck into meeting a lot of dung. But you know, the concern here from the from the listener who's called in is around our filters around management credentials management credential by itself can't be a filter because you know, to be a filter.

14:53It really needs to be kind of numerical and absolute. And we're the first to admit that management alignment management credentials is the hardest thing to get right in these businesses when you're looking at it from a long term investment perspective. We rely on the wisdom of the group to attempt to triage any management issues out. No, such as as a same lack of fundamentality hubris, key man risk, those sort of things that wisdom is never universally the same either because you know, we're not a homogenous organism. We're a group of individuals. So we have lively debate about it. So in terms of what happened with this business during COVID in my time, I do adjust after COVID. It has not passed the filters in that time. However, when when a business stops passing the filters, we do allow members to continue to follow it for a period of time. Just in case, you know, that's a temporary issue. And also we want to follow it for a little while to make sure that investors that will learn from any mistakes that have been made there and that so that we can dissect it and get better as we're as we're moving on.

16:00So that this did sort of pass what we call seven and down and vice triage for a couple of years, but it's slowly, you know, members started to stop watching it and voted out. Nothing that's the beauty of our process. The other beauty of our process is that I don't have to learn the hard mistakes. Some of the members have come before me have to make. We do not follow this anymore. It is not a team in our business with the accounting irregularities still being worked through. I would see a well clear of this business. It's had a check in a few years. How's that Michael? Yeah, look, I don't really have anything else further to add. I mean, you know, the key point at the end there was it given the, given the issues that they're sort of dealing with at the moment. All in your head, you're all clear of it. Yeah, look, it's, you know, and it's not as though, you know, it's it's the same as as WebJet. It's not as though it's a sector that I think has a lot of tailwinds and, you know, maybe it's it's dirt cheap and you give it a pun.

17:06You know, it's a it's a business that's going through challenges in a sector that's challenging. Where's the again, 20 stock portfolio? Why, yeah, why are you keeping up at night investing in in something like this? It's just, yeah, just keep it simple. I'm just still still well clear. All right. Our next stock stock is not in travel and so online and sort of books and data zero is something that Anthony is keen to get the opinion of the panel on. Michael Anthony says, is this stock capable of making a comeback? One day. But I love it. I love it. One day. Yeah, it looks a piece of string. You were very diplomatic there. Yeah, look, I mean, it's, you know, but I look, I will add the caveat that I think it's, you know, it is a good business. I use zero. They increase their prices on me all the time. I don't even know what I'm paying anymore.

18:10But it's probably double what it used to be. But I'm stuck there. So look, it's, you know, it's a good product. It's a good business. But I think it's the wrong time to own Aussie tech. I mean, we rotated out of our tech stocks a year ago. And basically into resources and we could see the chart here. I think it's, I think it's at the same price it was in 2020 at the COVID low. Wow. Okay. So, you know, you'd look at that and think, okay, well, it's fallen a lot. So it must be good value. I think what's going on is, you know, we could talk about SaaS, Pocca, Lips and all these sorts of things. But essentially, you've, you've got a situation where money has been rotating out of, you know, high, high PE tech stocks here in Australia and moving elsewhere. The rotation's still happening. It's still like your money, though. Yeah, yeah, still make a money. There's a lot of us use zero. And like you, just too much hassle to change.

19:11Or the bookkeepers use zero as well. They're probably the biggest sales force for zero. And so they just have that revenue stuck. Look, I mean, I think, you know, I think the problem is people are looking at, you know, where it's been and where it is now. Maybe overanalyzing the thing to death. And just not realizing that there's just, just the market is doing its thing. It doesn't want to be in the sector, especially when we've got interest rates still going up. So I guess coming back to the original question, you know, when is this thing going to turn around? I think it will turn around. I think it all happened. You know, it could even be a few months from now. It could be when we've had a couple of rate rises. The economy looks, you know, it looks like we're going to recession. There's all these bad things happening. And you know, oils at 150 bucks. And the only path from here is potentially rate cuts. And then everyone gets excited again. And then tech stocks might, you know, might have a bounce.

20:12And maybe zero will be down at 50 bucks. Right. And that might be the opportunity. But I do think there's just a broader, you know, rotation out of that. You don't really want to be in there when you've got yields heading higher. So I think that's the main story. But yeah, look, great business revenue. Expanding in the US that seems to be doing okay, not perfect, but doing fine. So it's one to keep an eye on. So rate, a rate brawlment. Yeah, I think so. I mean, that's my opinion. I just think it's the wrong time to be in a stock like that. And the problem is that, you know, I don't think we've bottomed on it because people are still talking about it. They're still talking it up. They're still saying it's a great opportunity. Yeah, whatever one's given it up and left it for dead. Then, you know, maybe that'll be an opportunity. So look, I don't know when that'll be. It could be in a few months. Yeah. Get a few rate rises out of the way with the RBA. And then we could see where we're at. Okay. All right. And Peter, what's your take on zero? Yeah, I guess I don't have a view on when it might recover.

21:16Tim, you know, we tend to sort of want the business to be fundamentally sound. That's when we'd enter. We wouldn't hesitate given it to pull back in. You know, SaaS poplips is just an opportunity for us, I guess, but. You both said it really well. This is a business like the fantastic underlying business with great and most. It's a very sticky product. You know, it's just what we call a trap door mode. Once you're in you, you decide for the customer to get out. But having said that, that it is a good product as well. But that makes the concern for us is, you know, we want management to be, you know, running a stable business and have very good capital allocation ability. In fact, you know, for me, your management's ability to allocate capital is the. For most criteria for my investing choice. So these guys kind of tend to have a growth at all costs mentality. It's very aggressive. You know, when they went overseas, they did that through a sort of four billion Australian dollar acquisition.

22:21We prefer to see more organic or more take it as a comes type expansion. You know, sort of a bit more like our technology one did their UK expansion. That's the way we prefer it provides much more stable business and one that's more easy to value. So if zero could stick to their knitting a little bit for a while, I suppose, and then the businesses that they've got in get some stability in it. You know, it really has great modes and probably not a whole lot of long term risk other than AI, which which I think remains to be seen across the whole. The whole industry. You could get into a bit for now, you know, to invest wouldn't wouldn't be involved in this business and it would be a self right. So more from management decision making, because I actually quite admired them. When the tech boom was going and it was all about revenue revenue revenue, who cared about the bottom line.

23:21They marketed, spent money on research, then the rate cycle changed and you had to prove that you could make profits. And they did back then under the previous management, they sliced costs, sliced marketing and actually reflected what the market did. But since then, they seem to have sort of lost touch with the market and what they're expecting from them. Is that a fair summary? I don't know in terms of losing touch with the market, but you know, they're not they're not going to take team investor willing to miss out on opportunities when there's a big change in the underlying business and when they're acquiring something and it takes a while to betting. We're willing to stand on the sidelines and let us some other people potentially make money in those situations. The key is potentially we don't want to get involved in situations where you know, we don't have a hide the height of real certainty. But that's all I'm not you know, I'm not saying management. Good here. I actually don't you know, don't follow the stock data. They don't know the management team well. So I'm not you know, not trying to criticize them at all, but other than to say our preferences that you know, cat will is invested.

24:32Stably, you know, it's invested in in bits. You bet those businesses in you try and run a stable business so that we can value what it is. Okay. Shirley wants a view. Peter, whether mass is the stable business that you're looking for. Yeah, of course, you this is a business I would just love to get behind. It's a great story. You know, where's mass? You know, started this business with with a bobcat and a trailer. I think you know, it's from double original area. I'll be driving through there on the weekend. Yeah, it's a fantastic location. I love to see regional businesses make it big. And these guys have done a fantastic job in their relatively short history. If a team invest, I suppose it's it's doesn't pass our filters. It's not one of one of the businesses we follow. They expanded quickly into a lot of new areas and likely that's sort of weighing on the capital.

25:33So this is the steam of of sensible capital investment. Again, they're a ton. Like what what are they expanding into? Well, they're just just you know separate businesses. So instead of they're not just now a you know equipment, I company, which is which is what they did. They've got. They've got other sort of associated business sold in the construction industry. Right. They're expanding in their return on capital and return on equity is is still fairly low. So it doesn't pass our filters for that. For those for those metrics, it's around sort of any route five to six percent return on equity. That's that's too low for us by house. But it's a fantastic story. It's a well-run business. I think they continue to do great work in that industry and in for that region. We need to see them start to sort of bed those businesses down and improve their return on capital. And maybe that happens as they as they scale or bed those businesses in and you know maybe in the future would be interested in it. But for now, good company.

26:34It's been an exciting story. You know, be having a whole new eye on it just to just to get the on these guys and follow them. Yep. Michael, there would be a lot of companies that wouldn't mind a chart like mass. Yeah, look it's five year high at the moment. Yeah. And yeah, similar thoughts. You know, they've done done really well. I mean, this is a one-year chart. So we could see that it's generally been been trending. I mean, it's a bit sort of volatile and messy. But you know, generally going up bottom left to top right seems to be at the top top of it sort of range. It seems to be a bit of a trading range. So we could say, well, it's a hold and maybe if you wanted to buy it, you'd look for a dip maybe back into the fives. But in terms of the business, yeah, there is a bit of uncertainty. So they're moving a lot. You know, basically redoing the whole business and moving into more on the electrical contracting side working with.

27:39You know, the role out of data centers, you know, hitching their wagon to the whole firm is seeing I can't remember if it's if it's the company itself has the investment in. In firmness or the founder, but so essentially doing a massive pivot into into data centers. So, you know, on the one hand, we could say, well, that's, you know, that's the fashionable thing at the moment. And, you know, everyone's, you know, the way the future blah, blah, blah. On the other hand, if we want to be a bit skeptical, maybe I'm getting a bit sort of skeptical of older age, but you know, I look at how my. It is to get. Go on, make me skeptical. Get it out there. You know, how hard is it to get anything built in this country? Yeah. Let alone a data center. I don't know. That's just British renovation. Yeah, exactly. And, yeah, I mean, you know, I hope we can get all this stuff done, but, you know, part of me is a little bit, you know, not sure if, you know, if these big, sort of these big targets are going to be met when it comes to rolling out of data centers here in Australia.

28:53And, and maybe that means that, that the mass group won't be able to get all the, all the work done that they hope to do. So, look, so, you know, it is, it is a bit of sort of forecasting where are they going to be in a few years from now. They've done a really good job so far. Can that, can management continue to do what they've done in this new area? And will there be enough work for them and, and so on? So, look, there's, there's a bit of uncertainty there. So, I think maybe it's, it's more an opportunity to buy and dip and then sort of chase it after it's had a bit of a run-up. But, hold by it, buy if it gets back into the fives. It is interesting because data centers are so hot at the moment. Everybody's on it. But, I was talking to, I was doing a, an AI conference and the boss of Microsoft was there and saying, a lot of capacity is being built. But, no, we're near as much as being taken up to meet that capacity.

29:54So, it's sort of that transition of industry usage into data centers, whether that puts the brakes on it as, as you were saying. Yeah, that's right. Interesting. All right. And, if it's stock, the last one for this half hour, and it's Michael's pick, which is remelius resources there. We know Michael is skew towards your resources, aren't you more than any other sector at the moment? Why remelius? Look, I, yeah, it's, it's a good business. I mean, it's more of a commentary on gold, really. I think, yeah, any of the sort of top, top Aussie gold stocks are worth buying. I think it's a buy at these levels. It's been trending well. So, yeah, I think, ultimately, if you, if you find a business which, you know, it's, it's well run, has no debt. There's very low, low costs. Then, basically, all you need from there is a rising commodity price. So, yeah, commodities are cyclical, gold, cyclical. There'll be 20 years where you don't want to own the thing.

30:57And then there might be a period of five years where you do. And we're in that sort of period now where you do want to own it. So, I guess a lot of people on this, you know, on this program, I've covered why gold is heading higher. There's, you know, rising debt levels in Flation, you know, central bank buying. We've got, you know, uncertainty around the monetary system. What the US is doing with its dollar and all that. So, look, it's undeniably the fact that the gold is attractive at the moment. It's trending. I don't know where gold will be. No one knows where it will be in a year from now is the gold price. It's going to be $6,000, isn't it? It's going to be $10,000. Or, all I could say with a bit of certainty is that it's going higher. That's the trend. Yeah, and a business like Remelius, I mean, in Aussie terms, gold is about $6,000 an ounce. Their cost is about $2,300. So, they're making a lot of money. In terms of, yeah, in terms of valuation. I notice UBS, I mean, they've got a gold price assumption of $37,50 US,

32:00which is about $500 under where gold is trading at the moment. And based on that, they've got a target over $5. So, yeah, as long as the gold price continues trending the right way, the share price should trend the right way. Ask me in five years, I might not be in gold at all. But, you know, that's by forecast, gold should continue heading higher. So, businesses like these, which are basically doing really well, should continue to see their share price go higher. So, why not hold it for a few years and make a bit of money in all the... And what you say to young traders like one of my sums in law, it goes, now, gold is for dinosaurs. Bitcoin is the new gold in terms of... Well, being sort of safety net against those issues that you talked about. Well, that's good. I mean, it's good to know that not everyone is positive on it.

33:00So, I think the, you know, when the last sort of negative investors finally start buying gold, and we know that that's probably the top... Where he says... Let me know when he starts buying it. Because I argue against them, I just can't value Bitcoin. Yes, maybe I am old fashioned, but at least you can see where the value comes from in gold. Yeah, and how it's mined. Yeah, you can keep physically keep gold, and it's always there to sell, or it's Bitcoin well. Peter, what about you? Traditionally, resources come out of these not an area that team invests use to. Yeah, you've got a great panel here because as I said, Michael, it's the... For him, it's the sector that he's in the most for the team of S-Members. I think it'd be the sector that we're in the least. And Michael sort of said it best to you, and five years time, he may not be in gold. And for us, that's how we make our investing decisions over that five to ten year horizon.

34:05So, you know, one of the companies don't tend to have the stability required for us to do that. And there are, I haven't said that, we've just run, or in the process of running our triages, which we do twice a year around the country, of end of three, or then this month already. And there are a lot of gold mining companies passing our initial filters at the moment, because gold has had, you know, now sort of a long run of good prices, and that's reflecting in a lot of the gold mining businesses. Rumor this isn't one of those businesses that has passed our filters. I'm just trying to remember, I don't think it passes on return on capital, or return on equity, or the stability of earnings. I did have a quick look at it. I do have a mining background, so I thought I'd dig in. Thank you, Michael. I hadn't followed this business, so it was a good chance to have a look at it. What struck me initially, I suppose, was the extremely IP ratio for this business.

35:05It's much higher than a lot of the other gold businesses. A lot of that, I think, from an initial look sort of as writing on this PFS, they've done, which is a pre-visibility study for the Never Never Project. They're touting an NPV for that mine of about $3 billion. Even if I netted that $3 billion off the current market cap, you know, it's still paying, it's demanding a lot to buy this. Management, they've got a $3 billion sort of project in the pipeline. I'm not sure what the capital requirements are for that business, but they're still buying back stock. You would normally expect to see them stockpiling cash to get that mine up and running. If it is as profitable as they're hoping it to be. In terms of gold miners, the ones that are passing out filters, they haven't passed out triodes, so we're not following them.

36:05But that's a filter that picked for me would be evolution, something like that, which has a much higher return on equity, return on capital. For us, it'd be a sell. Okay. Let's recap the first five stock stock of the day was Maya after their announcements this morning, and no from both Peter and Michael. Wed travel are hold from Peter, a sell from Michael. Corporate travel management know from both of them the same with zero. Mass group, a hold from Peter, as was with Michael as well. But if Mass' share price drops into the fives, then maybe that's a buying opportunity in Michael's view and Ramilius, a no from Peter and a buy from Michael. Here at the Coldwebid Track Heroin, high conviction fantasy fund was picked by the investment committee.

37:07Latest episode of the Committee meeting is available for you at Osbees.com. So let's check in with the portfolio update going into September the panel sold out of CSL, Electrooptic Systems and Newmont after a strong month, instead adding Ramilius resources, Northern Star and IPD group. You can now watch the latest episode to get the reasoning behind these investment decisions. The September episode is on Osbees.com.au, drop down menu the Investment Committee. The next generation of Osbees is here. Visit Osbees.com.au. Osbees is your home of investing intelligence, powered by people, matched by AI, tuned to what you like. People create AI connects, you discover.

38:11The next generation of Osbees is here. Visit osbees.com.au to learn more and join Australia's new home of verified investing intelligence. You get Osbees. Osbees Plus gets you. I go. All right. This half hour we're going to be covering jumbo interactive Treasury, Wine Estates, Waypoint, Read, Challenger and Kilsian Group. That is a real mixture of stocks isn't it? All right. Let's get into it. Peter, you have a view on jumbo interactive? Yeah, this is my stock of the day. For me, David, I... jumbo passes team invest filters. It certainly has passed some of the tri-aggers and such a business that we do follow and have followed for some time.

39:16This business has had a bit of a pullback recently. For those at home, they don't know the business they are a ticket reseller for the lottery corporation, but also diversify the business more recently into supporting organisations like the Mara Home Lot 3s, RSLR union type raffles and then also made some big acquisitions last year overseas in the tri- and price giveaway category. The business is much more diversified. The key risk with this business has always been their contract with the lottery corporation and whether that gets renewed each time that it comes up being their premium large customer, so that's a single customer risk. But feel that's going away in the last couple of years as they've diversified a bit. What I like about this business in particular is their capital allocation skills, as we were talking about earlier, that's fundamentally what the key driver of long-term growth is.

40:18You've watched this business in the past pay-out dividend, and then when a acquisition opportunity came along, they pivoted from paying high-dividend into an acquisition. Once they had that acquisition, they looked to pay down some of the debt that they had raised to take that acquisition and then when the share price had a pullback, they've paused that process and are now jumping into share buybacks. On Friday, there was a major institution which got out of jumbo on mass on Friday afternoon, which made the share price drop back to you into the $5 range. So what did jumbo do? They turned around and doubled the share buyback rate on Monday. All signs that I really, really like, there are some team investment members that do not like the process of buying back shares when you've got debt before the cash flow that this business generates. So I think it's worthwhile at the current price. So terrific business, founder lead, best in their game at what they do. They have debt levels that pass, excellent return and equity and return on capital.

41:23They pay not too much for those overseas acquisitions and they're generating lots of cash. Interesting accounting treatments have made them report underlying, sorry, net statutory net profit, much lower than what I think they're underlying and incapacities. So I think this business is a buy. Okay. What do you reckon, Michael? Look at what I follow. So I have to sort of trust Peter's judgment on that. So, yeah, look, I mean, obviously I look at the charts as well at the moment it is still sort of falling back. So for me, it would just be more a case of keep it on the watch list. As we could see, it's got the lower highs, so that does indicate I wasn't aware that an institution exited on Friday, but I was going to say that normally does indicate that the shareholders, they use whatever opportunity to sell when they can, once it has a bit of a run.

42:23So I mean, once that can, I guess, subside and you start to see previous highs get eclipsed, maybe even some more institutional money, move it to it, then I'd feel a bit safer that it's on the way back up. But don't look, I mean, yeah, given, given Peter's round up on the stock sounds like one for, yeah, for me, more for the watch list, I just wouldn't be buying it until that. Down to a, at the right way, five year low is or six year low at the moment. So it, it always was very sensitive. It was tabcourt wasn't it was a rich or you there that own lottery group and spun lottery group out. It was always the watch whether they could keep the contract going, but they diverse. Yeah, and I think there's sensitivity to, you know, whether you big contracts, sorry, big jackpot skit taken out or not. So look, it's, I don't understand it. To the same extent.

43:23Big jackpot sales and then government helped them a couple of years ago by changing the algorithm on how many big jackpot you could have, which went under the radar a bit. I didn't, you'd realize that that was legislated, but you could do keeping keeping mind this business as a reseller. Yeah, tickets. So they're not, they're not up for the risk of the jackpot. In fact, their business suffered last year because they had a one in 50 year event where jackpot didn't go up. So they actually do better when jackpot. So up. Yeah, more time. More tickets. Absolutely. Yeah, you want jackpots up. That's why they, they fiddle with the algorithm apparently. So interesting. All right. Thank you for that, Peter. That was a good suggestion to take a look at. Next up, Lenny wants to view Michael on Treasury wine estate. The owners of Penfolds is their premium brand and right around the world. They've got vidyards, not only in Australia, but charter and France and the US.

44:25Yeah, thank you. Treasury. We seem to get Treasury wine a lot on this, on this program seems very popular, but maybe everyone's looking for a turnaround story. It's been a turnaround story for a few years now, hasn't it? Yeah. Yeah, to me, it's, yeah, too, too hard. Look, this is just a short term chart because the longer term chart looks terrible. It's still in a downtrend. Short term, you know, the way it's trading, it looks like it's recovering to an extent. So I'd go as far as to say it's a hold for the moment. So, you know, nice, nice rebound there in the middle of the year, a bit of consolidation, you know, sort of selling wine. Sort of broke, broke hiring in July and then, you know, just to throw another term out there, you know, little bull flag. That's what we've got on the right hand side and it's trying to get moving again. And so, price action indicates that there is a bit of buying. I just don't know how long that's going to last until, you know, some trapped buyers from the sky.

45:26Wings going through, not only here, but around the world, are major structural changes, that sort of young generations are not drinking wine or really much a whole, at all. So, in a way of sort of saving up to go, their run club of a boarding rather than get on the turps of night before. And what this week's South Australian government introduced a loan program for wineries that wanted to dig their minds out and transition out of the industry. So, it was a real win. And that's not just in Australia, that's globally as well. But that was going to be my next point is that, yes, they're trying to turn the business around, but there's headwinds in the sector. So, you know, less than an optional, no, I was going to say, I'll try my best as well. Yeah, but my kids, sir, you're not, and great kids. And, yeah, and I mean, it's becoming expensive and people are drinking less.

46:30Yeah, so they've got that headwind in a business they're trying to turn around. So, a bit difficult at the moment, plus, you know, on the expensive thing, you know, some people are looking at what might happen with alcohol sales in Australia next year. Could that start, you know, mirroring what we've seen with tobacco where the prices are getting so high that, you know, there's all these little wineries and distilleries and breweries around the country. Yeah, can they get something through the back door to avoid the, all the exercise? Yeah, just tough, tough industry. Do we need this in our 20-stop portfolio? I don't think so. So, no interest from now. Peter? Yeah, I grew with Michael. He and I actually covered this stock only a couple of months ago when I was on. It's too hard. It's a consumer brand type business isn't it? So, it's up for the changes in consumer fashion, consumer taste. I'll leave the one drinking to the two of you.

47:32I have affinity for other alcoholic vices. But, you know, it's true what you're saying, David. You know, I've seen it myself. You know, we try and put on a social event now and get the young people into the office to come along. It used to be the word free beer and I would be there in a heartbeat, but we just can't get young people to come in and even socialise in a business setting anymore. So, it has certainly been a change in consumer trend. I called this business a reluctant hold two or three months ago. Since then, they've continued to have to impair their brands. You know, the turnaround looks like it's going to take even longer than you might have thought back then. Despite that, the business has rebounded from where it was. When I called it a reluctant hold, I think this is opportunity to take the bounty fat in the last few months and go find some of you that's got a bit more certainty behind it. Okay, so, a sell at these levels. And, Bayley wants to view Peter on the waypoint rate.

48:35Yeah, we understand a bit of trust, I suppose. Not our area of expertise. They've always got, you know, a return on equity and return on capital, which are very stable, but just too low for team invest members. So, not a business that we follow. There's been, you know, very little to no growth for this business in the past, sort of nine to ten years. We don't like businesses with single large customer risk either. And I think that's probably, yeah, which what's going to push me from a hole to a sell on this business is it's just to beholden to Viva energy. So, they over 90% of their revenue comes from leasing petrol distribution and convenience outlets to Viva, which, you know, as a long term lease that provides some stability. But anything could happen to to Viva or the industry. And this business could find itself in a lot of trouble.

49:38So, the fact that it's got, you know, low return on equity, return on capital, even though, you know, stable and it pays a, a pay's a good dividend. You know, you can value this business. You can get an idea on what it's worth, which sticks, sticks one box for us. But, you know, over the long term, if it doesn't grow and doesn't have good return on equity, you're treating it like a bond and dividend. But this one has a large risk attached with a single customer. So, I'd say if you're looking for a bond type product or, you know, a continuous income stream, there's other better, you know, continuous dividend payers to look at you. Okay. Michael, what should be on my point? Yeah, sort of Peter touched on what I was going to say at the end there in terms of terms of bonds. So, you know, my commentary on this is not too dissimilar to what I would say when someone asks about, you know, stocks like Transurban and the like. So, you know, people are in this for the dividend. It does have a pretty good yield. It's 7.7%. But these prices, but with no franking.

50:41But, you know, you invest in the share market, you're taking, you're taking equity risks. So, you can't invest for dividend only. You need growth as well because, you know, when it hits the fan, equities go down, doesn't matter what you're holding. Yeah, if you're after income, you need to look at sort of bond and bond type products. If you're in the equity market, in my opinion, you need growth. You know, dividends are great, but you're going to need some growth as well. Now, we could see from this chart that over several years it's gone nowhere. Depending on where you've bought it, you might even be underwater. So, yeah, what growth are we going to get from here, if any? Well, you know, it looks like it's at the bottom of the range. Maybe it can bounce, but we are heading into a period of again, you know, rising interest rates. And certainly over property valuations with tax changes and the like. So, yeah, it's just, you just don't need to be there. If you want the dividend, go and look for, you know, if you want yield, go and look for some sort of bond where you could sleep at night.

51:47Otherwise, invest in something that has capital growth. And this isn't going to get you to get you that growth. So, for me, it's a sell. All right. Still sort of in that financial area and dividends and the like. Let's once of you, Michael and Challenger, which I've still in that annuity type investment products don't they? Yeah, and look, I'm not invested in Challenger, but I think they're in a bit of a good period at the moment. You've got the higher rates helping with the annuity products. We could see on this chart that it didn't go anywhere for quite a while, but a bit of a rough sort of trading range there. So, from a technical point of view, the fact that it sort of broke out in mid 2025, came back and did a retest. So, to touch that $7.50 level and didn't go back into that old range and bounced again. So, from a trading point of view, that's all of this is positive. It shows good buying pressure and that pressure is still there.

52:49So, I think that the share price can continue to creep higher. I don't know if I'd be buying it here. I'd be happy to hold. I think the usual, or probably the biggest problem for Challenger is just when these annuities mature trying to get customers to roll into the new ones. And I think where we're sitting at the moment with interest rates and where they're heading, it's probably not too hard to sell. So, yeah, I think it's an okay period to be a Challenger shareholder. That might not be the case in a year from now, but I'd be happy to say it's a hold. Peter, does Challenger pass the team in best filters? No, it doesn't pass our filters, unfortunately. Management seem to be doing a pretty good job over the last couple of years here, but it doesn't yet pass our filters. Being a sort of a financial institution, it doesn't pass on debt. That can be a bit contentious amongst team investment members because managing debt is what financial institutions do.

53:56So, they're unlikely to ever pass, but that doesn't mean they can't be good businesses, I suppose. But yeah, this doesn't pass on historical profitability metrics. So, return on equity, return on capital again, sort of in the high single digits to low teens. And in particular, just really doesn't have sort of much stability. The other point with this business, I suppose, in terms of team invest lens is it's part fund manager. And whilst I acknowledge that funds management is not the feel and then all of this business team investment members are reluctant around funds management businesses because the outflows can happen so very quickly. And then they look like fantastic businesses when you're when things are going well and people are getting into it, but it can evaporate under you very, very quickly. Once again, some members have a difficult way with other fund managers. So that's the other reason I would say doesn't doesn't pass for us.

55:00We do have some funds management businesses that pass our filters and have passed triage in some cities. But this is not one of them given the management of being doing a fairly good job. Recently, they seem to have a clear strategy that's ready to see and speak of working at least in the last three years. I'll go with Michael here and call this a whole just to sort of see if they continue to play out a little bit. Okay. And final stop more. Remont of you Peter on Kelsey and group the transport organization. Yeah, so it's not a happy day for Tim. It's once again, it's not a business that that passes our filters. It does look to be a steady little owner, you know, nice little business. But it's return on equity and return on capital adjust just to low for us again. It's growth over 10 years has not has not sort of eventually added it still in terms of an experience for shares to see where it is.

56:02So similar to some of the other businesses we talked about here in his profitable. It seems to be well run. You can value this business generally speaking. It's really good over the last sort of six to seven years however you go about 10 years. It's almost where it was. I'd probably need to understand a bit more, you know, what happened in 2019, 2020, what the business has done to read your address that how they're getting the right that they've got not being a business that we follow and not your passing our filters with low return on equity. We haven't done that you diligence on it, but given that you can value this business and you know, it does feel pretty decent dividend. Yeah, I think you could call this business the whole. Okay. Michael, what do you think of Kelsey and the old ceiling? What's that? Yeah. I think it's over overseas as well. More than just the, you know, mainly pure transport out there because they sold off their tourism business.

57:03I think as well. Yeah. It's authentic fairies and buses and things like that sort of thing that I'm not in at the moment. Right. But yeah, look, I mean, yeah, they've they've had, you know, earnings for a while. It looks like it looks like the latest earnings growth is going to be a bit lower just from what I see. And if this is correct, then, then in the prior years, so, you know, not the sort of steady earnings growth that you'd prefer. But what's interesting on the chart there of circle and the far right hand side, you know, after their recent announcement, share price initially jumped and then was sold off. So it couldn't overcome that, that previous peak from 2025. So again, we've got a situation where, you know, there's this of major sort of selling from shareholders. So, you know, what do they know? I don't know. Well, I don't know the business well. So if you're looking at that, what the shareholders are doing, they're not, they're not sticking around for whatever reason.

58:03So, you know, at least from a charting point of view, you could say, well, it's likely to come back a bit further. So, yeah, if you like the business for our viewer, I think you could be a bit patient and pick it up a bit cheaper. I mean, it's potentially super cheap at the moment, to be honest, but for some reason it's getting cheaper. So, you know, maybe there's going to be some earnings adjustment or an expectation of something like that around the corner. So, I'd rather just be a seller here and, yeah, look for other opportunities. Okay. So, these levels. All right, let's recap the final five stocks. Jumbo Interactive, they buy from Peter. Michael's putting it on his watch list. Trujury, Wynastate. And I know, and I sell from both of them. Waypoint to know from Peter, sell from Michael. Challenger, hold from both. And Kelsey and I know and I sell as well.

59:04So, interesting bunch of stocks there to actually go through. So, a lot of information, investing information out there. But if you could cut through the noise and get more of the intelligence that matters to you, Osbus Plus, brings you insights and ideas from verified experts, personalized by AI to your interests. So, whether it's small caps, growth, income commodities or the bigger market picture, you can discover more of what you want to know. The experts you trust, enhanced by AI and built for you. So, subscribe now at osbusplus.com.au. All right, that's it for us. Thank you, Peter, from Team Invest. Good to have you aboard. Thanks David. And... Thank you Michael. Michael Gabel from Femont Equities like Clive. Good to catch up. Cool, is back, same time tomorrow. See you then.