Latest / The Money Puzzle / Top stock picks for 2026 (with Jun Bei Liu)

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Top stock picks for 2026 (with Jun Bei Liu) · The Money Puzzle

0:08
Speaker 1: Hello and welcome to The Australian's Money Puzzle podcast. I'm
0:11
Speaker 1: James Kirby. Welcome aboard everybody now if you've just tuned in.
0:15
Speaker 1: We started the year earlier this week with the edition
0:19
Speaker 1: Your Shares in twenty twenty six, and we had Mark
0:21
Speaker 1: Jocum take us on a panoramic view really of global
0:26
Speaker 1: investment markets and what we might reasonably expect in the
0:29
Speaker 1: year ahead. Today we're going to look at individual shares. Specifically,
0:34
Speaker 1: we're going to look at Australian shares on the A six,
0:36
Speaker 1: which means we're talking about stock picking. And joining me
0:40
Speaker 1: on the show is jun Belu of Tedcap. If you
0:45
Speaker 1: recall she did this exercise with me last year. She
0:48
Speaker 1: had just started her fund actually this time last year,
0:51
Speaker 1: certainly as in its current formation, and in that twelve
0:56
Speaker 1: month period, I think we can say that she's become
0:59
Speaker 1: one of the best known, high profile certainly stock pickers
1:03
Speaker 1: in the market. Very good to have you on again.
1:07
Speaker 1: How are you, JB.
1:10
Speaker 2: I am great, Hi James, thank you so much for
1:12
Speaker 2: having you. Always love to have chat about the stock market.
1:15
Speaker 1: Well, we are ready to roll. As I say, we
1:18
Speaker 1: did an exercise earlier in the week where we just
1:21
Speaker 1: looked at the broader market and they sort of conditions
1:24
Speaker 1: out there, just to refresh for everybody. You know, our
1:27
Speaker 1: own market, the US did about seventeen eighteen percent, and
1:31
Speaker 1: we in the end almost got to ten percent, thankfully
1:34
Speaker 1: due to as always the dividend kicker of three and
1:38
Speaker 1: a half percent or so, which has come down it
1:40
Speaker 1: used to be about four and a half percent. We'll
1:42
Speaker 1: come back to that as the show goes on, but
1:45
Speaker 1: we want to look at first of all the outlook
1:48
Speaker 1: for the AX. Tough question, but clear question for you.
1:53
Speaker 1: Do you think the ASEX can do it again this year?
1:56
Speaker 1: Can it do double digits?
2:00
Speaker 2: Yeah, a SEX definitely is going to get to the
2:03
Speaker 2: double digit if anything, potentially a little bit of upside.
2:06
Speaker 2: I'll tell you why. There's a couple of tailwinds. One
2:08
Speaker 2: is that we started seeing our corporate earnings doing a
2:11
Speaker 2: little bit better. You know, in the last few years,
2:13
Speaker 2: we have had a lot of downgrades and now looking
2:16
Speaker 2: you know, looking forward next twelve months, we're looking at
2:18
Speaker 2: the corporate earnings growth between eight to twelve percent. That's
2:21
Speaker 2: actually pretty good. And then if you look at some
2:24
Speaker 2: of the biggest sector actually you know, one of the
2:26
Speaker 2: biggest sector, which is mining for Australia, they are having
2:30
Speaker 2: they are on fire. That sector is projected to do
2:33
Speaker 2: pretty well again this year, of course, will be more selective,
2:36
Speaker 2: will be more supported by some of the structural commodity
2:39
Speaker 2: like copper and others, but that sector should do pretty well.
2:42
Speaker 2: They paid pretty big dividends and that should drive quite
2:45
Speaker 2: a lot of growth in terms of earnings as well.
2:48
Speaker 2: So our market, I think it will get to the
2:50
Speaker 2: ten percent potentially with a little bit more, you know.
2:53
Speaker 2: I guess there's a bit of expectation for US market
2:56
Speaker 2: to do so much better, as people always do. I
2:58
Speaker 2: think the one thing that sort of held holding us
3:01
Speaker 2: back is that, you know, the back of the mind
3:03
Speaker 2: question of what's going to happen to our interest rate.
3:06
Speaker 2: We're going to get a height towards the end of
3:07
Speaker 2: the year potentially. I don't think it's coming soon, but
3:10
Speaker 2: I do think potentially there is a chance. But that
3:13
Speaker 2: is still going to see us see our market have
3:15
Speaker 2: a pretty good return.
3:17
Speaker 1: So just to give you some context there, it's not
3:19
Speaker 1: that we have strong earnings this year so much as
3:23
Speaker 1: we have earnings this year, right, So it's actually been
3:26
Speaker 1: pretty dull hasn't it in terms of earnings and perhaps
3:29
Speaker 1: behind all the noise, the inability to have strong earnings
3:34
Speaker 1: on the axis is really what explains why we were
3:37
Speaker 1: dragging our heads compared to the US in recent times.
3:41
Speaker 2: That's right, so recent US because the index is very
3:43
Speaker 2: dominated by a lot of those growth businesses and they
3:46
Speaker 2: have done incredibly well. And the challenge is that for
3:49
Speaker 2: next year is you know, there is a bit of
3:51
Speaker 2: investor skepism with evaluation, you know, and now they're getting
3:55
Speaker 2: returns and they are becoming cabinets heavy companies now. So
3:58
Speaker 2: now in a way that our market may see, Ernie Swarth,
4:01
Speaker 2: that's actually not too bad.
4:03
Speaker 1: One of the things that people have been concerned. There's
4:05
Speaker 1: two sort of outstanding, obvious, in your face headwinds for
4:10
Speaker 1: the AX all things been equal, who knows, of course
4:15
Speaker 1: the international markets and if we wake up in the
4:18
Speaker 1: morning and Wall Street has a ten percent correction, where
4:21
Speaker 1: we are going to follow that for sure absolutely probably
4:24
Speaker 1: exceeded history would suggest. So let's put that on the table.
4:28
Speaker 1: But as we stand, and as you say, twelve months
4:31
Speaker 1: is a long time, so we're talking over twelve month
4:33
Speaker 1: pero that we could do this double digit. But you
4:35
Speaker 1: mentioned one thing first of all already, which is the
4:38
Speaker 1: prospect of rising rates. So the consensus is that we're
4:40
Speaker 1: going to have rising rates now that is surely going
4:44
Speaker 1: to work against sentiment in the market. And the second
4:48
Speaker 1: thing that I just alluded to at the start is
4:51
Speaker 1: our great concushion has always been dividends. The dividend yields,
4:55
Speaker 1: which was about four and a half percent, it's actually
4:57
Speaker 1: sliding and sliding. It's now about three and a half.
5:00
Speaker 1: So how do you bake in those two factors? JB.
5:05
Speaker 2: That's a really good question. I think it's very true.
5:08
Speaker 2: First of all, with the interest rate, it's very interesting
5:10
Speaker 2: the expectations for rate rise has changed very rapidly, literally
5:14
Speaker 2: within the last few weeks of December, that market start
5:17
Speaker 2: expecting a rate rise in February, rate rise in May,
5:21
Speaker 2: and you know, instead of ray cards previously. So now
5:24
Speaker 2: my view is that because market is very fast in
5:27
Speaker 2: sort of pricing in the expectations, which you know, economic
5:30
Speaker 2: seems to have moved together. I do think that what's
5:33
Speaker 2: been priced in which we saw a lot of selling
5:36
Speaker 2: in the ur retailers, is now actually perhaps way too pessimistic.
5:40
Speaker 2: My view that we're not getting a rate rise in February.
5:43
Speaker 2: Even May is very skeptical because you know some of
5:46
Speaker 2: the data stats coming through. Normally for RBA, they called
5:50
Speaker 2: for the board. The key thing is to do nothing
5:53
Speaker 2: usually is the first step, and then it takes a
5:55
Speaker 2: really high hurdle to move from raate card to suddenly
5:59
Speaker 2: rate right. So that is going to be very negative.
6:02
Speaker 2: So for me is that I don't think it's coming
6:04
Speaker 2: in the first half of the year. Yes, you'll be negative,
6:06
Speaker 2: you know when it does come that part of the year,
6:08
Speaker 2: and that's assuming inflation stays very strong. We only just
6:11
Speaker 2: really have a one data point, you know, in September
6:14
Speaker 2: quarter that was that was stronger than expected. So you know,
6:17
Speaker 2: we're just still too early to call. Yes, c it
6:19
Speaker 2: is negative for the share market, but right now market
6:22
Speaker 2: is pricing in quite a lot of rate rise already,
6:25
Speaker 2: so from here on you know in a way that
6:27
Speaker 2: we won't be surprised. So I think it's been pricing
6:30
Speaker 2: at least one rise for this year, and I think
6:33
Speaker 2: if anything, timing could be extended out so that if anything,
6:36
Speaker 2: that's kind of on the positive front. So for the
6:38
Speaker 2: market valuation, before.
6:39
Speaker 1: You talk about dividend, Yeald, that's very interesting. So your
6:42
Speaker 1: theory to some extent is that the sell off in
6:44
Speaker 1: the role of the Christmas was actually because of the
6:47
Speaker 1: change of sentiment about rates and the market and the
6:49
Speaker 1: analysts and the journalists are all running wareheaded themselves in
6:52
Speaker 1: terms of how quickly this would and THERBA would never
6:55
Speaker 1: be seen to flip flop quite so dramatically. Is that
6:57
Speaker 1: basically what where you're coming from.
7:00
Speaker 2: Absolutely, I think the pricing is essentially being in and
7:03
Speaker 2: now we actually if you've seen some of the rediscretionary sector,
7:06
Speaker 2: they started performing a little bit better just in the
7:08
Speaker 2: last few weeks because the probability for raate rise is
7:11
Speaker 2: already moving back from you know, something like eighty percent
7:14
Speaker 2: in February now down to twenty five. So, you know,
7:17
Speaker 2: just the market's got too way ahead of themselves.
7:19
Speaker 1: So but consumer sentiment is it's pretty poor, Yeah, I
7:23
Speaker 1: think so.
7:23
Speaker 2: I think consumer the actual consumer sector for this year
7:27
Speaker 2: will be a bit challenged because we heard the Christmas
7:30
Speaker 2: was okay, you know, November was strong, but the challenges
7:33
Speaker 2: there's a lot of discounting and because of the headline
7:36
Speaker 2: was being discussed in the media. You know, Ray Rice rayhike.
7:39
Speaker 2: Consumer just don't spend. And on top of that, we
7:42
Speaker 2: also had the tragedy at Boondai shooting, you know, hearing
7:46
Speaker 2: your South Wales that has really caused a lot of
7:48
Speaker 2: traffic to disappear from shopping centers and others. You know,
7:52
Speaker 2: this has happened previously, any of those similar sort of
7:54
Speaker 2: events that you know, consumer just don't feel they want
7:58
Speaker 2: to be shopping, they want to don't Yeah, they don't
8:00
Speaker 2: to spend. So we definitely seen that full back discounting
8:03
Speaker 2: is very heavy at the moment. We already have a
8:05
Speaker 2: couple of retailers came out already downgraded, not on the
8:08
Speaker 2: revenue front, but more so on the march because they
8:12
Speaker 2: have to discount. So I do think that will become
8:14
Speaker 2: a theme for this year because retailers are sitting at
8:17
Speaker 2: very big margins for the last couple of years because
8:19
Speaker 2: things been good. You know, they do have to give
8:21
Speaker 2: some of that back.
8:22
Speaker 1: This year, okay, and on the dividend yield. So the
8:26
Speaker 1: point we were making is that cushion is fading for
8:31
Speaker 1: Australian stocks. That the ability that you could always say,
8:35
Speaker 1: well you're going to get four and a half percent
8:37
Speaker 1: whatever happens, but you're only going to get three and
8:38
Speaker 1: a half percent. Now, that puts more pressure on the
8:41
Speaker 1: stocks to grow, doesn't it.
8:45
Speaker 2: In a way. So I think part of the reason
8:48
Speaker 2: the dividend has been steadily falling is one is that
8:51
Speaker 2: you know, clearly our banks is already sort of peaked
8:54
Speaker 2: in terms of their earning, so it's not growing in
8:56
Speaker 2: terms of dividend. And two is the last few years
8:59
Speaker 2: that resources company which normally pay big dividend, has been
9:03
Speaker 2: really tough. But we just started seeing those commodity prices
9:08
Speaker 2: turning around significantly. If you look at just take PHPO
9:11
Speaker 2: or Real as an example, both of them are sitting
9:14
Speaker 2: there with thirty percent earnings upgrade to come in this
9:17
Speaker 2: reporting season because how much commodity price has moved. Just
9:21
Speaker 2: this month, the commodity prices all up double digit. So
9:25
Speaker 2: that means these companies normally pay out quite a lot
9:28
Speaker 2: of dividends and that should see the dividend improved for
9:31
Speaker 2: this year. But definitely they will put pressure on companies
9:34
Speaker 2: because the Australian investors always demanded higher dividends.
9:38
Speaker 1: So do you think the big miners the mining sector
9:43
Speaker 1: in it it could actually revive the dividend yield across
9:46
Speaker 1: the market, it's self a structural decline.
9:49
Speaker 2: I think they will pay more, but one of my
9:52
Speaker 2: concerns for the Big Mind at the moment is that
9:54
Speaker 2: they're making so much cash flow at the moment, almost
9:57
Speaker 2: like a windfall, and they historically have being very bad
10:00
Speaker 2: in paying out shareholder and they'll hold on to the
10:03
Speaker 2: cash then normally would like to go out and buy
10:05
Speaker 2: things to grow. You know, managements sit around the table
10:08
Speaker 2: going how do we grow in next year? And we're
10:09
Speaker 2: already started seeing a.
10:10
Speaker 1: Bit of that.
10:11
Speaker 2: So the challenge is that hopefully they don't go out
10:13
Speaker 2: and slowly spend all the money. But I think it
10:15
Speaker 2: looks they will be a bit disciplined because you know,
10:17
Speaker 2: shareholder room punish these sort of nowsal quite quickly.
10:21
Speaker 1: Okay, very interesting now, folks, what we're going to do
10:24
Speaker 1: is we're going to we're going to deep dive. Now,
10:25
Speaker 1: we're going to go and have a look at first
10:27
Speaker 1: of all, and I think this is going to be
10:28
Speaker 1: very interesting. We're going to look at the miners. We're
10:30
Speaker 1: going to look the mining shares of what risks and
10:33
Speaker 1: opportunities you have in front of you, which as JB.
10:35
Speaker 1: Has said it is red hot, and it is red hot.
10:38
Speaker 1: I can't think of the time. I think you'd have
10:40
Speaker 1: to go back nearly twenty years two four to two
10:43
Speaker 1: o seven to see to see the sort of momentum
10:45
Speaker 1: in the big miners. We'll be back in a moment. Hello,
11:05
Speaker 1: Welcome back to The Australian's Money Puzzle podcast. Okay, this
11:08
Speaker 1: is the second of our Outlook shows four twenty twenty
11:13
Speaker 1: sixties are always very popular and if you can, I
11:16
Speaker 1: recommend you actually listen to them in sequence because you'll
11:19
Speaker 1: really get a broad picture for investing in the year
11:23
Speaker 1: ahead and it is very useful.
11:25
Speaker 2: You know.
11:26
Speaker 1: One of the secrets of investing is not what you
11:27
Speaker 1: think is going to happen. It's knowing what everyone else
11:30
Speaker 1: is thinking is going to happen. And this is what
11:33
Speaker 1: these shows are about. They do really give you a
11:35
Speaker 1: guide if you use them in that fashion. My guest
11:37
Speaker 1: today is Jun Belu of ten Cap. Ten Cap is
11:41
Speaker 1: a one point five billion dollar fund. It is an
11:45
Speaker 1: active manager. It is long short, which is very interesting.
11:48
Speaker 1: That is they have the ability to short should they
11:49
Speaker 1: wish to do so. It started basically it has a
11:53
Speaker 1: net return ruffling of about eleven point two percent since
11:58
Speaker 1: its inception. That's against the air six two hundred of
12:02
Speaker 1: eight point nine percent over the same period of time.
12:04
Speaker 1: And if you want to know more about my guest today,
12:07
Speaker 1: We've had a show that was very popular that Juliane
12:10
Speaker 1: Sprague did with JB earlier in the year, which is
12:14
Speaker 1: called Secrets of a one point five billion Investor. Have
12:16
Speaker 1: a look at that if you want to know more
12:18
Speaker 1: about her today, I just want to concentrate on what
12:20
Speaker 1: she knows about the market and what she's thinking. Okay,
12:22
Speaker 1: now the miners, Okay, where will we start? The big
12:24
Speaker 1: three BHP, Rio and Forteskew. As you say, they've been
12:30
Speaker 1: somewhat dormant, but boy, they were kicking at the end
12:32
Speaker 1: of last year. It takes a hell of a lot
12:35
Speaker 1: to lift those stocks. They're up about twenty five percent
12:37
Speaker 1: so far in the twelve month period. That is a
12:39
Speaker 1: bhp in Rio. And when they deliver dividends, they deliver
12:44
Speaker 1: gigantic dividends, don't they. They just blow it out of
12:46
Speaker 1: that They blow the banks out of the water when
12:48
Speaker 1: they're at the top of the cycle. So where do
12:50
Speaker 1: you think we are with these big miners just now?
12:52
Speaker 1: I mean is there is there more to come? Are
12:55
Speaker 1: we are they? Where are they in their own cycle?
12:57
Speaker 1: Because they are notoriously cyclical.
13:00
Speaker 2: Yeah, absolutely certainly, Minus are not what you buy and
13:03
Speaker 2: hold and your bottom drawer sort of thing. Look at
13:05
Speaker 2: they are still looking at having a pretty good year,
13:08
Speaker 2: But it really depends on what type of commodity is.
13:11
Speaker 2: So for if our commodity outlook, if you look at
13:14
Speaker 2: the support, you know, the structural names such as copper
13:17
Speaker 2: or certainly some cases gold and maybe even al aminium
13:20
Speaker 2: has some of the structural supports. In terms of copper,
13:23
Speaker 2: you know, it's electrification and the demand globally, demand for
13:27
Speaker 2: copper has really increased, and then the supply just hasn't
13:30
Speaker 2: been there and we all know that's going to create
13:32
Speaker 2: price this location. And we're seeing copper going to have
13:35
Speaker 2: another strong yet because there's just a supply with it.
13:38
Speaker 2: Iron ore is a bit harder because a big consumer
13:41
Speaker 2: of iron oil is actually China, and China hasn't really
13:44
Speaker 2: revived that much. It's just not doing any worse. So
13:47
Speaker 2: China is steady, and then we're looking at globally the
13:50
Speaker 2: demand is actually picking up a little bit. So yeah,
13:52
Speaker 2: I think all these commodities are well supported, so our
13:55
Speaker 2: minus probably still another good year. You know, probably not
13:58
Speaker 2: going to see that twenty thirty percent range for the
14:01
Speaker 2: large miners, particularly because we are now already seeing a
14:05
Speaker 2: lot of earnings upgrade coming through. In February this year,
14:08
Speaker 2: we're going to see something like twenty thirty percent earnings
14:11
Speaker 2: upgrade for a company for these large miners, FORTESQ, if
14:14
Speaker 2: you like, actually here looking at even bigger upgrades, so
14:18
Speaker 2: you know, it's quite a lot of earnings upgrade, big
14:20
Speaker 2: dividend to come through for them. You know, this reporting
14:23
Speaker 2: season and I think next reporting season August we're going
14:25
Speaker 2: to see an even larger name. But then posta we
14:28
Speaker 2: really have to see whether globally, you know, where we
14:31
Speaker 2: stand in terms of the global bombers, But certainly first
14:34
Speaker 2: half they're going to continue to do pretty well.
14:37
Speaker 1: It sounds to me like you're saying that to some
14:39
Speaker 1: extent it's priced in the Big three, But there is
14:42
Speaker 1: such a huge mining sector and we can look further
14:44
Speaker 1: down the line at what is available out there. So
14:47
Speaker 1: if copper is like this year's thing right this year
14:50
Speaker 1: is hot metal, so to speak, where could we enter
14:54
Speaker 1: as an investor? What sort of stocks are you looking
14:57
Speaker 1: at beyond those big three? And Fortescue isn't even in
15:00
Speaker 1: the game here, is it? Really? It's iron or almost
15:02
Speaker 1: and real with very heavily iron or BHP is more diversified.
15:06
Speaker 1: But beyond those big three, what's the next layer of stocks?
15:09
Speaker 1: Let's start talking about individual stocks. Yeah.
15:12
Speaker 2: Absolutely, there's a lot of interesting names. So in terms
15:15
Speaker 2: of copper, you want to play pure play slightly larger.
15:18
Speaker 2: One is the sam Fire. It has you know, has
15:20
Speaker 2: a really good copper exposure, but said by is very expensive.
15:24
Speaker 2: Then you go even smaller. The next one you can
15:26
Speaker 2: look at is Capstole. It's due listed in Canada and
15:30
Speaker 2: then also you know in Australia it's got a really
15:33
Speaker 2: good production growth as well. Because one of the things
15:35
Speaker 2: about minor is there not only commodities, you get a
15:37
Speaker 2: right each by company actually growing production and also can
15:40
Speaker 2: benefit from high prices right now, So I think Capstole
15:43
Speaker 2: is a really good one to look at. What's also
15:46
Speaker 2: interesting is so if you look at the copper price
15:48
Speaker 2: that's gone really well, there is the next derivative. So
15:52
Speaker 2: when usually globally where copper price go really high, there's
15:55
Speaker 2: some sectors they started moving into some substituting effects. So
15:58
Speaker 2: instead of copper, it might be to use al aminium.
16:01
Speaker 2: So if you look at the prices of aluminium, normally
16:04
Speaker 2: they trace copper, and so far at the moment aluminium
16:07
Speaker 2: actually underperformed comper Now I'm not a mining specialist, but
16:11
Speaker 2: you know if you look at what that means is
16:13
Speaker 2: that potentially, you know, with strong copper, alominium will have
16:16
Speaker 2: it stay in the sun.
16:17
Speaker 1: So there's like a like a reliable ratio like LPG
16:20
Speaker 1: two oil or whatever.
16:21
Speaker 2: Very reliable ratio. That's right.
16:23
Speaker 1: Who are the players in that space?
16:25
Speaker 2: Yeah, so the easiest purest play is our CoA And
16:29
Speaker 2: clearly the share price actually gone incredibly well. And that's
16:32
Speaker 2: again Julis said, it's not just pure here and then
16:35
Speaker 2: you know, obviously it's and it's for a cousin which
16:38
Speaker 2: has had many production issues, which is South thirty two. Now,
16:42
Speaker 2: being mindful mining companies, you do really need to know
16:45
Speaker 2: what's happening in total mind production. South thirty two has
16:48
Speaker 2: had a lot of issues. It's one of those companies
16:50
Speaker 2: people always say you buy it before the result or
16:53
Speaker 2: after the result, but not during the result because they're
16:56
Speaker 2: always disappoint So just be bringing mindful when you move
16:59
Speaker 2: away from the large chap the smaller ones they generally
17:02
Speaker 2: have issues and you just got to do the homework.
17:05
Speaker 2: Be very careful with those things.
17:06
Speaker 1: Can I ask you in your own fund beyond the
17:09
Speaker 1: big three bhp real and for the SKU, what would
17:12
Speaker 1: the peer ibor was looking at your fund and looking
17:14
Speaker 1: at the biggest holdings.
17:16
Speaker 2: Sure, so aside from the larger so larger ones, we
17:19
Speaker 2: actually have more PHV than the real because you know
17:21
Speaker 2: we go through later on, we have that, we have
17:24
Speaker 2: the capsule, we have the same fire, we have the
17:27
Speaker 2: alcohol as well, a little bit of self rearly to
17:30
Speaker 2: smaller position because a little bit, you know, it needs
17:32
Speaker 2: to be careful with those socks.
17:34
Speaker 1: Operational risk as they call.
17:36
Speaker 2: It, operational risk, it's very large, that's right, it's really therefore,
17:41
Speaker 2: you know for a period where you've seen that aluminium
17:43
Speaker 2: price catch up. And also one thing we haven't talked
17:46
Speaker 2: about is the gold set, that goal set.
17:48
Speaker 1: I'm going to do. I don't think I have a
17:52
Speaker 1: little of gold. Let's do it. Let's do it. Just
17:55
Speaker 1: before we do it, folks. Something that JB has pointed
17:58
Speaker 1: out and it's so true and it's just extraordinary. Don't
18:03
Speaker 1: for one moment think that because a company owns a
18:08
Speaker 1: gold mine and gold is rising at its fastest pace
18:13
Speaker 1: since the nineteen eighties, don't for one moment think they
18:16
Speaker 1: can't blow it. They can blow it every time, it
18:19
Speaker 1: doesn't matter. They can be sitting on a gold mine,
18:21
Speaker 1: so to speak, with the most marvelous external macro conditions,
18:26
Speaker 1: and unbelievably they can blow it. And one of the
18:28
Speaker 1: things in this market, and people regret that Newcrest, which
18:33
Speaker 1: was our biggest goal miner, was sold back in twenty
18:35
Speaker 1: twenty three to Numont and it was a giveaway and
18:38
Speaker 1: it was an exquisitely time purchased by Numont and a
18:41
Speaker 1: terrible loss for Australia. But what people forget is that
18:44
Speaker 1: Newcrest was the greatest disappointer on operational risk. Talk about
18:48
Speaker 1: things going wrong every time. So with that preamble, jombat
18:53
Speaker 1: a couple of things. Let's let's set the ground here.
18:57
Speaker 1: Gold is running extraor in extraordinary run, and it's entirely
19:02
Speaker 1: understandable and rational because of the mounting risks in world economy,
19:06
Speaker 1: primarily in the US, primarily off the back of the
19:08
Speaker 1: Trump administration's behavior. Now, on that basis, I think we
19:14
Speaker 1: can be confident that it will keep going. Gold is
19:16
Speaker 1: up about very roughly, up about sixty percent in the
19:19
Speaker 1: last felve months. Gold miners who tend to lag gold
19:24
Speaker 1: itself for commodity, they are up. That is our own
19:28
Speaker 1: ASX gold sector is up about one hundred and forty
19:31
Speaker 1: percent twice as fast as goes. So we can put
19:34
Speaker 1: it on the table. There's a enormous opportunity and I'm
19:36
Speaker 1: still excellent opportunity left foreign investors in gold stocks. Where
19:41
Speaker 1: do we start?
19:43
Speaker 2: You're absolutely right, I think where do we start? So
19:46
Speaker 2: with the goal companies, And you know one reason for
19:50
Speaker 2: why goal companies always lack the goal prices. First of all,
19:54
Speaker 2: goal prices can be affected by so many things, and
19:56
Speaker 2: often it trends in directions that we don't expect. Now,
20:00
Speaker 2: So with the so when people forecast gold equity prices,
20:03
Speaker 2: people don't expect the current spot. So most of the
20:06
Speaker 2: gold companies, you know, when others do their evaluation, it
20:09
Speaker 2: assumes it's going to fall. It's been like other commodities
20:12
Speaker 2: as well. And at the same time, most of the
20:15
Speaker 2: larger gold companies, they actually are contracted all their volumes
20:19
Speaker 2: has been contracted with their customers, so they don't actually
20:22
Speaker 2: get the highest price until they.
20:24
Speaker 1: Yeah, they're working on long term contracts, which which don't
20:28
Speaker 1: necessarily reflect the red heart lift in gold.
20:32
Speaker 2: Okay, that's right, that's right, and so that's the second reason.
20:36
Speaker 2: Now the last reason of why it's always lack is
20:39
Speaker 2: because gold companies, if you do, a risk customer. So
20:42
Speaker 2: we have a model we look at all the companies
20:44
Speaker 2: risk their volatile. They are relative to share market, gold
20:48
Speaker 2: is four times of volatility goal shares, goal gold equities.
20:51
Speaker 2: They're very volatile. The reason being is that most of
20:54
Speaker 2: the gold company always need to raise money to dig
20:57
Speaker 2: out all the goal because gold is hard to dig out.
20:59
Speaker 2: You have a lot of operational risks, so they always
21:02
Speaker 2: come equity raising, particularly smaller names. So when the market
21:06
Speaker 2: so often when the market goes through free four, when
21:08
Speaker 2: people worry about the world, the goal price will go up,
21:11
Speaker 2: but goal shares, goal equity will fall a lot because
21:15
Speaker 2: people think, oh, they can't raise money anymore. They can't
21:17
Speaker 2: dig those goals out. So it is very interesting dynamics.
21:20
Speaker 2: So it's not exactly like your goal bus. It's actually
21:23
Speaker 2: works as a very extreme volatility measure of the market.
21:27
Speaker 2: But normally market in the normal condition, they will go
21:30
Speaker 2: up rasually over the goal prices. So these are the
21:32
Speaker 2: key reason why they don't they always be cheaper. But
21:36
Speaker 2: I do think the goal sector is really interesting because
21:38
Speaker 2: in the last four month, we actually have gone to
21:40
Speaker 2: a lot of smaller gold companies. So when we talk
21:43
Speaker 2: about the big goal company, you know, they have contracts
21:46
Speaker 2: and everything takes a long time to benefit from the thing.
21:48
Speaker 2: And some of the bigger ones and we both know,
21:50
Speaker 2: you know, particularly Northern Start has had a lot of
21:52
Speaker 2: production issues exactly.
21:54
Speaker 1: Yeah, yeah, just like Luclest added their day.
21:56
Speaker 2: Yeah, yeah, that's right, the weather and everything else, and
21:59
Speaker 2: most of them they're pretty good in telling us about it.
22:02
Speaker 2: It's just that market don't remember. So by the time
22:05
Speaker 2: the market don't adjust their number until suddenly they report
22:08
Speaker 2: and they said, we told you, and then the market
22:10
Speaker 2: have been put into their numbers because they got too
22:12
Speaker 2: carried away with high prices. So we moved into some
22:15
Speaker 2: of the mid tier mid caps, so smaller names, and
22:18
Speaker 2: they are the one that actually has been doing really well.
22:21
Speaker 2: Not only they growing production, they actually don't have long
22:23
Speaker 2: term contracts, so they just they started benefiting much higher
22:27
Speaker 2: prices and get all these cash flow. That's why you're
22:30
Speaker 2: seeing them doing so much better than the larger names.
22:33
Speaker 2: So you know, so the names we sit in are
22:36
Speaker 2: the likes of Catalysts and the names of Genesis, Capricorn.
22:40
Speaker 2: They're all doing really well now. They all actually gradually,
22:43
Speaker 2: you know, going from small cap small ordinary index into
22:46
Speaker 2: larger index just because they actually are benefiting so much
22:50
Speaker 2: more than the larger like the Northern Star and.
22:52
Speaker 1: US fourteen of the top twenty performers last year were
22:55
Speaker 1: gold miners. That's right, a goal that is the extraord
23:00
Speaker 1: Do you think we have a similar reflection in this
23:03
Speaker 1: twenty twenty six?
23:05
Speaker 2: I think it will be harder, but of course, look
23:07
Speaker 2: if the goal continued with the way Trump operates it,
23:11
Speaker 2: the world is still very uncertain. There is a possibility,
23:14
Speaker 2: but I think hargely for that gold reray is they
23:17
Speaker 2: distruggle for many years. The part of the reray is
23:20
Speaker 2: the market recognized your cryptocurrency is not the true diversification
23:24
Speaker 2: from the money from the you know, over stimulus. You know,
23:27
Speaker 2: all these world and wash with money. So you know,
23:30
Speaker 2: because that has become quite a problem towards the end
23:32
Speaker 2: of the year. So now the gold you see just
23:35
Speaker 2: see investors moving back into gold at the same time
23:38
Speaker 2: you see all the central banks buying gold China in
23:41
Speaker 2: your emergency market. They're not buying what they might be
23:44
Speaker 2: buying some cryptal currency. But it's just it's the gold
23:46
Speaker 2: has now restored its title as the story value.
23:50
Speaker 1: That's very interesting and I certainly I actually did something
23:54
Speaker 1: a few prior to Christmas on this. It is certainly
23:57
Speaker 1: from my point of view, digitally goal. It's over really
23:59
Speaker 1: the story about whether crypto is digital gold. It's not
24:01
Speaker 1: goldles gold. But I'm going to ask you two questions.
24:04
Speaker 1: They're not easy questions. They're relating to gold. One is
24:07
Speaker 1: on the gold rally. I don't know if you're a
24:09
Speaker 1: buler bear on gold, but I wonder one thing. If
24:13
Speaker 1: the whole thing about gold is that it was a
24:15
Speaker 1: non correlated asset and in theory it went down when
24:18
Speaker 1: markets went up, then what's going on because markets are
24:21
Speaker 1: going up and gold is going up, and so what
24:25
Speaker 1: does that mean? I mean, if what does it mean
24:28
Speaker 1: it's becoming I don't know if it's becoming correlated sufficiently
24:31
Speaker 1: that mathematically that the analysts are convinced but does that concern.
24:35
Speaker 2: You in a way because it's like you said, it's
24:39
Speaker 2: becoming very correlated, right, So it's possibly correlated. So it's
24:43
Speaker 2: been like the bond and equity when they move together,
24:45
Speaker 2: which do these days, it's almost that reduces its effect
24:49
Speaker 2: as diversification. I think what with gold is a bit
24:52
Speaker 2: different at the moment. It's look, that's why it kind
24:55
Speaker 2: of feels okay, is it going higher? You know, it's
24:58
Speaker 2: harder to see it down from here now. But so
25:01
Speaker 2: the goal is a little bit different. I do think
25:02
Speaker 2: that investors or you know, insitutions or countries around the world,
25:06
Speaker 2: there is so much demand they realize how much under
25:09
Speaker 2: owned of the goal it is, so there is this
25:12
Speaker 2: rush to buy them. So it's actually demand for you know,
25:16
Speaker 2: from real demand. It's not actually more you know, sort
25:19
Speaker 2: of financial you know, sort of structuring demand. It's actually
25:22
Speaker 2: different countries positioning, for whatever reason, a real demand for
25:26
Speaker 2: this asset class. So I think it's well supported that
25:29
Speaker 2: it still is enough support to support that. And given
25:33
Speaker 2: you know, crypto is a little bit unsure of where
25:35
Speaker 2: it stands at the moment, I think that's at least
25:37
Speaker 2: for the next twelve month. You think this price is
25:39
Speaker 2: well supported, you know, very hard to see it collapsing,
25:42
Speaker 2: particularly given the Trump administration. What's happening.
25:46
Speaker 1: Yeah, I suppose the factors that have driven it to
25:49
Speaker 1: this point remain very much in place, if not, if
25:52
Speaker 1: not enhanced. Really Okay, it's interesting you mentioned about being
25:55
Speaker 1: under owned. There is there is speculation, hard to prove
25:58
Speaker 1: this at the big superfunds. Australian super funds are way
26:01
Speaker 1: behind on glow delocation and if they are, then that's
26:05
Speaker 1: another sort of demand that would come through from that
26:08
Speaker 1: under ownership. Okay, shortbreak, folks. Back in the moment, we're
26:11
Speaker 1: going to talk about what you might avoid. Hello, Welcome
26:26
Speaker 1: back to The Australian's Money Puzzle podcast. James Kirby here
26:30
Speaker 1: talking to June Beileu of ten Cap, regular on the show,
26:35
Speaker 1: perhaps a much better known as a staff picker now
26:38
Speaker 1: then we started talking to her earlier and I'm sure
26:41
Speaker 1: that will continue in this year. She's great to talk
26:44
Speaker 1: to and I think particularly for fund managers, she's talks
26:50
Speaker 1: in detail and takes a stand and there's nothing more frustrating,
26:54
Speaker 1: I can tell you on a podcast show than someone
26:56
Speaker 1: who's humming and haweiing and beating around the bush. Not
26:59
Speaker 1: everything works for you, you always have I mean, as
27:01
Speaker 1: a staff picker, it's hard, right every year something goes right,
27:04
Speaker 1: something goes wrong. I mean most things go right. I
27:06
Speaker 1: mean I think the last time we talked, the one
27:08
Speaker 1: that the one that I thought had let you down
27:10
Speaker 1: was Ramsey. Maybe they're turning a bit now this time
27:13
Speaker 1: around Premier Investments. How do you that didn't work out
27:16
Speaker 1: for your heart? I mean do you just say that
27:18
Speaker 1: it's like doing karate? You do karate every now and again,
27:21
Speaker 1: A punch lands and you just keep going. Is that
27:23
Speaker 1: your approach or what is your approach?
27:25
Speaker 2: You know, when we look at the company and we
27:26
Speaker 2: have a thesis, you know, what is expected to return,
27:29
Speaker 2: what are some of the catalysts, and then when the
27:31
Speaker 2: catalysts come along, we look at it and say, look
27:34
Speaker 2: that's just way too tough. And so in a case
27:36
Speaker 2: of Ramsey, I remember many years ago, you know, it
27:39
Speaker 2: was a case where we're waiting for the reopening trade, right,
27:42
Speaker 2: I remember when the you know, post COVID had a
27:44
Speaker 2: lot of issues. We're waiting for people to finally start
27:47
Speaker 2: using you know, egos of doctors, and they're like, now
27:50
Speaker 2: we are seeing it now, but it's two more years
27:54
Speaker 2: then expected, and they had all these extra inflation in
27:58
Speaker 2: terms of nursing stuff and others. That's been very tricky, so,
28:02
Speaker 2: you know, but Ramsey, to be honest, it's actually now
28:04
Speaker 2: finally looking a little bit better. We know, health scopes
28:08
Speaker 2: go through these challenges, but the market seems to be turning.
28:11
Speaker 2: We'll do double digit return. So this is what we see.
28:14
Speaker 2: We want to see our thesis. We're constantly testing our
28:17
Speaker 2: thesis to say if it's a still it is a
28:19
Speaker 2: still intact. If it's perhaps the money should be allocated elsewhere.
28:23
Speaker 2: So it's kind of all, well, we always look at
28:25
Speaker 2: in the case of the retailers. Yet last year was
28:28
Speaker 2: looking as a good year to start with that, with
28:31
Speaker 2: the rake cards, you know, with the you know many
28:33
Speaker 2: ray car on the car that's coming through, with the
28:35
Speaker 2: consumer not doing too badly, you know, things were looking
28:38
Speaker 2: pretty good. However, the challenge is now that we just
28:41
Speaker 2: you know that we all see now are we getting
28:43
Speaker 2: a rad cards? Probably not, Probably is more likely to
28:47
Speaker 2: stay on hold for some time. And then in the
28:50
Speaker 2: environment also where consumers a bit more picky, not collapsing,
28:53
Speaker 2: just a little bit more picky, there might be a
28:54
Speaker 2: little bit of challenges for some of those companies in
28:57
Speaker 2: that sector.
28:59
Speaker 1: Okay, so looking at docs that may let you down.
29:03
Speaker 1: They were so good for so long, and Combank obviously
29:06
Speaker 1: was I've been talking to people all week about this
29:08
Speaker 1: about Combank, and there's almost like a mystery as to
29:11
Speaker 1: just how it got to the sort of extraordinary levels
29:15
Speaker 1: that it get to, and when it had a valuation,
29:16
Speaker 1: and when it had an intrinsic value of allegedly one
29:19
Speaker 1: hundred bucks or so and it was trading at one
29:21
Speaker 1: hundred and eighty or whatever, of course it couldn't hold up.
29:24
Speaker 1: So the question this year with banks, we have the
29:27
Speaker 1: four banks now sitting with you know, possible rate rises,
29:32
Speaker 1: possible soft consumer sentiment, struggling with the fact that they
29:37
Speaker 1: were clearly overvalued in twenty twenty five, and they are
29:42
Speaker 1: the big sector that often we would be talking half
29:44
Speaker 1: the show on. But we'll take it. I don't know
29:46
Speaker 1: if you agree, but I would take it that the
29:49
Speaker 1: best we can expect from the banks would be a
29:51
Speaker 1: sort of market average return.
29:53
Speaker 2: What's your view, I think, Magie is that it probably
29:56
Speaker 2: will be market average, a little bit less in terms
29:58
Speaker 2: of written and the return delivered from the banks will
30:02
Speaker 2: be quite you know different, So within the banks, you know,
30:05
Speaker 2: also into outperform and then the disparity will be still
30:07
Speaker 2: quite large compared to last year, so that would be
30:10
Speaker 2: quite large. And I do think the banks will be,
30:13
Speaker 2: you know, in terms of performance, will be a whole
30:14
Speaker 2: lot worse than you know, the lives of resources and
30:17
Speaker 2: a few other sectors, just because they don't have earnings
30:20
Speaker 2: growth and they're previously their earnings upgrade was because people
30:24
Speaker 2: were expecting very bad, bad their cycle. And now all
30:28
Speaker 2: the expectation has been re rated, so people don't expect
30:31
Speaker 2: that cycle. So there's no earnings upgrade to come through,
30:34
Speaker 2: and there's not much earnings growth. And then now it's
30:37
Speaker 2: all about cost out, so revenue environment benign, you know,
30:40
Speaker 2: it's really just about cost out. Then who can do
30:42
Speaker 2: the cost out? So we saw A and Z already
30:44
Speaker 2: talk about cost out. I think it's got a little
30:46
Speaker 2: more rude to go, you know, West Pide potentially a
30:49
Speaker 2: bit more. And CBA is the one that doesn't you know,
30:52
Speaker 2: never really does cost out. They invest, so you know,
30:56
Speaker 2: that's the one I think will be probably struggled more,
30:58
Speaker 2: you know, for the next twelve month because they're not
31:00
Speaker 2: going down the path where they will control costs and
31:03
Speaker 2: they will probably want to invest ahead of the pus.
31:07
Speaker 1: Okay, so banks as a sector, the big four, you say,
31:10
Speaker 1: maybe average or less than average. And when we know
31:13
Speaker 1: we have one, we're talking about a very good year
31:15
Speaker 1: that put that on the table, folks. And I suppose
31:17
Speaker 1: part of the message here is always be diversified. So
31:20
Speaker 1: Bank's not looking great, ordinary at best, with some diversity
31:25
Speaker 1: within the four. After that, I think we're going to
31:28
Speaker 1: start basically we're going to get random here, folks. Okay,
31:31
Speaker 1: I'm going to just I'm just going to spray JB.
31:33
Speaker 1: But also as the questions that you probably have in
31:35
Speaker 1: your mind. So let's go CSL extraordinary disappointment. This great stock,
31:41
Speaker 1: once the biggest stock in Australia. Can you believe this?
31:43
Speaker 1: Bigger than CBA, bigger than BHP. Now what has happened?
31:46
Speaker 1: It's down thirty five percent, but it's got an ROI
31:49
Speaker 1: of about sixteen percent, which is magnificent. What do you
31:52
Speaker 1: think is going to happen to it this year?
31:55
Speaker 2: I think by the end of the year seer Priss
31:57
Speaker 2: should be higher, but it will betail two hearts again,
32:01
Speaker 2: you know, because the reason they sounds so much is
32:03
Speaker 2: because it's perpetual disappointment. It's disappointed market again and again.
32:08
Speaker 2: Last year. I think with something like two three downgrades.
32:10
Speaker 2: Now the risk is there's one more. There's one more downrade. Look,
32:14
Speaker 2: the operating environment is still very tough. Sounds like the
32:17
Speaker 2: core business has lost really lost, you know, lost its
32:20
Speaker 2: structural growth driver. Now you know, the ig business, it
32:24
Speaker 2: seems to be in oversupply. That's why the competition is
32:26
Speaker 2: being severe. They're losing share and they say they don't
32:29
Speaker 2: want to compete on price, but clearly the market is
32:31
Speaker 2: very competitive. So that's tough. We're not seeing that turning
32:34
Speaker 2: around yet. And then the other product category, you know,
32:37
Speaker 2: we're seeing the album is doing really poorly in China.
32:41
Speaker 2: That's another headway to come through. Flu is not great,
32:44
Speaker 2: but I think that's in people's numbers now, So I
32:46
Speaker 2: think the next six months there's still numbers to be
32:48
Speaker 2: notched out. But look, it is cheaper compared to what
32:52
Speaker 2: it was. It will never go back to the heydays
32:54
Speaker 2: because it's not a growth structural grower now because it
32:57
Speaker 2: doesn't have a big pipeline to grow it but cyclically
33:00
Speaker 2: should do better less than twenty times. It is cheaper
33:03
Speaker 2: for what it was. So I think second half the year,
33:06
Speaker 2: once the earning is really cleared through a weekend, you
33:08
Speaker 2: know confidently say it will grow from here. It will
33:11
Speaker 2: definitely you should outperform.
33:13
Speaker 1: You're not exactly calling it all the way back right, Okay,
33:16
Speaker 1: very interesting. I had no idea what you're going to
33:18
Speaker 1: tell me on that one. Okay, that's CSL. Let's take
33:21
Speaker 1: a look at and talking about potential areas that may
33:24
Speaker 1: not thrill, shall we say in the year ahead, the
33:27
Speaker 1: things that might let you down, things of where there
33:28
Speaker 1: are distinct risks. Tell me if I'm I mean, tell
33:31
Speaker 1: me what you think. If there's any area I'm guessing here,
33:34
Speaker 1: where are we standing on for instance, Reads and the
33:37
Speaker 1: big If we have rising interest rate environment, then the
33:41
Speaker 1: textbook would say keep away from Reads. That is a
33:43
Speaker 1: property trust. Where are you on that.
33:46
Speaker 2: Property trust? That you're right? They underperform leading up to
33:49
Speaker 2: the rate rise, and then you're probably looking at again
33:52
Speaker 2: the second half names. I think with the Reads they
33:55
Speaker 2: will do okay. For the first part of the year,
33:57
Speaker 2: earning is still pretty strong. Now this is as a sector,
34:00
Speaker 2: but this as a sector because the earnings just started turning.
34:04
Speaker 2: All of them has been come upgrades. Retail property is
34:07
Speaker 2: doing really well and they all probably have earnings upgrades.
34:10
Speaker 2: So your center group, your vicinity, that's doing pretty well.
34:14
Speaker 2: Even some of the office space, which you know Childhol's
34:16
Speaker 2: doing is not too bad. Dexus is a different story.
34:20
Speaker 2: That's just going to be tough. And then the residential
34:22
Speaker 2: space is actually doing pretty good. You know, we like
34:25
Speaker 2: the retirement some of the retirement living space where you know,
34:29
Speaker 2: the recent listing of gem Life is doing very well.
34:32
Speaker 2: So we kind of prefer company that more have the
34:34
Speaker 2: self help right, so they are building all these properties
34:37
Speaker 2: in the area highly desirable. You know, they're going to
34:40
Speaker 2: do very good earning growth regardless you know, whether they
34:43
Speaker 2: might be build a micro pressure. So I think the
34:45
Speaker 2: reason will do okay, but it's more on neutral stands
34:48
Speaker 2: for the rest of the year because once the great
34:50
Speaker 2: they usually start underperforming as a sector. You know, when
34:52
Speaker 2: they don't have a proper growth for the company itself,
34:55
Speaker 2: they tend to underperform five month leading up to the
34:57
Speaker 2: first rate hike. So if we say the the year's
35:00
Speaker 2: ray high, so second half the year, that's pretty much
35:03
Speaker 2: it or the rebrates is pretty much done. So that's
35:06
Speaker 2: how it is more neutral. I think the housing is
35:08
Speaker 2: still looking okay, but it's you know, it's the other
35:11
Speaker 2: the some Yeah, it's the other face.
35:13
Speaker 1: I wanted to ask you something there. Goodman being in
35:17
Speaker 1: theory a property trust but in practice priced as an
35:20
Speaker 1: AI play with an extraordinarly ambitious agenda, one would naturally
35:26
Speaker 1: be skeptical except for the fact that Greg Goodman has
35:30
Speaker 1: an impeccable record through decades of getting it right in
35:35
Speaker 1: the end again and again. Are you comfortable with the
35:38
Speaker 1: price that's at now?
35:42
Speaker 2: I am. I hold Goodman. I think it's an incredible company,
35:46
Speaker 2: and I think what they're doing there is a disclaimer coming.
35:49
Speaker 2: I think what they're doing is great because they're repurposing
35:52
Speaker 2: a lot of their industrial property, right and they just
35:55
Speaker 2: keep them another leg of growth and you're delivering double
35:57
Speaker 2: did you return? It is great? You know into the
35:59
Speaker 2: data like it's great now, I do have, But rather saying,
36:04
Speaker 2: you know, Russia for all your eggs and buying lots
36:06
Speaker 2: of goodment, I'm a little bit skeptical, and you know,
36:09
Speaker 2: unsure about this whole data center space, whether there will
36:13
Speaker 2: be enough return to be generated in five years time, right,
36:17
Speaker 2: So you know, because there's hyperscalers putting so much money
36:20
Speaker 2: into the data center and evaluation going through the roof,
36:23
Speaker 2: we just don't know who's going to be the ultimate buyer,
36:26
Speaker 2: like saying ten years, who's going to buy them, and
36:29
Speaker 2: then whether there will be enough technology if the data
36:31
Speaker 2: center is still going to be in the current form,
36:34
Speaker 2: So maybe there's no terminal value for those and Goodmen
36:37
Speaker 2: instead of just buy and sell it, they want to
36:40
Speaker 2: hold it because normally with their other industrial property that's
36:43
Speaker 2: what they do. So they will manage. They will put
36:45
Speaker 2: them into a fund and the fund will manage it
36:47
Speaker 2: so they will be the owner of this property. So
36:51
Speaker 2: it's a little bit challenging for me to see ultimate
36:53
Speaker 2: value of data center. But for Goodmen, I do think
36:56
Speaker 2: they underperform the sector enormously last year. You know, I
37:00
Speaker 2: think it does look pretty good from the industrial perspective
37:03
Speaker 2: and the money they can make right now from those
37:05
Speaker 2: data center.
37:06
Speaker 1: Do you say Goodman underperformed the sector last year?
37:09
Speaker 2: Yeah, they did, so the sectors down If you compare
37:12
Speaker 2: Goodman and Charta Hall, I think something like thirty percent
37:15
Speaker 2: or more difference now Obviously the year before Goodman did
37:19
Speaker 2: really well because the data center. But it's just it
37:21
Speaker 2: does look like there's a bit of catch up to do,
37:23
Speaker 2: and industrial property is still doing pretty well, demand strong,
37:26
Speaker 2: and then meanwhile they're making good profit out of those
37:28
Speaker 2: making building those data center So you know, so I
37:31
Speaker 2: think it's it's something that I do like. I think
37:34
Speaker 2: for the time being, it's good. But I'm still working
37:36
Speaker 2: out this whole data center centeris because our portfolio can
37:40
Speaker 2: hold it and we can show other companies, so you know,
37:43
Speaker 2: we can take how that data center uncertainty.
37:46
Speaker 1: I certainly tune into your notion, your concept that the
37:51
Speaker 1: technology itself could change, and then you know, maybe data
37:54
Speaker 1: centers as we know them will not look anything like
37:56
Speaker 1: data centers that have been planned to be built right
37:58
Speaker 1: now that are getting such valuations. One last thing, and
38:03
Speaker 1: it's a kind of a reflection really of our market
38:05
Speaker 1: and its absence of tech and AI that we leave
38:08
Speaker 1: it to last, because there isn't really a part. I mean,
38:12
Speaker 1: Goodman has become a proxy AI play in the blue
38:15
Speaker 1: chip space, or at least the top of the market,
38:17
Speaker 1: and within the market, there is very little else. NEXTDC
38:20
Speaker 1: has been seems to be a very disappointing company in
38:24
Speaker 1: many ways. Is what do you think of a NEXTDC
38:27
Speaker 1: and do you of in recent times has been disappointing.
38:30
Speaker 1: Do you see any AI play within the ASX.
38:37
Speaker 2: I think, first of all NEXTDC again, it comes down
38:40
Speaker 2: I think it's done very well. If you want to
38:41
Speaker 2: have exposure to data center, it's just one all the
38:44
Speaker 2: contracts and everything's great. My thing is that again, I'm
38:47
Speaker 2: just not sure about ultimate value of those data center.
38:50
Speaker 2: I don't know if by building it today in five
38:53
Speaker 2: years you know who's going to be the next person
38:55
Speaker 2: to buy those assets. You know it's going to be
38:58
Speaker 2: harder to see. And then when I talk about technology
39:01
Speaker 2: goal change, you know what if there's a breakthrough that
39:03
Speaker 2: you can have data center in the middle of the forest,
39:06
Speaker 2: like in the middle of the.
39:07
Speaker 1: A data center in your basement.
39:09
Speaker 2: That's right, Yeah, why what if you just put something
39:12
Speaker 2: out of the building. So I think it's just really
39:14
Speaker 2: I don't know, because the technology changing so fast. So
39:17
Speaker 2: that's the thing. So I like it as a data
39:19
Speaker 2: center exposure, but I'm just not sure if I want that.
39:21
Speaker 2: I seen the exposure at the moment. Goodman gives me
39:23
Speaker 2: a quasi it's still got other assets in that sort
39:26
Speaker 2: of exposure in terms of the AI player and everything.
39:29
Speaker 2: I really think this is the year when you actually,
39:32
Speaker 2: rather than just AI exposure, it's the company that benefit
39:36
Speaker 2: from the AI. You know, it's the costs out. It's
39:39
Speaker 2: the secer for example. You know what is the sector
39:42
Speaker 2: that has the highest labor cost? You know, where there's healthcare,
39:45
Speaker 2: where there's banks, there's a lot of cost efficiency coming through.
39:48
Speaker 2: You know, we're hearing chatters overseas now, you know people
39:52
Speaker 2: talking about overseas banks. You know, one of the JP
39:55
Speaker 2: Morgan Stanley cheap Ecommas said that they think the banks
39:58
Speaker 2: is the growth stock of the future because there's so
40:00
Speaker 2: much cost that can come through with the AI efficiency.
40:03
Speaker 2: So I think this is a year people will distinguish
40:05
Speaker 2: on also win there a loser. People still trying to
40:08
Speaker 2: work it out of the AI, the development of the
40:10
Speaker 2: AI rather than just go to the physical AI exposure.
40:14
Speaker 2: You know, I would actually say some of the company
40:16
Speaker 2: tech companies be sold off recently. It potentially is the
40:19
Speaker 2: benefit beneficiary of those AI because they you know, they
40:23
Speaker 2: have big database RAA for example, big database, the proprietary database.
40:27
Speaker 2: You know, they actually working with some of the AI model,
40:30
Speaker 2: you know, so that is the beneficiary. And but the
40:32
Speaker 2: market at the moment is selling your tech not sure
40:35
Speaker 2: what it is, and then just all buy just direct
40:37
Speaker 2: chip exposure. So for me, it's the companies that will benefit.
40:40
Speaker 2: And then there's a lot I think companies will start
40:42
Speaker 2: talking about it in the next six months.
40:44
Speaker 1: So hard one just wrap. We're going to say at
40:47
Speaker 1: the start stock you really like stock you think you
40:50
Speaker 1: could avoid top of your head.
40:52
Speaker 2: Yeah, so the things that the stoker would avoid, it's
40:55
Speaker 2: probably temple on website this stage. I'm a little bit worried.
40:58
Speaker 2: One is it's expensive and that we're heading into a
41:01
Speaker 2: somewhat slow down sort of environment. Lots of expectations. I know,
41:04
Speaker 2: shampires fallen, just a little bit caret cautious on that front.
41:07
Speaker 2: The thing that's soccer like is actually you know what
41:09
Speaker 2: flight center. Yeah, because of the companies downwhere look at
41:14
Speaker 2: Godfrey's challenges and everything. Then we had the war last year,
41:17
Speaker 2: so now it's heading into an environment where you know,
41:19
Speaker 2: the travel is normalizing. Austria faced Australia as we love
41:23
Speaker 2: to travel overseas, so you know, demand environments put not
41:26
Speaker 2: too bad. And and then you're cycling some really weak coms.
41:29
Speaker 2: That means you're earning growth will come through at the
41:32
Speaker 2: same time. Corporate travel. The problem with corporate travel, and
41:36
Speaker 2: it's going through review of some of the you know,
41:38
Speaker 2: dodgy accounting and the like has now created, you know,
41:41
Speaker 2: opportunity for other corporate travel service provider like flight center.
41:45
Speaker 2: You know, in a way that you know, all the
41:47
Speaker 2: large companies that we great speed to, they're all now
41:50
Speaker 2: revising their corporate travel contracts. So you know, I think
41:53
Speaker 2: the next six month growth for travel or flight Center
41:56
Speaker 2: is going to be enormous.
41:58
Speaker 1: Really interesting. Parently convinced by both those calls, might I
42:02
Speaker 1: say especially the travel one. Yeah, absolutely, well, well you've
42:06
Speaker 1: got two extraordinary stories there. One obviously the extraordinary story
42:08
Speaker 1: of corporate travel being so bad that they left it.
42:10
Speaker 1: They've just basically left a big gap in the market,
42:12
Speaker 1: haven't they, And every corporate and every government department is
42:15
Speaker 1: going to have to review. Terrific. All right, Thank you
42:18
Speaker 1: very much for being on the show. Always great. We'll
42:20
Speaker 1: talk to you again during the year, I hope, but
42:22
Speaker 1: thank you for today.
42:23
Speaker 2: Thank you so much for having me and Best of
42:25
Speaker 2: Black with twenty twenty six.
42:28
Speaker 1: Thank you. That was Jim Baylor of ten Cap Folks.
42:32
Speaker 1: Terrific to talk to us always. So now you've got it. Okay,
42:35
Speaker 1: You've got Mark Jocum of Global XCTFS, who talked about
42:38
Speaker 1: the global markets. Then we talked specifically today about Australian
42:43
Speaker 1: share opportunities stop picks. Next week, we're going to talk
42:47
Speaker 1: about property opportunities in twenty twenty six, and we're going
42:49
Speaker 1: to wrap it over Will Hamilton at the end of
42:51
Speaker 1: next week. Talk to you soon.