TONY KYNASTON | from QAV Investing

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Takeover tangos and merger mambos - dancing to the music of the markets. Tony Kynaston From QAV Investing Podcast
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Ever been blindsided by a takeover offer and felt lost in a sea of unfamiliar takeover jargon? In this episode, we dive deep into the murky waters of mergers acquisitions and takeovers and the impact on shareholders with the return of Tony Kynaston from QAV investing. Tony sheds light on what it really means when a company catches the eye of potential buyers and how small investors can navigate their decisions.

We discuss the nuances of schemes of arrangements to the strategies behind hostile bids and the complexity of corporate maneuvers. We focus on two companies - APM Human Services International Limited (ASX:APM) an Australia-based health and human services provider, and Austal Limited (ASX:ABS) is a global shipbuilder and defence prime contractor. Both of these companies are in takeover targets, and they make good examples for understanding the dynamics involved.

Tony reminds us that it is a fools's errand trying to forecast the direction of markets, instead focusing on a solid investment framework, and why sometimes the best response to market noise is to simply tune it out. Whether you're a seasoned investor or just starting out, this episode is packed with sage advice and timely reminders of the investment world's ever-present unpredictability.

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QAV Tony Kynaston taking the stress out of share investing

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Chloe: Shares for beginners. Phil Muscatello and Fin pods are authorised reps of money Sherpa. The information in this podcast is general in nature and doesn't take into account your personal situation.

Tony Kynaston: The market could go sideways, the market could go into a slow descent. The market could keep going up for another couple of years and keep dragging money into high priced stocks. That could all happen as well. Or interest rates cut, earnings improve and the market re rates the PE based on the earnings increase. So there's a lot of things that could happen very hard to forecast greater minds, and I just called it noise. And that's what it is, really, it's noise.

Phil Muscatello: G'day and welcome back to shares for beginners. I'm Phil Muscatello. Uh, what happens when a company becomes juicy enough to attract takeover attention? How can small investors know what to do when they start receiving notices that they don't quite understand the implications of? Returning to the microphone is Tony Kynaston from QAV investing. G'day, Tony.

Tony Kynaston: Hi, Phil. Thanks for the invite.

Phil Muscatello: Thanks very much for coming in. Tony Kynaston leads a vibrant community of value investors who learnt his QAV system quality at value, helping them to become more successful investors. But today we're going to be talking guitar and golf swings. Sorry, ladies. Before we start, turn the microphone or turn the recording device on.

Phil: Get plek treatment on your guitar to make it easier to play

We were talking about guitar videos and producer videos, but now we've got to talk about the markets.

Tony Kynaston: Well, we don't have to. We can go back to talking about music if you like.

Phil Muscatello: That's right.

Tony Kynaston: Phil's my go to man for, uh, guitar advice.

Phil Muscatello: That's great. It's good to see that you're going to get a plek treatment on your guitar to make it easier to play. If there's any guitarists out there, go and get a plek treatment done. Look it up and say plek and you'll get it. Get your guitar sounding fantastic. Back to the markets. How do you think 2024 is shaping up so far? And looking ahead in the maybe a couple of weeks in the crystal ball?

Tony Kynaston: I smashed my crystal ball a long time ago, Phil.

Phil Muscatello: There's no point.

Tony Kynaston: And if I was successful at forecasting where the market goes, I'd be talking to you from the Monaco Grand Prix or something instead. So, yeah, it just can't be done. As far as I can see, the market's been doing well this year, though if you look backwards, it's sort of six or 7%, which is pretty good.

Phil Muscatello: And that's a calendar year as well.

Tony Kynaston: Yeah, we're only three or four. Three or four months in. Qav is doing something similar to that. We keep our dummy portfolio live on our website, which tracks all our trades and applies the method so people can log on to our website and see how we're going and quite pleased with how we've done that. Uh, we're reaching our fifth year anniversary now and our, we've been doing double market for the last five years and that's really pleasing. And you said before we have a vibrant community. That's a great way to describe it.

Phil Muscatello: Oh, I got it from your website.

Tony Kynaston: Oh, was it? Well, I'm very proud of the community that we've got. Um, they're great and they're interactive and they're always throwing up curly questions and new ideas. But I think what's really exciting me at the moment is there's some amazing coders out there who are giving us some good tools. And one of the things I'm really looking forward to is we're just sort of debugging a regression testing tool which will allow us to go back and isolate items on our checklist and see how much they contribute to our, uh, overall process and then tweak their scores and improve the process. So even though we've been doing well with what we've got, we could always look to improve. So that's exciting.

Phil Muscatello: Yeah, it's interesting to say because I asked you the crystal ball question immediately dismissed. And that's really the point, isn't it? It's like you've got to have a strategy in place that doesn't require you to be looking at what the markets are doing every day, isn't it?

Tony Kynaston: Correct?

Speaker D: Yeah.

Phil Muscatello: I mean, it's one of the basic things to learn, isn't it?

Tony Kynaston: You've got to have a framework. Absolutely. And you've got to understand what sort of investor you are. So you've got to know yourself. And then that feeds into the framework and then stick by the framework through thick and thin, really. Because if you look at the market now, both the US and Australia are trading way above their average pe ratios, which is usually a bit of a danger sign for the market. In the US, it makes sense because the top tech stocks are all well supported. There's so much investor money flowing into them, particularly AI related stocks, justifiably, I think, in some cases. But the, uh, valuations are nosebleed, as far as I can see. And once that happens, of course, the index funds are required to follow suit as well. And people who are in overseas index funds have a lot of their money diverted to it. So when the regression to the mean happens, and it always happens, that's one thing that history has taught us. The tall timbers will fall pretty heavily. So there's that australian market doesn't have those tech stocks, but it's still trading at a very high p ratio. So the market average is around sort of 16 times, uh, earnings. It's now about 25 times earnings. I think that's a function of people getting excited about interest rate cuts and that the earnings will improve under a lower interest rate environment. And that's true, but the market's factoring in that interest rates will cut this year and that that will help the market. Now, what's the downside risk like? I like to invert things and have a look at what the other side of the coin is. And if we don't get an interest rate cut this year, that means that all the stocks are overvalued. And so it's potentially setting up for a fall. Now, having said that, I've seen this happen lots of times over the last 25 years that I've been investing. The market could go sideways, the market could go into a slow descent, the market could keep going up for another couple of years and just keep dragging money into high priced stocks. That could all happen as well. Or interest rates cut, earnings improve, and the market re rates the PE based on the earnings increase. So there's a lot of things that could happen, very hard to forecast and greater minds than. I just call it noise. And that's what it is, really. It's noise.

Phil Muscatello: What about even if there's a disaster? I mean, I've been talking to a lot of people and I've just been finding out about a thing called the carry trade that occurs between Japan. This is to do with currencies, interest rates between Japan and the USA. And if, for example, Japan starts ditching their us treasuries, I believe that's could be the implication. Now, you're not looking convinced about that.

Tony Kynaston: No, I don't know much about it. But the first time I encountered the carry trade was when australian interest rates were higher than the rest of the world. And they used to have the classic example of japanese housewives who would borrow for next to nothing in Japan, invest over in Australia in a bond or even a savings account and bank the three or 4% difference in those interest rates year in, year out, which is.

Phil Muscatello: What'S been happening with the US and Japan. I think there's money managers who've been buying Japan treasuries. I'm not even sure what the term is. And if Japan suddenly aggressively raises interest rates, it can have quite an effect on US treasury markets, I believe. I'm not an expert here.

Tony Kynaston: I'm not an expert either. And it could, because Japan has had very low interest rates for a long time because it's been basically in a deflationary environment. But they did raise rates for the first time in 20 years to 0.05%.

Speaker D: Yeah.

Tony Kynaston: So it's still pretty low. But, yeah. Obviously, if Japan raises interest rates and that arbitrage, which is what it is, becomes less attractive, then it will unwind, will be selling of us treasuries for sure.

Phil Muscatello: And that could be of a disaster, apparently.

Tony Kynaston: I don't know about a disaster. It could be.

Speaker D: Yeah. I don't know.

Phil Muscatello: I love your sanguinity.

Tony Kynaston: There's plenty of other disasters that could happen. That's the hard part about forecasting. It's always the black swan event. So, um, Iran and Israel could go to war. Um, Ukraine could flare up again, or anything else could happen in the world. And again, you've just got to be aware that those things happen. If you look at the history of the last, sort of 2030 years in the stock market, every couple of years, there's a downturn caused by some kind of catastrophe somewhere. Tech crashes, asian financial crisis, long term capital management going broke, et cetera, et cetera, et, comma, Gulf war. They always happen, and they always affect the market. So you've just got to factor into your thinking that it's going to happen, and you don't want to panic when it happens. And it might actually turn out to be an opportunity as well.

Speaker D: Okay.

Phil Muscatello: So I know also, we're talking about things we have no expertise in or very little expertise in. So takeovers and mergers and acquisitions. Now, this is inspired by a question from listener Stuart. G'day, Stuart.

Speaker D: So, Stuart wrote, hello.

Phil Muscatello: I'd like to know what happens to shares during an acquisition and what happens if a shareholder, uh, elects to take stock in the new company, especially if the new company is unlisted. And I've done a bit of an investigation to see what they. CVC, I believe is CVC.

Speaker D: Were.

Tony Kynaston: They've walked away.

Phil Muscatello: And they've walked away. So it could be a bit out of date.

Speaker D: Yeah.

Tony Kynaston: Dearborn, Madison.

Phil Muscatello: For a more exact reference, I'm looking at ASX code, APM. Any info along these lines would be appreciated. Thanks for the question, Stuart. So what do you know about this company? And do you have any thoughts on the current takeover? Uh, manoeuvrings?

Tony Kynaston: I'm not familiar with the company. I did do a bit of research before I came in to talk to you about it, though, so I had a look at the numbers for APM to start off with. APM is a services company that provides support for people who are looking for jobs. So they will give you skills to apply for jobs, they'll help you find jobs, etcetera. But they also do work in providing services to people who need, uh, testing to go into an aged care facility, or testing for the ability to receive NDIS payments, that kind of thing. And they also run corporate health and wellness programs. So they're in that kind of human services area. Their numbers look good from a QAV point of view, which basically means lots of cash, steady cash flows, and their debts under control, if I can summarise it very quickly like that. But the sentiment's been against them. So they listed back in September 22 at $3.55. They dropped to 3.38. They got as low as $0.54 earlier this year. And they've been boosted by some takeover activity, up to $1.21, roughly, which is where it was day or so ago. And I had a look. So sentiment's been down. So that would be something I wouldn't invest in because of that reason. Generally, if sentiment's going down, but the numbers look good from a financial point of view, analysts are forecasting that the future isn't going to be rosy. Management called out recently that the employment side of their business, helping people get jobs, was struggling a little bit because we're basically in close to a full employment economy. But they did call out in response to takeover initiatives that they thought that they were forecasting a growth in earnings next year. So from a fundamental point of view, the company doesn't look too bad to me. That's backed up by the fact that, as you said before, CVC, a private equity fund, have launched a bid. They actually walked away last week, but another company called, um, Dearborn Madison, um, have stepped up and they've put an offer on the table of, uh, $1.40 for these shares. So slightly above where they're trading now. Dearborn Madison are actually a large shareholder in this company.

Speaker D: So they own, I think they hold.

Tony Kynaston: 29% of the company.

Phil Muscatello: They own a lot, don't they?

Speaker D: Yeah, yeah. Yeah.

Phil Muscatello: So they do have a lot of power to affect their decisions. Yeah.

Tony Kynaston: I suspect, as I say, I don't know this company, but I suspect CVC walked away because they couldn't convince the aborn Madison to sell to them would be one of the reasons why I think they gave up. It's never a good sign when, uh, someone lobs a bid and then has due diligence and then decides to walk away. But it's potentially because they couldn't convince the cornerstone shareholder to accept. The cornerstone shareholder is now launching a bid to take the company private. So, getting back to Stuart's question, the offer that Dearborn, uh, Madison are making is, uh, $1.40 a share, either in cash or rollover into one of their unlisted funds, which is in the US, too. So a couple of issues there. If it was me, I would always take the cash and move on to the next stock to buy. Not saying Dearborn and Madison aren't running a good fund, and that could be a great investment, so. But you're in an unlisted fund, and I'm not familiar with Dearborn Madison's unlisted funds. And I couldn't find anything from a quick review of their website that talked about how they let people redeem. That's the critical issue here is how do you get your money out of the fund at some stage in the future? So it's a private equity company and they will have redemption rules. Sometimes private equity companies will say you're tying up your capital for a certain period of time, three years, five years, one year, whatever, and. Or you can only redeem on certain dates. So it's important to know what you're getting into there. As I said, I couldn't see it on their website. I suspect that they'll have to. Well, they will provide a scheme of arrangement, which will mean that they'll have to do a detailed report on their fund and how you get to redeem out of it, etcetera. If they don't, and Stuart still wants to consider that, then he could perhaps email Debourn Madison and ask them how you could redeem out of their fund. That's this particular example.

Speaker D: Yep.

Phil Muscatello: And this is general advice only.

Tony Kynaston: This is general advice. I'm not telling Stuart what to do, but, yeah. So if a takeover company in general was saying, we're going to take the company over and take it private, then, and it's not part of a traded fund, which happens, then you're stuck with the, uh, shares in an unlisted company, and it can be very hard to trade money out.

Speaker D: Yeah.

Tony Kynaston: You have to wait for an event to happen like that. Private companies sold or taken over by someone else before you have a chance to get your money out. So it is a concern. The other concern that Stuart might want to consider is that Dearborn Madison is a us company. So there's always going to be taxation issues and I can't give tax advice here. Stuart should talk to his accountant, but also currency risk as well. So if the australian dollar changes versus the US dollar, that will affect the value of what you have invested to, and those two things you don't have while it's still listed, while this company is still listed in Australia.

Chloe: Super is one of the most important investments you'll ever make. But how do you know if you're in the best fund for your situation? Head to dot au to find out more. Life Sherpa, uh, Australia's most affordable online financial advice.

Phil Muscatello: And that kind of speaks to the situation where you've bought some shares in a company and you think, okay, everything's going fine, and then suddenly you get that letter or the email and you've given this offer. And it's very hard sometimes to unpick how useful it can be. One thing I would suggest is joining the Australian Shareholders association, because you can talk to people there quite easily about it as well. But like, if you were a beginner investor and suddenly you got one of these letters saying there's, uh, a two for three share offer or a takeover or something like that. What steps would you take to understand it better?

Tony Kynaston: Yeah, it's a really, really good question. I think doing a simple Google search to find out what's going on is probably the first start. Uh, if you're not keeping up to date with financial press or keeping up to a date with alerts from the company, that's a good way to start. But, yeah, I think there are kind of basic situations which experience teaches you and basic approaches to these kinds of situations. And so maybe if I step back and talk about the general way that companies are required, there's basically the old fashioned way, which is a hostile bid, which this doesn't appear to be the case with APM.

Phil Muscatello: It's not the eighties anymore.

Tony Kynaston: That's right. And that's probably the image that people have in their minds of share rate is washbuckling, share rate is launching bids, and the board doesn't approve of that. And, you know, there's a bidding war could potentially break out, all that kind of thing. So that's kind of the old way of taking other companies. It can still happen, but what that requires normally, is that for the takeover to go ahead. The company needs 90% of shareholders to vote in favor of the bidder, and that's a difficult threshold to achieve. Normally, it often means that the bidder will launch a bid, but then at some stage, they'll increase the price to try and mop up enough acceptances to get to 90%. It also means that they're oftentimes fighting the board. So the board will adopt what's called a takeover defence. And so they might sell parts of the company to try and unlock some value. They might demerge part of the company to unlock some value. They might pay down debt, take on, um, more debt to make the company less attractive to a takeover target. So there are all sorts of things a board can do. They will probably, at some stage, commission an independent valuation of the company. And if it's a hostile bid, surprise, surprise. Usually that valuation says the bid is undervaluing the company. If it's a scheme of arrangement, then it's often in the fair value range because the boards engage with the process. So that leads me to the second way that acquirers normally approach boards now is with the view to forming a scheme of arrangement. And what that means is that you don't need 90% acceptance to take over the company, you need 75% of a shareholder vote, 50% of shareholders who voted to get the deal across normally. Well, you do need the board to be in favour of the bid and then the board actually engages with the acquirer and they come up with a suitable arrangement. Put it in paper. A scheme of arrangement needs court approval to go out to be voted on, and then court approval once the votes happen, to make sure that everything's above board. And it does require ASIC to agree to it as well. So it's a scheme of arrangement, even though it's a lower threshold that requires a longer time period to acquire a company. So, having said all that, you want to check where the share price is compared to the bid price. And so at the moment for APM, the share price is a bit below the bid price, and that usually indicates that the market's a bit skeptical about whether the bid will go ahead or not. And so then you've got to form the view of, well, do I want to sell the shares now, in APM's case, at $1.20 ish, when the bids are the dollar 40? Or do I want to see if the scheme goes through and you've got some time to wait for that, and even until the scheme document comes out, which you can read and form your opinion. The risk is that if it doesn't progress very far and the bidder walks away, then the share price will drop from $1.20 and it was as low as 50 something cents at the start of the year before bids started appearing. So it could drop all that way. So the way I operate in takeover situations, and it probably happens to me once or twice a year, because if I see value in a buying a company's shares, then chances are, um, expert fund manager is going to see value there as well and launch a bid. So it's happening at the moment with a company called ASB Hostel Shipbuilders, which.

Phil Muscatello: We'Re going to talk about.

Speaker D: Yeah.

Tony Kynaston: So they're on our buy list. And I will tend to adopt the approach of let's see where the share price is compared to the bid. If I'm not happy to accept the script in the new acquiring company, or to have the company delisted and taken private, I'll probably sell my shares at that price.

Phil Muscatello: Because you have the opportunity to take private.

Speaker D: Yeah. Yeah.

Tony Kynaston: So what's the risk? If I sell now and there's a second bidder, the price might go up. But as Daniel Kahneman Rip said, I get less of a high out of missing out on an opportunity than I do compared to the low I get if the bidder walks away and the shares drop. So a loss always hurts more than, uh, the upside wins. Generally, in a scheme of arrangement, if a company has arrived at the point of view of making the offer, uh, going to a scheme, the board's accepted, it's pretty hard for another bidder to come in and upset that apple cart. So it's unlikely to get a better offer than that. And if the share price is trading at that offer or near that offer, then I'd normally take, sell my shares and take the cash and walk away and invest somewhere else. And there are people out there who play the arbitrage game. If the share price is $0.05 below the bid price, they'll buy your shares and they'll make the wait the two or three months for it to go through, and that's how they make their money. That's fine. So there's still a market operating for those shares. If it's an open, hostile bid, I would normally wait a little bit because generally the first bid isn't the final bid, and the bid will have to be increased. And so I'd be waiting for at least a second bid to come through. But certainly if it got to the stage where the board went through all of their defence, had the independent report come back. The independent report says, yeah, it's fair value. The board then recommends shareholders take the value, take the bid. Sorry, then I will probably still sell on the market, but the price should be pretty close to the bid price at that stage.

Phil Muscatello: And somewhere in between one of these friendly bids and a, uh, hostile bid, there's also activist investors who will come in and try and change the way the company is run because they can see the value in the company and this is not hostile in a sense. And we don't have a lot of that here in Australia. There's a lot more of that in the United States. But the example I was speaking to a guest with recently was EML payments and they had a Texas based activist investor who basically had the management and the board changed and suddenly it's become a reasonable stock again.

Tony Kynaston: Right, yeah, look, that's another way for a change to happen in a company. If someone sees value and they don't want to launch a bit, it is reasonably rare. Australia is certainly not as high profile as it is in the states. Um, I'm not sure why that. Is it potentially because of regulations?

Phil Muscatello: Oh, it's just a smaller market.

Tony Kynaston: Smaller market.

Phil Muscatello: There's just, there seems to be a bit of a dance of directors going between companies as well.

Tony Kynaston: Well, yeah, but I'm thinking about what would be a good example in Australia. I'm thinking about Boral. So seven Group bought a stake in Boral and did a lot of work in replacing management and taking board seats. And now we're offering to take that company over or to complete a takeover because there are all sorts of regulations about taking over companies. So, for example, in Borrell's case, it's a rule that if you have a, uh, 19.5% shareholding, if you go above that, you've got to launch a bid for the company. If you stay at that 19.5%, you're allowed to creep 3% every six months so you can sort of slowly build up into the register. And so people like Kerry Stokes, who've been around for a long time doing this, will play those rules to their advantage and eventually got to the stage where they had quite a large shareholding in Boral and there's only 30 or 40% of individual outs, independent shareholders now in the company and they're faced with a decision about whether they want to roll over or accept an offer from seven for Borrell.

Phil Muscatello: Anyway, let's move on to ASB Austal and we'll just put in a little musical reference. That great song by Elvis Costello Shipbuilding.

Speaker D: Yes.

Phil Muscatello: Which we're going to be talking about. What a great song it is. So you've talked about ASB recently and it's an interesting one because, coincidentally, it's been subject to a takeover bid. Tell us about Austal and the korean company lobbing this bid.

Speaker D: Yep.

Tony Kynaston: So Austal is a shipbuilder and been around for 20 odd years, or about that. And it operates out of Perth, although they have, I think, seven shipbuilding centres around the world now. Started off pioneering the use of aluminium in shipbuilding. And if anyone's been on a harbour cat ferry or a catamaran type ferry, they pioneered that design, which has produced a very stable way of cruising through ferry. I came across Austal, uh, when I was going from Airlie beach across to Hamilton island. It was one of the first places I encountered a catamaran ferry when it was just so much smoother than taking a single hulled vessel across a body of water. And so they pioneered that. They eventually grew big enough to attract, uh, attention from the US Navy. And so they started to make dual hole catamaran like they're called literal combat vestivals. L I T t O R a l. Which means that they stay above, inside the continental shelf around a country. And again, incredibly smooth ships for the US Navy.

Phil Muscatello: Presumably it, uh, makes it a lot easier to take aim with your guns.

Tony Kynaston: Yes, you'd think so, yeah. So they're doing lots of work for the US Navy. They still produce large ferries around the world as well. They've got Australian Defence Force work for the navy here to replace all the coastal patrol boats for the Australian Navy. Big shipbuilding company. Pioneering work, australian success story, really, but have attracted the attention of Hanwha. And Hanwha recently took over Daewoo, which is a korean shipbuilding company. And so they want to roll Austal into that and get economies of scale from that. However, in this case, the board's response to the offer was to say, was to point out, you'll need both australian government approval and US Navy approval. Us government approval, because we have contracts with both of those governments and they have to approve a change of shareholding. You may or may not get that.

Phil Muscatello: They also added level of complexity, isn't it?

Tony Kynaston: Well, the additional level of complexity is the shareholding of Bostil. So the original founder still has some 9%. A guy called John Rothwell, he sits on the board still, but also a company called Tatarang, which you may know as Twiggy Forest's personal investment vehicle. They hold 19 odd percent too. So something like 27 28% of the company is held by two shareholders. And any bidder is going to have to convince them to sell. And Twiggy Forrest is on the record saying he won't sell to an overseas company. Now everyone has a price. Currently the price isn't flooding their boat, so to speak, but it may in the future. But yeah, I personally think Hanwha has their work cut out for them, achieving approvals and convincing the current shareholders to sell to an overseas company.

Speaker D: Interesting.

Tony Kynaston: Uh, and the market thinks that too because I think the bid was something like $2.82 and the price is about 240 at the moment.

Phil Muscatello: So they don't think it's going to get through to that price.

Tony Kynaston: Some do because the share price went up 10% when the bid was launched. But yeah, I think cooler heads are saying let's wait and see.

Phil Muscatello: But there obviously would be some people going, oh, if that bid gets through, I'm going to make that $0.40 difference in the. Correct.

Speaker D: Yeah.

Phil Muscatello: So some people would be taking that, but that's not a game for amateurs, is it?

Tony Kynaston: Well, it's true. I think so. There are people who specialise in the arbitraging takeover situations and they'll be working out the odds of the big going through and whether getting forty cents a share is worth it. For sure.

Speaker D: Yeah.

Phil Muscatello: Okay, well, let's focus back on the vibrant community of investors at QAV. Again, we've got deals. If you use the promo code SFB for the full version of QAV or SFB Lite, you can get a significant discount on joining up and becoming one of the members of this vibrant community. Just tell us a little bit more. Give us a little bit of the sales spiel.

Tony Kynaston: The sales spiel, yeah. So, uh, QAV is a process and it uses fundamental analysis. So we use the publicly available financial reports for its companies.

Phil Muscatello: Quality at value.

Tony Kynaston: QaV stands for quality at value. So what we're trying to do is to, is classic value investing. We're ranking it using a checklist of scores. We're ranking the quality of a company. So is there lots of cash, is there little debt, how good the management, that kind of thing. And then we're seeing whether it's a fair price to buy the company. We use a bit of sentiment, so we look to see if there's a bit of market support for it. I don't, because, uh, one of the classic issues with value investing is a company can look cheap and it's cheap for a reason. And, uh, the share price just keeps going down and you're just trying to catch a falling knife, which is never pleasant or easy. So we look to see sentiment turn or going up before we invest. And there's plenty of stocks out there which are, uh, doing that, but still cheap. And if you join the full QAV membership, then you'll get access to the checklist, to the community, ask questions on our podcast. We do a podcast every week where we talk about our companies, what's going on, what's going on in the market, and answer questions from listeners. Or you can join QaV Lite, which is a lower cost, and we publish once a week what our buy list is. And we set up some dummy portfolios and show what their trades are. And you can choose to follow those if you like, or you can use that as a resource to guide you on your investing journey now.

Phil Muscatello: Ah, fantastic. So again, those codes are SFB for the full version and SFB light for the lite version. With the full version you also need a stock doctor subscription as well.

Tony Kynaston: Yeah, we recommend that. So that's a good data provider that feeds into our checklist and makes everything a lot easier than manually trying to find the data yourself from company reports.

Speaker D: Yeah.

Phil Muscatello: Oh, it's a better way than, you know, depending on newsletters and.

Tony Kynaston: Yeah, I think stock doctor is a fantastic tool. Yeah. You got all the company information going back years at your fingertips, really, which you can slice and dice. They do financial health scoring for us as well. And for people who use stock doctor, it's a terrific tool.

Phil Muscatello: And this vibrant community will let you know if you've got any wrong headed ideas.

Speaker D: Yeah.

Tony Kynaston: Ah, well, it may or may not be stock doctors fault, but there are occasionally data corruption issues from their provider. So yeah, it gets picked up pretty quickly.

Speaker D: Yeah.

So tell us about the SG guitar. So your favorite guitar is the SG

Phil Muscatello: So tell us about the SG guitar. So your favorite guitar is the SG guitar, which, let's say Angus Young from AC D. Correct. Jimmy Page from Led Zeppelin. Who else was there?

Tony Kynaston: I can only think of Angus. Yeah, that's. That's who I focused on when I bought it.

Phil Muscatello: You were just trying to channel Angus.

Tony Kynaston: M trying to channel Angus, yeah.

Speaker D: Ah, yeah.

Tony Kynaston: It's that classic horned look around the neck from the body. Phil and I were talking before about I've got a Yamaha acoustic as well and I'm finding difficulty getting back into it to play the chords I need to because it's a much wider neck and higher strings compared to the Gibson SG, which I just seem to fly over with the fretboard yeah.

Phil Muscatello: But you can get lost in all of this.

Tony Kynaston: Oh, yeah.

Phil Muscatello: I mean, I've been watching videos and Tommy Emanuel, who's a fantastic guitarist, but he uses strings that on his acoustic that are so heavy you would never be able to get them down. But he's just obviously got the strength and flexibility of playing for years and years and years. He's incredible. Have you ever seen Tommy Emmanuel live?

Tony Kynaston: I have, actually.

Phil Muscatello: Amazing.

Tony Kynaston: A long time ago up at the Gold coast jazz festival.

Phil Muscatello: Amazing, isn't he?

Speaker D: Yeah.

Phil Muscatello: Ah, that version of classical gas that he does.

Tony Kynaston: Right.

Phil Muscatello: Mind bending. Tony Kynaston. I'll let you go and get back onto your guitar.

Tony Kynaston: Get it plucked.

Speaker D: Yes. Yeah.

Phil Muscatello: Get it plucked. Thank you very much for joining me today.

Tony Kynaston: Thanks, Phil.

Chloe: Thanks for listening to shares for beginners. You can find if you enjoy listening, please take a moment to rate a review in your podcast player or tell a friend who might want to learn more about investing for their future.

TONY KYNASTON is a multi-millionaire professional investor thanks to the QAV checklist he developed . Tony's knowledge and calm analysis takes the guesswork out of share market investing.

Any advice in this blog post is general financial advice only and does not take into account your objectives, financial situation or needs. Because of that, you should consider if the advice is appropriate to you and your needs before acting on the information. If you do choose to buy a financial product read the PDS and TMD and obtain appropriate financial advice tailored to your needs. Finpods Pty Ltd & Philip Muscatello are authorised representatives of MoneySherpa Pty Ltd which holds financial services licence 451289. Here's a link to our Financial Services Guide.