Cadence Capital Limited (CDM) Earnings Call Transcript & Summary

Hi, everyone. Thank you very much for your time for joining us today. As Karl suggested, we've got the whole team here. We've got Karl, myself, and Jackson and Charlie. Already, we've received numerous questions here from you.

So I'm going to kick off with the first question that we received. And the question was asked, would Cadence consider increasing the daily buyback to close the NTA gap and further increase shareholder value? Karl, if you want to?

Hi, everyone. And obviously, before I even start answering any questions, apologies for not being able to see you in person. I think we said about 18 months ago, we were going to start seeing everyone in person and obviously, the events of coronavirus and COVID-19 have prevented us from even traveling to meet you in person. But hopefully, this is a good compromise, and we get to communicate our message again today and answer your questions. So then in relation to the buyback and our discount to NTA, I think you can see from the presentation that we've just given how surprised I really am at the discount to NTA at the moment. This discount is greater than during the global financial crisis and conversely creates an opportunity greater than during the global financial crisis. So at least, with our fund, you've seen it before, and you're seeing it again. You've seen us go from a premium pre-GFC to a discount in the GFC, back to a premium pre-COVID to a big discount in the coronavirus. And the logical question that someone has asked here is, do you -- will you get more aggressive effectively in the buyback and can you increase the buyback? I have to say, yes, because we -- the Board had just approved to buy a further buyback of nearly 31 million shares. We actually only ended up buying back around 13 million shares in the last buyback. So this is our new buyback for the year ahead. And we may, at the AGM, also call an EGM to allow us to buy back an additional 10% of shares, for example, which will mean we can buy back up to 62 million shares. That is not the Board's position at the moment, but I'm just outlining to you legally what is possible. We can buy back shares at such a big discount to NTA from shareholders who are prepared to sell at these prices, that will increase the value of shares for the shareholders who are not prepared to sell at these prices and want to remain medium to long-term investors and also will create an opportunity when new investors will come in, and they'll see the benefit of the NTA discount contracting and also the benefit of the buyback, which increases the value of every share when we cancel the shares that are bought back. A very important mechanism, and history continues to tell us that buying at a discount and selling at a premium is better than buying at a premium and selling at a discount. I think there's another question, Wayne, in relation to that.

Yes. The other question that was similar to this, it says there has been a great deal of criticism of LICs trading at discounts to NTA. It has been suggested that a LIC might convert to an ETF structure to address this issue?

Yes. So what -- so that logic, if you -- and I must say, the benefit of this is, we've seen this before through the global financial crisis and once before that when I first started the fund in the early 2000s. The logic goes like this: When -- people want to sell when times are bad, and they want to buy when times are good. So they want to have the opportunity to sell now and buy again when everything is really good. A closed-end structure maintains the capital within that structure so that you can buy when times are bad like now and sell when times are good. So in actual fact, the good investor is doing exactly the opposite. They're buying at a discount and selling at a premium. And inside the structure, we, as investors, are attempting to buy when the stocks are cheap and sell when stocks are expensive. That is the long-term goal. We don't want to set up a structure where all the money gets pulled off us at the bottom and people throw money at us again at the top. That's reflected in the discounted premium, and it's reflected in the desire for people to sell at the bottom and buy at the top. And actually, if you're a medium to long-term investor and you're investing your superannuation money for a decade or 2 decades or 3 decades, it is probably a good idea to buy at a discount and sell at a premium and have a longer-term view rather than react to every market move that occurs on a monthly or quarterly or half-yearly basis. Because it's really that -- those short-term emotional reactions that cost so much money in the long run.

Thanks, Karl. We received a number of questions around dividends. I just have chosen one of them. The question here is, what is the current franking credit balance and company profits reserve balance? And when approximately will the final dividend be declared? I'll answer that. Obviously, at year-end, the directors would sit down together, and they'll make the decision on what the dividend is going to be. To give you an update just in terms of the company profits reserves, you would have noted in the half year accounts that we had, I think it was $12 million, which was the equivalent of, let's say, $0.05 per share of profits reserve. You would have been aware that we obviously paid out $0.02 there, which would kind of leave, what, $0.03 per share in our profits reserve. In terms of franking credit balances, we've always been a little bit lighter in our franking credit balances. Long gone are the days where we had an excess amount of franking credits. So they always -- our franking credit balance is a lesser amount, but yes, that's really an update of where we stand.

And just Wayne, just adding to that, the way I think about it from an investment point of view from what our team has to do, we have to make a profit, which we then pay tax on to have franking to pay out fully franked dividends. And as things stand at the moment, well, I think we were about in line. We hadn't lost or made money when we put out our last newsletter, something around that.

Correct. Correct.

And the market was down 5%, 6%, 7%. So we've outperformed the market, which is great, but we haven't actually made money. So if you haven't made money, you don't pay tax and you don't go on a franking. Now the intention always with a medium to long-term fund like this is to make above-average returns, pay tax on those returns and then be able to pay fully franked dividends. I mean that's the stated intention of the fund when the prospectus was launched 15 years ago.

Another question we received more to do with the actual portfolio here. There is one over here. Can tech stocks continue to perform? I don't know if one of you guys...

Let Jackson or Charlie have a go at that.

Yes. It's an interesting question. They've obviously performed very well to date. I think one of the interesting things what I think about is the contrast that we're going to be seeing over the next 6 to 12 months of the companies which haven't been affected as much or have actually benefited from COVID and the companies which are going to be picking up the pieces and really trying to get back to historical levels of earnings over the next couple of years. So we're definitely bottom-up stock pickers. So we're thinking about it on a stock-by-stock basis. But I do think that that's going to be quite powerful. Those companies that haven't been disrupted and are able to continue investing in their business, I do think there'll be opportunities for those companies to continue to perform.

And the surprising thing is some of those tech stocks are not expensive, but we keep reading about how expensive tech stocks are.

Yes. And we don't know exactly the level of earnings or valuations at the moment. So it can appear like things are more expensive than they are or cheaper than they are.

And I can see another question, this is Jackson here. I can just see another question in the list regarding the U.S. or the increase in U.S. exposure and typically technology exposure. I guess the flight to quality and flight to quality balance sheets with net cash, that kind of alludes you to those high-quality businesses in the U.S. that are benefiting from a number of trends in COVID, whether it be increase in usage of connectivity or online e-commerce or the acceleration of digitization of payments or whatever it may be, these guys who have huge amounts of cash on the balance sheet are probably going to benefit the most in all of this. And when Karl just mentioned about valuation, when you compare them to a number of companies here, they're actually relatively much cheaper.

Listen, another question, obviously, around themes here that we received is, can you give your view on travel stocks? It's -- obviously, it talks about Sydney Airports, Qantas and WEB?

Yes. So I think I tried to allude to this a little bit in the investor presentation by saying when we come up to the June 30 presentations for year-end for, say, Qantas or Webjet or any of these style of companies, the 2020 results are going to be terrible. And to some extent, the 2021 numbers will also be terrible, unless we're able to travel again and book holidays, especially internationally. Domestic travel may open up and domestic motor vehicle travel to some extent has already opened up. So it's fair to say that you really have to look out further into the future to be able to see an investment thesis for those companies. And the interesting thing about the stock market is the stock market is looking forward. I mean, I talk to people in, what I call, the real world, and they're saying, geez, things are bad. And they say, how can the stock market be up 20% or 30%. And the answer is, is because the stock market is having to look forward to a future where coronavirus is contained and people are actually doing things with their lives again more so than they are now. Travel really is very squarely in that sector. So it's -- simply put, we don't know the E in the price-to-earnings multiple or the cash to earning -- cash-to-price multiple. And so that will only emerge. So it's really in the early days of that investment at the moment. It's really a trade. You're trading on the future. The earnings are not actually there.

Another stock-specific question. I've seen a couple on Arq. So I've just chosen one of them. Could you please give an update on your Arq holding?

Yes. So look, I've stated on the record many times before. I think people know that I've joined the Board there to try and help resolve the Arq investment, and we -- and if you read some of the Arq announcements, you'll see that there's been a lot of progress. And I've said on the record many times before, and I'll say it again now, it's probably the worst public investment that I've ever made, and we are starting to get resolution of it. It's important for people to realize now that the pain that has been felt for the Arq investment for the fund has already been felt. The position is a very, very small percentage of the portfolio now. And no matter which way the issue is resolved going forward, it will not have a meaningful or statistical material effect on the performance of the portfolio going forward. And it will be good just to resolve it and to have the lessons learned. Probably, I jokingly said, write a book or a chapter in a book about it because you obviously learn a lot more from your mistakes than you do from your wins. But it would be a shame for people to be looking at the portfolio and saying, oh, what effect is Arq going to have? Because the answer, really, is a very, very small effect. Now that doesn't detract from the fact that we made the investment, and so we have to continue to prove that we can invest well and invest your money for the medium and long term. And I think you're starting to see signs of that again emerging. So put simply, the Arq position is very small and will not have a meaningful impact on the portfolio going forward.

Karl, there is a question further down that I just thought it leads into maybe this question. It just said, what will you do to prevent another individual stock disaster like Melbourne IT?

Yes. So what do you do to stop something like Arq in the future? Well, I think you'll see from -- it's worth having a think about what's just been said in the investment presentation, and actually, in a number of the investment presentations over the last 18 months to 2 years. The spread of the portfolio has widened. The concentration of the portfolio has reduced. The size of positions bigger, larger, higher market cap companies has significantly increased. It quite -- quite simply, the opportunity to implement our process and our thesis is not only in microcap stocks and in a concentrated portfolio. And so we're seeing that the process working with a widely diversified portfolio with larger market capitalization, probably a product of our history. We started as a very small company with $4 million of funds under management and grew to $400 million of funds under management. And so we have to grow the size of the portfolio, the diversification of the portfolio and look at larger market capitalization stocks. And I think if you look at our presentations over the last 2 years, you may or may not have time, I'll just summarize this for you, you will see greater diversification and greater emphasis on larger market cap stocks, but still using the same thesis. So we've seen that again. For example, the largest position in the portfolio now is about 6%, the second-largest position is about 4%. Yes, I think I'll let Jackson go into that a bit, actually.

So just adding on that concept of liquidity and diversification, part of the COVID drawdown and kind of the -- following the Cadence process this time was, we cashed out to about 60%, 65% cash. And what that allowed us to do was to kind of reconstruct the portfolio coming out the other side. So we actually adjusted some of the weightings of what we call exploratory positions when we first scale into the positions. And that allowed us to put in a number of more positions across a number of different industries, geographies, sectors, et cetera, et cetera. And what we also did was adjust some liquidity constraints. So now when we're trading stocks, we never want to be above a certain percentage of, let's say, 10-day volume. So that kind of goes to the point of what can help us avert a situation where we cannot kind of get out of a stock. And then I just found a couple of stats, while we were listening in here, on the concentration per se. In 2018, the top 2 stocks accounted for roughly 24% of the portfolio and now the top 2, as Karl said, at 10%. And then in 2018, the top 10 positions were 50% of the portfolio, and now the top 10 are roughly 1/3. So you can kind of see the spread of positions. And then I guess the last point to make is relating to the diversification across regions. We've now have roughly 20% of the portfolio offshore. So I think that kind of answers the question of how we've adjusted and reconstructed the portfolio per se.

Another question that we've got, and I've received this in numerous forms, but it says, do you think the market will suffer severe correction in the near future? And one other questions that was asked was, what would you do about a correction?

Well, okay, for my part, I mean, everyone's going to have a view on this. That's the good thing about markets, everyone's got an opinion. Yes, the market will definitely suffer a correction in the future. History has taught us that the markets suffer corrections all the time. And what we will do is what we've done in the last 2 severe corrections, is we'll reduce exposure, get to high levels of cash. We've proven we can do that. And then when the market turns, we'll reinvest into those positions that we like that meet our criteria, and we'll scale back into that. And we've proven several times that we can do that. I think the other really interesting feature of that is that we tend to see on the way down as we're increasing our levels of cash, that we tend to react -- our performance seems to be kind of in line with the market on the way down. And it's been on the way up that we seem to see this massive amount of outperformance as we're scaling back in because the process takes us there. That happened initially in 2004, 2005. It happened after global financial crisis. That is happening again now. So it's -- I mean, if there is one thing you should be able to take out of this is that we have been true to process. So the scaling back in is what allowed us to outperform more in the last 2 to 3 months as well.

The next question is, please, could you explain the status of Deepgreen? And how the holding is valued for the portfolio?

Yes, we've had quite a few questions on Deepgreen. So importantly, Deepgreen is not a material position in the portfolio as defined by what an accountant or auditor might say. So once again, it is not a big position. Having said that, we've put money into the position about 18 months ago, and again, we put money in about 11 or 12 months ago. We added to that position. The stock, you can log into the Canadian exchanges and see at what price the company has been raising money, some of the key institutions globally and major players that are investing money into Deepgreen and the big opportunity that it presents. Importantly, we have valued this in our portfolio at the price money was raised at about 14 months ago. And so the last rounds of funding were done at much, much higher prices, but we've just not been prepared to increase to those prices. We want to be conservative about the valuation of that position. And this COVID, coronavirus period has meant that the -- traditionally, in these peak positions, they go to, what's called, a gray market before listing. That gray market has been delayed because of corona. Nonetheless, the company has continued to be able to raise money. So we would have liked to have been able to have sold some of that position prior to this June year-end. That is not going to be realistic now, but we get regular updates from the company. The company is going extremely well, and we do think that, that gray market will emerge in the 12 months ahead.

Thanks, Karl. Another question we received is, are you trading a lot or not much?

Yes, Jackson?

Yes. I guess from the trading and portfolio perspective, I touched on earlier the amount of positions or how many more new ones we have in there. So yes, the answer is, yes. We've been trading significantly more. And I think as the market has settled in this kind of range now per se, we've had the big run from the bottoms, it probably will be much more volatile on the up and the downside moving forward as we get new cases in Texas or we get, what not, Fed stimulus in the U.S. So I feel like there'll be episodic volatility, if you want to call it. So I think that allows us to have our trading hats on and potentially take advantage of opportunities. And on that point as well, throughout this period, companies have done a lot of capital raisings and share sell-downs or whatever it might be. So we've participated in a lot of that as well. So that's allowed us to generate some performance as well.

Yes. And a funny side note on that as well is, and I've tried to illustrate this in the outlook in the investor presentation, is that this severe correction has also allowed us to find opportunities that are core. So we've got a number of new core positions. So the spread of the portfolio has widened again, and hopefully, that core position will stay there, and then we'll add to those positions and reduce those positions around the edges. But hopefully, this period has also shown us a number of new core positions that will be there for a long time. I'm thinking specifically examples now, I was asked about for the newspaper, Credit Corp is raising that money at such low prices. We hope Credit Corp will become a core position. Maybe, what would be another good one? A.P. Eagers might become a core position. Definitely, Webjet, I think we've got asked about travel stocks a while earlier on today. Webjet is clearly an early-stage trade at the moment. But if it starts to produce earnings again and at this reduced price, it may become a core position. But it may not because they've raised a lot of capital and has many more shares on issue now. So the opportunity may not be that attractive. So there is this very interesting group of stocks that are showing core capability, that have started off with trades and become core. They may end up being in the next round of core position. So it's a very interesting, [ peer ] investment period.

There are 2 questions here that I'm actually going to combine. The one question was, how are you handling the U.S. dollar and Australian dollar gains and losses? And then the other question is, is there any currency hedging on international investments? And I'll answer both of those questions. With our overseas investments, I'm going to quickly just confirm one thing because I know it has been asked in the past. When we make overseas profits, we pay full Australian tax on those overseas profits, and so we are able to then actually pay out fully franked dividend on those overseas profits. So any money made on local stocks or overseas stocks, we do pay full Australian tax on that. With regards on the hedging side of things, we have the ability to -- when the investment manager decides to or portfolio manager decides to invest in an overseas stock, they have the decision whether we actually hedge that currency exposure or we don't hedge that currency exposure. At the moment, all our positions are actually hedged. And the way we actually do that is that when we buy an overseas position, let's say, in U.S. dollars, we actually use U.S. dollars to buy that overseas position. So that's really how we manage our exposure. We obviously are then not hedged on the profit and loss that we make on that position. But typically, when we sell out that position at some point in time, we'd actually then go in and hedge that profit that we've made. Because, again, at some stage, we're going to be paying out tax on that profit, and also, we'd be paying out a dividend on that profit at some stage.

So the logic behind that is, we're happy to invest in overseas shares. We are an equity investor. So we're trying to find shares that are undervalued to buy and overvalued to [ short ]. But we're not -- this is not a fund where we're effectively in "punting the currency." That's not what we're doing.

I think we may have answered this in a few ways, but I'll just ask it. I'll just ask the question because it has been asked. How has COVID-19 impacted the investment process? Charlie, if you want to?

Yes. Yes, so we have sort of talked to this. It's really accelerated for ourselves as well, a journey the fund was already on in terms of position, sizing and liquidity that Jackson talked about. But the core process of adding to our winners, cutting our losers, that remains the same. The core focus on bottom-up stock picking internally, call it stock by stock, that -- those -- focusing on the fundamentals, that remains the same. We're certainly thinking about different scenarios, how they can play out, where expectations are, whether we're compensated to that in the valuation, but it is a bottom-up exercise. I guess another thing that's changed, that we sort of talked around the edges on, is sort of the quality generally in the portfolio. And again, COVID has allowed us to do that. Previously, a lot of these stocks were too expensive. Now they've got down -- or they got down to levels that were more attractive. So you can see, as you look through the portfolio, a number of high-quality names now. You have the car sales, [ ARBs ] large U.S. tech companies, et cetera. And I guess one of the features of these stocks, high-quality typically means that they've got more resilient earnings and cash flows, and that typically means the stocks themselves are also less volatile. So it can help with scaling into and out of the positions. So yes, at the core, nothing's really changed, but we have been able to adjust the process and adjust sort of the way that we've structured the portfolios to reflect sort of, I guess, the current environment.

Thanks, Charlie. Another question on the portfolios. Will you be increasing the percentage of shares you're shorting, considering the market appears a little expensive at present?

I mean, again, it comes back to a stock-by-stock, as Charlie mentioned, basis. I think the thing with shorting is, you don't want to stand in front of a moving bus if the market wants to keep moving higher. So I agree that with the market moving and potentially not on any earnings or, as Karl mentioned, looking 2, 3, 4 years ahead, there definitely will be some stocks that get ahead of themselves. And throughout our company visit process and analysis and stuff like that, we will continue to look on the short side. I think just in the last few weeks, the short exposure has increased. It's not significant, but for specific examples, we've probably increased our short exposure by 2 or 3 stocks in the last month.

Yes. I'd say this. When you've seen a market hit a bottom like it did, an extreme pessimism, and then start to recover, of course, the wall of worry is then, oh, it's higher than it was yesterday and the next day it's higher than it was the day before, that tends not to be the ideal shorting environment. The ideal shorting environment is when everyone is really happy and buying stocks and doing a lot of speculative share trading and everyone's exuberant and everything is fantastic, then you really start to see some bubbles. And I'm not sure that we're quite at that stage yet, but I agree with Jackson, it's really a stock-by-stock thing at the moment. I suspect that there will be more shorts.

Another question here. Do you see the market being determined by artificial intelligence, AI?

Yes. I mean, could you use some of the Ed Seykota quotes to answer these questions, right? The market is determined by the market, and sometimes it's not even determined by that, and then it's determined by people. And people are animals, and they react to hope, fear and greed. So I don't think the market is going to change. On the other hand, the market is changing all the time. So it's a very ambiguous answer, but I think, look, AI will play -- AI can easily do the simple things more effectively than the human. I was talking about a stock yesterday on the telephone to an analyst, and he was saying to me, oh, it's going to be a 5% fully franked yield, and they've got to do this CapEx and that CapEx. And I've said to him, hey, listen, that's not possible from -- like I'm just running the numbers in my head, the company doesn't earn enough money to do that. So I mean, AI will perform a very important function in just putting those numbers in front of me on my iPhone or putting those numbers in my head or on the inside of my glasses or something so that I don't have to waste an extraordinary amount of time to get to the point where -- which I -- like I had a gut feel on yesterday, which was actually the company is only earning 1.7% yield, not 5.4% yield going forward. And so if I'm getting told that I want to buy the stuff because it's on a 5.4% yield and it's actually on a 1.7% yield, I want to just have all that data in front of me, I want to have the data quickly. So AI is actually going to help. As I think Kasparov, the famous chess champion said, he said, it's not about whether the computer is better or the human is better, what's the best is the human using the computer.

Another question just on themes is, what is your view of the Aussie iron ore stocks?

It's a tough question. I don't really have a strong view on the iron ore stocks really. They've had a strong run. It's been a very -- there's been a number of factors that have led to a higher price. I'd probably -- I think we're more recently tending towards the negative side or more that we don't think that the situation that the industry has found itself in for the last few months will continue at the same rate. The disruptions in Brazil are continuing, but at some point, you expect them to be resolved. The price is very high relative to other commodity prices. There is the potential for supply coming out of Africa, if the Chinese invest there to put a bit more balance in the equation when they're dealing with the big miners here. So yes, I don't really have a definitive answer for you, but we're probably a little bit more cautious at the moment on that space.

I think if many of you followed the portfolio in the last couple of months, Fortescue was a good position for us over the last few months. We bought it. I think it was in the middle of COVID at probably $9.50, $10 kind of thing right after they paid a big -- announced a big special. And the iron ore price ran really hard. Obviously, the disruptions in Brazil. But more recently, I think it was just yesterday or even overnight, Vale has recently said that they have no worries about getting back to capacity per se. So that could potentially have a short-term impact on the iron ore price. So we've recently sold our Fortescue position, but I'm always looking for opportunities again if those should present themselves.

Okay. Thanks. I have received numerous questions around our reports or even comments around our reports. But I would say, just from the outset that, hey, listen, thank you for those. That input we always look to improving the way that we report back to our investors. So I'll obviously take on board all of those individual questions I had or comments. But one other question here is, and I know I had received this question from other investors, why did you change the listing of the top 20 positions from percentage to alphabetical order?

Yes. Okay. So I've answered this question quite a few times in the last few months. Really put simply, we were showing people our positions, the percentage, the number of shares we held, exactly how -- if you tracked it long enough in our portfolio, exactly where we'd added to those positions. And also that would give you insights into when we'd have to sell those positions based on our stated investment process. So basically, we were showing everyone what we were going to do and giving them an idea looking forward of what we would do if prices were moving. And basically, that allowed any smart investor to effectively pick us off or play us like absolute amateurs. And so we had to balance the idea of giving you full transparency on what we were doing and leaving ourselves exposed to being played by smart investors in the community. And we've decided to continue to show you our positions, but not the size and not the exact number of shares and so we won't be easily picked off going forward.

Thanks, Karl. Listen, we're most probably getting to a time where we're only going to be able to answer a few more questions. But one of the questions here, market PEs and risk return are currently priced in an environment of low interest or cost of money and large QE intervention by governments. What happens when this changes?

Okay. Sorry for smiling then, but I have been saying -- I got criticized writing about when interest rates were 8%, what would happen if they went back to 10%. I remember writing this newsletter, and you never know which newsletters are going to resonate with people. And basically, our shareholders really, really disliked that newsletter, and they let me know it. They rang me and said, "Who are you to say interest rates are going to go from 8% to 10%." And they -- I really had an extraordinary number of complaints about that newsletter, which was about 10 years ago. And so I've stopped writing newsletters about interest rates going up. And so I've just joined the pack, and I just write about interest rates going down. So now we're at what, virtually 0 and what's going to happen when they go up again or what's going to happen if they continue to go down like they have been. So I think really the thing to say is that we are living in a period of extraordinarily low interest rates now. And at the risk of upsetting people, even if interest rates were to go up from here, they will still be extraordinarily low. But that -- the big dilemma that we've all been facing for really a decade, but really in the last 5 years, is interest rates continue to fall which, by definition, means that asset prices continue to go up. And until that formula is broken, that will continue to happen. So in actual fact, it could be argued that the stock market, when it recovers, its earnings recover now after COVID, should actually trade higher than it did beforehand and significantly higher because interest rates are significantly lower than they were before the coronavirus. And by significant, I mean, in an accounting sense significant. I mean 1% fall in interest rates in some regions in the world now is a 50% fall in the actual interest. So there is nothing to suggest that, that trend is reversing. But of course, when it does, asset prices will be sensitive to that.

Thanks, Karl. Another question from a shareholder is, when, if ever, do you envisage issuing more stock?

Well, okay, that's an easy one. We will not issue shares at a discount to NTA because that would affect the wealth and value of our shareholders' shares. And so we will only ever issue in and around NTA. We've never been a company that's issued shares at a premium to NTA because we think that, that is unfair on the new incoming shareholders. So the ideal time to issue shares is in and around NTA. And as I said, this came up at our Board meeting the other day, when will we be able to do a dividend reinvestment program? And the answer is, it is actually up to our existing shareholders and potential new shareholders to decide when we go back to trading in or around NTA. And we are obviously involved in buying back our own shares at a discount to NTA, and the directors and managers in this company are buying shares at a discount to NTA. So to the extent that we can help get it back to NTA, we're doing it.

All right. So most probably just time for one last question, I'll just see. How big effect are -- sorry, ETFs having on share trading and prices?

Yes. Probably good one for Jackson. I'd say yes, it's definitely having a larger impact as time rolls on. We've seen some big moves, in particular, in the last few months, driven by the ETF flow.

Yes. I think these things are becoming much more popular, but part of the reason that they have a much larger effect on stocks with lower liquidity per se. So that's -- we're trying to stick to our process and buying assets on the way up and selling assets on the way down. And without getting too cute with the ETF thing. It's there, and you can sometimes see it in the screens in certain stocks. So you have to be aware of it. But yes, it's becoming more and more popular.

Well, the one that I can think of which was extremely frustrating was, we were having the COVID correction, massive fall in stock markets, and gold was going to protect us. And so we were all buying gold stocks which were going to protect us. And then a large global ETF decided that they were going to sell a portion of their gold stocks because they got redeemed because people needed money. And so this wholesale selling of gold stocks in Australia started because we are a big producer of gold in Australia, and the gold stocks fell by more than the stock market. So here, we are using our traditional logic that if the markets fall, gold goes up, and so gold stocks are a good investment. And actually, in fact, gold stocks were a worse investment than the stock market. And that was very much quant, volume-driven selling.

All right.

So ladies and gentlemen, we're kind of running out of time at the moment. But the important thing that I'd like to reiterate, as I always do at the end of every webcast and I think we have a little note at the end of our newsletters every month as well, is, obviously, we're going to start doing these 6-monthly investment updates, but we're also always open to people ringing in or sending us e-mails on the [email protected] e-mail address or communicating with us on any issues that you might have with your investment in Cadence Capital Limited. And please be in contact with us if you need additional information. And once again, thanks for your time today, and hopefully, the next time we do a 6-monthly update, we're actually seeing you face to face and not via a video interface or a telephone connection. Thanks very much for your time today.

Thank you.