Cadence Capital Limited (CDM) Earnings Call Transcript & Summary

All right, ladies and gentlemen, I think we'll get going. The formal part of this is going to be quite quick, and then we're going to get everyone in for the presentations, and then we -- that will be when we do lots of questions. So, good afternoon, and welcome to the Cadence Opportunities Fund Limited Sixth Annual General Meeting. And I would like to thank you all for your attendance and would like to warmly welcome any new shareholders who are joining us for the first time. My name is Karl Siegling, and I will be chairing today's meeting. I'm joined today by our Board members, Susan Oakes; Jolanta Masojada; and Wayne Davies. Welcome. Joining us from Cadence Asset Management investment team are Chris; Nicholas; and Kieran. And joining us from the Asset Management finance team is Elizabeth; and Min Li. Also joining us to address any questions regarding the company's financial statements is Kinh Luong with HLB Mann Judd, the company's new auditors. So, welcome for the first time as well. Our agenda today begins with the formal part of the Cadence Opportunities Fund Limited meeting. Straight after this, we will be joined by Cadence Capital Limited shareholders for our initial investment briefing -- for our investor briefing presentation. We would please ask that you keep questions to the end of the investor briefing presentation where we will be given opportunity -- where you will be giving the opportunity to ask questions. After the presentation, we would ask that you please join us for a cup of tea. So now moving on to the formal part of today's meeting. The first item is to discuss the financial report for the year ended the 30th of June, 2024. Does anyone have any questions in relation to the financial report? All right. Then I'll move on to the resolutions for today. There are 3 resolutions to be passed. All resolutions today will be decided by a poll in accordance with the proxy form, which form part of the AGM pack. The Chairman intends to vote all eligible undirected votes where he holds the proxy in favor of the resolutions. The final voting results will be released to the ASX following the conclusion of today's meeting. So here, Resolution #1, that the company adopts the Remuneration Report as set out in the Directors' Report. This resolution is advisory only and does not bind the company or its directors. I hold proxies for approximately -- sorry, not approximately, this is accurate at this time. I hold proxies amounting to 5,479,191 for this resolution and 119,670 against this resolution. I will now ask shareholders with questions regarding the first resolution to raise their card. Please complete the voting card in relation to this first resolution. All right. Moving on to Resolution #2. Resolution #2 is that Ms. Susan Oakes, who retires in accordance with the company's constitution and being eligible offers herself for reelection to be reelected as a director of the company. I hold proxies amounting to 5,794,209 for this resolution and 1,335 against this resolution. I will now ask shareholders with questions regarding the second resolution to raise their cards. Please complete the voting card in relation to the second resolution. And finally, Resolution #3 is that Ms. Jolanta Masojada, who retires in accordance with the company's constitution and being eligible offers herself for reelection to be reelected as a director of the company. I hold proxies amounting to 5,794,209 for this resolution and 1,335 against this resolution. I will now ask shareholders with questions regarding this third resolution to raise their card. And could you please complete the voting card in relation to this third resolution? All right. If everyone has had an opportunity to vote on these resolutions, I now declare the polls closed for the vote on each of these resolutions. And that concludes the voting on these resolutions. Could you please place your cards in one of the ballot boxes provided by the Boardroom? I don't think there are even boxes anymore. I think they're just a folder. There is a box. Does anyone need to fill it to put anything in the box? All right. Ladies and gentlemen, that concludes the formal business of the meeting. We will now be joined by the Cadence Capital Limited shareholders and Board members for our investor briefing presentation, which was planned to start at 2:00. What time is it, Wayne? 5 minutes, that was good. All right. So we've got 5 minutes before the rest of the shareholders come in. Thanks very much. [Audio Gap] Annual General Meeting. I would like to thank you for your attendance and would like to warmly welcome any new shareholders who are joining us for the first time. My name is Karl Siegling, and I will be chairing today's meeting. I'm joined here today by Board members, Wayne Davies; Jenelle Webster; and James Chirnside. Joining us from Cadence Asset Management are Chris Garrard; Nicholas O'Shea; and Kieran Barratt; and from the Cadence Asset Management Finance team, Elizabeth Santoso; and Min Li. Also joining us to address any questions regarding -- sorry, Elizabeth, you're right there. Also joining us to address any questions regarding the company's financial statement is Kinh Luong with HLB Mann Judd, the company's new auditors. As we -- correct, this is your first time at an AGM. So they've joined us as new auditors and the changeover was last year. Our agenda today begins with our investor briefing presentation. Following this presentation, we will answer any questions that you may have before moving on to the formal part of the meeting. We would ask you to keep your questions to the end of the presentation where you will be given the opportunity to ask them. At the conclusion of our meeting, we would like you -- to invite you to stay and join us for a cup of tea. All right. Turning to the investor briefing. We're going to go through both of the funds -- a briefing that covers both of the funds. And then we'll take questions, and then we'll move on to the Cadence Capital Limited resolutions, which hopefully don't take very long, just like the CDO ones. So, the fund was up around 10.5% for the year ended 2024, produced around a $22 million profit. And last year, the financial -- in the year -- that financial year, the fund displayed significantly lower market volatility, resulting in good risk-adjusted returns. The top contributors to performance last financial year were Meta Platforms, Alumina, Netflix, the Karora-Westgold Resources merger, Whitehaven Coal, Capstone Copper and Austin Engineering. The largest detractors from performance were Sierra Rutile which has since been taken over, Zillow, and Syrah Resources. We exited Zillow and Syrah Resources last financial year. Investing in turnaround situations such as Meta Platforms and Netflix was a strong driver of returns for the fund. And interestingly enough, both very, very large companies. It's the bigger companies that have been doing quite well. Performance of resources companies was mixed. Investments in copper, aluminum and gold companies such as Capstone Copper, Alumina and Westgold Resources performed well, while obviously, investments in lithium mines performed very poorly. Let's not forget that the previous 2 years those lithium companies had done extremely well. We never really held significant positions in lithium. Whitehaven Coal performed well after acquiring the Daunia and Blackwater coal mines from BHP at an attractive price. And we can talk a bit about that theme because that theme has continued even into today's paper where coal assets are trading into different hands at very good valuations in effect. So here's our performance over time. The fund was up 1.5% in October, outperforming the index by 2.8%. Over the past 19 years, we've outperformed the market by about 3.1% per annum. And over the past few months, we've been sitting on large amounts of cash. We are trading at a discount to NTA. There have been a few questions about that, and we'll address those through the meeting as well. Importantly, we do have quite a liquid and diversified portfolio at the moment in different stages in the cycle. We can be in small and mid-cap or medium and large-cap stocks. Small and mid-cap stocks, especially microcap stocks have not performed that well over the probably 3 to 4 years compared to, say, larger stocks. And obviously, you're running liquidity risk as well. We hold around 35 positions in the large fund, the biggest position being around 6%. And approximately 81% of our positions are at $1 billion market cap or larger at the moment. So that's quite big companies. Currently, 87% of the portfolio could be liquidated in 1 week and around 92% within 1 month. Here are our top 20 shareholders. So if you scan down the page there, you'd be -- I'm sure you'll see quite a few resource companies, energy companies and then the large international stocks that are trading on compelling valuations relative to Australian companies and then one or 2 companies that have -- actually are in a turnaround situation and being rerated. We can come back and talk about any of those companies or if you have any questions on any of them or any company in our portfolio for that matter. The fund was up 10.8% for the year -- No, that's not right. We're doing CDO at the same time, I beg your pardon. Sorry. These are the CDO numbers now. The fund was up 10.8% for the year with a profit of around $2.3 million. And again, with this fund -- these funds were -- mirrored each other quite similarly in the year just gone because they were both predominantly running core positions. You'll see in this New Year that the CDO portfolio has got a lot more trades in it than CDM. The top contributors for the period were Meta, Alumina, Austin, Netflix, Capstone Copper, again, the Westfield -- Westgold-Karora merger and Whitehaven and the largest detractors, Sierra Rutile, Strike Energy and Syrah Resources. Again, this funded well in turnaround situations last year. Performance of the resource companies once again mixed with the gold, copper, alumina performing well and the lithium companies performing poorly after having had a good period -- good run the previous 2 years. Whitehaven Coal has performed well after acquiring the Daunia and Blackwater assets. So here's the performance of the fund since inception, 24% per annum for a compound return of 245%. CDO is, as I've just indicated, an active trading version of the Cadence Capital process. And so, you will see in periods of trading that this portfolio can turn over more quickly than the CDM portfolio. On the other hand, when there's not much profit to be made in trading, the portfolios will look very similar. The performance over that period of 23.6% per annum outperforms the index by about 13% per annum. And this fund is also trading at a discount to NTA. Again, you can see how liquid and diversified this portfolio is. In actual fact, because it's a smaller portfolio, it is more liquid. The top 20 shareholdings, this is where you start to see some of the differences. You can see that the capital raise to -- for the CapEx to get the degraded mine going are in this portfolio. EIQs in this portfolio as well, the IPX traders in this portfolio and STP, Step One Clothing, the placement that they did -- I mean, if the sale down that they did at $1.71, we have a stake in that company as well. So the portfolio is starting to look slightly different to the Cadence Capital Limited portfolio. We did hold around 7% gold coming into the month of November, which is obviously, if you've been reading our presentations, the gold sector has done well, and then we'll go into some detail on the last month with gold, what it possibly means going forward. I mean, there's a lot happening in the world at the moment. So this is probably -- if I was thinking about the most important thing, or the thing that I'm thinking about the most with investing and with our process, it's probably this slide. And I'm just going to bring it alive with one stock just, so as not to keep it too theoretical. At the beginning of this year, CBA was $100, and its earnings growth is around 6% to 7% -- muted to be around 6% to 7% for the year. From a Cadence perspective, the stock was trading on around 14, 15, 16 PE, shall we say, I'm estimating. And the earnings growth was half that. So that's not attractive for an investment in our process. Since that date, CBA has gone from $100 to $160 when I left the office last night. So the share price of CBA is up 60% since the 1st of January and is the largest contributor to the increase in the All Ords Accumulation Index in Australia. It's also got a very special place in history as now being the most expensive bank in the world and trading on 3.5 times its book value. And its earnings growth is now around 6% per annum. So, what can we say about that? We can say that someone who owns the index, an index fund in Australia, CBA would be the biggest contributing factor in that index this year and that Cadence would not be in a stock like that. With that valuation, with that level of growth, we simply wouldn't be in it. And so, recently, we were up in Gold Coast presenting to some of our shareholders, this came up as a topic. The room kind of split in 2. There was the people that owned CBA and were never going to sell it. And the people that started selling it at $100, we thought it was expensive. So -- and so, the short run is the short run and the long run is the long run. We wouldn't own CBA. But importantly, as I say to shareholders when they ring me now, we are certainly not going to be buying CBA at $160, growing at 6% on a PE of 27 or 28. So that's just not what we do. And we're just not going to change our minds on what we do. And I mean, we're going to probably go through a bit of pain because we just can't bring ourselves across the line to pay 26 PE for Cadence -- for CBA. But that's just the nature, I guess, of investing in the long run. And so, if we bring that back to this chart here, we've just been through a reporting season. In fact, we've been through 2 reporting seasons now where the same thing has been happening. And in actual fact, we've probably been through 3 reporting seasons where the same thing has been happening, but it's been clouded by the COVID earnings recovery, and that is earnings growth is falling and asset prices are going up. So, someone was telling me the other day that property in West Ryde is now trading on a 1.9% yield, and they were very pleased about that because their property had gone up 4 times in value. So that in theory, if the rent hadn't changed much, they would have been getting a 7.5% yield on that property before it went up fourfold. And then they were very confident that, that property would double again. And so I was say, okay, well, that's good because then if the rents don't go up much and you're getting 2% yield, you'll be getting 1% yield. So I'm trying to illustrate that in another format, which is property because people instantly they -- it's the same thing with PEs, but just another way of saying it. What you're saying there is the property is trading on 100 PE. So here we've said that stocks have moved, in the example I gave, from a 14 PE to a 27 PE. That's across all the banks have moved significantly higher. Wesfarmers moved significantly higher. Basically, all the stocks in there, and then definitely in the ASX 20 have moved to much higher valuations than they were at. And so, that's a really interesting chart and a really interesting dilemma when you're running money like us looking for earnings growth. And the actual fact, we're looking for the opposite. We're looking for 25% per annum EPS growth on a 12 PE. And we're not going to be finding that in the top 20 stocks in Australia, which is okay because we can go overseas or we can go somewhere else and look for it. It's a very important chart at the moment. We started showing this chart about 2.5 years ago. The mood has definitely changed on this. When I asked people 3, 4, 5 years ago if they thought interest rates would go up, the answer was categorically no. Interest rates will not go up. 4 years ago, no, 3 years ago, maybe, 2 years ago, definitely, last year or almost definitely this year. I'm sure I don't have to explain to you. You all read the paper and read real estate magazines and so on, they explain to you how interest rates are going to go down. But these are long-term trends. And interest rates from 1945 to 1982 went from 0 to 14% in America, and they went from about 2% or 3% here to 17% in Australia. And then they fell in what we call the golden period. So if you bought any property after that period, of course, it went up in value because as interest rates fell, your repayments fell and then the person that was buying it off, you could afford more. And so we went all the way down to 0 in America, 2% fixed for 30 years. And in Australia, we went to 1.9% fixed for 5 years. So -- and then that's gone now. So that's just a figment of -- that's just history. So now we're at 7.5% fixed for 5 years or variable rate of whatever you're getting. So that green line, I'll just -- there's a little -- that little green arrow there. It just doesn't stop at an odd spot. It stops at 8.5%. 8.5% is the average interest rates over the last 225 years. So that -- just to put it in a context kind of what we're living in, where we're living and what's normal and what could happen. I mean these are extreme things to say, right? So when I was saying that interest rates were going up 4 years ago and the Reserve Bank categorically said they were going to be flat for the next 3 years, these are extreme notions. And a lot has happened since then, the people -- there was just never going to be any acceptance of the fact that we were told that interest rates are not going to go up and then they did go up. I mean, if they had said interest rates were going to go -- weren't going to go down and then they went down, we'd be happy with that because that's good for your asset thesis. But this is where we are at the moment. And here's a version of it cuts and sliced short-term. And every day -- it's in the paper every day. It's almost the most important topic. There was a really good article in the paper yesterday explaining how 15% of mortgages in Australia are fixed for a period of a maximum of 5 years and 99.5% of mortgages in America are fixed. And most mortgages in America are somewhere between 20 and 30 years. So if there was one country where it was really going to hurt if interest rates went up, it was a variable rate country with big mortgages. So this is the thing that everyone has been talking about. I mean it kind of goes about saying there's not much you have -- not much more you can add to it, except to say that as interest rates go up, houses have been going up, just like this chart I showed you, where just as earnings have been coming off, valuations have been going up. This is one sector where we feel there's been some kind of -- we're hoping or presuming there's some kind of protection, which is gold. Gold stocks are cheap. They are growing quickly as the gold price goes up. We're discovering a bit more volume as gold prices go up because it becomes profitable to mine gold at a higher price. But the gold stocks have not tracked us. And you can see the big fall in the gold price after Trump [Audio Gap] -- President Donald Trump got into politics -- what am I saying, he's become the U.S. -- he's got to be the U.S. President. That's a simple way of saying it. So -- and so then the market said, okay, well, that's great. Everything is going to be okay. It's good for business. There's -- everything is going to be fine. And now as we're going through some of the analysis, we're realizing that actually, it's possible not much is going to change, which is, there's a lot of debt in America, and it's probably going to get bigger. So the important thing is that commodities are the purest form of trading in the world and companies are a leveraged version of that. So as these profits grow, eventually, the share prices will catch up. And we believe that these prices should outperform gold in the medium-term. Here's an example of a company. We were just talking about a company growing at -- on a PE of between 27 and 37 with growth of 5% or 6%. Here's a company growing at 50% on a PE of 15, spitting off cash. And this operating performance, combined with the merger that they've just done, is going to put this company to be the third or fourth largest gold mine, so a bigger part, and will put this company into being -- will put this company into having a profit of $0.5 billion in the following year. So -- and the additional thing that's happening here is that the gearing is falling as well. So we believe that this company will perform well in the future. That's how the share price has been performing. I just got my wires crossed on this company, that's why I was confused. So Westgold has been the merger of the 2 vehicles. We're having 73% earnings here and an 8 PE. Again, operating cash flow yields are even higher and no debt on the balance sheet. So we expect that the synergies to be found here of between $100 million and $200 million, which have been muted by the 2 sets of management, will come through. And the company will obviously producing a lot -- be producing a lot more gold. And if gold continues at the rate it's at in Australian dollars, we're going to have nearly $2,000 of margin per ounce here. So this has been -- this is a very well-positioned company. And again, that's what the share price has been doing. We've got other gold positions at different stages in development. One of the companies that has hurt us this month is Resolute Mining. I know Terry quite well, and he was bailed up in Mali in a hotel room, it's been in the paper, and they wouldn't let him go before they said you've got to give us USD 80 million and commit to another $80 million before we release you. The reason they're saying that is because they've seen how much money this company is making, and they need money to pay their -- for their military and to pay for -- to pay the government in effect. This is one of the biggest businesses in West Africa. And so, we've just -- we -- when something like this happens, which we call an exogenous shock, there's virtually no time to sell any shares. We probably could sell some shares now, but we've got to try and form a view on what the recovery looks like for this company because this company produces a lot of gold and at a big margin. West African gold is about to double its production. We've been following Richard for 15 years. We helped them get into pre-IPO at $0.10. And this company, again, has an extremely strong cash flow, 21% free cash flow yield trading on 5 times earnings. The next 2 are more early stage. Kingsgate, if people that have been around a while, they might remember this company, in Thailand. This has the potential to have a lot of production, again, at very low prices and to throw off very, very good cash flow, making it a very cheap company. The idea is that this is going to go back into production in the next year. But we would have to say that this is a small position, early stage, but we're watching it very closely. And Turaco Gold is closely aligned to the -- well, the management have left Tietto mines, that mine just got taken over by the Chinese, and he's gone back into running this business. It's a -- I beg your pardon, he's taken a stake in this business. He's going to be running Robex Gold and he's taken a stake in Turaco and Justin's running this business. And there's been a lot of drilling done in this company already. And so, as they go to firm up resources, surprise, surprise, there is a lot of resource and reserve being discovered here because the drilling has already been done on it. Again, these West African gold mines, they've got a lot of gold. So the issue in West Africa compared to, say, Australia isn't whether they've got gold. It's always just country risk because there's a lot of gold here and it's mostly open pit mining. So it's very, very low cost. Okay. So turnaround situations is probably where we're hunting most of the time to try and make returns. I'm going to let you talk to this, Chris. You're going to talk to all of them. All right. So I'll just introduce Chris Garrard, who's been heavily involved in all 3 of these turnarounds.

Thanks, Karl. Meta, Netflix and Block all had large share price falls in late 2021 and early 2022, which can be seen on this chart. So that's this area just here. This was part of a broader market sell-off with the S&P 500 falling 25% and the NASDAQ falling 35%. Meta and Netflix became cheap fundamentally. And when the share price began trending up, we invested in both. Block has only recently met our fundamental criteria, and the share price uptrend may have begun after moving sideways for the past few years. It is hard to tell from looking at the chart, but the Block share price has already doubled from its low point about 1 year ago. We have recently invested in Block, which has performed well so far. I will go into detail about these 3 stocks in the following slides. We can see on the left-hand side of this slide that Meta's fundamentals are strong. We expect EPS growth of 45% in 2024, which equates to a P/E ratio of 24 and a PEG ratio of 0.5. Operating cash flow yield of 6.8% and free cash flow yield of 4.3%. Meta is in a net cash position of $47 billion and has a market cap of $1.4 trillion. Meta's shares were up over 75% during the last financial year, which we show on the next slide. The benefits from Mark Zuckerberg's Year of Efficiency as well as improved revenue from advertisers drove net income of $55.5 billion for the last 12 months, almost double the $29.7 billion earned in the 12 months prior to that. There have been concerns from some investors that young people are using Facebook less. But on the second quarter results call, Mark Zuckerberg said that Meta is seeing good results on their efforts to get more 18 to 29-year-olds using Facebook. He also said that user growth in the U.S. was a bright spot, which is positive as the U.S. is Meta's most mature market. Even after the share price rise, Meta is on an undemanding P/E ratio with good growth prospects. Meta is currently investing heavily in AI and is well positioned to benefit from its integration into Facebook, Instagram and WhatsApp. We can see on this slide that the Meta share price was up strongly over the last financial year. The upward trend has continued since the end of the financial year, and the fundamentals support continued share price growth. For Netflix, we expect EPS growth of 57% in 2024, which equates to a P/E ratio of 45 and a PEG ratio of 0.8. Operating cash flow yield of 2.3% and free cash flow yield of 2.1%. Netflix has net debt of $7 billion, which is very small when compared to its market cap of $384 billion. The Netflix share price continues to perform well. Over the past year, Netflix has benefited from a focus on reducing password sharing as well as the introduction of ad-supported plans that are cheaper for subscribers, but are expected to be just as profitable as ad-free plans for Netflix. These initiatives have driven continued subscriber growth and the Netflix share price rose more than 50% last financial year. We are confident that Netflix can continue to achieve excellent growth. They are the market leader in subscription video streaming and have excellent economies of scale. The extra cost to Netflix of adding a subscriber is very small. So most of the revenue from new subscribers drops directly to the profit line. On this chart, we can see that the Netflix share price is in a strong uptrend that began in the middle of 2022. They've had a very strong run in the last few months, which has pushed the 2024 P/E ratio up above 40. So we need to keep a close eye on the growth outlook. For Block, we expect EPS growth of 30% in 2025, which equates to a P/E ratio of 20 and a PEG ratio of 0.7. Operating cash flow yield of 7.5% and free cash flow yield of 6.3%. Block has net cash of $4 billion and a market cap of $57 billion. Block has 2 divisions. Square provides point-of-sale systems for businesses and Cash App is an app that allows users in the U.S. to send and receive money easily with low fees. In Australia, we can already use Internet banking and pay IDs to send and receive money reasonably easily and with little or no fees. But in America, Cash App is making money transfers cheaper and easier than they have traditionally been. Block is targeting Rule of 40 in 2026, which is defined as gross profit growth plus adjusted operating income margin. In effect, Rule of 40 targets both growth and profitability. Until recently, Block has prioritized growth over profitability and has not met our fundamental investment criteria. On the recent quarterly results call, Block stated they are targeting 15% gross profit growth and 25% adjusted operating income margin in 2026. We add these 2 numbers to see how this will achieve Block's Rule of 40 target. If this can be achieved, Block's 2026 P/E ratio will be below the 20x we expect in 2025 and will be cheap for a company with good growth prospects. We believe Block may be at the start of a significant uptrend that is supported by strong fundamentals. At first glance, it looks like the Block share price has been moving sideways for the past few years. On closer inspection, we could argue that the big downtrend -- so this big downtrend here, finished here in October 2023 and then a new uptrend has begun with the share price already up over 100% from its low point. I'll now hand back to Karl to talk about some of our energy positions.

Thanks, Chris. So yes, just quickly on that. I mean, I don't know if people remember that this was Afterpay. So, this is the great thing about doing this job. So when we went from here to here and when we got up to this enormous valuation, the excitement and the pizzaz and all the fun -- it was in the paper every day. And then the really exciting part was when the stock just collapsed and people lost most of their money. So, that sounded weird the way I said that. So if you think about it, the valuation was enormous up here. And this company was losing money. So now, like if we just say that slowly, the valuation was enormous and the company was losing money. So the animals in the room were very excited to buy a company that was losing money. Now the animals in the room are not that excited to buy a company that's making money, but we are, because that's the type of thing we really like. We really like to buy a company on 1/4 of the valuation of when it was losing money and is now making money and stands a good chance of making a really serious amount of money in a scaled position in an industry that really needs solving. And I think Chris outlined how bad banking really is in America for people that are not super wealthy. So, this is a really, really good solution. And then remember, in the background here, you're picking up that old Afterpay thing that everyone loved so much for free. So just like I've been moaning about the valuation on CBA and how high it's got, here I can find something much, much cheaper with potential to grow a lot. Okay. On to energy. Again, a sector that struggled. This is the largest industry in Australia, which is the export of coal. Australia exports 50% of all the world's metallurgical coal. We are a very, very important country when it comes to metallurgical coal. Whitehaven acquired the BHP assets, Daunia and Blackwater, and this has roughly doubled production from its original base and has also moved the revenue streams so that metallurgical coal is now 65% of the company and thermal coal is 35% of the company. Why is that so important? Because one day, and that day is pretty close, people are calling metallurgical coal the green coal, the coal that turns you into a green world. You use it to make wind farms, solar panels and -- but you also need it to make everything basically, and they are more opposed to thermal coal. Now, the people that I'm describing are the people that are saying that you're not allowed to invest in coal companies. But that's changed for Whitehaven because they are predominantly the coal that apparently you are allowed to invest in. So we hope that there is a re-rate coming from Whitehaven Coal just on that basis. They sold a 30% share of this business, they bought up BHP for USD 1 billion, which has basically eliminated their current debt, and is sold on a valuation higher than they acquired the business. As the CEO said to me to simplify it, he said, Karl, we bought a loaf of bread. We sliced it up and we sold one of the slices for more than the value of the underlying loaf of bread. I thought that was a good analogy. This deleveraging has also occurred in a period of very large cash generation [Audio Gap]. And so you can see now that the company presents very well in terms of its valuations. And these prices have stabilized both for metallurgical and thermal. Yancoal Australia, I'm sure we would have all read, is a producer of metallurgical and thermal coal in New South Wales and Queensland. They have just lost out on the acquisition of the Anglo -- "lost" in inverted [ commas ] -- The Anglo assets were just sold overnight to Peabody. There's either going to be Peabody, Stanmore or Yancoal. Yancoal stopped paying a dividend because they wanted to buy the Anglo assets. That's worth reflecting on because they didn't buy the Anglo assets. They've got 2, $1.8 billion of franking on their balance sheet and $2.4 billion nearly of cash, not quite $2.4 billion. That's an estimate including cash flows for the last quarter. For the quarter, we haven't seen those numbers yet, but it gives you some idea. You can see here, they say $2 billion of net cash on the balance sheet. I think it's slightly higher than that now. So there's a good chance that they're going to start paying dividends again, and they pay 17% free cash flow yield. There's a lot of dividend that can be paid out of that company. Stanmore also missed out on the -- on these Anglo assets and has deleveraged its balance sheet. Based on its fundamentals, we just went through these numbers this morning with the broker, the price that Peabody paid for Anglo is 20% higher than where Stanmore is trading right now. So you could buy similar assets at a 20% discount to what Peabody paid yesterday. Okay. Then now, these are some positions where we have benefited from PE expansion. As you would have read in the paper and seen television shows and all this, insurance premiums are going through the roof, and that's what tends to happen during price periods of inflation, and insurance companies make a lot of money when that happens. And this has happened with Suncorp and QBE and actually many of the other insurance companies as well. And we've also benefited from the Origin Energy position having a PE expansion so that these companies are trading at much higher multiples than they were, say, 5 years ago. So if we had put the whole portfolio into things like this, these positions have actually performed very well and they kind of sit in the halfway ground between what bank valuations are and what the energy and resource companies are trading at the moment. But each of those positions has performed pretty well in the portfolio, and they're all trading at good PEGs. The problem with it is, again, as I described with the banks, the PEs are starting to expand, so it makes it more difficult for them to reach our criteria. On CDO specifically, I started off by saying to people, look, there is a number of trading positions that are starting to enter the CDO portfolio that are not in CDM. Iperion is one of them. It produces titanium at significantly lower costs than industry standards. And this company is scaling up its facilities and is winning a lot of U.S. contracts. Echo IQ is a medical technology company that uses artificial intelligence to detect heart failure. This is a very, very clever company. So if you go in to have a heart bypass surgery or a stent put into your heart, you tend to have that done. A human does that. And then you tend to be back there not long after because a lot goes wrong with these operations. These scans are all put into a computer and they are compared to each other, to thousands and thousands and thousands of scans from all the different heart surgeons that are doing different operations. And in effect, this computer is learning and the images are learning and learning and learning and they start to tell the surgeon, look, this looks like that situation with this case, that's what happened here, the stent got blocked, et cetera. So these guys are winning a lot of contracts in America, and they're going muted to be winning a lot more contracts in America as well. Titomic has an advanced cold spray technology to be used in additive and manufacturing and advanced coatings and metal repairs. Again, these are manufacturing plants that are being expanded into the U.S. All 3 of those trades there are looking to -- they're effectively exporting. They're going to -- their predominant business is going to be earning U.S. dollars in America. And that seems to be one of the trends that's developing in the world as we possibly move away from globalization towards more nationalization and America is going to be doing a lot of this stuff on their shores. Solvar is a leading business that is being turned around and has an improving business profile. I think that this company, whilst the trade also has the potential to be a core position next year and the year after, this is the old money [ tree ]. And so we've known this business for about 15 years. They have been through a terrible period. I mean, just about everything that could go wrong has gone wrong, but there's a strong management team there, and we think that, that's a turnaround story. So I -- if I was guessing, I'd say that's a trade. They've got a big buyback in place at the moment, which is why it's a trade, but it also has the potential to be a core position that could find its way into both portfolios over time. Okay. So the outlook. So I'll try and go through this quickly. There is -- there are so many conflicting signals at the moment, and there's so much information out there, which I'm sure many of you are digesting on a daily basis. But the first thing to say is we expect commodity prices to be volatile and to remain high in the coming months and probably in the coming medium-term period. Growth in China and Asia appears to be slowing compared to what we were investing in, say, a decade ago. And some of the property sector there is dragging the economy down and causing weaker consumer and investor confidence. And China is continuing to stimulate and re-stimulate the economy, and we hope that the markets can improve there. And I mean, this is not unheard of territory, right? During the global financial crisis, the U.S. government stimulated the U.S. economy, the Australian government stimulated this economy. There's a lot of government stimulation going on all around the world. Relatively recent phenomenon, but it's happening in many parts of the world. Trump winning the U.S. elections has created more uncertainty. The U.S. is going for growth at the expense of the rest of the world. I'd have to say when I was asked about this before the elections, there's one area where I think there is not uncertainty, and that is whether the Democrats got in or whether the Republicans got in. I still have that saying down there that the U.S. government continues to issue $1 trillion of debt every 100 days. That wasn't going to change on the government. It's just how they were going to spend the $100 trillion that was going to change. So that structural thing of just issuing more debt to make it through the year, that seems pretty embedded at the moment. Gold prices have fallen following the U.S. election. The geopolitical environment has become more uncertain, bond yields have risen and any tariff should cause more inflation, we think. Gold prices are now recovering to be on trend again. Huge amounts of public spending in Australia. I thought this is really interesting. The IMF have requested Australia to include all its expenses in its budget and not to create special purpose vehicles, to put those expenses into effectively side pockets. So the budget was muted to be a while ago, it was going to be between $22 billion and $28 billion. And when you include those side pockets, it was around $50 billion. And you saw today in the paper that they've come out with a revised $49 billion budget. So I think there's a bit of a meeting of the minds halfway between those 2 extremes, but it's fair to say that these are pretty chunky budgets -- pretty chunky deficits. Sorry, I said budget, they're deficits. The amount of money you're spending that's greater than the amount of money you're earning, like, that's a lot of money. Interest rates have been rising since 2020. We spoke about that. It's an unpopular thing to say, but it is just a statement of fact to look at the interest rates, they are going up. And that uptrend seems to us to be firmly in place. It doesn't matter whether a journalist says they're going down or whether a friend of yours says they're going down or -- what's important is that they continue to go up. And it's media speculation that the Reserve Bank was going to cut rates, but that has not happened and the rates appear to be on hold. And this is an important point. Rates are muted to be falling in the U.S. faster than in Australia, and we rose more slowly than the U.S. But we are uncharacteristically lower with interest rates than the U.S. That's only happened twice in 50 years. So over time, you should expect Australian interest rates to be higher than the U.S. interest rates. How we get there is a bit uncertain, but we should get our rates to be higher than the U.S. Top 5 exports, it's worth remembering what we're doing here. We export fossil fuel, coal #1; fossil fuel, LNG #2; iron ore, pig iron #3; inbound tourism #4; and education #5. We -- unfortunately, education was #4, but the government has had this really weird initiative in place to reduce the number of students coming to Australia. And so, that has reduced our exports in education, which is a real shame. So there you go. If you're looking for an area that's bombed out and you think might be good in the future, education might be a place to look because, I don't know that they can continue just to destroy the industry. I mean, it doesn't make much sense to me. I think they say maybe wake up 1 year or 2 from now and go, let's grow the education sector again. Well, demand for electric vehicles has collapsed in Europe and other Western countries. But in China, they're doing extremely well. China are really dominating electric vehicles, and they've had a strategic initiative to do that, that was started over a decade ago, in fact more than a decade ago. So that strategy is working for China, and it's not working for the rest of the world. Stock markets are rising despite interest rate expectations increasing and companies recording lower profit growth. I've gone on and on about that, but that's just the case. And the P/E ratio of the entire stock market in Australia is now over 20 despite me showing you our biggest sector, coal and LNG trading on single-digit multiples. But that's the average. Fewer stocks are meeting our fundamental and technical criteria, but they do exist. So that's the exciting part of what we're doing. When you find them -- in fact when there's not a lot of them around, when you find them, it's almost more exciting. That Block position I just showed you, the Whitehaven position when it fell to $1.83, it's great to find things that are cheap and they've had an exogenous shock on them. And Netflix, when it collapsed, it was very exciting because it was trading on [ 14 times ] P/E when it fell. Obviously, it's more than tripled since then. And we just have to be patient to find those opportunities. And we're going to continue to focus on implementing our process, which I'll say every time we presented these things. But hopefully, after 19 years, you can see that. All right. And now on to questions. Just if there's any questions about any of the funds or any of the investments or anything that we're doing, please fire away. Yes, sir.

[indiscernible] how much cash is in CDM right now?

So that's different in the 2 funds. At the moment, in CDM, there's around 15% to 20% cash. It's been oscillating around those levels. And inside CDO, it's been around 5%, 10%, 15% because, as I said, CDO has quite a few more trading positions, but then those trading positions get bought and sold more quickly as well. So the cash levels can move around more quickly in CDO, but roughly 20% in CDM.

You have to also add, we do have a small -- sorry, we do have a deferred tax asset position of around another 15%. So if you add the 15% plus the cash, we've got cash and cash equivalents of around 35%.

Where I only -- but we never agree on this with the accountants because I'm only investing the investable portion of the portfolio. So I'm on 20% cash.

And just the other thing, I always listen to Gina Rinehart. I just think she's a brilliant lady. She says the way it is. And I listened to her the other day and what worries me is the future of mining and minerals in this country. If everything she said, if it doesn't come in, it's going to affect -- possibly affect our future mining in this country?

Yes. I am -- I agree with some of that sentiment, but I would also temper it with this. I just -- and this is why I did this, and this is why I'm going around showing people what our top 5 exports are. So, they are these companies. They -- 3 of our top 5 exports are minerals and resources and energy. And so, I don't know, maybe -- I think I said this to you last year, if we get on to a situation where in Australia, hypothetically, we're using no energy or carbon neutral, let's say, right? Whatever that means, like a lot would have to happen for that to be the case. It's a quantum leap from there to say that we're going to stop exporting coal and LNG to our Asian neighbors; Korea, Japan and Malaysia, for example, to -- so that they can stay warm. I mean it's another step to say that you're going to stop sending metallurgical coal to Japan so that they can produce motor vehicles that we buy or to send thermal coal to Japan or Korea in the middle of winter so that they can stay warm. It's simply another step to say we're going to -- I mean, what am I saying there is that they can't live -- we're going to that next level where we're saying we're okay, but it just doesn't seem realistic to me. I think we're going to be okay. I think we're going to be using coal, LNG for a long time. I think we're going to be using iron ore for a long time. I think people are going to be visiting Australia for a long time. And I think when we get to act together, we're going to decide that educating people in this region is probably a good idea. But where Gina is -- which I'm looking at Gina and Chris Ellison and then going, wow, they've invested heavily in lithium assets, and they also need the gas on the Western shelf. They need that Western Australian gas supply to be abundant because to get that lithium out of that rock, they've got to burn it with energy. They've got to use a lot of energy to get that lithium. So that piece, to me, that seems on hold at the moment. That lithium piece just -- I mean, hopefully, it recovers. We're watching it closely, but that piece does seem on hold to me.

Yes. It's just going to be interesting times in the future.

Yes. And what's the other one? Where does gold sit, James? 7 or 8 or...

Export?

Yes.

I think Australia is the second largest producer of gold in the world behind China. China is rapidly depleting a lot of mined commodities. That was what that recent antimony export ban was all about. In terms of export value...

[indiscernible]

No, I thought it was like, it's certainly top 10...

Top 10. It's top 10, but I don't think it's -- I think I want to say it's 8 or 9, but I'm not sure about that. So there are a lot of...

It will be now...

Yes. And as the gold price goes up, it will become a bigger exporter. So we do -- I mean, we're blessed here like with every possible thing to go on. I mean if it isn't protein and gold and energy and coal and just everything...

You just mentioned lithium. I have a lot to do with lithium. In fact, last week, I was with -- in SQM's offices in Perth. And their view on lithium is that it's a very immature market. And often, you get massive volatility in early years of the market getting established. But I think just as -- their long-term view on lithium is very positive, it's highly likely that we will see prices recover quite a bit from where they are over the next couple of years. And all of that green demand, if you like, I mean, it's just been deferred really. But ultimately, it will come through. The big question in lithium is whether or not brine production is going to be a much better cost proposition than hard rock. And that's -- I think the people here are a bit concerned about that actually. I think we only have one brine lithium production asset in the country. [indiscernible]

The big opportunity -- I probably zoned in on electric vehicles. But really, the big opportunity at the moment where everything is moving is hybrids. So it isn't actually EVs, it's hybrids. So you still need lithium. I mean the interesting thing about hybrids is you need everything. And once again, you need catalytic converters for exhaust pipes, you need lithium, you need nickel, you need copper, you need fossil fuel, you need everything to run a hybrid. So that could end up being the really big opportunity. That's certainly what Geely and China think. I mean everyone's got a view on it. Yes. Well, that was a -- really nice thing about our job is we get to meet people, and we saw QPM last week, and they showed us charts of the coal demand in Queensland and then they showed us the supply side for coal, for solar, for wind farm and gas. And the peaking is still getting met by coal and then maybe gas is better for peaking because it's about 3 to 6 times cleaner burning. But as we go forward, the situation even with the electrification doesn't improve very quickly. You still need a lot of energy. We're consuming more and more energy every day, not just because there's more of us, but because each of us is consuming more and more energy every day. Each and every one of us. And if we're in a wealthy country like Australia, we're consuming even more. And if we're wealthy in a wealthy country, then we're consuming even more. So we're probably -- I hate to say it, but in this room, there's probably some serious offenders. Yes, the AGM is consuming energy. Danny?

My name is Danny Goldberg. Karl, I've got a question with regards to the Cadence process. And as you hunt for cheap stocks that are growing quickly on PEG ratio less than 1, how tempted have you been to update your process or change your process given what's going on in the markets today, particularly with the huge flow of passive capital that's impacting stocks like CBA, the Magnificent 7, because it doesn't look like stopping?

No. So of course, it's tempting. I mean it's tempting every day to just change your process. And -- so the worst thing is the emotion of regret since -- I wish I had bought the index. I wish I had bought the index. But -- so I mean, -- but all you can do is just reflect back on periods in time. And if you've been through it enough -- so I was lucky enough to be running a tech fund during the tech crash. And coming into that period, I just remember like, it was just [ Gaga land ]. I'd go to things and it would be like [ Gaga land ], it would be like, okay, these things are on massive multiples. I've been asked to pay massive multiples for them, they're losing money. And I've just said that. I've just been talking about stocks like that, and I couldn't buy them. And my boss, quite a famous man, he's -- you just better get in there and do it, and I'm going to send you over to another famous man who's got some assets for sale and you're going to buy them off him. And -- so we went over and met all the famous people and did all the famous stuff. Sorry, we didn't do any of the famous stuff. We just stay in cash. And then the industry -- the tech index fell 78% for next year. And then it all looked different. So what I'd say about some of these valuations is if they are halved, they still wouldn't be cheap. So -- so I think the better and more tempting thing to do is to hire and have people working for you and [ go guys ], there's not many of these things out there, but just hunt them. And you can go in packs or you can do whatever you need to get out there and find something growing at 25% on a 10 PE or growing at 15% on a 6 or 7 PE. And they're out there. So don't get stuck at the -- I shouldn't be using CBA though, I mean don't get stuck at the NAB AGM working out whether they put the paper in the register clockwise or anti-clockwise and how many doors they're closing or -- it doesn't matter. We're not buying it. It's on [ 24x ] PE and it's growing at 6%. So we just got to stay true to what we're doing. But of course, of course, an index guy just goes, we just turn the computer on in the back here and it's doing it beautifully.

Karl's observations on interest rates, absolutely [indiscernible] question you just asked. And it's taken a long time for the rates and rising rates to flow through. And increasingly, governments are the main offendants on inflation and everything. And the debt pile just keeps growing. At a point when that debt pile either stops growing or even [indiscernible] shrinks, that's when everything returns to fundamental valuations, and that's when the PEs [ half ]. And we're heading towards that. You can't deny. So it just takes -- always takes a lot longer, doesn't it, Tim? You should know that anyway.

I mean it's not like -- it might not even be -- it might just be [ debt ] by 1,000 cuts or popping off the balloon, a beer out of the balloon. You don't want to be too extreme about it, but it doesn't matter because that's not what we're looking for. We're looking for things that are meeting our criteria on the long side. And by the way, we're short as well, right? So on the short side, we're also looking -- we're not looking for the one on 27 PE growing at 6%. We're looking for the one on 611 PE. We're looking for the one about to merge into a listed vehicle on 61 PE. We're looking for the one that's about to go listed where the indexes are not getting any stock. So they're just going to have to hit a button in the background and go crazy to buy it on a higher valuation than it's ever been. There's extreme things going on all the time, which creates the opportunity. Are there any other questions? Hi, sir.

Could you tell me what the churn rate is, please?

Yes. So that's a good question. So between the 2 funds, so the churn rate in what we call the housing days when things -- we're finding things and it's really -- we can move through the portfolio by -- the churn of the CDM is about [ 1.8x ] per annum on the core part of the portfolio. And on the trading part of the portfolio can be 3 or [ 4x ]. At times, like we've been experiencing in the last year the churns even lower than that, so probably 1.4 on the core side. And trading there just wasn't much of it or any of it last year. Inside CDO, we're starting to see a higher churn rate because there's more trading going on. So I would put [indiscernible] then in a kind of medium churn fund, not a high velocity churn, unless there's a lot of trading to be done in CDO, which hasn't been the case to date.

And can you tell me what the current discount is...?

So the discounts, we had them in at around 8% to 10% when we were paying the dividend, and we put out the results that we're talking about now. And since then, they've grown to 12% discount to NTA. We're actually trading about a 13% discount to NTA. So we've just seen it slightly go out again. And I think -- did you look at all the other LICs last month, they were all...

A lot of the LICs are all trading at a discount, and we would be on the lower end of those discounts.

So -- I mean, this is not a -- our discount is not particularly large or particularly small at the moment. It's just kind of in there. But inside that for me is the idea that both of our funds are trading at a similar discount to NTA, which strikes me as slightly odd. I would have thought that the bigger fund, which is more liquid and has more shareholders would potentially not be at as much of a discount as the smaller fund. But at the moment, it's around 12% for the funds, yes.

Is there much movement in the trading of the shares income?

CDM has a lot of trading. So people say, is there enough volume for me to be in the stock as an investment in my superannuation fund? Let's say, for example, you had a reasonable-sized super fund and you wanted to buy $100,000 or $200,000 worth of stock, you could do that in 1 day. So -- and you wouldn't do that in 1 day because you probably do that in 1 week, but that could easily be done. But inside CDO, where you might struggle, you might struggle for 2 or 3 weeks to do that. So the bigger fund is a lot more liquid.

You expect the buyback to continue or discontinue?

Yes. So the buyback is in place. So the phenomenon there of doing the DRP and letting people get their stock without having to go across the bid offer and also issuing new stock to people that want to be in a DRP as an ongoing strategy, which is people in accumulation mode, that will just continue. And then we'll have to buy back those shares all the time. So that will just continue. And that's working -- that's working pretty well. It's a pretty clean mechanism.

It's a floor under the [indiscernible], I presume though?

It does. We try not to be too predictable. We buy back stock and then we stop and then we go back in and do it. But -- so we try to make sure that when we're buying back shares on behalf of all shareholders, we're getting a good price. But generally speaking, the buyback is, I think, also psychologically seen as a positive thing. We're there. We're buying. And I mean, I've been told, I'm probably not allowed to say this anymore, but I continue to buy shares because I believe in the process. And I certainly believe in buying shares at a discount to NTA. I'm more inclined that way to buying the shares at a discount to NTA than paying a premium. But I can -- I mean, I know that sounds obvious, right? But if I can tell you for sure, and I've been in this situation 3 times before, if we were trading at a premium and there was a whole lot of stuff going on [Audio Gap] before. So that's just kind of the way -- I don't know what it is about LICs and discounts and LICs and premiums. It's not the same with houses. If you said to someone, your house is -- I saw the house next door was $2 million, but you can have this one for $2.4 million, same house, you wouldn't want it. But if you could get at $1.6 million, you'd want it. But with LIC, that's not true. If you see at $1.6 million, they go, I'm not touching it. And if it's a $2.4 million, they said, have you got another one, I'll have 2 of them. It's counterintuitive. But it's always been that way. And I won't be able to single-handedly change that, except to show that I'm buying at a discount to NTA, and I don't really buy at a premium. Any other questions?

Karl, I've got a question -- actually 2 questions from investors that got sent through. The one question is, wondering about our thoughts on TUA? And is it in any of the Cadence portfolios currently? That's [ TUA AU ].

Tuas, yes.

And then the other question from that shareholders was, can you give your general opinion on Bitcoin?

Why [ don't ] we decide? Chris, do you want to do Tuas? Sorry? We both know a little bit about it, but we...

Yes. Tuas, we haven't been invested in it recently. We were invested in TPG about 6 years ago. So David Teoh is the man who ran TPG and he did an excellent job. And TPG, as most people would know, has grown to become one of the largest telcos in Australia. Tuas is Singapore only. It's a spin-off from TPG that is just the Singapore asset. And he's basically using the same approach that he's [ using ] in Australia. He's using that again in Singapore. And he will probably be successful, but I think according to the Cadence fundamental process, we'd probably say the share price is a bit expensive, a bit overpriced at the moment. But he will probably be successful because he's a good operator.

And the only piece I can add to that, and I don't know if it was just for proof of concept or if it is still the case, is it was very -- the initial rollout was extremely clever. They were putting antenna on the top of buildings all over Singapore. And Singapore is a small place. So they got a footprint going in no time at all and implemented the infrastructure in no time at all and obviously at very low cost. But so that's why I think it went to such a high valuation. People just built in such a large subscription base. To be clear, we don't own the stock anymore. But founder-led, David Teoh and that his family, the whole family, they're just a money-making machines. So yes, it's a good starting point to people that know how to make money. What was that on Bitcoin?

Yes.

So Bitcoin is a -- for us, Bitcoin is it could never be core. It's in the trading part of our portfolio, and it's just something that people trade. And it's increasingly being viewed as something different to -- it's being viewed as a hedge, I guess, against everything we've just been talking about. I prefer gold. But we did have a chance to delve into this market when a company called Iris Energy that floated in Australia by 2 guys from -- 2 brothers from Macquarie, they floated a company a while ago for $20. Everybody loved it. And then it fell to $2. So it fell 90%. And then I got interested in it because it was trading below cash in the bank. So you were buying $2.50 of cash for $2 and you got a Childress Mexican data center and you got a British Columbia data center, and they're all run on green energy, and they were -- not only were they -- so they were mining Bitcoins and making money. But then they had a really interesting thing happened, which was instead of using CPUs inside those computers, they got one of the allocations for GPUs from NVIDIA. And so they could do -- they started processing for AI, AI processing. And so demand for their services for GPU computers shot up. And that's early stage. And so the share price has gone from $2, what is it, Elizabeth? $10? $10. So -- but it's been a wild ride, yes. It went from $2.50 [indiscernible]. We made some money on it, but it's probably a bit wild for us, the space. But certainly, the buccaneers that are out there building the AI platforms, which is the next stage of what the Bitcoin manufacturers were, is an evolving space. So Bitcoin, yes, I don't have a strong view one way or the other. If you want -- if you bought and you want to trade 24 hours a day, it's probably not a bad marketplace. Any other questions?

And just the other question. [indiscernible] was talking around the discount. CDM continues trading at a discount. The buyback strategy is not closing the discount. The 1% management fee is not [ representing ] to perform. Is it time to return capital to shareholders?

So again, this is this thing about buying something when it's cheap and selling it when it's expensive. I'd say the same about LICs. I mean all these questions come about when you're trading at a discount. The way to really do it is to wait until you've had a tremendous period and you're trading at a premium and then just flog the whole thing to someone else. So that's the time to really do it if you're going to do it properly. But returning money when it's trading at a discount to NTA and when you've got a tax asset and when you've got the potential, you're holding cash and you can make investments that will make returns over time, not just a slice of time, I don't think that's a very good time to be having those conversations. I would certainly rather be buying shares at a discount because that creates an opportunity. And don't forget that there are many people entering the self-managed super fund market every year and who need a solution to their investment problems and just closing funds down doesn't really achieve that. So there aren't that many funds that have been around for a long time that have a demonstrable track record through good times and bad. Yes, I don't think closing it down is the way to go. I would think the opposite. I just don't think that's -- that would be something on the books. But I think that's like an old style of question from about 5, 6, 7, 8 years ago when people were coming into from America and they were breaking funds up or selling them. That's not -- in our funds, I'm the largest shareholder and the management and people that work inside the business own a lot of shares. So it's not like we're just a -- we're not one step removed from all of this. So we wouldn't be keen on -- I don't -- I certainly wouldn't be keen on seeing it sold at a discount. That wouldn't make any sense to me. All right. Well, let's just -- why don't we just -- shall we quickly go through the formal part? And then if there are any other questions, we can come back to you? Sorry, I went too far.

[indiscernible] data centers?

Yes. At the data centers? So -- so the vision there is who could have predicted like how much demand for data centers there is. Even 5 years ago I couldn't see it. There's another one about to be floated called DigiCo and AirTrunk just got sold. I mean AirTrunk was only set up 8 years ago. So it's incredible. And the demand -- the production of data and the demand for housing data and processing data and synthesizing data is enormous. But beyond what we were -- and looks set to just continue exponentially. I mean it's interesting to observe that there was -- Macquarie floated a company called Nuix, floated at a very high price and then collapsed and they had to go to court and it was going to be -- it was terrible. Anyway, it's all -- it's recovered. It's just about making all-time highs now. They synthesize data and do very, very clever things with data. You've had a lot of data centers set up here. I think it's a good space. I think the trick with data centers and any of these new areas is you want to be buying them when the valuation is compelling. Like I really think some of the valuations that they're achieving now are pretty high. You have to feed a lot of growth into some of the numbers at the moment to make it work. But I just gave an example of Iris Energy where it failed, the data centers were worthless. And that -- buying them at no valuation, that's a good price to pay for data center, nothing.

[indiscernible] in your portfolio?

Now we don't have them at the moment. No, no. But we have in times gone by. It's not something we tend to hold on to just because the valuations are too big. Yes. All right. Let's just quickly whip through the Cadence Capital Limited formal part of the Annual General Meeting, and then we can come back to any informal questions or we can just step out for tea. I've missed something. Sorry, no, I haven't. All right. So going straight to the -- all right. We're already there. We're on the formal part of the meeting. All right. Sorry. All right. So for the formal part of the meeting, the first item is to discuss the financial report for the year ended 30th of June, 2024. Does anyone have any questions in relation to the financial report? All right. I'll move on to the formal resolutions. There are 3 resolutions to be passed. All resolutions today will be decided by a poll in accordance with the proxy form, which form part of the AGM pack. The Chairman intends to vote all eligible undirected votes where he holds a proxy in favor of the resolutions. The final voting results will be released to the ASX following the conclusion of today's meeting. Okay. The first resolution is that the Company adopts the Remuneration Report as set out in the Directors' Report. This resolution is advisory only and does not bind the Company or its Directors. I hold proxies amounting to 45,546,474 and 3,235,278 against this resolution. I will now ask shareholders with questions regarding this resolution to raise their card. Please complete your voting card in relation to this first resolution. I will now ask Wayne Davies to read out the second resolution.

So the second resolution is that Mr. Karl Siegling, who retires in accordance with the Company's Constitution and being eligible offers himself for reelection, be reelected as a Director of the Company. The Chairman holds proxies amounting to 48,765,387 shares for this resolution and 2,136,718 shares against this resolution. I'd now ask shareholders with questions regarding the second resolution to raise their card. Please complete your voting card in relation to the second resolution. And I'll now pass back to Karl. Thank you.

Thanks, Wayne. That's yours. All right. Turning to the third resolution, and that is that Ms. Jenelle Webster, who retires in accordance with the Company's Constitution and being eligible offers herself for reelection to be reelected as a Director of the Company. I hold proxies amounting to 48,022,455 for and 2,270,372 against this resolution. I would now ask shareholders with questions regarding this resolution to raise their card. Please complete the voting card in relation to this third resolution. Everyone should now have had the opportunity to vote on that resolution. I declare the polls closed for the vote on each resolution, and that concludes the voting of the resolutions. Could you please place your cards in one of the ballot boxes provided by the Boardroom? Whilst we're waiting for that, we can look at the no votes, Jenelle. 2.137 for me and 2.270 for Jenelle. I don't know what's happened there, Jenelle. Somebody with [ 1,000 ] shares. All right. All right. Well done on your reelection, Jenelle. I think you're going to get through. Ladies and gentlemen, thank you for your time today. Once again, please do stay behind and join us for a cup of tea outside. Thank you.