Cameron: [00:00:00] Welcome back to QAV America, Tony. This is episode 38 of QAV America. Been a turbulence week, weak in the American markets. Bitcoin is down, gold and silver are down.

New Fed chairman nominee sell. America Trades are still going on. The president of the United States are suing the United States government for $10 billion. Nothing to see here. Jeffrey Epstein. Millions of files released. Oh wow. It’s a lot to keep up with. One of the good things about QAV is we don’t have to keep up with it.

Tony Kynaston: correct and, and of course the Melania Trump, uh, premier.

Cameron: Uh, and, uh, Jeffrey Epstein, not, not in it as, from what I can tell. I, I don’t understand. Anyway,

Tony Kynaston: Bezos. You [00:01:00] think $40 million would give you a walk on cameo or you’d it in front of the blue rocket or something, wouldn’t you?

Cameron: meanwhile, Elon Musk is merging SpaceX and X ai, uh, news is today,

Tony Kynaston: Uhhuh.

Cameron: I think SpaceX’s building is buying Twitter or taking over Twitter and x ai, which is part of that, uh, something, something I don’t understand. It’s all going on. Microsoft’s share price are down. Ai, the Mag seven share prices are down, but they’ve been down before.

Tony Kynaston: guy?

Cameron: Well, I’m glad you asked Tony. Our portfolio is doing Doing okay. Doing okay. Let me, let me bring it up and we can talk about it in some detail. I did have to sell, uh, a couple of stocks out of QAV Light, the new light portfolio yesterday. I’ll get into that in a second. But the [00:02:00] dummy portfolio that I’ve been running on in the US since September, 2023 is, has returned 98.41% since then.

So it’s doubled in little over two years versus the s and p 500, which is up 57% over that same timeframe. So not quite doing double market, but pretty close to double market and. It’s really boomed since, um, well let’s see, as of 19th of November last year we were neck and neck. We’d been up, we’d come back.

We were neck and neck with the s and p about November last year. So it’s broken away since then. Doing very well the last couple of months, two months, two and a half months, absolutely killing it. Um, [00:03:00] just to give you a sense, our rockstar Willis Lee’s finance company currently sitting at about 300% gain Innova, which is actually in my news items today.

Uh, I’ll get to that in a minute. It’s up 188%. Euro, CS ESEA is up a hundred percent. Uh, BLX Foreign Trade, bank of Latin America up a hundred percent. Regional management are up 66%. Gas, stealth gas transport, shipping company up 60% UBS also in the news today, up 55%. So yeah, doing, doing quite well across the board.

The QAV light portfolio, as I mentioned, I sold a couple of stocks this week. I just decided they’d hit their three point trend line and I’d given up, I dumped them. So that was, um, A MTD idea, dear that we talked about a little while ago. Calvin Cho’s Company, they [00:04:00] breached their three point trend line and spider net and, um, XL PR infrastructure, X-I-F-R-Z-A.

Um, they also breached their three point trend line. So rules are rules.

Tony Kynaston: yeah.

Cameron: thing about QAV, we have rules tell us what to do. Sold those. And I have bought, uh, the stock that I’m gonna do a deep dive on today. Ec eco petrol sa out of Colombia.

Tony Kynaston: Not,

Cameron: am,

Tony Kynaston: not eco petrol as in it’s green petrol. It’s Ecuadorian petrol, maybe

Cameron: no, they’re very eco, very eco-friendly, very, oh, no one has ever been more eco-friendly than these guys, Tony. They’re the most eco-friendly company you’ve ever seen.

Tony Kynaston: Or company. You

Cameron: Well, they are

Tony Kynaston: don’t

Cameron: see. They are,

Tony Kynaston: look at those wells over there. [00:05:00] Look over here. Plenty of windows over here.

Cameron: listen. As Barry and Stan would say, um, if you don’t have oil, you don’t have energy. If you don’t have energy, you can’t, you know, you can’t drive tractors to plant trees,

Tony Kynaston: Oh right.

Cameron: you know, yeah, it’s, it’s oil is there to grow trees. Um, couple of news updates in Nova I mentioned they’ve come out with their Q4 figures revenue of 839.4 million, up 15.1%, year on year, adjusted EPS of 3.46 or $3 46, exceeding estimates by 9.1%.

Record originations in small business lending for eighth consecutive [00:06:00] quarters, and pending acquisition of Grasshopper Bank. Aimed at expanding market access and simplifying regulation. Um, I watched a Bruce Lee documentary over the weekend Be Water, and of course they talked about his script that he wrote called Warrior and took to Hollywood about, uh, Kung Fu Master Walking the Earth.

And they were like, nah, don’t like it. And then they came out with David Carradine and Kung Fu as Grasshopper.

Tony Kynaston: I wonder how

Cameron: They,

Tony Kynaston: how, how many writers there are out there who submitted things to Hollywood got rejected, and then five years later, see it up in lights on the big screen.

Cameron: well, the thing is with Bruce, uh, Bruce knew that the big concern was they, they didn’t want him in it, right? They, they, they didn’t think you could have a Chinese American starring [00:07:00] in a role in 19. 70, 71, whatever it was. Sad thing about the documentary is a, after he got frustrated with his inability to break through to anything in Hollywood, went to Hong Kong, made four movies in two years, and then like five days before enter the dragon was due to launch, uh, which was kind of a co-production with Hollywood and Raymond Chow.

Uh, he died and, but then they show you the opening of it at the Groman’s Chinese Theater in la Just Bruce Lee everywhere. Massive. Like his dream he had finally done it. Had to go to Hong, back to Hong Kong. Cracked the whole Hollywood thing downtown. Groman’s Chinese Theater. La Bruce Lee is Stars Inn. And he wasn’t alive to see it.

He died five days before, you know, he had [00:08:00] achieved his. And you know, you look at him today and he really did have such a huge influence on the, the, there was a girl at my Kung Fu studio last, oh no, she said she saw a Nip Man film. She came along, but you know, his, his influence on people studying martial arts and on martial arts in films and the perception, the portrayal of Asians in American TV and cinema.

Anyway, how’d I get onto that? Grasshopper bank.

Tony Kynaston: no idea.

Cameron: Grasshopper Bank Kain of Kung fu, uh, UBS group also, uh, uh, again, announced their Q4 uh, earnings with projected increase in earnings per share, despite a decline in revenues year over year. Uh, earnings estimate is 25 cents per share, indicating an 8.7% increase year over year quarterly revenue expected to decline to 11.62 billion.

Strong performance in global wealth management and investment banking is [00:09:00] anticipated. So little bit of a mixed bag there for UBS group. Um, so we, we talked a little bit on the Australian show this week, Tony, about gold and Bitcoin. I did have a laugh at Bitcoin’s expense. Bitcoin has doubled in value over the last five years.

It went up and then it came back. Gold and silver and the process of coming back, but they’ve still, you know, had a really good run. But we’ve talked before a lot over the years about these things as a store of value. And I was having this discussion with somebody at Kung Fu the other night. He asked me about Bitcoin, you know, what do you think about Bitcoin?

And I was like. You know, it’s a pump and dump. Pretty much. That’s my take on it. Um, but this whole idea of, uh, a store of value, you know, despite what you might think about the inherent properties of cryptocurrencies, uh, versus fear [00:10:00] currencies or the inherent value in gold, uh, something that can be used in jewelry or something that can be used in electronics or a store of value.

The challenge that I have, I always try and point out to people as somebody who has learnt from you to try and think about investing rationally, is the question I have to ask myself before I can invest in anything is what is the value of one unit of this thing, whether it’s a share or a coin or a gram, and can I buy it at a discount to its value today?

Um, and I can’t figure out how to come up with a value for a coin or a gram of gold. What is the inherent value? I mean, it’s essentially the price is the only thing that I have to measure it on. And so then the question is, well, how do I know if that price is high or [00:11:00] low? And I, I, there’s no, I have not found an answer to that question.

How do I tell if that price is high or low? Then you get, well, there’s a limited supply of it, and as I always say, there’s a limited supply of autograph photos of my high school graduation too. Does that mean that they’re, they have intrinsic value? Probably not. You know, these things have the value that the market puts on them.

That’s it, which is flaky.

Tony Kynaston: Yeah, for sure. And I mean, there is that collectible argument, um, that of limited supply. But you know, if, like, if Air Jordans put out a range of sneakers, they get snapped up. But next year they put out a range of different sneakers that get snapped up. What’s the resale value of the first op they put out? Um, it’s like they create their own supply demand, the underlying value of the sneakers is probably a hundred bucks. So, um. Value is what you get. Price is what you pay. It’s the, it’s the same. [00:12:00] Gold only interests me in terms of gold miners, um, because as gold, the gold price rises, they make a bigger margin.

So you can work out the value buying a gold mining company. You can’t work out the value of gold itself. And more and more these days, it’s being used by central banks to, um, hedge their holdings of US treasuries. Um, so as the US dollar drops, they buy gold so they can try and keep their balance sheet intact.

Um, and as we saw on Friday when, uh, new fed chair was uh, nominated, people thought his background was a hawk and that he might not. Lower interest rates as quickly or as, as much as the market and Donald Trump wanted, therefore gold came down in value. ’cause uh, people predicted if there are less interest rate cuts, there’s gonna be less central bank, um, buying of gold. it seems to have stabilized after the weekend. And [00:13:00] I dunno if that’s because the Fed chair elect has come out and he’s gonna cut rates or the market thinks he’ll cut rates to keep Donald Trump happy and to keep his job But, um, right. Underlying goal itself has really has no value except as manufacturing input into Julian Electronics, which has some value.

But, um, uh, you know, that’s, it’s much lower probably than what the price of gold is.

Cameron: Yeah. What’s the value of a gold necklace? Well, whatever somebody’s willing to pay for it really. Uh, and the whole Bitcoin thing, like bitcoin’s come off roughly 30% since, uh, since it’s highs. I. But at the time when it was selling for its highs, everyone was saying it was buy and it was gonna go up forever.

It was gonna be a million dollars a coin or whatever. So like, why has it come back by 30%? The people that are selling it obviously don’t [00:14:00] believe that, or they wouldn’t be selling it. Uh, I mean, look, it is true that sometimes you are, you are forced to sell things that you do believe is gonna continue to go up in value for a variety of economic reasons.

You need the, the cash to pay a bill or to cover something else. You need it to hedge something.

Tony Kynaston: Mm-hmm.

Cameron: Or, you know, you know, your boss is forcing you to take profits to make a balance sheet look good or to pay a tax bill or whatever it is. There are reasons why a, a purely rational person will sell something even though they think the value might be higher, but.

The market should be snapping it up when they’re selling it. If everyone really believes that all of the advocates should be buying it up when it’s being sold and they’re not. So the whole artifice that the story is built on is just a sham. Uh, but, you know, try telling that to the, the pumpers, ah, you know, I genuinely believe [00:15:00] that they, they sell it, let the price go down.

Then they do another pump cycle. Buy it again at a lower price, pump it up, let all the mums and dads get caught up. Then they trick them into selling it, and then they buy it cheaper and re rinse and recycle.

Tony Kynaston: And now it’s being done at, at an industrial scale because Wall Street are allowed to, uh, issue ETFs that hold bitcoins. And I suspect that’s what has happened, that there was a tremendous amount of buying of bitcoins when those ETFs were set up about a year ago when they became to do so legally.

And now that buying is dried up and Bitcoin prices dropped. And you’re right, there might be some more ETFs set up to soak up what’s, you know, the up Bitcoin at the price and we’ll go through that same cycle again. But that’s all. There’s, it could may as well be called paperclip. Really that’s all people are doing. Look, there, there are some people who use it as a money exchange. So if you know you’re visiting Venezuela at the moment, Bitcoin [00:16:00] might be the best way to transfer money and out of the country. I, I would think that’s a limited use for Bitcoin. I, I actually thought that would be the best use of Bitcoin going forward, but it’s just too damn unstable to be able to, to use it as a currency exchange.

Maybe when stable coins become more prolific, you can use it to disintermediate exchange. Um, there’ll always be some friction in that market, but perhaps less with Bitcoin. And the only other use is being on the black market to, for criminals to trade or to buy drugs or worse. Um, so I, I

Cameron: Autumn

Tony Kynaston: any other use for it except pump and dump.

Cameron: Gussy favor with presidents of large economies. Uh, the president of the United States is suing the United States government for $10 billion. Tony,

Tony Kynaston: You’ve muted yourself. Sorry.

Cameron: no, I didn’t mute myself. My computer muted me so much for my attempt in a reboot.

Tony Kynaston: You shouldn’t talk So

Cameron: Yeah,

Tony Kynaston: about the US government?

Cameron: [00:17:00] CIA is muting my microphone.

Tony Kynaston: Mm-hmm.

Cameron: Well, let’s get into talking Dispar disparagingly about the Colombian government then just for a change. Um.

Tony Kynaston: Well, well, I, I’d like to go on the record saying I love the Colombian government. I don’t, I don’t want to, don’t wanna end up like the last scene in Scarface, so I’ll, um, I’ll let you talk about them.

Cameron: The current Colombian government, uh, is okay, it’s previous Colombian governments that might have been the issue. Well, listen, we’re gonna talk about ec eco Petrol high on our buy list this week. Not as high as I thought they were initially, because they had to redo the numbers to account for the fact that they were report in Colombian peso.

Um, but once I redid some of particularly the earnings per share numbers, which changed our internal values, uh, intrinsic valuations, um, score came down a little bit, but it still would’ve been top 10, um, in our bio list. So I, I’m using it anyway, [00:18:00] but just to let people know if they are looking at the numbers in Wikipedia that you have to, uh, adjust for the Colombian peso.

I think the Colombian peso is currently worth 0.0, 0, 0, 0 0 2 US dollars. Something like that.

Tony Kynaston: Right.

Cameron: it out. Yeah. So, um, interesting company. This basically goes back to the early 20th century when, uh, the President of Columbia, Gus, no, not Gustavo Petra, he’s the current guy, or Raphael Reyes issued something called the DeMar Res Concession.

He was a general, nearly went to war with the United States over Panama, decided at the last minute, probably not a good idea, to go to war [00:19:00] with the United States over Panama. So they pulled back, this is before he became president. He became president.

Tony Kynaston: a, he was a president, was he?

Cameron: Well, they were gonna go to war over Panama. Panama was part of Columbia. Panama was claiming their independence and Columbia was gonna fight for it. Then they realized that the United States was gonna probably enter on the side of Panama, and they decided, Hmm, maybe not then. Okay. So he did a deal with the United States instead, he came up with something called the Demares Concession, which basically allowed an American subsidiary of Standard Oil Company called the Tropical Oil Company.

Pretty sure I used to,

Tony Kynaston: a

Cameron: I used to use that to get a suntan in the eighties. Yeah. Smelled like pineapple or No coconut. Coconut oil. Yeah. Yeah. Don’t think it was coconut oil, but it smelled like [00:20:00] coconut oil. Uh, yeah. He issued them the DeMars concession in the early 20th century. Uh, he gets a mention. By the way, Raphael Reyes in Gabrielle Garcia Marquez’s, 1985 novel Love in the Time of cholera. You ever read that?

Tony Kynaston: No, I’ve read a hundred years of Soli shoe, but not the other one.

Cameron: Did you like that one?

Tony Kynaston: I did. Yeah, that’s fine.

Cameron: I loved it. Loved it. Yeah. Uh, loved love in the time of cholera too. Terrific. Um, what does he, what do they call that? It’s like, um, his style. Magical realism. Yeah, it’s great. First time you read it, you’re like, what the hell is going on? Yeah. No really good stuff. Uh, good friend of Fidel Castros, Gabriel Garcia Marquez.

Tony Kynaston: another magical realist

Cameron: Well, he used to send [00:21:00] his manuscript drafts to Castro, who would correct them and send them back to him. Castro was running a country.

Tony Kynaston: I was gonna say he had enough time to do, to read the,

Cameron: Yeah,

Tony Kynaston: It wasn’t sure. It wasn’t outsourced

Cameron: I’m pretty sure.

Tony Kynaston: chat,

Cameron: he would,

Tony Kynaston: the script for me. The corrections.

Cameron: uh, yeah, he would, he would mark it up and send it back to him. Uh, astonishing. Anyway, so that concession ended in 1951 and they sort of nationalized the oil and this company has been around ever since. And, um, it’s been. You know, a difficult time in Columbia, let’s say the last 75 years politically, economically [00:22:00] hasn’t all been smooth sailing.

But this company is basically the national oil company of Columbia, and they’ve got a few challenges at the moment. Um, the current administration under President Gustavo Petro, who’s been the president since 2022, he became the first left wing president in the recent history of Columbia. Anyway, former Gorilla Fighter age of 17, he was a gorilla fighter.

He’s clamping down on the oil industry, which is, uh, having an effect on eco petrol’s share price and, and the consideration of his future. But they’ve, they’re making some investments in other areas that might get them out of oil just in time.

Tony Kynaston: Hang on.

Cameron: So

Tony Kynaston: own still still own a fair bit of eco petrol?

Cameron: yeah, they do, they own 88 and a [00:23:00] half percent of it. Fair bit, but it was floated, uh, in 2007 on the Colombian Exchange and then later on the New York Stock Exchange. So, you know, bit of both. Bit of both. Best of both worlds. Yeah. But it’s really cheap and um, some of that has to do with the fact that Gustavo Petro, I keep thinking

gustavo free becoming the President of Columbia. That would’ve been a good spinoff for, for breaking Bad if they hadn’t have blown him up at the end. Um, I. He is an outspoken critic of fossil fuels. One of his campaign.

Tony Kynaston: percent of an oil company.

Cameron: Yeah. So,

Tony Kynaston: Sorry. You just mark it. Knock at your worst asset, don’t you? Yeah.

Cameron: he’s a believer. [00:24:00] Tony, you are the last person

Tony Kynaston: or

Cameron: in transitioning away from oil. The green future. Sustainable.

Tony Kynaston: in the world.

Cameron: Wow. You’re in a

Tony Kynaston: future. Yeah. But we have to transition. Could take a while. This is like a, it was that Kiwi comic to come on the, uh, seven 30 news. Uh, Fred

Cameron: John John Clark.

Tony Kynaston: Yeah. Yeah. Yeah. We’re, look, I run an oil company, but we’re transitioning. We’re very eco-friendly.

Cameron: Yeah. Well, you know, they’re eco-friendly. It’s in the name Tony.

Tony Kynaston: Yeah.

Cameron: Yeah. Like

Tony Kynaston: So is that, is that the change that, what’s his name? Pedro Garcia has made to

Cameron: Gustavo Petro.

Tony Kynaston: Gusta.

Cameron: It’s like Elon Musk tweeted the other day that, you know, the Nazis were socialists ’cause it’s in the [00:25:00] name, the National Socialist Party. You know, they were must have been socialists.

Tony Kynaston: Mm

Cameron: Any who, they were like, this is the guy that we’re letting determine the future of humanity with his AI and his robots and his rockets.

Really?

Tony Kynaston: mm

Cameron: That’s his, uh, that’s his, uh, logical bloody frame of train of thought. Any who?

Tony Kynaston: he’s a big troll.

Cameron: Yes. He’s a big troll. Gustavo Petra, on the other hand. Is forcing eco petrol to liquidate their oil business into a clean, green

Tony Kynaston: Really.

Cameron: machine.

Well, yes. Slowly though, Tony, slowly, slowly,

Tony Kynaston: Yeah. It’s a period of transition. Ooh.

Cameron: we will get into the transition in a minute. Um, they, they’ve had a number [00:26:00] of, um, scandals as you would possibly imagine being an oil company in Columbia. Um, did you read about the Ika scandal? The

Tony Kynaston: I

Cameron: heist?

Tony Kynaston: No.

Cameron: this is a, you love this one. Um, 2007 Eco Petrol launched a modernization project for the Nia Refinery known as Ika.

To double its capacity. They got a contractor in that provided them with a lump sum, turnkey quote. Uh, contractor takes all the risk. It was gonna cost, I think, 3.8 billion US dollars. Uh, three years into it. The board switched it to a cost reimbursable model

And the contractor, Chicago Bridge and Iron basically ended up with a [00:27:00] blank check to, to. Take as long as you want and cost as much as you want. And we’ll foot the bill, um, based out of Texas, despite the fact that it’s called Chicago Bridge in High, I think originally out of Chicago.

Tony Kynaston: there.

Cameron: Yes. Yes. Well done.

Congratulations. Um, yeah, so it, it, it changed and instead of costing 3.3 billion, it cost over $8 billion for this project and represented roughly 5% of Columbia’s national budget at the time.

Tony Kynaston: Oh dear.

Cameron: Um, and what made it a sensation weren’t just the overruns, but the type of spending that the comptroller general uncovered. [00:28:00] There was about $16 million spent on prostitution services and social escorts for executives and contractors often build as labor relations.

Tony Kynaston: $16 million.

Cameron: Gotta keep, gotta keep the executives happy, Tony.

Tony Kynaston: how many? How many hookers are there in Columbia? $16 million.

Cameron: And what do they charge? You know, you imagine what your average Colombian hooker charges and then figure out how much of that you get for $16 million.

Tony Kynaston: Originally they had a fixed price contract, but they moved to, uh, cost. plus

Cameron: Oh, cost plus hookers, uh, bills were found for luxury spa treatments, high-end alcoholic beverages, and no-show jobs where people were paid to do nothing while the project sat idle. People who have [00:29:00] watched the Sopranos know how

Tony Kynaston: of as well.

Cameron: knows how that works. Yeah. So, um, multiple former eco petrol CEOs and directors were indicted for unfair administration and falsifying public documents, and an international arbitration tribunal in New York ruled in June of 2023 that CB and I was grossly negligent and ordered them to pay ref a car over a billion dollars.

USD.

Tony Kynaston: Is that

Cameron: So well, well, CB and I’S parent company McDermott filed for bankruptcy. So

Tony Kynaston: Yeah.

Cameron: yeah, that’s, they’re not seeing that money any time soon. So, um, when we did A-M-T-D-I-D Tony, we talked about the concept of a spider net. Um, [00:30:00] these guys were a bit of a spider net eco petrol. They’re becoming a spider net. Yeah, spider net.

It’s working so well for A MTD.

So let me break down where these guys are getting their money from and where they’re transitioning to. Despite your unfounded cynicism.

They still got the oil

Tony Kynaston: my cynicism has been a finely honed weapon in my arsenal over many years.

Cameron: weapon in your what?

Tony Kynaston: Arsenal.

Cameron: Oh, arsenal. Former Shell Senior executive. Yeah. No one to talk.

Tony Kynaston: the oil industry. They’ve been transitioning for a long time.

Cameron: Uh, so the most of their money’s still coming from oil. They still produce 750,000 barrels of oil a day. Bowed, uh, still have the rubles and the kaon fields, [00:31:00] but they’ve got another little asset called cite, C-E-N-I-T, cite, which is the toll road of moving any oil around Columbia. Basically, it’s a wholly owned subsidiary that owns the pipelines of oil in Columbia.

If you drill oil in Columbia, you basically have to pay eco petrol to move it. They’ve got a monopoly. And the great thing about this is it doesn’t really care what the oil price is. Um, they still get their margin, so it’s way more stable than your typical oil driller. Basically, you have three branches of the Andes Mountains dense jungles, limited roads.

Moving oil by truck is prohibitively expensive and dangerous, so the only way to get it around is through the pipelines and they own all the [00:32:00] pipelines. So that’s, uh, a good big money earner for them.

Tony Kynaston: monopoly,

Cameron: Yes. Good. Uh, a moat, we don’t use the monopoly word in value investing, Tony, we just call it a moat. It’s much more for the other M word.

It’s shorter. Sounds better. It’s a moat.

Tony Kynaston: a motor oil,

Cameron: Yes.

Tony Kynaston: on fire if when the vandals get close.

Cameron: And under Colombian law, oil transport is considered a public service. So is legally required to provide open access to its pipelines to any producer as long as they pay the money. So you pay the money, he gets to dance in our pipelines. Um, the checkmate though is at the ports, the,

the pipelines end at maritime terminals. And [00:33:00] Eco Petrol slash Suneet owns the majority of the storage and loading facilities. So. Even if you were to build your own pipeline, you’d still have to pay eco petrol to store the oil and pump it into a tanker to get to the other end. So they’ve got all of that stitched up.

And then the pivot, the transition in 2021, they bought 51.4% of ion,

uh, the national grid of Latin America, ISA high voltage transmission lines in Columbia, Brazil, Chile, and Peru. So they’re using dirty oil money to buy electricity monopoly. Basically, it’s the lifeboat for when the oil runs out. They’re gonna control the power grid of Latin America

Tony Kynaston: how is the power generated in Latin [00:34:00] America?

Cameron: rainbows and, and, uh, thoughts and prayers. Tony.

Tony Kynaston: Right. So they could be transiting from oil to coal or, or gas.

Cameron: Wind. Lots of wind.

Tony Kynaston: right?

Cameron: And, um, Aztec, uh, shamans.

Tony Kynaston: Pyramids. It’s pyramid pout.

Cameron: Shaman’s, again, a tap into, um, shamanic, uh, energy. Lemme tell you a story. So my son Taylor, uh, was back from LA this week for a couple of days, and he told me, he said he, he said, look, there’s this girl that reached out to him that wanted to catch up with him. He caught up with her and, um, they’re having a coffee and she’s an entrepreneur.

She owns a, she’s buying a magazine, Hollywood Reporter in Australia.

Tony Kynaston: okay.

Cameron: and, [00:35:00] uh, she’s an Aussie, but based in LA I think, no, this was in Sydney. You caught up with her in Sydney actually. And, um. She’s doing all this stuff. And then he said, wow, you know, she’s only same age as him, mid twenties. And he’s going, you’ve accomplished so much.

How? And she goes, well, when I go see my charman, uh, we do all of these, uh, mushroom trips and I get to speak to my, um, higher evolved, uh, self, and it tells me what I have to do, and then I just go and do it. So I just go, I have meetings with my shaman and I do my, have this trip and, uh, do acid or mushrooms or whatever it is.

And then, you know, I find out what I have to do for the next year and I come back and I do it. And then I, and I said, was she messing with you? He goes, no, no. Totally straight face. Totally straight face.

Tony Kynaston: attract high quality people.

Cameron: [00:36:00] And he is like, well, obviously works. I, maybe I need to go meet with her shaman. She’s doing quite. So, um, they bought, so this is the bit that I don’t understand. Eco Petrol

bought this from the Colombian government. So essentially the government owned oil company bought this stake from itself,

Tony Kynaston: Like suing, is it like the president suing the IRS?

Cameron: the moving money from the left pocket to the right pocket.

Tony Kynaston: Mm-hmm.

Cameron: Um, but whatever,

Tony Kynaston: Yep.

Cameron: for investors in ec it means that they now have an asset that, uh, could mean that they have a future beyond oil.

Tony Kynaston: So they have

Cameron: So.

Tony Kynaston: monopoly and they have the electrical grid monopoly.

Cameron: High voltage [00:37:00] transmission Monopoly. Yeah. Yeah.

Tony Kynaston: All right.

Cameron: Which makes it,

Tony Kynaston: two more houses and I can put up a hotel.

Cameron: it’s a bit like that. Yeah. May fuck lane, they just bought, I don’t know if I ever told you about this, where I play Monopoly with Fox. If he doesn’t get to buy Mayfair and Park Lane, he quits. He goes, that’s it. I’m outta the game. Like, because that’s his whole strategy. He won’t buy anything until he gets Park Lane and Mayfair.

He buys them. Then he just keeps doubling down, doubling down, doubling down, and putting hotels on. If I buy them, he is like, ah, I quit. He just, he,

Tony Kynaston: a bad strategy.

Cameron: yeah, it, it, it’s worked for him many times, but if he can’t control the real estate, he just doesn’t wanna play. That’s it. I’m outta the game. Um, so anyway, bottom line is they’ve bought these things.

It’s sort of a strategic pivot for them and. So despite the fact that they’ve got a bit of a turgid history and, uh, the president [00:38:00] of the country seems to be forcing them to get out of oil, getting the oil business out of oil, they’re, they’re sort of spending serious amount of money to transition into this new thing.

And they still have the pipelines for when, while the oil is still running. They recently, Cho Cho, they recently cho, changed auditors from Ernst and Young to Deloitte, unlike A MTD, uh, that we talked about, not a strip mall accountant. Um, and there’s also something called the FEPC, which is worth, uh, understanding The Colombian government subsidizes gasoline for its citizens.

They don’t often pay eco petrol cash for this. They get paid in receivables or delayed transfers. So Eco Petrol is essentially lending the government money to buy its [00:39:00] own product. Um, so there’s some complicated stuff with the financials that makes it hard to, it’s hard to track,

Tony Kynaston: That does go on in the oil industry. From my experience, you, you can get what’s called post David checks, so you deliver, you’re basically delivering on credit and then getting paid afterwards.

Cameron: right? So you’re basically buying a, a bit of a spider net of a company. Here. You’ve got the oil production, you’ve got the pipeline monopoly, you’ve got the electric grid, and you’ve also got a 9% yield. Basically. You got the Golden Goose here, which is in the wolf’s den. Um, I, I, if it delivers on some of this stuff, it could be a great deal, but right now it’s getting, well, it, the share price has shut up again recently, but it been getting punished [00:40:00] by the market for the last couple of years.

One of the reasons for this is they got a $1.3 billion tax bill, 5.3 trillion Colombian pesos.

Tony Kynaston: We got a 1.3 billion tax bill that

Cameron: Yeah.

Tony Kynaston: a huge, they made a huge profit.

Cameron: Well, it’s for unpaid VAT and penalties related to fuel imports between 2022 and 2024. Eco petrol is contesting it, but it could be a big chunk of money that walks out the door. Could threatened, could threaten their 2026 dividend.

Tony Kynaston: I think if they have to pay it, they should sue the IRS in Columbia.

Cameron: Well, the president should sue because his government owns 88 point whatever percent of it. Um. [00:41:00] And their 2026 annual investment plan, which came out December last year, said they’re planning on spending between six and seven US billion dollars on hydrocarbons. They’re planning to drill 380 to 430 development wells.

Now, Petro, uh, has, which is a great name for a petrochemical company owning president in the first place, isn’t it? Gustav Petro. The Petro King

Tony Kynaston: It’s a giveaway. Yeah.

Cameron: he hates oil.

Tony Kynaston: Yeah.

Cameron: he’s banned any further minds development of, well, no development, I think of regions, but they can apparently sink wells into regions they already have permits for.

Tony Kynaston: Okay.

Cameron: So.

Tony Kynaston: And they’re spending $7 billion doing that, even though the president doesn’t want them to do it.

Cameron: Well, you know, he hates oil. Tony, I dunno [00:42:00] how many times I have to tell you this. He’s transitioning, Tony, it’s, I can’t be,

Tony Kynaston: he owns

Cameron: I can’t be clearer than that.

Tony Kynaston: $7 billion on drilling for oil. It’s like, it’s,

Cameron: Look. Uh, he’s halted oil.

Tony Kynaston: I do.

Cameron: He’s, he’s halted all new oil and gas exploration contracts, but they can still mine existing contracts. You see how this works, Tony? It’s not very complicated. Tony,

Tony Kynaston: So loophole you can drive a oil truck through

Cameron: five to $7 billion oil truck through anyway. Um, so it’s a green administration, but they still need, still need the oil revenue. So these, these guys seem to be confident enough that they’re gonna be able to keep drilling new wells, uh, under their existing contracts. They’re also facing a massive national natural gas shortage,

Tony Kynaston: [00:43:00] you.

Cameron: estimating a massive deficit of 300 billion BTU per day by 2026. Um, not really sure what that. Is caused by, but um, they’ve got big natural gas problems. Apparently they’ve got a lot of boardroom changes going on. Several directors resigned in late 2025, citing disagreements with the government’s direction.

So they’re being replaced by yes men for the Petro administration. Um, whether or not that is a good or a bad thing for the company remains to be seen today. The day we’re recording this. February 3rd, president Petro is visiting the White House to meet President Trump

Tony Kynaston: I

Cameron: to

Tony Kynaston: I think I read a, an article about it

Cameron: [00:44:00] write.

Tony Kynaston: in the

Cameron: Um, so I’m not sure if they’re discussing President Trump becoming the president of Columbia and what that means for the future of eco petrol.

Tony Kynaston: Well, according to the Wall Street Journal, they’re talking about drugs uh, Columbia hasn’t done enough to stop the drug trade. And the President Petros going to the White House to point out that the, they’ve on record, uh, what do you call ’em? Not the laboratory closures and seizures and shutdowns.

And the seizures of drugs is at an all time high. And Trump’s arguing it’s not. But after the meeting, Trump was, before the meeting, Trump was calling him a lefty. And after the meeting he was saying, well, I’m met him in person now he’s making sense. So we’ll see what happens.

Cameron: Wonder how many Trump coins Petro had to buy on his way in.

Tony Kynaston: Yeah.

Cameron: Yeah. So we’ll see what happens. I mean, obviously the relationship with the United States [00:45:00] is, uh. Uh, possibly a good or a bad thing, depending on how you, uh, how these things play out. Not really sure what’s going on in terms of Venezuela and their oil.

I saw there was some announcements this week by the new president of Venezuela that they’re enabling more foreign investment in the Venezuelan oil industry.

Tony Kynaston: I mean, that’s the thing, isn’t it? I mean, if Venezuela ramps up and what happens to the Colombian oil industry if it’s trying to get out of oil and turn green, it’s, um, yeah. I, I suspect at some stage, the people of Columbia will say, look at all the money that Venezuela’s making out of oil, and we can’t keep warm.

What’s going on?

Cameron: Yeah. I don’t know, Tony. It’s, uh, beyond my pay grade, pay grade to figure out the implications of all of this stuff, but, um,

Tony Kynaston: And nor does it matter to QAV in terms of investing.

Cameron: well, it doesn’t really like, yeah.

Tony Kynaston: I was gonna say, I did [00:46:00] notice just in the numbers, just in looking at the figures that company, revenue, profit and earnings per share have all decreased since 2022. Um, PE is its highest in the last three years, and there’s a negative earnings per share forecast.

So a lot of reasons why the shares have declined over the last three years, just from a, a purely financial point of view.

Cameron: But that said scores very well, um, for us on QAV, even when I rejigged the numbers for the Colombian peso. Yeah. Um, so the Rejigged QAV score is 0.27. It was 0.30, I think it did have a hundred percent quality rating on QAV until, uh, before I readjusted the IV numbers. Then it came down to 75%. Still pretty good.

Um. Let me see. It scored, uh, stock edia wise. It scored for quality rank. It scored for stock [00:47:00] rank. It scored for F score. Um, it scores for price being less than book plus 30. It’s got a three point uptrend. Obviously book value growth is positive. Yield is higher than bank debt. As I said before, maybe when my mic was muted, the year percent.

Tony Kynaston: Yep.

Cameron: Uh, so with my rejigged numbers, it had nine outta 12, 75% as I said. So it scored, yeah, really well. Um, actually the, the original QOV score was 0.36, so it came down to a 0.27, but, um, and a huge average daily trade too. Average daily trade is, um, I don’t know, something like

Tony Kynaston: Ben

Cameron: hundred million. No, I don’t think so.

My.

Tony Kynaston: sorry. By the way, I was gonna ask you what, um, what, uh, oil graph are you using for the commodity check for these companies? [00:48:00] Because we use Brent Crude for the Australian companies, but this should be WTI, west Texas Intermediary, is where the you, where the American companies sell.

Cameron: Oh, I haven’t been checking a separate one. Have you checked it?

Tony Kynaston: I haven’t checked it. No, it’s um, but there are two, probably there’s more than two around the world, but they’re the two main ones

Cameron: All right, well,

Tony Kynaston: of oil and the differences in different markets.

Cameron: I’ve got the WTI in front of me. Let me have a look. Ah, they won’t let me do that. I am a member, god dammit.

Tony Kynaston: While you’re looking up that, the other thing I noticed in Wikipedia was that this company qualified for O Shaughnessy’s filter on value investing. So for listeners out there, O’Shaughnessy is one of our bibles. It’s um, what works on Wall Street, and he has a in there on a filter that he uses for value investing in this company meets the criteria in that filter [00:49:00] according to Edia.

Cameron: I had that in my notes as well, Tony, although, no, that’s okay. Although I noted that his strategy is massively underperforming. The s and p have you? Yeah. If you click,

Tony Kynaston: looked it up. Yeah. Lemme just find it again.

Cameron: if you click through on Wikipedia to James O’Shaughnessys Cornerstone value

Tony Kynaston: Mm-hmm.

Cameron: over the last, it seems to have done about 137%, um, versus the s and p up 259%.

Tony Kynaston: And let me just check that Um, I’ve got, when I click through it, uh, 95%. Since inception for him, 40% in Australia and 95.98 in the us.

Cameron: Yeah. Versus [00:50:00] 250% over the same timeframe for the s and p.

Tony Kynaston: I’m not seeing the s and p. Sorry. Okay. That’s interesting.

Cameron: Hmm. Yeah. It’s 90, 93% for the US going back to July, 2014

Tony Kynaston: Mm-hmm.

Cameron: the chart that I’ve got.

Tony Kynaston: Yeah.

Cameron: So, yeah. Um, so surprising when I saw that

Tony Kynaston: Where are you getting the US numbers from? Sorry. In that graph?

Cameron: it’s in the chart, um, I’ve got a, the comparison. When I click through, it shows me his United States performance versus the s and p 500 performance. You don’t see that in the

Tony Kynaston: I’ve

Cameron: chart?

Tony Kynaston: I don’t, I don’t. Okay. So what I’ve got is I’ve got, uh, those three things. I’ve got, Australasia has done 34.82% over that time period, s and p ASX, all ordinary at 61.8 and the United States at [00:51:00] 82.6.

Cameron: Hmm

Tony Kynaston: see an s and p number.

Cameron: hmm.

Tony Kynaston: I’ll take your word for it, but that’s what I’m saying.

Yep.

Cameron: Yeah. Well, maybe we should get O’Shaughnessy on. He can explain it to us.

Tony Kynaston: Yeah.

Cameron: Um, I’m trying to look up, um,

Tony Kynaston: Was Texas,

Cameron: yeah. In Wikipedia, because this other one won’t let me do it. They don’t have it in stock. Pedia. They’ve only got Brent and stocked. Oh no. Crude oil. WTI. There we go. Five year monthly. Ooh.

Tony Kynaston: I’ve just called up in Stock Doctor. I’ve got one called, um, Stock Doctor has crude oil, WTI caution us FOB and that is, um, looks like a cell to me. Just yeah, it’s just gone through probably in about October last year.

Cameron: Brent Chart opened in Wikipedia now and it looks like a [00:52:00] cell two again.

Tony Kynaston: you see the trading economics chart? Lemme see if I can get to it.

Cameron: I’ve just opened up the, um, trading view chart and yeah, oil has turned down.

Tony Kynaston: hmm.

Cameron: I, wow. That has happened since I checked it on the weekend.

Tony Kynaston: Yeah. Right.

Cameron: So not a cell, but it’s definitely a Josephine.

Tony Kynaston: Mm-hmm.

Cameron: I wonder what happened to oil in the last day. I wish I hadn’t bought this now, but, uh. I might have to sell it again.

There you go. Oil has turned around and gone from being a buy to a Josephine in a very, in a two day period.

Tony Kynaston: So the headlines are saying the oil price has slid as Donald Trump talks is fears of US Strike and Iran. So it sounds like, um, the oil price was up because it looked like the US was going to [00:53:00] turn off Iranian oil supply.

Cameron: They’ve already turned off Aranian Oil Supply. It’s under sanctions.

No one can buy Aranian Oil. They’ve been under sanctions for 45 years. Anyway, what do I know?

Tony Kynaston: obvious. Yeah. And sanctions don’t often work.

Cameron: Hmm. Well there you go. Um, so before you buy, have a look at the oil price and uh, maybe hold off if the oil price is in decline again.

Tony Kynaston: Or

Cameron: It was only a buy for a week.

Tony Kynaston: if you’re seeking some green, uh, energy exposure, have a look at EC

Cameron: Yeah. Well maybe that’s, maybe we shouldn’t judge them on the oil price.

Tony Kynaston: by bp. They, uh, they turn themselves green bike. Painting themselves green. Painting their brand green.

Cameron: The logo’s green. Yeah. You know that they’re green. Yeah. I.

Tony Kynaston: But, um, I actually, I [00:54:00] recently heard BP of reversing that stance that they’ve been taking. They come out and saying, said they’re listening their investments in green technology and energy Now

Cameron: Right, because

Tony Kynaston: Donald Trump was elected

Cameron: Yeah.

Tony Kynaston: and it’s drill,

Cameron: Oh dear.

Tony Kynaston: drill, baby drill.

Cameron: Yeah. All right. Well that was sort of a, a downer for this episode.

Um,

Tony Kynaston: interesting story though.

Cameron: interesting business in the middle of a transition. Um, we’ll see.

Tony Kynaston: involvement.

Cameron: Yeah. Prostitutes

Tony Kynaston: involvement,

Cameron: say Castro involvement.

Tony Kynaston: prostitutes on time and cost.

Cameron: Yeah. Cost reimbursement model for prostitutes. All right. Well. That’s QAV America for this week. Thank you [00:55:00] tk.

Tony Kynaston: thanks Cam. It was very enjoyable.

Bernard: Q A V is a checklist-based system of value investing developed by Tony Khighneston over 25 years. To learn more about how it works and how you can learn the system, visit our website, Q A V Podcast dot com.

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