On The Desk Talking With Special Guest Henry Jennings

With Chris away, Tom and Ben are joined by a very special guest in Henry Jennings. Sit back and enjoy as Henry shares his own "origin story", detailing how he went all the way from the London pits to Macquarie's Australian office, and a few pieces of wisdom he picked up along the way (plus a couple of stocks he would put in the top drawer). If you have a question, be it about macro factors, stock, sectors, a please explain, something you don’t understand and want us to research, or even just feedback you can reach the On the Desk team at otd@marcustoday.com.au Why not sign up for a free trial? Get access to expert insights and independent research and become a better investor.  


*PLEASE NOTE: Transcripts are autogenerated and may contain errors, especially Stock Codes and Names. Marcus Today offers information that is only general in nature. It does not take into account your personal financial situation, needs or objectives. Nor does it take into account the financial needs of any specific person. You should consider your own personal financial situation and needs or seek financial advice before making any decisions based on this information. For more information please see our Financial Services Guide.   Chris Conway  00:00 If you're enjoying the on the disc podcast make sure to sign up for a free trial of the Marcus Today daily stock market newsletter for more in-depth content from us   Tom Wegner  00:09 No Credit Card required and you get access to the entire newsletter including Stock Recommendations, Investment Strategy, Opinion Pieces, Education Articles and Investor Tools.   Ben O'Leary  00:22 You can find the trial sign up link in the description or head to marcustoday.com.au.   Chris Conway  00:37 Ladies and gentlemen before we get to the podcast please note that the presentation is general in nature only that before acting you should take into account your personal financial circumstances if you would like to read Marcus today's full disclaimer you can find it on the Marcus today website. Now over to the boys   Ben O'Leary  00:52 Morning everyone. Welcome to another episode of On The desk. It is a fun date today is the 22nd of the second 2022 to 202202. I think all right, I'm been earlier he joined by Thomas Wagner to my right as always guys, and with Chris unavailable this week we have a very special guest joining us through the power of the internet. Welcome Mr. Henry Jennings.   Henry Jennings  01:14 Thanks guys. I don't know if I'm a special guest, I'm just a guest that's just keep it at that.   Tom Wegner  01:18 special in our eyes at least definitely Henry   Ben O'Leary  01:22 Henry needs no introduction, but in case you have been living under a rock Henry's the author of Henry's Take one of the core daily components of the Marcus Today Newsletter which includes the management of his very popular small cap portfolio, which has been shooting the lights out, and he's a regular talking head on the likes of Oz, B's and ABC. You can also occasionally find Henry spending his time performing as a frontman in a band or two in the Sydney's Northern Beaches and helping little old ladies cross the road. Before we get into it, do a quick market check in the Russia Ukraine conflict continues to hold the headlines over the last week. The storyline is in every newspaper and news clip so I won't pretend to be a political correspondent by getting into it here. More interesting for us is a Goldman Sachs note that said US markets are already factoring in a fair amount of geopolitical risk with a 5% discount priced into the US stocks and European markets carrying an 8% geopolitical discount. And that has the Stoxx Europe 600 index trading in a four month low, so a fair bit of negative sentiment in there already, and no grand predictions here. But historical data has shown that the negative effects of military and terrorist activities on markets have traditionally been short lived and offered up more of a buying opportunity than a prolonged down period. quick pause for a question without notice. Do we as Australian equity investors need to be worried about Russia and Ukraine? Henry?   Henry Jennings  02:48 Yes, very, we do for there's a couple of reasons why guys that we should be worried about Russia and Ukraine apart from the fact that extended elevated oil prices are no good for anybody really, if they go through 100 bucks and keep going. That is adding to the inflationary issues is also adding to the cost of living pressures. More importantly, closer to home. Of course, there is the issue of Taiwan. And President Xi in China, looking across to is now best buddy, Vladimir, and the reaction that he's getting around the world and the respect. I used the words in the bunny ears, I guess the respect that he's getting at the moment from the West, may embolden President Xi to make moves on Taiwan. Now, that is significantly more damaging, bearing in mind that most of the world's chips, semiconductors, of which there is a critical shortage at the moment already come out of Taiwan.   Ben O'Leary  03:46 As very interesting take on that I've not heard that be talked about too much. But it makes a lot of sense that we could get a bit of a copycat closer to home. Tommy worried about it.   Tom Wegner  03:56 I had a little bit of a different view reading this morning. One commentator One Harvard economist was saying how Russia's position in the global economy is wonderfully important. And I found that rather interesting, apart from oil and gas, which it will it's very important for Europe, I think Europe gets about 40% of their natural gas from Russia. But apart from that, it's not like China when their whole system shut down in 2020 with COVID and they had their economy embedded in all these really intricate supply chains. Russia is not very much like that. But as Henry said, there are different elements to the conflict. And you know, if China does become a bit bolder with their decisions in you know, the copycat thing not a great idea, but I thought it was rather interesting comment.   Ben O'Leary  04:53 Very interesting. The other issue that's been bubbling away under the surface in the market is of course The issue of rising interest rates the probability of a 25 to 50 basis point hike in the March Fed meeting continues to rise. It is now up to an 82.3% chance. So there is high expectations there. As we know rising interest rates hurt valuations of high PE names, amongst other impacts. And we have seen the tech heavy NASDAQ sold off three and a half percent since the start of last week. The s&p 500 and the Dow are both veering slightly better, but still down around 3%. And for all the wild headlines, and we've had some other wild headlines locally that have been less market impactful. But for all the wild headlines in general, the ASX 200 is down 0.1% Since the start of last week, although today I think we're down around 100 points.   Tom Wegner  05:40 Although those come back a bit as we speak, I was surprised that the Dow futures started to come back they were down something like 500 points now less so and market. Things come back a little bit as well.   Henry Jennings  05:52 I think the thing to point out as well about our index, which has really masked what's going on underneath is that although our index hasn't really done too much at the headline level, it has been held up by the big stocks, the iron ore stocks, which have been doing relatively okay. Also CSL and the banks, which are a major part of our index. If you look below that to some of the second liners, the small caps, and so called fintechs and technology sector, they have been decimated.   Ben O'Leary  06:22 Yeah, it's a really good point because between bhp, the big four banks and CSL I think it's about it's about 30 or 40% of the market so.   Henry Jennings  06:33 More than that bhp is about 10. The four banks are probably 25 to 30 and CSL you put in another cup, Rio and Wesfarmers and you pretty much covered the market.   Ben O'Leary  06:45 Yep, yeah. So some performance at the top level does hide that. It's very good point Henry. And of course we've had results season over the last couple of weeks. That's been the big item of focus locally as of yesterday, which was the 21st of February 94. ASX 200 companies have reported earnings 52% ended flat or higher, so just above the halfway mark, and they had an average daily gain of 0.9%. So it's been just positive overall. Among the best performance since reporting have been seems JB Hi Fi and nufarm or with gains around 20% while following just behind was Magellan which has bounced back in fun fashion up 17% Since reporting and Henry you were talking about as a buying opportunity in the lead up to their results after the Hamish sell off. So props to you there.   Henry Jennings  07:34 I was a bit early, but I gotta say I was a little bit early my buy price around 20 bucks and it went to about 17 before it bounce. But at least it's above were when I was really keen on the stock anyway.   Ben O'Leary  07:46 Yep, so all money in the pocket, isn't it. And on. On the other end of the spectrum, the worst performer has been red bubble, which was down 42% Since reporting, followed by losses of 34% a piece in premium and new Acts and 20 odd percent losses in debt and Tyro never good to be on the receiving end of those. But the good news for us is that some of our reporting season predictions are looking on the money. Tom, I think you want a red bubble, particularly being somewhere you would not put $1 of yours ever.   Tom Wegner  08:16 I think that was an easy guess, to be honest.   Ben O'Leary  08:19 And we discussed at length concerns around tech and retail is leading to results. So good to see we got a few little things right there. So I think that's enough of the boring stuff. As we are privileged having Henry with us today. We thought we would take the opportunity to quiz him on his origin story, which is something that Tom, Chris and I did a few weeks ago. So Henry Schein, how did you get into markets?   Henry Jennings  08:43 Thank you for the question, Ben. I got into markets. I guess my interest was stirred at school when I was about 1312 or 13. And the headmaster at the time was a shareholder in that I think it was Daily Mail. But we used to look at the prices on a daily basis in those days. If things moved by half a penny. It was a big day for some of the stocks but it got me interested in the market and the grand old age of 17. I decided that school really wasn't doing it for me. And as also part of the reason was that I went to a very, very expensive English public school. And it was very expensive for my poor old dear dad and he was rapidly running out of money. So he allowed me to leave school I hadn't completed my A levels. I was doing pure maths, physics and chemistry. There's a fantastic combination. And he allowed me to leave school on the basis that I got a sensible job. And then I started a career. I didn't at the time asked me I didn't have much interest in university at all. I wanted to get out there and start earning some money mainly because a lot of my friends were already out there in the world earning some money so I applied for two jobs. I applied for one as a stockbroker. Well stockbrokers Clark in a regional office of a company called griefs and grant down in Tunbridge Wells in sunny Kent, and a job in an advertising agency. And I've yet to hear back from the advertising agency, but I'm considering it's probably a no..umm   Ben O'Leary  10:17 If they come back to you, or do you consider the transfer now?   Henry Jennings  10:21 I think it would be worth thinking about certainly Band Aid, you'd be good. I've been doing this for 43 years. So it may be time for change. But now I started in, in a in a regional office, doing clients ledges with technology that would turn your hair and curl it and make it all fall out. It was antiquated, to say the least. But after a year there I've worked out pretty quickly actually, when I was there that I wanted to be on the floor London Stock Exchange. And I wanted to be what they called a blue button. And a blue button was the lowest of the lows, they got paid very little. And we had a pretty crappy life, to be honest, but you had to do a two year apprenticeship on the floor as a blue button before you could move up into more hallowed circles as a dealer. So after a year of strutting about in the regions, I managed to get myself a gig as a blue button for a company called Lang Cruickshank and joined them and started my life on the London Stock Exchange floor which was full of fun, I have to say full of Japes mainly populated by English public school boys and it was an extension to Tom Brown. And there was a lot of Japes, there was a lot of club newness to the whole thing. It was very old school indeed. But so after two years, I became a dealer. And I then spotted an opportunity because at the time, it was a very new world was traded options, which were traded an open outcry on the trading floor, that stock exchange. So I decided that being a young man with ambition that that was the area I wanted to get into. So I kind of shuffled myself off and got myself a job in options as a broker, executing for clients on the floor, and then decided the trading really was the way to go. So I snuck over to work for a company called Smith brothers, which was one of the big trading companies on the London trading floor and join them as a options trader and learn the business learn how to trade I was I was there when I was so much fun. It was so much fun open outcry markets, best time of your life. It's it was just hundreds of people screaming and shouting at you, especially when we were doing privatisations. There were some big floats at the time Thatcher's Britain was selling off everything selling England by the pound. So we have British Gas Rolls Royce jagua, British Aerospace, you name it, if it wasn't nailed down, Maggie was flogging it. And as a result of that first day, it was pandemonium, I have to say risk control was extraordinary. In those days, this was before we even had computers really, there was no pricing models, they were very in their infancy, we made up pricing depending on supply and demand. I used to do risk management by putting one hand or the buy slips and putting in the other handle the sell slips. And then I'd compare the the the height of the various piles. And that would determine my position, whether I was long or short whether I needed to increase the pile on the left or on the right. But that's how rudimentary it was. It was fun times went through the crash in 87, which was a fantastic week for option traders, which we were we saved the company. We made an extraordinary amount of money that week for the for those days extraordinary amount of money, bearing in mind that a house. I bought a house around that time in London, which I regret selling obviously. But I bought a house for 60,000 pounds. And I think for the week, the business that we were involved in on the options floor, we made 9 million quid in profit. So that gives you a bit of an idea of the size and the magnitude now is vastly different. But the numbers then were quite big to us. We saved the company because the the upstairs guys who didn't have the benefit that we had have been long millions and millions of puts. Did $9 million. They lost $9 million, which was kind of nice, because we saved the company we had standing standing ovations when we went back upstairs because we were downstairs in the in the troglodyte, troglodyte land of, of the market, but they were back upstairs in computer trading, it just kicked in for the crash which made it even more fun. Probably more volatile, looking back on it because no one really knew what the hell was going on. Most of the old Fuddy duddies had no idea how a computer works. How keyboard even works. That was something you left at Secretary while you went off and smoke cigars and drank the Scotch or port after lunch. So it was it was an interesting same time, I have to say is that is that enough burbling on about why I started.   Ben O'Leary  15:05 It's amazing because it's something that, in contrast, Tom and I's 90s babies, it's, it's a world that we never even got to see you just hear stories from you, or Marcus all walks or movies, it's, it's, it's amazing how different it is than the world we're in now. And the education you get, like the education you got just from that experience.   Ben O'Leary  15:28 Because it's all real. It's sort of, it's far more tangible. You're talking about holding the sleeps in your hands. So it actually is tangible. And you can relate it and see the passion that other people have. And it, it seems you distil it into feelings and emotions. Whereas today, it's a bit harder to do that behind the screen.   Henry Jennings  15:48 It is, I guess, I mean, at the end of the day, it's all down to fear and greed. And that was certainly something that you saw. During the crash. It was it was an extraordinary time. In that, that period, 87, when we when we did see that massive, massive fallout. And when I tell people today, or when we go through this, funnily enough, my brother who I managed to get a gig working for Smith brothers, which became Smith new court, which then became Merrill Lynch, which then became whatever it is now. But he actually started a week before the crash week, so he had a real baptism of fire. So he was a blue button starting out on the floor, he'd had had one oh level, he was very good at darts, which is how I sold him to the company. In terms of his ability, his ability to pitch it to be a trader, he is very good at darts. Now, for anybody that's giggles away and says, Well, that's stupid. Do you remember darts scoring is quite a complex thing to do. So when you've got 157 left, Andy had the ability to be able to work out that was a treble this a double that and single this, which did it demonstrate mathematical ability. He did go on to become a director of Merrill Lynch, by the way. So his one oh level, at least got him in the door and his darts, arithmetic, got him a gig. And he went from strength to strength, but watching his face, I guess, for that, that that week or so, of absolute pandemonium on the stock market floor, was certainly an interesting experience he'd never seen. Well, none of us had ever seen it. Like it. We've, we've all been yuppies, we've been children of Facha. We've seen the the big bang in London, where salaries just exploded when I started in London as a blue button. I'll give you a clue I was on I think I was on about 1900 pounds, which just about covered my train fare. Every day. It was such a pathetic salary. That it just about covered my train fare, we used to buy season ticket. And I think that was about 1400 pounds. So there wasn't much left over. So as a result, I had to work for my dad who was a builder, on a Saturday and a Sunday in my four weeks holiday. When I started out, I used to work on building sites so that I'd have enough money to actually live. So it was also I lived at home, which was very nice for my parents to allow that to happen. But in the few years after I joined with 1900 pounds, the Big Bang, I became a member of the stock exchange passed my exams, we can remember the stock exchange, and I was on 40,000 pounds, and a guarantee bonus and a car allowance. And a house cost 60,000 pounds. That was a terraced house in Clapham. So that gives you an idea of how things changed so quickly, in the financial markets back in the early 80s. It was extraordinary   Ben O'Leary  18:51 20 times pay rise is a fairly, fairly handy move.   Henry Jennings  18:55 Well, I got to say Ben, it was coming up a pretty low base. We used to get lunch and vouchers back in those days. You didn't have them in Australia, but used to get 15 pence a day for sandwiches when a sandwich would cost about a pound. So it was way beneath you. But we used to collect them up so you can actually afford something. And we'd always volunteer as a blue button to go and get everybody else's lunch. And then we pocket the change and buy ourselves lunch without us anyway you could survive was just a little bit of this and that on the side.   Tom Wegner  19:24 That's, that's incredible. And sort of an interesting segue to the next question. What's the biggest thing or things that have changed from when you started your career to now so that could be anything technology, relationships, how the market works?   Henry Jennings  19:42 I think that the biggest thing, the biggest thing is one is the size of positions. You know, as I said back in the 87 crash we made 9 million quid in profits and we thought we were absolutely God's the Masters of the Universe. So the size of position has changed my days at Macquarie. And if we get onto that, you know, the positions there at the time were massive yet compared to what investment banks take on now in terms of risk, it was hardly raised a sweat. So I think the size of the, the just the size of the numbers is, is a massive, massive change. The other issue, I guess, is technology base, but just the speed and the volatility of the market. In the 80s. The 87 crash was the first time we'd really seen mass volatility that was mass hysteria, fear and greed on a large scale, but up till then stocks moved you know, two or three P it was P in those days. It still is in the UK because we didn't adopt the Euro thankfully, on decent decision they did make but you know, things didn't move that quickly. Now. You know, we're seeing things move 10% On the back of someone mentioning challenging in a corporate report and the Twitter feeds, picking up those or the the algos picking up on those words. And just it's the speed I guess, and the size and the scale of financial markets as well. Back in the 80s and 90s. No one really cared about the stock market. Let's face it, it was the thing that rich people played with. It wasn't something that was sold to us. wholeness, bolus is the panacea for all our woes and all the reasons why we were going to be rich in retirement. It was it was very much in its infancy. Now, of course, it's the biggest thing since sliced bread, there's no other conversation. So I think those are the things that are really changed. Human beings are still human beings, we still panic, we still still things that stupid prices, we still buy things at stupid prices. There's still a lot of hype. There's still a lot of, you know, in those days, there was different things that were very much invoke a sense remember in the 80s, every man his dog wants to buy Brewing Company, Guinness was under siege. We had corporate raiders, we don't have those anymore. And now it's all it's a scheme of arrangement. And it's a non binding. You know, it's one of those wishy washy kind of things where you try and get the board to roll over. In the in the bad old days. You know, it just some some guy came knocking doors the right, there you go. I remember when, back in the day, there was a famous story from the Sydney Stock Exchange back in the day when BHP was undertake over threat. And we used to have slips on the trading floor in Sydney Stock Exchange when I was down there. And a guy just put a bucket on the floor and just said bhp $12.50 bid, there you go fill the bucket. And that was it. And we just wrote out the sell slips. Bucket got filled, and it just ended up at the end of the day. How many but you know, it was it was a very different world? I think   Ben O'Leary  22:48 So. So what you're saying is you want to say more aggressive takeovers?   Henry Jennings  22:51 I don't know about more aggressive. People are very circumspect. There was a lot of mistakes made back in those days because the companies that were aggressive, might not have done quite so much due diligence, but I think that the corporate raider was always a great threat out there in terms of floundering companies that stuffed it up. There was always that threat private equity, to some extent has become that corporate raider. But we did have you know, the likes of Robert Holmes, of course, there was a lawn row guy in the UK that there were lots of Christopher skates. Now there are lots of colourful characters around those those now there's, you know, there's, there's not even any characters around anymore. They're all hidden behind private equity walls, things have changed.   Ben O'Leary  23:33 Interesting. So tell us Henry how you ended up going from, it's in an old blue button that flew by London, working way up the ranks in London to be in Australia and working from a Macquarie?   Henry Jennings  23:48 Well, it's not a difficult story. And at the heart of all good stories, there's always a woman. And then in this case, there was a woman. And it was women troubles, I guess, to some extent, and there was another woman as well Kylie, who was very popular in England in the 80s. And I have to say, neighbours, and not so much home away, but neighbours was a massive, one of the few things I could afford to do was actually watch telly at lunchtime in the box. In the subterranean world, we have these little offices called boxes, and we used to watch neighbours. So Australia kind of did it for me, I looked at it, I thought this was fun. I was having some some issues on the woman front at the time and thought, you know what, this is not working. And maybe I need to escape and spend a couple of years working overseas and somebody else paying for that privilege. And I saw an advert in the Financial Times, and for a job with a company called Bain and CO at the time, which became Deutsche but at the time was Bain and CO and an English guy was running their trading division. And he interviewed me and then I had a four hour interview with Morris Newman. Many people will know I had no idea who he was. And for our interview with the chairman of buying cars he was then He's John Howard's best mate and is that he was in charge of the show the ABC, I think for a while. Anyway, I had a four hour interview with Maurice, we just talked about cricket for four hours anyway, I was in, filled in the forms emigrated effectively, I arrived here with permanent residency in 1989. And joined, as it was, then Bain and CO here, worked for them for two years. And then my old company in London, Smith, new CT, wanted someone to try 1000 shares, and hand the book over to London because it was a 24 hour trade. So we had around the clock trading desks for us and shares. So we would trade in Australia and then hand the book over to London, they would trade it in London, and they would trade it in New York, but it would come back to us in Australia. So I did that for a year and then split Newport decided that the Australian market had no had no upside at all, it was just too much like how I think the index was about 1100. At that time, it was the absolute low. But luckily, a friend of mine have a query, they were looking for someone who specialised in small caps and stuff that was a bit weird. And so I applied, I think we had a beer would have been somewhat a bit of a sit down for our psych test. And next minute I was in, and supposedly trading small caps. But within two or three days, the guy running the arbitrage book left. So I ran the arbitrage book there for a while, for a long while, actually for seven years. And I also ran within about two or three months the derivatives desk, which was in charge of trading convertibles, and doing the arbitrage business portfolio trades as well. And I was lucky enough to do the biggest ever at the time, that's probably tiny now compared to what they do, which was what they called exchange for physical where you're swapping futures for a basket of stocks, that was around $410 million worth of stock that we had on the arbitrage business that we had. Times have gone up to around $450 million book, which was basically designed to protect the ASX 200, and short or long futures against it. So that was fun times. And after a stint running the derivatives and doing the ARB and portfolios, I also ended up being in charge of all the options, market makers are on the trading floor as they transitioned to the upstairs environment and the trading for clients. So I ended up being there for seven years running cash trading, trading. And the flooring Sydney which was fun time to say it was it was a heap of fun.   Ben O'Leary  27:39 And it was. You gave us a bit of an insight into the size of the book you run in there. And some of the deals really impressive, what got what kind of size team we running when you're in heading up those desks?   Henry Jennings  27:50 Well, originally that was seen, there was six of us guys that were just super smart, way smarter than me. And my job really was to facilitate an environment where they can shine. And they do their thing to give them the tools that give them the technology. So I was involved in developing the technology to for risk system, which we appropriately called egos. But my job was primarily to facilitate enable, I did run the spy Trading Book, the arbitrage book, which was to say up to 450 could have gone higher depending on circumstances because in those days, Spy arbitrage was all done manually, it was all done physically. So the idea was to buy a basket of stocks that replicated the index, and then sell the futures against it, or vice versa, depending on where the premium or discount was for that basket. And under certain circumstances depending on premium or discount got so big that you would just ramp up the size of the portfolio. And ultimately, the two are cash settled. So they come back to Paris. And so that was the idea that was always fraught with danger coming out to expire it. But it was a real fun game. I had seven or six or seven operators at my beck and call. So when we were in full flight, I've just been yelling orders across the Office report on a very crowded office at the time to six or seven operators to buy and sell stuff serviced by 25,000 bhp by 20,000. Western mining I just did rattling them off. And they dropped into my account real time and I had a computer screen that showed what the positions were against the futures are in or out of balance. I was what my net exposure was. And I could choose to run Long's or run short net if I chose to. So it was quite fun. It was good fun, per se it was very much open outcry kind of stuff. When I was running the whole division as we probably had 2025 traders within that I was still doing spy arbitrage portfolios. And basically I was kind of I was the school teacher that would be assessing the risk and assessing trades. And a lot of our trades were big licks if you like we would do big trade. For instance, recently, the bhp the tuna structure was a typical kind of trade that we would have done, we used to do it in what was called the Rio spread where you bought Rio in London and sold ratio here and tried to trade the spread between the two, assuming that they would come within a set parameter. But that could have been quite fraught with danger. So most of the trading that we did was big lips, and someone had to say yes or no, ultimately to that, and keep the traders within their limits, because that was always part of the hard bit was to ensure that our volatility limits and our risk control was there. So part of my every day was to go through the risk parameters for all the portfolio's all the traders that were there, and ensure that they fitted within the very framework, which is why I know Korea is is such a risk averse animal in some respects, because I know what happens when you were outside those and you got a visit from the risk managers you want to avoid. My job was preemptive. But it was fun. Yeah..   Ben O'Leary  31:09 Fairly high pressure at times, I'm sure as well?   Henry Jennings  31:12 Yeah, it was. We used to have the senior people there. Because I was the divisional director, we used to have a medical every year where we'd get on the treadmill, and they'd look at the cholesterol and assess the risk, I guess it comes down to key man risk. And there were some years in fact, most years when I went to have my medical and there was a round of applause. That like made it another year because not only was quite high press Return to trading. But there was also a fair amount of interaction with the broking side of things, a fair amount of wining and dining and a fair amount of client contact. So there was some, shall we say, burning the candle at both ends, as well as some stress involved. As with all things, there are rewards, but there are risks as well. And it was a pretty high profile, high stress position. In terms of stress. I remember I got a phone call once from Alan Moss, who had just received a phone call from stellar, who was a little concerned that Macquarie Bank had bought over 10% of challenge bank, and you needed Trisha permission to buy 10% of I mentioned retail bank. And I had bought 12 13% of challenge bank Trading Book who were being taken over by Westpac. And as a result, it was very close to being turned into Westpac shares, which I would then sell on the market position will be null and void and that just make a difference. Alan had to fend off Costello, and then the phone call and the hostile phone call. And we made it into the papers where we were in the IFRS with Corey stunning raid on Westpac and I got quoted about how it all worked out with this challenge bank chart, that was always fun.   Tom Wegner  32:50 It's always good to be quoted, well, it's good and bad to be quoted in the AFR. Sometimes you're not sure if it's gonna be a positive headline. But sounds like there's a lot of exciting times there, Henry. Now, we've looked at a lot of the history now we're going to look into a crystal ball into the future. And the last question, if you had to put a couple of small caps in the top drawer for the next five years, what would you choose and why?   Henry Jennings  33:19 It's such a tricky one. The markets changed now. So quickly. I think we've seen the demise. In some respects, at the moment of lithium stocks, I still think Lithium has a massive, massive place. And it's still going to have a lot of a lot of upside. But there are a lot of wannabes out there. One of the ones I think is going to get sold off a bit more is Pilbara minerals, which isn't that smaller stock anymore. So when you talk small caps, I think you probably go lower in the scale, but certainly the lion town one, which is a $12 million band that has some serious potential and that Kathlyn value that comes in. And that could certainly be much, much bigger stuff in five years time before it goes according to plan. And the lithium kicks in as it should. The other one that I kind of like still. Again, this is five years down the track and who knows what the future holds, but calyx which is Cx L is the stock code there, which peaked at around eight bucks. It's around five bucks. I interviewed the CEO, Dr. Phil Hobson, a year or so ago. And we're talking about this one these guys are in the business of taking carbon dioxide out of the process of lime and Summit. They have a thing called a counsellor, which does seem to be part of the solution for climate change. It has been it got hyped to to the moon and now it's coming back as are so many of these stocks. So certainly in no rush but this one I think in three to five years time will certainly be a much bigger company if all goes plan, this is a good thing if all goes to plan. At the moment we're seeing valuations be absolutely wallet, because things just got too out of control. This is an $800 million company, but valuations to get way too, out of control the world and his wife was punting the market. And whether it was money that the government given you, or Bitcoin money, or whatever it was, every man his dog is punting the market, it could never end. Well, that respect. And I've written recently in the newsletter about how investments stock market is a bit like driving around the Nurburgring. Actually, I've just been investigating is a bit of a side thing. I've just been investigating, doing the Nurburgring because I've never done it. And I've always wanted to end it, funnily enough, it's not a million miles away from Bolton energy. In West German, sounds like I'm feeling a site visit coming up. And just as an aside, that's another interesting one as well, I have to say, but again, valuations are pin the tail on the donkey. But that that is certainly happening at the moment. There's a lot of companies that got massively tight, and are unwinding as quickly. And what we have seen in the market and this this is another thing I've it's that I've seen over the years, is that momentum, just pushes things way too far. Either way, way too far. On the upside, I'm waiting for the downside. And the moment, it's all about downside. It's all about when you drive around the Nurburgring, you want to be flat to the floor on the streets. And you want to be careful around the corners. And the moment we are in the corners with chicanes. And the idea is to be able to put your foot on the floor when the strike comes. And I think we're still under the way away from that straight in terms of market valuation. So we will see further falls not in the US, but also in our market. And maybe we'll even test that 6800 I think, that we saw during the sort of January collapse, before we found the footing. As we head towards March. People listen to this. It's now February the 22nd. And it's the Palindrome day. But as we head towards March, it's it's ironic, I guess, maybe that's not the right word. But the Ides of March are a time when it is kind of dangerous out there in the world, especially if you're the head, man. And we are, we're heading for the Ides of March, which ran 15/16 of March, which funnily enough, is when the Federal Reserve meets to have their meeting. So don't be wandering down any dark alleys with your so called mates around that time, there might be some extra risks of being stabbed in the back. But yeah, I think we've still got some downside to come. So I think for me, as I say, calyx is certainly one that I do like, but it could come back to four bucks. It's not it's not out of the realms of possibilities, you know, two days away of bad falls to be honest.   Tom Wegner  38:10 Line town and Calix. But yeah, like you said, valuations are the tricky part. And that's what we try and do in our job is Pick, pick discounts and sell premiums.   Henry Jennings  38:20 Well, I you know, we all try and do that time. And we'll try and pretend that we do that. But the actual truth is that none of us have any, any idea what the right price, what the right valuation of calyxes what the right valuation of blind town is, you can do as many discounted cash flow models as you like, you can analyse them till the cows come home, you can build spreadsheets. Now in my time will cry the research analysts would spend months building the spreadsheet for QB or IAG. But at the end of the day, if you're putting crap in, you're going to get crap out. And if you if you decide Lyon town is valued at this, based on the assumption that lithium is going to be that, well, if your lithium assumption is way off, then that is going to kill the rest of your model. No matter which way you go. It's so it you know, we can all pretend we can value companies we can't. The only times it's a bit like when you buy and sell a house or buy and sell any asset. The only time that it really matters is when you buy or sell something, the value in between is somewhat irrelevant. And for for me, if you're looking at the stock market, that the only times where you can really fix it, it's okay, this is definitely what something is worth is when somebody bids for a company and then you can start looking at other companies that we know what if Michael Brooks and Brookfield paying this for AGL then this company that does the same thing as AGL should be worth pretty much the similar because that's what that's a corporate transaction of business sale holders bowlers. So, anything in between, like with your house, you know or your flat evaluate when you buy it and you value it When you sell it, but if we looked at the volatility in between, it could scare the pants off you at times or maybe certainly in Sydney prices. Definitely not. But you know it. Those are the two important times. So what happens to the middle is a bit pin the tail on the donkey issue. It does depend a lot on fear, greed and human sentiment. And that's what drives markets no matter which way you cut it. You know, here we are. We're down nearly 90 points today, because Vladimir Putin has has recognised now he's recognised two parts of the Ukraine, which are having some civil wars and have done for the last eight, eight years. And West is in palpitations about it. So this is all about sentiment at the moment. Now gold's up oils up sentiment.   Ben O'Leary  40:46 Well, Henry, I think that is a very fitting way to end having just touched on housing prices and sentiment and markets, considering you started by telling us that you sold your property in London for 60,000 pounds.   Henry Jennings  41:01 No, I didn't sell it for 60,000. I bought it for 60,000.   Ben O'Leary  41:05 And I have no idea what it was. But I'm guessing a house in London. \Current valuation would be a hell of a lot more than 60,000 pounds.   Tom Wegner  41:14 A couple more zeros.   Henry Jennings  41:16 I I weep I weep. I bought I bought that house which was a two bedroom terraced in Clapham. Not even in one of the good streets in Clapham 60,000 quid in the top in the pre around 90's of London property, it was worth about 120. I sold it for 97. On the way down, I think it's probably conservatively 1.5million now.   Tom Wegner  41:40 Pounds as well, isn't it?   Henry Jennings  41:42 Real money, real money! Yeah. Although funnily enough, I know, everyone gets all hot and bothered about exchange rates. But when I came here, the pound to the dollar was about two. And it still is. So it's had its moments up at three. It's had its moments down at one and a half. But it's here we are, we're back at two to the pound. Yeah, that's one, I have a few regrets in life. And that is one of them. Selling that house. That was a bad bad move.   Ben O'Leary  42:19 We will stop stealing all your time, Henry, but you just did make me that. There's one other thing I just want to ask you without notice on that, which is if you had one message one piece of advice for yourself, age 20 or 25 or 30? What would it be? What do you wish you knew when you were making your moves?   Henry Jennings  42:38 I wish I'd known Facebook and Amazon we're going to be quite so big.   Ben O'Leary  42:43 Invest in Apple.   Henry Jennings  42:45 Invest, invest that what you know, we had chances to do that. I you know what I there's nothing I would change. I have regrets we will have regrets about selling things. There's nothing I would change. And I know that you know there's there's a school of thought that says you shouldn't go nuts in your 20s. And then you should be saving money and putting it away and building up the super excetera. I had an absolute ball in my 20s I had a ball in my 30s I've thoroughly enjoyed my 40s and my 50s I probably wouldn't change a thing. There's a few things that I regret selling in Macquarie Bank shares, possibly one of those. My house also had a Porshe 356 A that I bought from a blog called Robin Hood, which I paid 20 grand for and I sold that for 22 grand and thought I'd done really well. Don't even think about what they worth now that makes London property prices look even sillier. But yeah, there's a few things I regret. But I think the one piece of advice for my 25 year old self would be to find a good woman and stick with her and make that relationship work because that's the most important thing in your life.   Ben O'Leary  43:56 There we go.   Tom Wegner  43:56 It's all about love all about love.   Henry Jennings  43:58 All You Need Is Love.   Tom Wegner  43:59 Doot dudidi do   Ben O'Leary  44:01 You're always you're always having a good time, Henry and you're always all your stories are full of fun. So I think that having having fun as he goes probably a good message.   Henry Jennings  44:09 And this is this is so bad. You want to do well. You have we have about bought the pants off you and I've had a few, glasses of red.   Ben O'Leary  44:17 Quite the opposite end right, the opposite. Well, thank you for joining us that Henry. That was fantastic.   Henry Jennings  44:23 Anytime, guys, always a pleasure. And thanks for asking me on it. So it's delightful to be on this end of the conversation for change. Usually I'm the one asking lots of questions.   Ben O'Leary  44:32 I'm sure this will be our most listened to episode yet, because people want to hear you on this side of the mic. So.   Henry Jennings  44:38 We'll say.   Ben O'Leary  44:40 Thanks, Henry.   Tom Wegner  44:41 Thanks Henry.   Ben O'Leary  44:41 And thanks, everyone.   Henry Jennings  44:42 Thanks, guys.   Why not sign up for a free trial? 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