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Castle tackles inclusivity with exclusivity

The board of Rugby Australia (RA) has capitulated at the altar of political correctness. CEO Raelene Castle unconvincingly announced the reasons why Israel Folau’s contract has been terminated. This is a board that acted on external activism. It buckled. Castle squirmed around the question of whether sponsors had applied pressure or not. What Folau said was unnecessary but how is it other players can get arrested and get away with a written warning?

Ultimately, RA will feel the wrath at the ticket office from already disgruntled paying fans. Attendance continues to slide. RA losses are expected for 2019 following the losses in 2017. The 2018 profit was merely due to an exceptional item. Perhaps Folau’s termination will help plug the hole in the P&L. No wonder losses are being made, given the pitiful performances led by a man with the worst record of any Wallabies coach. Why is he still there?

Australia will be lucky to make it beyond the quarterfinals at the Rugby World Cup in Japan this year. Yet the CEO and board tolerate his woeful record. CM has long argued Michael Cheika can’t unite that team. His record proves it. His team rally behind him publicly but their faces tell a different story.

Castle is out of her depth. She might have cried inclusiveness but there was no conviction in the press conference. Inclusiveness, to many of those on the left, is limited to whatever they prescribe. Stray from the party line and get excluded. Her eyes said it all in the press conference – she is definitely no crisis manager.

Folau, on the other hand, didn’t accept a $1m buy off to walk away so RA could wash their hands of the matter. He stuck and continues to stick to his faith. Hopefully, he takes it all the way to the High Court to leave RA with more egg on its face.

Let’s be clear. Folau hasn’t called for violence against homosexuals. Yet why is it just that group that is singled out as victims? CM ticked a few boxes on his tweet. Surely CM’s right to feeling oppressed is just as valid on the faux outrage scale. Where are the drunkards, adulterers and fornicators calling for his head? Nowhere. With good reason. Because 99.9% of people probably rolled their eyes at the tweet and moved on.

Look at RA’s Male Champions of Change (MCC) program. This is the focus of RA and it is not rugby. RA’s website openly states the following,

MCC works with influential leaders and encourages them to take action towards gender equality. 

Rugby Australia is a proud supporter of MCC and our Chief Executive Raelene Castle has recently been appointed as a Special Advisor on the MCC Sport program. 

This program aims to enhance the involvement of women in all aspects of sport and works with key stakeholders to achieve pay equity.

What on earth could have possessed RA to hire an activist as CEO? Castle also promotes on the RA website:

I have seen the challenges first hand and I have a personal passion to ensure that the gender equality discussion is at the forefront across all aspects of our society.

Quite frankly 99% of her customers couldn’t care less about RA’s stance on gender equality nor the group’s wish to drive it across society. They want to see good rugby. They d not see it as RA’s job to tell them how to behave. RA is answering questions nobody is asking.  If female coaches are better than the males, no male rugby supporter will care if the team is quite literally putting scores on the board. No one needs or wants RA’s activism which also extends to male domestic violence. How about female domestic violence against men? Take a look at the stats. Let’s just beat up on toxic masculinity because it is easier.

Where was the board when Wallabies flanker David Pocock encouraged school kids to join the climate strike or retweeted posts mocking climate skeptics? Is his climate activism ranked above Folau’s quoting of a religious text? Did RA do anything when Pocock was arrested for chaining himself to an excavator for 10 hours at the Maules Creek mine? He was charged with “trespass, remaining on enclosed land without lawful excuse and hindering the working of mining equipment.” Raelene Castle wasn’t CEO at the time but Cameron Clyne, Paul McLean and Ann Sherry were and still are board members. Where is the balance in sanctions handed out?

Let’s not forget the double standards of Pocock. He can find it in his heart to play for a team that is sponsored by Qantas which emits more carbon dioxide per passenger-kilometre than any other airline operating across the Pacific, according to an analysis by the International Council on Clean Transportation. Oh, the irony that he also happily played for a team that was sponsored by gas-guzzling Land Rover SUVs. Nary a peep from the climate activist when it lines his pockets.

What will the other devout Christian Pacific Islanders do? Will they leave the Wallabies en masse? They’re good enough to find homes in other sides. The Japanese would welcome them.

If the RA board think they’ve reached a moral high ground in this decision they’re seriously mistaken. Trying to pay him off was the first big mistake because his faith trumped their expediency. They thought he was all bluster, just like the players who threatened to boycott the team if he remained. Folau wasn’t for sale.

CM has repeatedly said that Folau’s remarks in a public forum were unnecessary but defends his right to say them.

Castle’s decision is a perfect representation of the growing trend of allowing virtue signaling to infect a board which will spectacularly backfire. This is no different to Gillette, Colgate and other brands trying to do moral preening. People want the product. Start throwing lashings of political correctness and watch customers desert them. Footy Show anyone? Trying to be a ‘woke’ corporate is the closest thing to sleepwalking off a cliff.

Was Tesla/Maxwell deal smart?

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Tesla (TSLA) has bought Maxwell (MXWL) for an all-stock transaction at US$288m notional value. The question is why any company would accept an all share transaction from a chronic loss-making company to buy its supposedly “amazing” futuristic dry capacitor technology? Are shareholders of MXWL as hooked into the EV cult as those at Tesla? Clearly not all of them. A group of MXWL investors launched a class action to block the deal. Sadly they failed.

If the management of Maxwell truly believed this deal was a winner and the technology was game-changing, why not demand cash? Why didn’t Tesla invite Panasonic’s battery boffins to assess whether the technology had merit? One must question how good is Maxwell’s IP to only find one buyer and for an all share deal? Where were the private equity (PE) vultures circling? How little confidence in one’s product or how much faith in Musk’s cult-like status to fall for such terms?

Maxwell at the 9 month FY2018 stage reported US$91.6mn (-8%YoY) in revenue and a net loss of $30.2mn. Cash halved from $50.122m in 9M 2017 to $23.561mn 9M 2018. The company did sell its high voltage product line to Renaissance Investment Foundation for $55mn with a 2-year $15mn earn out. That involved an upfront payment of $48m making pro-forma cash as at Sep 30, 2018, total $69mn. The company has an accumulated deficit of $277mn.

While the two companies had been in conversation for several years, Musk seemed to get serious in December 2018.

Forget the technological merits of Maxwell. It is easy to work out the quality of the deal based on the structure and the lack of appetite from the mega battery makers or PE firms to validate it. There is no way that MXWL didn’t show its wares to the majors. Given the deal was announced in February 2019, the EV battery and PE world would have at the very least done some back of the envelope calculations to value the business.

All that Musk has done has absorbed another loss-making business into the same cult and give himself another “dream” to add to the smoke and mirrors story.

Maxwell’s management must have channeled Don Adams, “good thinking, 99” but will undoubtedly end up saying, “sorry about that, Chief!”

No, ScoMo!

For a Conservative party to push a subsidy of up to 20% of the value of a property for first time home buyers shows how bereft of policy it is. When Vic Premier Daniel Andrews raised a similar plan in March 2017 CM trashed it.

Think about it. Home prices have started to fall in major capitals because of a lack of demand thanks to astronomical prices and tapped out borrowers. This is before the Royal Commission puts the brakes on lending.

Why provide a subsidy to first home buyers toward the top of a bubble? It is not the role of the taxpayer to subsidize nor insure the downside risk in the event of the owner going into negative equity. What happened to free market economics?

What will this 20% subsidy do? If a couple go house hunting with a budget of $800,000, they will be able to shoot for a $1mn property. It might end up being the same property, pushed up by the desperate buyer thanks to the subsidy creating a false sense of security. So the reality is the taxpayer and the homeowner may end up in the red the day they move in. What a policy!!

Has ScoMo just called the top of the property market?

Aussies pay more tax than Japanese and Shorten wants to raise them higher!

CM is repulsed by the confetti blowing promises being made ahead of May 18. This election is about cost of living to be sure. It is not about climate change and not about resettling refugees. Yet there has to be a limit on the free give away with a growing deficit. Where is the fiscal responsibility? Do politicians run their own household budgets like this? Not in a million years.

Our federal tax receipts are A$430bn this year. Did you know Japan collects $A750bn at the national level? So Aus is 1/5th the population and raises 1/2 the coin of Japan. Having said that the Japanese government must raise A$500bn EVERY YEAR to plug the national deficit! That’s what happens with poor fiscal management. So doing the math including the debt financing, we still raise 31% the revenues than the Japanese on 20% of the population. We might argue our economy is 1/4 Japan’s but we’re following an unsustainable trajectory. It’s insane. How can we tax people more? Yet that is what Shorten will do.

We can debate til the cows come home about how GST is funneled back to the states from federal coffers but we need to wake up to our relative costs! Our budget deficit is c.$600bn yet here we see Labor throw confetti promises around everywhere. $1.18bn in new aid to foreign countries over the next 4 years. PNG spent our aid money on 40 new Maseratis. Shorten pledged $1bn to acquire land to put the VFT in place. Surely the private sector can deal with that. $2bn for a Melbourne metro. We can go on and on.

Everyone seems like a winner until everyone becomes a loser. The sad fact is that we must wake people up to reality. We need to spend smarter, not chuck more money and hope it has impact. Neither government will see a surplus. Take it to the bank. The economic growth projections aren’t there. No matter who wins this election, the global economy is slowing and either party will be handed a basket case of economy controlled by external forces which includes a slowing US and China. It won’t be pretty. The question is who can best manage that? Not Labor. Climate change will be so irrelevant in this downturn.

It gets worse. The Reserve Bank and APRA are asleep at the wheel. Instead of navigating sensible policies to thwart the largest recession we will face in almost 30 years which will decimate housing, both are discussing climate change compliance reporting by corporates. Seriously? It is so telling they are focusing on the wrong message. Have they seen that the world’s central banks have printed $140 trillion in extra debt since 2008 and got $20 trillion extra in GDP. Shockingly poor returns. $7 of debt gets us $1 of GDP.

Yet our political system has only one pair of rose tinted spectacles where the prescription is 27 years out of date. They are equally as oblivious to the oncoming onslaught where our Aussie banks face a real risk of part of whole nationalization. Their position is as bad as the Japanese ahead of the collapse of their bubble.

Do not be fooled. CM personally believes that the Coalition is not deserved of government but the alternative is even worse. The last thing we need is to rest on that old Aussie saying of “time to give the others a go!” because this is a time when we can least afford change. It will be buyer’s remorse + alpha.

Climate alarmist CNN moves by the waterfront

Despite the constant preaching about global warming and rising sea levels, CNN is moving to Hudson Yards on the waterfront in NYC. Have the network’s horrible slide in ratings, mass lay-offs and crimped profitability meant it needs to seek rock bottom rental prices? What a reprehensible organization to put current employees in harm’s way!

Folau’s religious beliefs not for sale

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How pathetic is Rugby Australia’s (RA) “peace offering” to buy off Israel Folau for $1mn? Good on Folau for rejecting it. It only proves his religious beliefs aren’t for sale.

It is becoming more and more typical of boards to yield to trolls on social media which ends up in knee-jerk decisions that often end up backfiring. This week The Australian conducted a poll of c.27,000 people which showed 89% support for keeping Folau in the Wallabies team.

If RA’s board acted rationally, it could have simply made a public statement saying it deeply disapproved of what Folau wrote on Twitter yet his words are protected under the Constitution of Australia.

Instead, the board panicked and revealed its own shortcomings in dealing with the crisis. Management’s behaviour seems to have filtered down to the players too. Several Wallabies made comments suggesting they may boycott the team if Folau stays. It is almost guaranteed they won’t sacrifice their lucrative contracts to virtue signal. Pure vanity at its worst.

Why hasn’t the RA board removed the coach for poor real world performance? The board is there to build a team that can win. That’s what sells tickets and brings fans.  Coach Michael Cheika’s record is the worst of any Wallabies coach period. Yet he remains.

He has a 43% overall win record at the helm. With the All Blacks its 17%. England 13%. Ireland 20%.  Even Scotland is 50%.

Bob Dwyer – 64% win record

Alan Jones – 68%

Greg Smith – 63%

Rod Macqueen – 79%

Eddie Jones – 58%

John Connolly- 59%

Robbie Deans – 58%

Ewen Mackenzie- 50%

Maybe the board should consider Cheika’s actual performance rather than his views on Folau’s social media engagement. Clearly political correctness is a bigger priority at RA.

Please spare us the “inclusivity & diversity” babble. By explicitly trying to exclude Folau for his religious beliefs, RA clearly acts how it proclaims it does not. Furthermore to offer $1m shows that the RA has little case to answer for. Whatever ‘code of conduct or inclusion’ clauses in his contract may exist, they do not supersede the Constitution.

CM does not think highly of what Folau said but defends his right to say it.

RA’s board should be focused on what matters (winning)  rather than wasting countless time and money trying to restore their tarnished reputation to a tiny cabal of social justice warriors.

Elon Musk’s golden chocolates are already melting

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What is it with Elon Musk that keeps making up such fictitious dreams about the future? So even assuming his $2bn capital raise all goes smoothly, his dream of up to 1,000,000 robo-taxis, Tesla cars doubling in value and a market cap of $500bn is just barking mad. It reminds CM of a time when a mobile phone retailer in Japan, Hikari Tsushin, had Y100 trillion (c.US$1 trillion) market cap gold coin chocolates produced as a hubristic internal target in 2000. 19 years later the shares are only 9% of the peak price reached and 1% of the value of the prophecy embossed on the chocolate. It is up to the market to decide how much a company is worth, not the CEO. A CEO obsessed with the share price is always a dangerous game.

According to CNBC Musk said at his Autonomy Day,

that autonomous driving will transform Tesla into a company with a $500 billion market cap, these people said. Its current market cap stands around $42 billion. He also said that existing Teslas will increase in value as self-driving capabilities are added via software, and will be worth up to $250,000 within three years.

Musk reiterated that because Teslas can be upgraded “over-the-air” with new software-enabled features and functionality, they will appreciate in value, unlike nearly every other car on the market. A Tesla will be worth $150,000 to $250,000 in 3 years, he claimed. He also said that a full self-driving upgrade will increase the value of any Tesla by a half order of magnitude, or five times.

Tesla expects to have 1 million vehicles on the road next year that are able to function as “robo-taxis,” Musk said, reiterating statements made at Autonomy Day and on the company’s Q1 earnings call. Each car should be able to do 100 hours of work a week for its owner, making money as a robo-taxi he told investors.

So if Musk’s cars would be worth $150,000-$250,000 how does that reconcile with a sticker price of $35,000~$124,000? A used 2018 Model S 100D with 18,588 miles on the clock is $60,990. So the above used car could technically be worth c.2.5x higher in Musk’s thought bubble. Where is the stampede of people running to used car lots to hoard compatible Teslas? That has to be one of the best investments out there – forget buying Tesla shares! Buy the used cars. Sadly, about the only cars that appreciate are limited edition classic cars. A mass-market electric car in abundant supply will not be worth a 100% mark-up, even if one takes into account the hypothesis is driven by the revenue uplift of one’s car doing the rounds of a taxi while you sleep.

If Musk truly believes his robo-dream, he should move to immediately raise the price of his cars to the price range he thinks his cars will be worth. Why not bring back residual value guarantees (RVG)? That’s right, he had to take a $121m write-down on existing RVGs this quarter just gone. Guess how many of his current line up he will sell at $150,000-250,000? Zero. That shows us the true value of Tesla. Appreciating Teslas and $500bn market caps. Some of the best comedy going. So is $240/share.