Hello, and welcome to The Australian's Money Puzzle podcast. I'm James Kirby, the editor at The Australian. Welcome aboard everybody. You might think in a podcast like this, I have lots of fund managers on the show, but I don't. Actually,
I've had maybe three or four a year. The reason for that is, to be honest with you, a lot of them sound the same, they say the same things, and that type of manager, the traditional fund manager, is now indeed trouble because index funds basically are eating their lunch. You can see those big names that were household names, Perpetual, Platinum, Magellan,
they are deeply challenged now because of index funds. And so what fund managers have to do is they have to do something entirely different reproducing the index as they call it X hugging. It's just simply no good anymore. You have to do something very different to attract the investor and to make it worthwhile. Basically to swing with
someone and to have someone pickstocks for you. Today, I have someone that I know for quite a while and he's in the business largely of finding what we call small cap stocks for mid cap stocks, I can tell you it's not a game for the faint hearted because one year, basically you can shoot out the lights and the next year it can go all off the rails big time. And that's how it goes. It's volatile. You need an iron like constitution to stay at it. Dean
Fergie runs the Cion Investment Fund. He's going to talk about the market, what happened this year some of the big stories in stocks? Guzmny Gomez. Is that a big story. It's a big story, that's for sure, but whether it's a big stock remains to be seen. Commonwealth Bank now there's a big stock, two hundred billion dollar stock being shorted, mind you, because many gome as it turns out, has been shorter too. Can you one week after it floated?
It's been a really interesting year. How are you, Dean Fergie?
Good morning, James. Thanks for having me on.
Great to have you on. We had a very interesting show last week. Conceptually, it was a very interesting show because I had John Stenshold, who is the editor of The Rich two fifty and he's basically tycoon agraphy is he think he keeps in touch with all the tycoons. And we did a piece of what they've been investing in and the stocks that had been winners and losers for them. And it's interesting because they had plenty of
winners and plenty of losers over the year. But just to give everyone an idea that the share market this year in the end kind of a normal year, maybe nine percent across the board for the AX and maybe another three or four percent in dividends. Is that how it's looking if it was to keep going, We're not finished yet, but that is what you call it broadly in the end, a very normal year in this scheme of things.
I think at the top line, it is, you know, I think you might expect a high single or low double digit returns in any normal year in the stock market. But I've also seen, you know, there's been a real absence of activity in the IPO market, so there haven't been those free kicks for a lot of investors that play the stock market individually. And also I think it's also been kind of a bit of a tale of two tails. Like you've had a lot of the big
cap stocks doing really really nicely. Small caps have performed a little bit better later on in the year, but the microcaps are still really really kind of underappreciated and still in a real slump at the moment. So we tend to operate in the smaller micro cap in and we've found that in there it's been quite a challenge just in terms of liquidity and investor interest in that space.
For the listener, we have all sorts of listeners, but for the every day listener, just to find those what's a small cap, how does it? What's the tiers there?
I'd probably say small, low marker caps of anything under one hundred million dollar in market cap to five hundred and two billion in small cap, and anything over a billion's probably a large captoc.
And so let's just talk about some of the things that have been going on this last quarter in the market. It's been really interesting because you mentioned IPOs and when we did the show last week, Guzman Ego is the Mexican takeaway chain, had just arrived on the market and they'd literally floated an hour or two earlier, and that was the biggest float for a long time, I think
three years. Instantly successful on a technical basis in that it listed and it immediately rows by thirty percent up to thirty dollars now in the week that's passed a lot of questions about this float, and you just said at the start there that we need IPOs, and we do need IPOs. Some people think this is great, it's wonderful for the market. Hey, we finally got a big IPO that took off. Some people say this is as good as it gets for those guys, believe it or not,
there's already a million share is shorted in them. They haven't passed the level that they passed that for US day they were thirty dollars and they're twenty nine. Now what's your view on them, and more importantly, what is their significance as a float?
Well, courst up with positives that. I think it's been a fantastic result for the market. You've had a very large float that have had both promoters and tractors involved, so it wasn't all one way traffic. In terms of the expectations. It's come on at a significant premium with quite material volume training over the first few days. So I think in terms of looking at the health of the market, I think it's been fantastic. It's a real sign that things are starting to get back to normal.
For me in terms of pure evaluations. Given what else is out there, it just doesn't stack up. I'm a fundamental investor, and maybe be your fundamental investor is not as irrelevant as it has been in the past. In this market, I feel the market becomes very gets very excited about certain themes for a while, and then then forgets about them and looks at the new kind of shiny thing. This is a new shiny stock. But look at the revenues, the underlying profitability, which is close to zero.
I think their MPACT for the year was about three million dollars. It's trading at a market cap of three billion, so that's a pretty steep multiple. If you ask may Well Ernie's, it's a bit irrelevant when they're so small.
That's higher than Nvidian.
Yeah, but again it's off a very very low base. I think the best comparison is something like Dominance, So the market cap of Domino's and gos And is broadly the same. Dominoes does four billion dollars in sales, Grismond does seven hundred and sixty, so it does six times the sales. It's got twenty times the number of stores. The profitability of Dominoes is one hundred and twenty million at the bottom line, So there's a massive gap in
evaluation between two I'd say similar socks. The difference being that Gusman is new, it hasn't had a bad track record. In fact, everything isn't listened to. He has been fantastic so far, albeit over one week period. Dominos has had early massive success and recently has struggled a little bit.
So so thoughd promise really isn't it it's worth three billion? Someone was saying that it's working out at about seventeen million each Gormez on your shot it's one. There are what's seventeen million eeds according to the stoff market, So people are betting that they will do a Domino's. Is that it just have this ramp up period.
It has to be right that if you've got that much expect built into the current market capitalization of the stock, then it's all expectation. It's expectation they can take this success store in Australia and replicated overseas, which they may be able to do. I mean, they've got a management
team that's been proven so far. But we've seen we've Dominoes that you go into new jurisdictions with all those different challenges, and it's a little bit harder than building out a franchise in a country that you're very familiar with.
Yes, and you know the rules and the regulations and the logistics, etc. And you have your relationships I spols with your bank, yeah yeah.
And just understanding the customers as well. People have quipped that taking Mexican food to the US isn't overly unique, and there might be some competition over there, but it'll have to be very successful to justify where it's trading now. But does that mean it won't continue to go up? I don't know. The trend is there at the moment.
When you if you sell shorts a million shures it's not enormous. But have when you seen people actually taking a bet and shorting a stock for something like Guzman, which is a new stock. What does it mean to you?
Yeah, Look, we don't short stocks as a business. You know. My sort of philosophy is that your losses are unlimited and your gains are kepped at one hundred percent. I think on the basis on evaluation, it is easy to justify that it is a logical short, but it also would have been in a logical short at twenty five dollars or twenty dollars, and it's trading here at thirty. So
it's not something I would personally be doing. I can understand the logic behind it, but I have seen many stocks in the domestic and international markets become completely hyped and over valued and wiped out shorts very quickly. The main example of that overseas has been what's happened in Game Stop. You know that you've had a lot of investors just driving the stop us up to what would
appear to be artificial has to wipe that shorts. And once you take a bit of a pain in a short position, if you can't take any more pain, you have to close up position by buying stock, which makes your short look worse. So I think it's a little bit dangerous, but I can understand why some investors have decided to do it.
The irony is that they have to buy the stock to cover the short, which means they drive the stock up, which is the exact opposite of what they were trying to do. It's really interesting, it's fascinating. I mean, our listeners would know the basics they're on shorting that people borrow stock obviously and they try to profit. Then when the stock they try to drive it down basically, and in doing so they make money when they get the stock back. It's a strange game. It goes back to
the nineteen twenties. We were sort of something of exemption and there wasn't much shorting here for a long life, long time quick history. Jim Chainos, the hedge fund manager, famously short at mcquarie bank back in two oh seven and it was a very successful short. McQuary went from about eighty dollars to seventeen at the time. He made huge enormous amounts of money. That meant people came into
the Australian market. Various people Glaucus came in at one stage, especially on the old the old MFS plantation stock and all that. There's lots of successful ones in the early days. Now people are more sort of attuned to it. I'm using this as a preamble dean to something I suppose more important for people, which is Common Bank. So it's got eight hundred thousand shareholders. I imagine just about everyone listening to this show has direct or indirect holding a
comwell bank. You couldn't avoid it, right because it's just about the biggest stock now it's been short and substantially yeah at the moment, and Phil King, there's some names in the market publicly saying they're shortening it. Of course they tell us they're shortening it because that's part of the game, isn't it that to let it be known you're shorting. But tell me when I say to you that there is now short activity and more shorts than usual.
I think about three billion dollars under line betting against come Web Bank. Come We Bank's about two it's a two hundred and thirteen billion dollar stock, as I say, and it's worth maybe one hundred and thirty dollars. I think at the moment, what do you say when? How should people react when to hear that.
I wouldn't think that'd be too concern. I mean unless they're short, as know something specific within the Commonwealth Bank that is likely do materially impact its business. And I think something like a data breach or you know, like a trader that has blown up some money in a foreign exchange deal or something like that. Betting against the largest most successful bank in Australia because you think it's
a little bit overvalued. I just don't really so much of a potential gain in the short to medium term from doing that, that would be my perspective. We've seen that the stocks are twenty five percent this year, you know, on no real upgrade in earning, just because people walk the yields. They trust it, say to the biggest bank, it's almost the biggest stock on the Australian market. So yeah, certainly,
but a small amount of CBO bony shorter. I don't think his cause for concern would be comfortable holding it because I think it's a very solid business, well run.
And in your end then, and we're kind of leading into your particular sort of zone. I imagine there isn't much shorting at the small cap medium caps end of the market, and if there is, it seriously makes a difference on like a three billion worth of shorts against Combank, you know, petty cash, throw it out the window. But if someone goes in with a big short on a tiny stock, I presume it just cuts it to shreds, or could cut it to shreds.
Yeah, I mean, look, there are structural issues with respect to shortening in Australia. The practical reason is you have to borrow stock from another shareholder. So if I own one hundred shares and sets are, I can lend them to you and you can sell them and at some stage in the future have to buy them back and then give them back to me. That's the way it works.
If I was a big holder in a small stock and someone said I want to borrow your shares to short them, I would probably say no as such because it'd be downward pressure on the price. But you're right that those sort of mid cap stocks where there it is a free float around and companies can borrow and short, it can make a significant difference. And often those businesses if they are in a single business stream and there is something going on. We've seen a number of retailers
struggling recently because of just reduction in your earnings. Then you can see some really significant falls in these businesses and good guars means to be made, and I'll look at other businesses like Blue Skylar was one of the ones a few years ago that got seriously shortened and
ended up surviving, so that was a great trade. But then again we've seen big short reports on things like wise tech that have appear to have merits at the time, and wise Tech against been a fantastic performer in the market.
So it's a great test at its best, like this is actually a great test of a stock if they come out the other side of a short attack. Yeah.
Look absolutely, And in a way I think a number of companies will sort of complain on we shouldn't let shorters release their reports. You know, you're in a public market, you're a public company. People have opinions on what they think your business is worth and how well it's managed in it and its prospects and opportunities and its valuations. So they should be allowed to pass comments and the market will make up its mind. It won't always be right, but that's what a marketplace is.
What we'll do with take short break and we'd come back and we would talk about your layer of the market and what you do. We'll be back in a moment, folks. Hello, welcome back to The Australian's Money Puzzle podcast. I'm James Kirby Well, the editor at The Australian, and this week we're talking to Dean fergie Off Cian Investment Management. He's a fund manager specializes in a special layer of the market, which is small caps and microcaps. That is a completely
different area than many of us are familiar with. I mentioned at the start how I don't have many fund managers on the show because many of them are doing the same thing. Someone I deemed there's something entirely different specializes in small businesses that are listed on the market. That means he's not sitting at a screen doing his quant sort of mathematics. He's actually getting to know them. He's literally going out and sitting in front of these
guys and asking them questions about their business. A lot of these businesses don't have stuff broken research notes that you or I could get, so it's like original research and just conceptually, Dean, it is a game where things go really right or really wrong right. So I think it was the year before last you had a thirty percent return in one year, and then another year you had a minus twenty five percent retime. How do you
steer through that? Is that how it goes? Is that what you have to come to expect your line of work.
I would say the last four or five years have been very unusual in terms of how the market's reacted. Certainly the smaller, and there's been an in incredible amount of nervousness and then high and momentum driving stocks, and so the volatility has been extreme, and it's been I think, in aspects, a really difficult time to invest, because I just don't always seem to know what's going to perapture of the market's attention on what's going to drive stocks.
We looked at just how hyped up stocks went through COVID when everyone was home and everyone was investing and the stock market was going bananas. It's why is this happening on a fundamental basis? Because there was governments throwing money at people I was seeing at home trading the stock market, trading bitcoin and bond stuff online, and then that kind of all blew up, and now it's sort
of startings its way back. So it is hard like I would have normally said to our clients, you know, a bad year, you might expect negative fifteen percent, of
a good year, might expect plus fifteen. Now at the moment, it's sort of can be negative thirty to plus fifty, which is just we don't say to our clients whether sort of investment manage that you put twenty or thirty percent of your money with you might look at allocating five percent of your SIP towards a microcap investor, and if you have a couple good years, you can turn it five percent into ten or fifteen.
And I suppose what you're doing is you're in a way you're combining rather than you the investor, putting that particular investment, which has a I don't know if you're comfortable with the world speculative, but it's riskier than buying a blue chip. Rather than narrowing your better one stock, you actually get a basket of stocks. How many stocks would you hold in the fund, the sea and fund at any given time.
Typically we'd hold kind of around twenty five stocks, right, so it is very diverse. But what we have found, certainly in a couple of years prior, was that when investors decide that they don't want to be in smaller micro cap stocks, everything gets sold and liquidity make the volatility much increased. Shares go down, and then you'll have a period, particularly two years ago, where you had a number of falls posts OVID and there was a hell of a lot of tax law selling as well, which
comes around in June. So it was just a bit of a vicious circle. It's going to feel that things are starting to improve at the moment.
But tell me upselling you picked up when you get it right, when you get a beauty. I think you have a gaming software company that did very well for you.
What's that called again, Playside Studios.
Today Side Studios. How did you pick them?
I'm always interested in people that like invest in businesses that are based in Taiwan, or Belgium or the US. The play Side's actually I'm based just up the road from where I lived in Port Melbourne, and over the last couple of years I've grown from about eighty staff to around three hundred and twenty, so I've kind of seen the growth in my backyard that we're doing contracts
for some very big international customers. So they do programming for metsa part of Facebook and and Netflix and a gaming company called at Blizzard, so that blue chip clients. They were doing some really decent revenues that was profitable, only mildly profitable, but they've just ended up driving some
really really good business decisions. They've bought a kind of a viral name or brand called Dumboes to Die, which has sort of become very successful TikTok and Instagram and with the minor games and so their revenues have almost tripled in the last couple of years, and the business is just going from strength to strength.
And do you know them, like, do they know you? Can you get them on the phone? Is it that sort of relationship?
Yeah? Yeah, Like I know Jerry Sakas really well actually, and Mark Alopolos is one of the board members there. So you know, we were probably a little bit fortunate or lucky to know those people personally before the stock actually listed, and we put a lot of money just pre API. So it's been a really good success story. But you know there's obviously that's out wide often against a lot of the ones that aren't great success stories.
So as someone where it's it's literally you're knowing the company and that's important, and other people don't know the company. So you're on your own making these decisions. Right, It's not like you're with a herd. It's not like there's a whole pack. It's not like you're deciding today to buy Nvidia or you're deciding today to buy Guzmni Goolmez. Right, it's like you're on your own, dude, how important is the people to you and key person risk? How important is that at your level of investing.
It's generally pretty important. Like if you're investing in a company. I mean people say about Guzmini Gans that Steve marxis.
He's the wiz behind the whole thing.
Yeah, just an absolute so energetic and what he's built. Full credit to him. He's built a great business up from scratch over ten years. So you have to invest in the people. But sometimes the risk is that you have a loyalty or an association with them that gets a little bit too close, and when you start seeing things maybe unravel or stock becoming too overvalued, you become just too wedded to the stock to make purely objective decisions.
I think that's just something you can't avoid, but you've got to be aware of as much as you can. But I much prefer to be investing in someone I knew, that I trust, that I respected, rather than I mean, how many people know Gensen why at any video or have to spend much time with Mark Zuckerberg or any of those guys. They just don't, So I would rather make rejective financial decision with someone I can meet and look in the eye and speak to and get answers out of us.
Yes, And what about something I've always wanted to find with fund managers is that a lot of them can be naive. I think about figures. By that, I mean they're very, very dependent on the numbers and less interested in the management. And you're talking about how in the microcraft small capital level the people really really matter. With all due respect to say, come back, Matt Common. He could go tomorrow and they'll find someone ass who's really
good and it's not a crisis. But in a little company that you might be invested in, there's some wiz feed male or female, and the company is built around them and they're instrumental in this and they've got skin in the game. But you have to believe what they tell you. How do you decode between the numbers and their interpretation of the numbers, because they can say to you, hey, we're just about to turn the corner, We're just about
to sign three contracts. They're not lying, right, they don't believe that, But how do you your bullshit detector?
Yeah, I mean that's the case with all those I mean all these people that are running smaller businesses, are very old entrepreneur they're very aggressive, they're often very optimistic, and so sometimes you can get caught up in that and that's fine if they're right. But for me, the results have got to meet the narrative and you can
only have that proven up over time. So it's about saying, Okay, James told me this back in twenty fourteen, I'll write that down, I'll keep notes, and you know, six months later, has that happened? Is the ahead of expectations? Is he behind that kind of thing? So that's what I find is just matching up the results with the previously estimated
time owner. And that's what time in the market gives you, you know, coming back again to you know, like a Guzman versus a Domino's guzmins, it's all promise but no results as yet. Domino's promised a lot early on, delivered a lot, promised more, didn't deliver, and that's what's happened to the share pro So yeah, that's sort of probably my sort of that that just got to be. Don't get too excited as much as you can help, but.
Don't get as excited as that as the CEO all right on the opposite end then things when things got really wrong. And I don't know whether you were in satire or not. I'm sure we have some people who are in it, but it would seem to be this year's example of a company that has absolutely whatever the opfset of shot the lights is, they've crashed basically, haven't they by fifty percent or more? In recite? And they were seen as this wonderful online jewelry company, the sticker
company everyone missed. Well, what happened? Could you tell people what happened there and why? That's how a stock goes wrong sometimes like that.
Look, I don't really know what's happened with said. What I can tell you is I've just never been a believer, and I've always thought there were a lot of red flags. Yes, right, it became wildly successful very quickly.
Did you take a look at a Danny stage?
I did, but I just never got it fundamentally. I never understood why premium you know, ultra premium brands, you know, these are companies selling up polo shits for two thousand dollars would want to be having them discounted through a third party operator of Australia I just I never got why Hermes and Priora and all those other brands would
when I have a middleman doing that. I think at one stage early on, I asked them sort of how many employeers they had, and they said they had thirty, And I just thought, to myself, how is a business with thirty employees doing hundreds of millions of dollars in revenue and you know, tens of million dollars an even dar with thirty employees. I just didn't understand how they were doing it. And then the business was so secreted
they wouldn't really tell you very much. They were used to answer questions all the same time, while founders were selling.
Licks of shares into the market.
Yeah, teens to hundreds of millions of dollars of shares. I mean, it's just red flag on red flag on red flag. But at the same time, the business was doing really well and big firms were in there driving the share price. So I think at one stage it was worth a couple of million dollars. So in the market there's always always dozens of companies you regret not buying, and you've just not got to not let it get
to you. And that was when I just thought, I think at some stage there will be a judgment day on this, and it appears it's coming now. Whether I'm ultimately right or wrong, I don't know. I don't really care.
It looks like it's colmed in. It's down to fifty percent. Yeah in weeks, oh look it.
Yeah. And I think sometimes when you have these big hits that it's really really hard to recover from. Sign I'll do no profitability this quarter after doing ten plus million per quarter of adversary quarter. So if you extrap light that the business will never be profitable again.
Yeah, on that particular layer, it's a very It really is the most tricky end of the market, small caps. And if you've done any investing at all, you would probably know that. In the mid caps, in the blue chip space, you know, you may do well or you may do badly, but it's all within a zone. But in small caps, I mean, you can literally lose ninety percent of your money, or you can have a triple four bag or five bagger. That's the business that Dean
is in. It's a fascinating end of the market and sometimes I imagine it's very helpful to have someone to hold your hand. All right, Well, take short break. We'll be back with some really good questions in a moment. Hello, Welcome back to the Australian's Money Puzzle podcast. James Kirby with Dean Fergie of c An Investment Management, who was a fund manager at the spoon and microcap end of the market, which we haven't actually had a look at
for quite some time. I've got two questions here. I've just narrowed it down to two, Dean, because they are probably the ones that I think we'll get the best answers from you. One one is from Luke and we've been talking about stock splits of late in the Australian market. That the famous stock splitter is CSL. Listeners are into overseas stocks and invariably they are into the same ten overseas stocks that everybody else is into, one of which is in video and they've done a split. So Luke says,
what does the data say on stock splitz? Do they perform or onto performers to the market after a stock split. I'm wondering is there any behavioral psychology involved in investing post split seemingly but not actually lower price. It's a great question. Could you explain to the general listener what a stock split is if you would quickly, and then whether it makes the difference to you when this has happened. Yeah.
Basically they're saying, if you have one hundred shares at one dollar, will turn that into two hundred shares at fifty cents. So the value is still one hundred dollars, but the shares in isolation look like they are half the price. The empirical evidence unequivocally is that that adds some value to the value of looseness. I think the rest it was like three to four percent.
So people think it's cheaper, but it's not cheaper, right.
No, it's not cheaper. There are enough people on the edge that are prepared to buy more shares a lower price. Even tho there's twice as many on issue as beforehand, and we saw that happen. Tesla did a stock split I think a couple of years ago. Main material impact. So the answer is, yes, has put my fundamental finance theory had on that shouldn't make any difference. But you can't argue with the data, and that's the data.
I suppose there is a point at which it gets absurd for a stock is just bensive paras stock.
Yeah. At the micro end're also having the issue when stocks get so bummed out and land up being point two of a percent point two of percent. I'll do a consolidation as well, because people think it two cent share is far too cheap. Let's make it twenty five cents.
Yes, yes, that's very interesting. Yeah, the opposite. Forgotten about the stock consolidation. So look that's the opposite.
Right.
Let's say you have zing zing widgets and as Din says, they're treading at zer point two five cents each, and they say, this looks so bad, everybody. What they do is they said they said to the shareholders, for every ten you've got, you now have one, which is the opposite of the Nvidio thing where they say for everyone you have, you now have ten. So it's a stock can't sell.
Ad Yeah, look, I don't know. I'd suggest it probably goes the other why because the reason they consolidating is the businesses are so bummed out.
Yeah, times are not good as opposed to for one thing, that's for sure. With the stock splits, things have been pretty good when you get them CSL as we say, Tesla we mentioned in video that might not not always. I remember some dot coms did them. That's going back a fair bit, but there.
Was mightbe sabids. Consider doing your stocks plit givns and.
I knows that's right.
That'll worry the shortest.
I know. You don't need many cbahas to have a nice holding of them these days. Question from Rowan The as X seems like it's been pigeonholes, a backwater for legacy Australian businesses who predominantly dig up rocks lend money to buy houses or services. What needs to change to make the ASX a place worth listing on for future focused companies. You must be really interested in this. Are you that that the AX is shrinking, that there is less stocks listed than there was a year ago because
you're under the market. You need lots of IPOs, don't you. I mean you need that feed if you like.
No, it's actually it's a very good question. You look at the ASX composition and it is You've got your big four banks and a bunch of resources companies that dig dirt out of the ground, class a few other telcos, so it's a very a.
Couple of supermarkets and they take off. What percentage of the market do they take up like half more?
Yeah, I think it's more than fifty percent, and then you throw Aldi and ij in there, it's close to eighty. So everything's very, very consolidated in Australia. There's not a lot of competition, you know. I look at you know, and I think it's maybe a bit of a cultural issue in Australia, you know, the tall poppy syndrome. And I say, if you've tried to start up three businesses and failed at them in Australia, regard it as a bit of a failure, whereas if you do that in
the United States, you regard it as a thriving entrepreneur. So, you know, I'd like to see Australia and there's been a lot of press this week about it is just you know, funding more startups give young entrepreneurial people to go and have access to capital so they can make it big and have that confidence that they can, you know, do something special on a global scale. You know, there's been a handful of them, obviously, the marquee ones, the things like can for an after pay that have made
it globally. But I think we need more of that positive investment can do culture that you start funding some of these startups that they can progress through to being commercial businesses that list from exchange and thrive. That would be my underlying view rather than if you're not a legacy bank or a big miner, we don't really want to know about it.
And the companies you do with that that end of the market, the smaller caps do they have to depend on the pulse to be vss aren't interested in the markers are listed, they're not covered by brokers. Most fund managers don't invest in them. So what do they do? Are they internally funded? Is that must be it?
There are still they still do have access to capital in the markets, but it's harder than it used to be. I think what I've seen in the last couple of years is well two things happen. That the companies bunker down, can serve their cash, run the businesses efficiently and start getting growth at the bottom line, which attracts investors. Or in fact they get taken over. And that's what we're seeing a bit at the moment. A number of these
small businesses are getting takeover offers from international companies. Have just seen the value in the market because everything's so bummed out. But I mean, that's not a great outcome of actual for investors. But I'd just like to see more business as listeds of are thriving in Australia rather than just trying to have a safety need of let's get taken over.
Yes, okay, very good, and thanks for that. Roan is actually a real theme in the market, and more so now because of two things. One, our own market is shrinking in terms of number of listings. Very hard to do. An ipo. We've had an IPO just goes Many Gomez, which is all fine, but we all hope it goes okay, because if it doesn't and it disappoints people in the shortter, medium term, there won't be any more IPOs for a
long time of any significance. Everyone gets scared again. The other thing is people used to run off and join Nastack or whatever I was reading this morning. They like about three hundred million in revenue before they let you on to the big US exchanges. Okay, hey, look, thank you very much, Dean, Thank you very much coming out the show. It's really good, really interesting to talk to you. That's Dean Fergie of CN Investment Management small cap fund manager.
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