RAK 1.00! Being AI!
"What on earth is going on in the House of Commons"
I want to dedicate today’s newsletter to my dog, Rupert, who passed away today while running at the cape in Oamaru. 2013-2024.
NZ
RAK — $1.00 as of writing (!)— if deal goes ahead that is significant upside ($1.70). Do you have a strong stomach? Every time I message Nick Laurent(RAK IR) I get the same copy and paste response back. It reminds me of Connor Roy’s catchphrase…"Connor Roy was interested in politics from a very young age”. Nevermind that — think the likelihoods of a deal is still high, so throwing my cash behind this (you’ll recall we had a couple of other good arbs — Hipgnosis, which is being sold to Blackstone for 104p per share after a bidding war, and Activision-Blizzard, which was sold to Microsoft. We also had one painful failed arb — Manchester United, after those Glazers went with Jimbo Ratcliffe).
I do wonder if Reg Co or RAK should say something here as clearly there is very little market confidence in the NBIO going through at this point. Be greedy when others are fearful…?
I was amused by the NZX’s recent release re: Being AI — most amusing is the assertion that they are an AI company (see below). Call me old fashioned but I define a company by where they make revenue and profit — for BAI, that is a school, a filing storage company and a physical mailing company. Not sure where artificial intelligence feeds into this.
I am extremely suspicious of anyone hawking AI. I spent some time training ChatGPT to make a version of me — Eden GPT. It writes like a lobotomised version of myself, and doesn’t capture the essence at all. It didn’t change in spite of how much I fed into it (all the posts I’ve written here; an unfinished novel, etc). There is still such a gap between AI and humanity. I suspect, strongly, that anyone who praises AI’s writing capabilities has never read a book. It’s just not there — it’s a pallid facsimile of humanity. I’m also extremely suspicious of the tech bros like Sam Altman who hawk this technology — what do they know of humanity, of soul, of art? I echo Miyazaki —
Anyway — point is, Being AI’s revenue is derived from some very non AI businesses. Unsure why the NZX’s email said nothing about that. I guess — maybe — it’s not very exciting to say “Being AI owns a mailing company and a school on the North Shore”.
I think a better way of describing Being AI is New Zealand’s very own (and very short lived) meme stock. It didn’t last. It was no GameStop! I’m not sure if even Being AI would describe themselves as an AI company — more of a company that acquires legacy businesses and “optimises” them with AI. Quoting chair Sean Joyce from the Herald:
“Our model is to acquire more and more legacy businesses - with a view to optimising them with a combination of old-school investment banking initiatives for improving the underlying business and growing them through complementary acquisitions and then optimising their performance through the implementation of artificial intelligence and advanced technologies. [To] just have an AI solution independently of business is too narrow a business model.”
OK then!
NZX — speaking of, Paul McBeth writes a good piece here on the trials and tribulations of our bourse. He nails the biggest issue facing it — it’s much easier to sell your business (Wet and Forget or whatever) to PE or a cash buyer, rather than try and list it. You know — that’s an issue — especially when most funds here will only touch our “large” caps. No liquidity, few buyers, you know the deal…
Blackwell — An absolutely wild read from Rebecca on Blackwell Global, the shell company chaired by Sean Joyce (Joyce is also the chair of Being AI). Involves Everton, the football club, Michael Chai, former director of Blackwell, an alleged $100mn fraud in China and more. Link. Changing its name to RTO. As per Sean Joyce and the other directors:
The news of Chai’s arrest finally hit NZ in April after NZ stock exchange-listed (NZX) Blackwell Global Holdings Limited informed the market, with independent directors Sean Joyce and Craig Alexander voicing their extreme disappointment “to learn of this development at such late notice”.
IFT — Passed $11.00 briefly y’day. A good friend of mine and I always say - why don’t we get give up on stocks and just buy Infratil and go on holiday.
NZ preference list — RAK, MFT, IFT; ARV, OCA.
Aus
We still like Duratec (DUR) around $1.00, as First Sentier continues to sell off its +$600mn small cap fund. Materially undervalued … 11x earnings! -35% for the year. The three founders of DUR put their own money into founding the company and are extremely competent owner-operators. Intelligent capital allocators, skin in the game — all the things we love.
BHP — Mining giant seeks South African sweetheart; will offer $39bn. Target is Anglo-American. Undervalues the co — Anglo was valued at +$50bn not that long ago. Noting Elliot has taken a stake in the co. Don’t see BHP getting it at this price but perhaps a bidding war — Glencore and Rio could put in their own bids.