Here’s what you need to know today

• OpenAI have officially closed their latest funding round, raising $6.6 billion at a $157 billion valuation. Notable investors include Microsoft, Nvidia and Softbank. As part of the raise, OpenAI is converting to a for-profit company and is considering granting Sam Altman up to 7% equity (which would be worth almost $11 billion).
  
  

• Tensions in the Middle East continue rising. As Israel considers its retaliation to Iran’s missile attack, America has said it would not support an attack on Iran’s nuclear sites. Meanwhile, Israel announced it had lost eight soldiers after a day of heavy fighting in southern Lebanon and separately banned the UN secretary-general Antonio Guterres from entering Israel.
  
  

• The US port strike continues. President Joe Biden urged port operators to increase their offer of a 50% wage increase to striking workers. The workers are asking for an increase of 80% and protection against their jobs being automated.
  
  

• Australian casino giant Star Entertainment has had a shocking run, with shares down 54% since the start of August. The company’s market value today is $730 million, however, investment bank Barrenjoey believes Star’s flagship Sydney casino is now worth just $8 million.
  
  

• Australia’s renewable energy generation keeps breaking records. This week, for 30 minutes between 11:30am and 12pm on Tuesday, 74% of the east coast’s electricity came from renewable sources, the highest it has ever been.
  
  

• Australia may have a new food conglomerate as tinned fruit giant SPC prepares a three-way merger with Original Juice Company and Nature One Dairy. Together, the Australian companies would generate more than $400 million in annual revenue.

What the…?

Recent findings published in the journal Nature Ecology & Evolution has captured video of octopuses and fish working together to hunt prey. As co-author of the paper, Eduardo Sampaio, explained, “There’s a sign that some cognition is occurring here, for sure.”

This is just the latest evidence that octopus have far more sophisticated intelligence that we first thought.

Investing is a lifelong journey

Here’s what you can learn today.

This is an excerpt from our conversation with Emma Fisher on Equity Mates Investing Podcast titled Expert: Emma Fisher – Mineral Resources, PWR Holdings & Investor Psychology (Apple | Spotify)

Question: Why are you interested in Mineral Resources?

So we did a screen for businesses that are generating a return on capital greater than 50% for the last decade (This would have been back in 2017). And it's part of this list, which really surprised us because it's a mining services company. So most mining services companies make good returns one year in ten when commodity prices are high. And the other nine years they're blowing up. So that intrigued me. 

I kind of wanted to understand why it was in this list. And the heart of the model is the key difference. It’s a mining service company at its heart. But the difference is for most mining services companies, they would work on a CapEx project. So if BHP is bringing up a new mine, they'll put it out to tender. These mining services companies will win the project, they'll build the mine and then they're done. So there's money to be made when there's work around and there's no money to be made when there's not. 

Mineral resources business is production linked, so they do crushing for the major miners who produce everyday. So it doesn't matter what the commodity price is doing, because they're crushing. So they're crushing ore and they own all of the market. 

They own the part of the mines they run, it's their staff on site. So they've got very, very long tenures and they're able to make really good returns every single day out of this mining services business. 

The other thing that's a little bit different about them is the guy that runs it and founded it - Chris Ellison, he's got a very, very good track record of basically being an awesome deal maker, incredible value creator. 

What they do is they buy an asset counter-cyclical, when that commodity is not necessarily in favour. They get their foot on the asset and then they bring up the mine because they've got in this mining services business, they've got people that know how to build and run mines. Then they lock in the life of mine mining services contract to themselves, which is great because you're never going to kick yourself off a project. 

So you're backing that. But it's not going to be a smooth ride. It's going to be very volatile. 

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 ¹ Past performance not indicative of future performance. As of August 2024, net of fees.

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