Here’s what you need to know today

• Australian government regulator the ACCC is suing Woolworths and Coles alleging the supermarkets mislead customers by claiming they were dropping prices on hundreds of products when they actually increased them. Australian Prime Minister Anthony Albanese called the conduct “completely unacceptable” if true.
  
  

• REA Group are not giving up. The owner of Australia’s RealEstate.com.au has just submitted a third bid for UK property listing platform Rightmove. REA also criticised the Rightmove board saying it was “genuinely disappointed at the lack of engagement by Rightmove’s Board”.
  
  

• Australia’s build-out of renewable energy infrastructure continues to accelerate. Recent analysis from Rystad Energy shows that this year has already eclipsed the previous annual record for new wind, solar and battery projects, and we still have more than a quarter of the year to go.
  
  

• As The Quad leaders meeting wrapped up in Washington DC, Australia, India, Japan and the US all reaffirmed their commitment to the security of the Indo-Pacific (aka pushing back on China’s territorial claims). US President Joe Biden said the quiet part out loud when he was caught on a hot mic saying, “China continues to behave aggressively, testing us all across the region. We believe Xi Jinping is looking to focus on domestic economic challenges and minimise the turbulence in China’s diplomatic relationships, and he’s also looking to buy himself some diplomatic space, in my view, to aggressively pursue China’s interest.”
  
  

• On the sidelines of The Quad meeting, Australian prime minister Anthony Albanese was focused on winning concessions for Australian critical mineral exporters. After a tough year for Australia’s mining industry, it would be a welcome win if he is successful.
  
  

• After a months-long standoff, Elon Musk’s Twitter (X) will comply with Brazilian Supreme Court orders to moderate hate speech on the platform and block certain accounts. This will pave the way to Twitter (X) resuming operations in the country and Brazilian users will once again be able to access the platform.
  
  

• Sri Lanka has a new President. Marxist candidate Anura Kumara Dissanayake won the Presidential election after winning just 3% of the vote in the last election in 2019. Dissanayake ran an anti-elite campaign, particularly critical of the economic recovery since the Sri Lankan economic crisis in 2022.
  
  

• Reports are the UAE is looking to woo chip-making giants Samsung and TSMC to build semiconductor foundries to make AI chips in the Middle East, with as much as US$100 billion put on the table by the UAE’s sovereign wealth fund.

What the…?

Saudi Arabia’s desert city, Neom, was always a pipe dream. If you’re not familiar, relive their wild plans with one of our most listened to episodes of The Dive: Flying taxis and an artificial moon: Saudi Arabia’s $500 billion desert dream.

Well fast forward a few years and the plans are falling apart. Originally, the city was planned to be 105 miles long, now it will just be 1.5 miles. And original population estimates of 1.5 million have been reduced to 300,000. It has got so bad, that even the influencers are giving up on it.

Investing is a lifelong journey

Here’s what you can learn today.

This is an excerpt from our conversation with Lawrence Lam, Managing Director & Founder of Lumenary Investment Management. Listen to the full episode on the Equity Mates Investing podcast.

You've touched on founder-led companies, but can you define them and explain why you believe they make good investments?

Lawrence: At its core, the founder-led strategy is about chefs who eat what they cook, as Warren Buffet would say. These are companies led by founders who have accountability, ownership, and influence over their success or failure. I look for specific indicators, such as equity ownership percentages and management positions. The founder's name on the logo is often significant; it reflects their reputation.

Ideally, you’d want high metrics across all these areas, but finding a great company at a great price is rare. The challenge with many non-founder-led companies is misalignments in equity ownership, management, and the board. It’s not merely a money problem; it’s a behavioural issue. If you invest in bureaucratic non-founder-led companies, you'll struggle long-term due to the lack of alignment with ultimate managers, owners, and directors. Instead, it’s better to invest with a manager who is engaged and focused on the long term.

Alec: Do you have rules of thumb, like a percentage of equity ownership from a founder to consider it a viable investment? Or is it more about the founder’s day-to-day involvement in management?

Lawrence: I look at equity ownership and voting rights. Companies often have Class A and Class B shares, where economic ownership differs from voting rights. I'm looking for significant equity ownership and management positions. However, it’s not just about the absolute figures; it's about their direction. For example, Mark Zuckerberg has been selling down his economic ownership in Facebook since 2020 while maintaining high voting rights—that's a red flag. Similarly, with Richard Branson and Virgin, his ownership has diminished. I focus on the direction of change rather than just static metrics.

Bryce: Is there a minimum equity holding you want to see from founders?

Lawrence: I prefer at least 10 percent. Any less approaches passive status. However, if a founder holds 8 percent and is actively involved as CEO and chair, that's a different scenario than simply holding 10 percent without engagement. It’s about the metrics combined.

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