Podcast: Wayne Jones

I spoke with Wayne Jones, co-founder and portfolio manager of the Ganes Focus Value Fund, on the recent travails of Domino’s Pizza Enterprises, including its difficulty getting to critical mass in France and Germany; wrongly betting that the boom in sales during COVID lock-downs signalled a permanent change in consumer habit; and the complexity of managing its global portfolio, especially given the flurry of recent acquisitions in Denmark, Taiwan, Singapore, Cambodia and Malaysia.

This transcript has been lightly edited for clarity:

Graham: Hi everyone! Welcome to the Longriver Podcast. My name is Graham Rhodes, and I'm delighted to welcome today Wayne Jones, co-founder and portfolio manager of the Gaines Focus Value Fund, a Brisbane-based investment manager. Wayne and I connected several years ago when he reached out to me to talk about Domino's Pizza Enterprises, the Australian Master franchisee of the Domino's brand. Wayne, welcome to the podcast. It's great to have you here.

Wayne: Morning Graham, and thanks for having me on your podcast.

Graham: Before we begin, I need to make a quick disclaimer. Nothing we talk about today is financial advice and shouldn't be taken as such. Please do your own research. With that, Wayne, why don't you tell us a bit about yourself?

Wayne: I'm an accountant by background. I've loved the share market for a long time. Like everyone, I bought some shares when I was young and lost money. But then I found Buffet in about 1990 through the John Train book. Started investing, started the fund in 2002. And yeah, that's how it's worked. I also have business interests as well. So when Warren Buffet says he's a better investor because he's a businessman and a better businessman because he's an investor, I totally resonate with that. I get to see things in my businesses that I can apply to investing. Yeah, that's pretty much how it's been going.

We've got a 20-year track record of just shy of 12% per annum, beating the Australian Index. So I'm measured against the ASX 300, and I'm beating that by about two and a half percent over the last 20 years. So yeah, it's been, it's worked out quite well. It's been a lot harder to beat the index than I ever thought when I started. I'll say that 20 years later. But yeah, that's, and my philosophy has evolved a lot over the last 20 years.

When I first started, I was a very valuation-driven investor. I was looking for 50 cent pieces, sort of thing. And as soon as I got to a dollar, I sold them and moved on. These days it's much more about finding founders and holding things for the long term. Domino's squarely fits in that sort of wheelhouse. And it's a fairly concentrated portfolio by most people's standards as well. Yeah.

Graham: I think what strikes me when I look at the Gained Focus portfolio is the collection of gems that you've built there. I'm guessing most people outside of Australia won't have heard of most of these businesses, but they're global franchises, you know, and they're diversified across industries and geographies as well. And when you and I talk about Domino's, I can tell that your knowledge of that company has just compounded really well over time. So I was wondering if you could just share with us how you've built your circle of competence and how you've found this collection of gems.

Wayne: I look at it like doing a jigsaw puzzle. When a fund manager says, "Oh, interest rates are gonna go up, so we're not looking at interest rate-sensitive stocks," they take a macro piece of information and then try to find a stock to fit that macro. I look at it more like a jigsaw puzzle where I've started in the bottom left-hand corner, and Buffet calls it his work of art. You're just looking for another piece of, "Okay, I've got a piece there, where's another piece of this that will fit next to that?" And it's just a compounded process where you build the jigsaw puzzle out. You don't go, "Oh, there's a piece over there. I think that's the sky, that'll go over there." You don't get any economies of scale trying to pick up disparate pieces of knowledge in that sense.

So it means that it limits what I can look at. I had a fund manager the other day calling me up, wanting to talk. He said, "Oh, look, I'll show you my top 10 if you talk to me about these stocks." And he went through his top 10, and I said, "I don't know any of those." Whereas, I don't own as many things, and the knowledge just compounds over the years.

When you are learning a language, the way the language seeps in is that you are relating things that you already know to what you're learning. You don't go and learn a new word that has no relevance to you. You can go and learn that, but you'll forget that word three days later. Whereas, if you learn words that you already know and they relate to the concepts, you build the language layer by layer. You know what I'm saying? There's a theory called comprehensible input that it relates to. Yes. So when I look at comprehensible input, and as I say, I was watching someone doing a jigsaw puzzle and thought, "That's actually the way I learn." Yeah. Adding bits to the bits I know. And that's how I find stocks.

Graham: Yeah, I totally get that. I describe it as adjacencies, so I just happen to learn a little bit here, which leads me to there, which leads me over there. And I could never have told you how this journey would unfold in advance, but it has, and that's where I am. And my circle of competence, it's not really even a circle, it's got a lot of jagged edges, where my interests have taken me and sometimes they connect and the circle expands that way. So let's get into Domino's then, Wayne. I was wondering if you could begin by telling us about the company and your own experience with it.

Wayne: Sure. Okay. So Domino's floated here back in 2005. The business had been around in a couple of various iterations before that, but there was a company here in Brisbane called De Silva's Dial-A-Pizza. Dom May was working for that as a delivery driver. He ended up becoming a franchisee, and then they took over the Domino's brand. They floated the business on the ASX in 2005. They had around 330 stores at that stage, making about 10 million in profit. Then in 2006, they wanted to expand into Europe. When they started, I think the shares were $2.20 at the float price, and the company was valued at about 130 million.

When they announced they were going to expand into Europe, the share price fell because there's this belief in Australia that our domestic companies go offshore to die. So I went and saw Dom, and I said, "What's going on with this European expansion?" And he said, "Look, Wayne, Domino's brand, Domino's is a 50-year-old brand. I'm just taking it off to France. I'm not inventing anything here." So on that basis, I started buying in 2006. And they went along very nicely. 

Being a value investor at the time, by about 2010, the share price had tripled and I thought, "You beauty!" and I sold them. However, that turned out to be a huge mistake because the shares went on to reach about $80 each. Then they started expanding into other countries. They acquired stores in France, Belgium, and the Netherlands, paying around $15 million for 150 stores. In 2014, they expanded into Japan, acquiring a 75% interest. In 2016, they entered the German market, purchasing over 200 stores. And just recently, in 2022, they expanded into Taiwan.

In total, they now own about 13 territories offshore, and their revenue has grown from around 200 million to an estimated 4 billion. However, the past six to twelve months have been challenging for them, as they were a significant beneficiary of the COVID-19 pandemic but not so much anymore.

Graham: Let's go back to the basics, though. Tell us about how the business works. You have Domino's Pizza in America, who then franchises the name and, I guess, the technology to Domino's Pizza Enterprises in Australia, and they, in turn, franchise it to their own franchisees. So can you help us understand a bit about the business and what makes Domino's special?

Wayne: Okay, so yeah, Domino's Pizza Australia has a master franchise agreement, an MFA, with Domino's Pizza in the US. It usually goes for 10 years with 10-year options. After that, they pay a royalty on their network sales to DPZ. And then they collect a royalty from their local franchisees in each territory.

When they started, they were collecting, oh, I'd have to look at my notes again, but I think it was around 7% from the local franchisees and passing 2% of that on to the US. I believe those terms have now changed, and I think it's close to the 4% or 5% that they pass on to DPZ now.

They used to run some company stores at the time, so if they saw a territory they wanted to be in, they would just go and build the store, open it, run it, and then wait for the franchisee to come along, rather than just looking for franchisees to open stores. A typical store costs about $350,000 to $300,000 these days, about $380,000 to build, and typically, the average store would make about $110,000 to $120,000 EBITDA.

Now, that's an average across thousands of stores. Some of the best stores in the group would make way more than that, and then there would be a whole bunch of stores that don't make that. It's a pretty marginal game for them. In Australia, it's actually very dense. Now we've got a pizza store for every 35,000 head of population. It's way less dense than that in the offshore markets.

Graham: I was just going to add, I think one interesting thing that I understand about these people, Jack Cohen and Don Meij, the CEO, they've been long-term investors and participants in the QSR (Quick Service Restaurant) industry, haven't they? Like Jack Cohen built Hungry Jack's in Australia before pivoting into pizza, and Don Meij obviously started his career as a university student delivering pizzas before becoming a franchisee owner and hugely successful in his own right. So I think it's interesting that these guys are quite scrappy, and you know, maybe you can add to this, but it sounds like the Australian pizza market was originally quite competitive, but they led a consolidation of that market.

Wayne: Yes, as you say, Jack Cowen, who's the current chairman of the board and a 25% shareholder in the business, he put $400,000 into Silvio's Pizza in about 1990. And that shareholder is now worth well over a billion dollars. He started off here in Australia with Hungry Jack's, but he also owns the KFC franchises.

When they floated, he had to have his shareholdings in a blind trust because of the competition between KFC and Domino's. At the time, the major player in Australia was Pizza Hut, but Pizza Hut had a dine-in model, while Don and Jack could see that the world was going to move to a takeaway model.

So when they opened stores, they only opened up 100 to 120 square meters with no dine-in capacity at all, whereas Pizza Hut stores were much larger, around 300 to 350 square meters, with room for dining in. It was a very different business model. Both Domino's and Pizza Hut had about 40% market share at that time. However, when Domino's floated, I would estimate that they now have a 70% to 80% market share because another player called Eagle Boys, which had 150 stores, no longer exists.

Don brought a high-volume mentality to the Australian market, and he is taking the same approach to offshore markets—low prices, high volume, and a very marketing-driven business model. Jack Cowan is one of the most underrated success stories in Australian business. He is a Canadian who came to Australia in the early '60s and got involved in the QSR industry. He couldn't invest in Domino's initially due to competition with KFC, so he had to hold his shares in a blind trust.

Domino's CEO, Don Meij, is a charismatic leader who knows the business inside out. He's personally involved in every aspect, even down to the smallest details. I remember once he showed me how to cut a pizza, explaining that doing it a certain way saves three seconds. He understands the ups and downs of the business, and even during a rough patch, he remains optimistic, saying, "You have bad patches, and that's just the way it is."

Graham: One of the things that makes Domino's special, in my opinion, is having a CEO who has the freedom to think long term. Don and Jack have known each other for over 30 years, and Don has generated significant wealth for Jack. This relationship has given Don the freedom to think about how to build the business even better over the next 10 or 20 years.

Wayne: Absolutely. Jack Cowan understands the ups and downs of business. When I spoke to him at the end of last year, he acknowledged that they were going through a tough period, but he said, "I've been around for a long time, and you have bad patches. That's just the way it is."

Graham: Pizza itself is such a versatile concept, isn't it? You start with the dough, and then you can have an endless variety of crusts like Italian thin, cross pan, or stuffed crust. And the range of toppings is almost infinite, right? The menu is incredibly versatile, appealing to a wide range of people. One thing that Domino's excels at is reducing delivery times. Could you tell us more about how they've achieved that?

Wayne: Absolutely. Pizza's key ingredients, flour and water, give Domino's a slightly higher gross profit margin compared to burger chains because there's less protein involved. So they have a slight edge there in terms of profitability.

Another interesting aspect is that everyone likes pizza. I once heard a psychologist talk about it. When you're in a group and discussing dinner options, if someone suggests fish and chips, there might be someone who doesn't like fish, or if someone suggests Indian or Indonesian cuisine, there might be someone who doesn't like spicy food. But no one ever says, "I don't like pizza." It's a universally accepted food that can be customized with different toppings to suit individual preferences. That's the beauty of it—universal acceptance and customization.

Don Meij, Domino's CEO, isn't competing with small artisan pizzerias. He's up against fast-food giants like KFC, Hungry Jack's, and McDonald's. He once told me that their typical customer is a young male who decides on pizza just 15 minutes before eating. It's a spontaneous choice. On the busiest night of the year, the State of Origin football match, people gather at someone's house and enjoy pizzas together. And guess what? The second busiest night is also the State of Origin match. That's the appeal of pizza—it's universal.

Graham: And when they manage to bring down delivery times to below 20 minutes, customer satisfaction skyrockets, leading to a surge in orders, right?

Wayne: Absolutely. Speedy delivery has been crucial. They have always maintained control over their delivery network and never relied on aggregators to deliver their pizzas. Pizzas are ideal for delivery as they stay warm and intact during transportation. Moreover, they introduced the pizza tracker, inspired by Uber's technology, which allows customers to track their pizzas. Everything they have done focuses on enhancing the customer experience. They are even using artificial intelligence to predict customer preferences. If you always order a pepperoni pizza, the moment you log in, they'll start preparing one for you, reducing the overall preparation and delivery time.

Around four or five years ago, they implemented a strategy called "Fortress" where they aimed to split territories and get closer to their customers. So, as you mentioned, once delivery times drop below 18 minutes, customer satisfaction soars.

Graham: Yeah, can we discuss the franchisees for a moment? One of the great advantages of a QSR business like Domino's is its ability to expand using other people's finances. However, the challenge lies in keeping the franchisees motivated, excited, and willing to invest. You've been following the company for almost 20 years. How were they able to convince so many individuals to join the Domino's franchise? Did their success attract more success? Please share your insights.

Wayne: Absolutely. I believe part of the reason lies in Don, a charismatic CEO who started as a pizza delivery person and now leads the company. This success story is not unique in the industry. For instance, David Burgess, who currently oversees Australia, began his career in the business back in the nineties. Andrew Renny, who managed France for several years, is another example.

Domino's offers a clear career path within the company. Once you become a store manager, they provide assistance in financing your own store. They offer a two-year loan at bank rates, which is particularly beneficial for exceptional managers. Rather than approaching a bank for a loan, they can enter the franchise through Domino's support.

The goal is to encourage franchisees to become multi-store owners. Instead of having a group of individual store operators, Domino's aims to have franchisees like Don, who manage 10 to 12 stores. These successful franchisees contribute to the network's growth because they are already earning profits from their existing stores.

The payback period for a store is approximately three years, enabling franchisees to generate income and reinvest in expanding their store network. Domino's can find new franchisees through their employees in existing stores, but they also achieve store growth through existing franchisees who become multi-franchise owners.

Graham: Exactly. It's remarkable to see these franchisees operate like a dedicated army of entrepreneurs, allowing the company to delegate more autonomy and authority to them. They make important business and investment decisions, creating a fantastic ecosystem, don't you think?

Wayne: Absolutely. Consider this: if you come across an Uber driver who delivers random orders from different restaurants, it may seem ordinary. However, if you work for Domino's, you can start as a driver, progress to a manager, acquire your own franchise, and eventually own eight to ten franchises, each worth around $100,000 to $120,000. By the time you're 40, you could be earning a million dollars within Domino's. In contrast, as an Uber driver, there is a defined career path, and if you excel, you can achieve significant success. Many individuals have indeed thrived in that regard. I believe Domino's should emphasize this more in their communication. It sets them apart from other chains, especially for young people.

 Graham: Absolutely, the equity value is substantial. We've discussed the numerous advantages and smart strategies that help Domino's outperform its competitors. They have undeniably excelled in Australia, New Zealand, and the Benelux markets, where they have a dominant presence. However, when they expanded into France, around 2007, it seems they didn't achieve the same level of success. They struggled to gain critical mass and failed to gather enough momentum. Do you have any thoughts on the reasons behind this?

Wayne: Indeed, in 2006, Domino's started with 90 stores in France. They acquired another 90 stores in 2016, bringing the total to 180. Presently, they have nearly 500 stores, adding around 300 stores over the past 10 to 15 years. It's not a poor performance, but it's not outstanding either. As you mentioned, Benelux started with 60 stores and achieved similar growth without acquisitions, building organically. I believe the French culture may not embrace takeaway food as enthusiastically as some other cultures. The French Domino's advertisements focus on personality and unique names for their pizzas rather than straightforward descriptions. This may indicate a cultural difference in embracing takeout food.

Additionally, Germany faced even greater challenges. Despite having 80 million people, making it the fourth-largest pizza-eating market globally, Domino's entered in 2016 with an acquisition of over 200 stores and now has only around 400 stores. They struggled to gain traction, primarily due to advertising and the need for scale. Until they establish a substantial presence, localized advertising is ineffective. I agree that Domino's hasn't achieved the same level of success in these markets as they have in Australia or the Benelux region.

Graham: Could the difference in population density and suburban living between Australia and France or Germany contribute to the varying concentration of stores? This could affect delivery times and create a positive cycle where satisfied customers order more pizza, thereby incentivizing franchisees to open additional stores.

Wayne: That's a valid point. In Australia, approximately 85% of our population resides in capital cities. While we may not have the same density as European capitals, the rest of the country doesn't require store openings in remote areas with low population. In contrast, France has numerous small towns, and I imagine Germany faces a similar situation. So you're correct that achieving the same store density in those regions becomes challenging. As mentioned earlier, Australia boasts approximately one Domino's Pizza store for every 35,000 people, whereas in Germany, it's still one store for over 200,000 people, and France stands at around one store for 130,000 people. Although progress is being made, it's still a considerable difference compared to Australia or the Benelux region, which I believe has reached around 35,000 to 40,000 people per store.

Furthermore, in Germany, they seem to struggle in garnering support from existing store managers and franchisees. In contrast, France boasts the highest number of multi-store franchisees within the group. The average store count in France is over three, while in Germany, it's approximately 2.2. This indicates a lack of buy-in from existing franchisees, suggesting that they might not find it as profitable as their counterparts in Australia or the Benelux region.

Graham: Another change in Germany is that DMP recently acquired the minority interest previously held by Domino's Group in the UK. I wonder if that will have an impact. Perhaps they'll be even more motivated now to make it work.

Wayne: Actually, I didn't mention that earlier. Don also mentioned a similar situation in Japan. We had a minority interest shareholder, a private equity firm, who wouldn't invest any money. They acted as a hindrance to the business for several years. I wonder if Germany will face a similar situation now that they have eliminated that hindrance. With management control but limited capital expenditure, it becomes challenging. Every time you propose investing in something, they just want dividends. This can cause problems. I believe Japan will fare even better now that they have removed the minority shareholder. Hopefully, Germany will follow suit because it has been the biggest disappointment for the company.

Graham: You mentioned the high-volume mentality, which is a defining characteristic of Domino's. Has it been challenging to instill that mentality in new franchisees in Europe?

Wayne: Yes, that's one aspect. Additionally, in the early days, and I'm not sure if it still applies, Domino's franchisees wanted to choose cheaper locations to save on rent. However, Don always emphasized the importance of being on the high street, even if the rent was higher. He believed it was worth it for visibility. Convincing franchisees to take that entrepreneurial risk and invest more in prime locations was a cultural challenge. It seemed to be an issue for quite some time, though I haven't personally been to Germany, so I can't speak to that specifically.

Graham: I guess that's the flip side of having an army of entrepreneurs. Sometimes it can feel like herding cats. Okay, let's provide some context. In your recent shareholder letter, you discussed the challenges Domino's has been facing, despite your admiration and appreciation for the business. So what we're describing here are some of those challenges, right?

Wayne: Yes, and it's also the aftermath of Covid. When people couldn't dine in restaurants, they turned to Domino's Pizza. The company may have been lulled into thinking that this brought in a wave of new customers who would remain loyal, providing a new platform for growth. As a result, they increased store growth and marketing spending. However, when Covid restrictions eased, people preferred dining out or trying different options rather than having pizza at home. The post-Covid boom subsided, especially in Japan, where the development team aggressively opened new stores during the pandemic. Now they are facing the challenge of immature stores that take about three to four years to reach maturity. It will take another two to three years before these stores become profitable. We are currently going through a period of adjustment in Japan, and perhaps to some extent in France as well. We are waiting for these stores to mature, surpass the fixed cost base, and start generating profits again.

Graham: Yes, you can see that in the numbers. In the most recent reported results, the store count increased by around 50% compared to pre-Covid levels. They added approximately 1,500 stores, correct me if I'm wrong, Wayne. However, the revenue remained relatively flat, and profits were down, right?

Wayne: Profits were considerably down. Yes, they added 500 stores in Japan alone in the past two years. It's unrealistic to expect 500 perfect location decisions and 500 exceptional managers. Mistakes are inevitable in such expansion. Additionally, when the rules changed and people started dining out again instead of ordering pizza at home, the numbers suffered in Japan. Europe faced different challenges, including geopolitical situations, energy prices, and customer confidence. It has been a disappointing past two years, despite initial optimism that Domino's had captured the mass market. Just like with online retailing, where people predicted the demise of shopping centers, habits have shifted, and people have returned to shopping centers. The same seems to have happened with Domino's.

Graham: Exactly, it's like a head fake. People thought habits were changing, so investments were made accordingly. But in reality, people still want to go out, socialize, and not rely on pizza as their primary option within 15 minutes of deciding.

Wayne: Indeed, I had a couple of other companies in my portfolio that performed well during Covid, but I knew their success was temporary, and their numbers would eventually decline. I anticipated it. However, with Domino's, I think both the company and Don believed that these customers would continue to choose them. In their last full-year results, they had to acknowledge the need to reassess their Japanese business. They had been spending money under the assumption that these new customers would remain, but their buying habits changed. The company itself was somewhat deceived into thinking that these customers would stay loyal.

Graham: Yeah, it's interesting how the virtuous cycle of Domino's wasn't fully realized this time. We discussed earlier how more stores should lead to reduced delivery times, increased customer satisfaction, and ultimately more orders and revenues. It seems like that cycle didn't quite materialize.

Wayne: Exactly. It's surprising that the change in consumer habits wasn't as permanent as expected.

Graham: It surprised both Domino's and us, I believe.

Wayne: Yes, indeed. Personally, I think it could be attributed to cultural factors. In Japan and possibly in France, people tend to live in smaller houses and prefer going out to eat rather than staying home. Here in Australia, where houses are bigger and more spacious, staying home is not as much of an issue. The shift in habits caught the company off guard, and it surprised me as well.

Graham: Let's also touch upon the impact of inflation on Domino's and its supply contracts. Can you elaborate on that?

 Wayne: Certainly. Inflation has been a significant issue, particularly in Europe due to rising power prices. In Germany, they experienced inflation rates above 20% recently, leading to mature contract clauses being enforced on some supply agreements. For instance, the prices of cardboard boxes for pizza delivery soared. However, instead of passing on all these costs to franchisees, Domino's absorbed the expenses at the company level. This decision aimed to minimize the impact on franchisee profitability, even though other costs such as food supplies and power bills have also increased. This has had a substantial negative impact on the company, especially in Europe, over the past six months.

Graham: I believe passing on the cost increases to consumers through higher prices only worsened the change in habits. If someone was considering going out, they would be even more inclined to do so if the price of a delivered pizza increased by 20%.

Wayne: Apologies, you broke up again. Could you please repeat the question?

Graham: Of course. I was saying that the cost increases and subsequent price increases likely exacerbated the change in habits. If the price of a delivery pizza went up by 20%, those who were already considering going out would be even more motivated to do so.

Wayne: Yes, exactly. They found that their existing customers continued to buy pizzas despite the price increases. They adjusted their prices to account for the cost hikes and also introduced delivery fees, which were previously absent. This was an attempt to recoup the costs and maintain profitability for franchisees. However, it was the marginal new customers who were more price-conscious that abandoned them in large numbers. It's unclear where they went, whether they turned to McDonald's for burgers, started eating at home, or opted for restaurants. But it was primarily these marginal customers who were the first to leave.

Graham: Right. Now, let's discuss the acquisitions made by Domino's. Besides expanding store presence in France, Germany, and Japan, they also ventured into new territories during Covid, such as Denmark, Taiwan, Singapore, Malaysia, and even Cambodia.

Wayne: Yes, Denmark is a bit perplexing. It's a small area with a struggling business that continues to incur losses. I'm not entirely sure why they chose to enter Denmark. However, they made a more favorable acquisition with Taiwan, which had around 160 stores. They paid approximately 80 million for it in 2022. It's a well-managed business and should perform well. The purchase price was about 10 times EBITDA, so it seems they didn't overpay. In the recent announcement, they acquired businesses in Malaysia and Singapore. The previous owner, an entrepreneur, wanted to accelerate growth and needed capital, so he sold to Domino's while staying on to run the business.

Although I hope these acquisitions succeed, they may have come at an inconvenient time, considering the ongoing challenges in Europe and Japan. It will require Don to once again distribute his management team's focus across multiple Asian territories. Additionally, managing 13 territories with different languages and cultures poses its own challenges, particularly in marketing. However, it's worth noting that Taiwan is performing well, and all the acquired businesses are profitable. Malaysia has 240 stores, indicating scale, and Singapore has nearly 40 stores, suggesting similar potential.

While these acquisitions may dilute the management team's ability to address issues in Japan and Europe, they are not problematic businesses in themselves.

Graham: Yeah, one of the key aspects to consider is that different markets have different consumers and businessmen. However, what remains consistent about Domino's Pizza and its team is their high-volume mentality. They excel at conducting business in that manner and focusing on delivering increasing value to customers, incentivizing franchisees, and expanding anywhere. It's interesting to see that this approach has worked in some markets like New Zealand and the Benelux countries, but not in others. Now, I'm curious if they're taking on more than they can handle and if they can replicate their past success. Their track record is somewhat mixed.

Wayne: Yes, they've been doing this for 20 years, and the CEO, Jack Cowin, has remained the same. That gives me confidence in their ability to execute. I don't think Cowin would have approved these acquisitions if he didn't believe in them and if the numbers didn't support it. However, they now need to deliver the results that align with their narrative. In my update, I mentioned that I'm not buying more shares for now. I haven't sold any, but I want to see the numbers match the narrative. These new acquisitions should contribute to profits rather than add to existing problems, as not all acquisitions are successful. They need to prove that they made the right choices with shareholders' money.

Graham: Absolutely. One thing Don does exceptionally well is motivating people.