After 35 years of stockbroking for some of the biggest houses and investors in Australia and the UK, the Secret Broker is regaling Stockhead readers with his colourful war stories — from the trading floor to the dealer’s desk.
There comes a time (as Neil Young would sing) in every man’s life, where he has left the family home and ventured into the big wide world and then, at some point a romantic partner arrives on the scene and it becomes settling down time.
In those early months, the rules of settling down ‘domestic engagement’ starts to take shape, as you both try and navigate ‘The Love Boat’ towards a blissful and (hopefully) long term relationship.
One of the early rules for me, was when you would hear the whine of a hoover starting up in a distant room, and the noise would start to move nearer and nearer to my ears at an ever increasing decibel.
The remote would be reached for, as the battle for my ears’ attention starts to be lost to the noise of a hoover, which eventually appears around the corner and into the room, followed by it’s blissfully ignorant owner.
Legs were expected to be automatically lifted, all whilst helping to re-arrange tables and chairs at the same time and in the same movement and with a beer still in one hand.
Male multitasking at its very best!
Getting in the mood
In those early months of learning the blissful rules of engagement, this event would always seem to occur, just as you were settling down to watch an all important and life changing game on your oversized ‘impress the boys’ TV.
Then after a bit of tense negotiating, it would be agreed that I will in future, handle the hoovering of all areas downstairs as ’right now it’s not that important’.
Now, I am sure that this is a sneaky way, handed down from mother to daughter, to offload some of the domestic chores to the other half.
For me to get into the hoovering mood, I would always think of Queen’s song ‘I want to break free’ and their video of Freddie, strutting around and doing his stuff, all whilst dressed up as a woman with his goofy mustache.
For those of you who don’t remember the song and the video, here it is (though I don’t think many of you won’t recall Freddie’s moves, as this video has been watched over 500m times).
That’s right.
500m views of a video, which was made in 1984.
In fact Queen’s last album made was in 1995, which was four years after Freddie had died.
But the numbers become even more outstanding than just 500m YouTube views of one video.
The (modern) music business
In 2019, Queen were the fifth largest revenue generating recording artists in the world and in 2018, they were the 6th largest.
According to Spotify, Queen were the 38th most played artists on their streaming platform last year and their song ‘Bohemian Rhapsody’ has been played, wait for it, a total of 1,530,000,000 times.
Queen Productions Ltd is jointly owned in equal shares by the three remaining band members and Freddie’s estate. Last year, the band’s royalties came in at A$77,089,500.
When a song gets played on Spotify, it will attract just over 0.0073c in royalty payments.
So a song played 100,000 times means that a cheque for A$730 is posted out and then, if a song is played over 1,500,000,000 times, the cheque would be for A$10,961,250.
Over my musical listening lifetime, my collection of Queen’s songs has gone from vinyl, to homemade cassette tapes (for the walkman and car stereo), then to CD’s, then to being burnt onto a hard drive and now to being streamed on Spotify.
Everything physical has now long gone and the family subscription of A$18.99 a month covers off five family members, listening to what we want, when we want and all advert free.
If you think about it, this is the first time ever that commercial music attracts a small royalty every time it is played privately at home.
Add this to the royalties received on the radio, in TV shows, on stage productions and live concerts and you have one hell on a recurring income stream.
I wrote about this sometime ago, about how a boozy night out for me, led me to an ‘upside down elephant’ of an investment.
Putting the ‘royal’ in ‘royalties’
The upside down elephant is the logo for the London listed investment fund, Hipgnosis. Their ticker is: SONG.
Hipgnosis currently manages a back catalogue of songs valued at over A$3.7bn, after accumulating various artists’ royalty rights, by buying them out at 15 times their current generating revenues.
This ratio would value Queen’s back catalogue at A$1.156bn alone and even though he passed away in 1991, Freddie’s share would now be worth A$289m.
So, if you have any budding artists in the family, try and steer them away from the paint brushes and more towards the piano in the corner of the room.
I have a good friend, who paints the most beautiful paintings and he is always complaining to me that I never buy any of his works. I kindly tell him that, if he ever becomes ill and is carted off in an ambulance, call me on the journey to the hospital.
You see, I have to point out to him that his works are worth more to me if he is dead, rather than alive.
And that’s the problem with living artists who paint. They only get paid once and no ongoing fees.
They are trying to change this with offerings of Non Fungible Tokens (NFT’s) on the blockchain, where in the event paintings do get sold on, a royalty of 15% (based on the new valuation) is automatically passed back to the original artist, out of the sale proceeds.
Whilst this proved popular a few months ago, the market has now fallen away on a lack of interest.
Hipgnosis is now a FTSE 250 company and still a favorite of mine, as they currently yield about 4% and their revenue continues to grow (even in these COVID times), when film production and stage shows have been frozen in lock down.
Bad Bunny (emphasis on bad)
Now, like me, you are probably thinking, who is the number one streamed artist on Spotify?
None other than a chap called Bad Bunny.
He is a Latino rapper and his songs were streamed a total of 8.3 billion times in 2020. And to be honest I have never heard of him.
I listened to his most popular song and it sounded like a load of old tosh to me.
I can tell you, if Mrs. Broker likes any of his songs and tells me to get ‘more with the musical times’ than Freddie when I’m doing the hoovering, then my days of sharing the domestic chores are well and truly over.
If you don’t believe me, here is a small snippet of a song from Bad Bunny.
Try doing the hoovering to this:
(Source: https://en.wikipedia.org/wiki/Bad_Bunny)
Give me Freddie and an upside down elephant any day!
The Secret Broker can be found on Twitter here @SecretBrokerAU or on email at thesecretbroker@stockhead.com.au.
Feel free to contact him with your best stock tips and ideas.