Wolf of Wall Street Sales (Study Notes)

Hello. Hey, how are you? Nice to meet you. Nice for taking the meeting. Thanks for coming in. Great. Having a good day? So far so good. Yeah. So far so good. Sorry to do this. I've only got about 20 minutes. No problem. I'll get it. Hopefully we can get to the front of the thing. Perfect. So real quick, I mean, I guess the way I usually work is I kind of want to know about you, your company, what kind of challenges you're facing right now, what's right in your business, what's wrong in your business. And based on that, what we do here at LMK is we kind of tailor-make our strategies to directly suit our clients' needs. We have three areas of excellence we focus on. Capital markets, hedging strategies, commodities hedging, finance for your business. B, investment banking, meaning if you're looking to go public, raise any money for specific projects, both foreign and domestic. And lastly, of course, asset management, your land, your trucks, and trying to maximize your value there. But again, that's just broad areas. I looked at each client kind of as a unique situation and try to kind of tailor that in. So if you had to say one thing right now in your business that was kind of like giving you the most problem, what would it be? In terms of growth, like, you know, stop you from growing as fast as you could. It's probably uncertainty around China. You know, we're a business that's really got its history very much rooted in Australia. We've had some experience in Singapore and Hong Kong. Right, different markets. China, yeah. China's really unknown to us. And, you know, that does keep me awake at night a little bit. In the sense of that, obviously, to fill the demand, you have to kind of grow a certain amount or produce a certain amount of crop or milk, and then you're not sure if they're going to buy or not. So there's an issue of, you know, overproduction versus making sure they're going to buy at the end of the day. Is that what it is? Yeah, does that end, I guess, the question of, you know, setting up facilities in China. Will we go down that path or whether we can continue to do it out of Australia? You know, I believe we do need to set up some facilities in China. That requires capital. You have nothing there right now at all? No. Okay. And have you investigated opening up anything at all in China right now? I mean, are we still in the early stages of it? No, look, it's been something I've been meaning to talk to my banker about. We've kind of discussed around the edges before, but, you know, we haven't really talked about it yet. Let me ask you a question. I was doing some more research on the industry, and one of the things that stuck out is that, in fact, there's still a massive growth potential for you here domestically in Australia, right? Yeah, yeah. You're really scratching the surface domestically. You have a good market share, but obviously the market's grown here pretty much, you know, 15%, 16% here. There's still a lot in there. So are you also kind of building the current market share as well? Absolutely. You know, we've certainly got strong customer relationships here in Australia. I think there's a lot of opportunities for growth here. I think we've got a unique opportunity in China because of our accreditation standards. Right. The Chinese are very important. Which is easy to get. No, I think we might be the only Australian company that has it. So, you know, we could go very comfortably just focusing on Australia, and that might be the best path. I'm not sure. But the China opportunity is just dangling out there, I guess. Right. I know. It's kind of like I do, not just, obviously, the New York guys. I mean, pretty much every business is high-tech, low-tech. Yeah. Everyone's kind of – China's like this kind of, you know, this 900-pound grill on every conversation. And the idea – I think that's the question, the challenge everyone faces is, no, we know we've got to go there. There's a massive market there. But how do we get there in a way which is basically risk-averse, but allows us to kind of test the waters, and if we hit it, to kind of expand quickly and capitalise? Yeah, yeah, you're right. And the risk thing for us is really important. I mean, while we've got some ambitious plans, you know, we don't want to take up too much risk. Right. No, it makes sense. In terms of you, where do you fit in with the company? In terms of what's your – like, you know, what's your kind of division of responsibility? Do you manage the entire company, or how does it work? Yeah, so I'm the major shareholder of the company, and I manage the operations day-to-day. So I'm very hands-on on the operational side of the company. And how about the brothers, the guys that are – those are the two? Yeah, yeah, one of my brothers is quite involved, but probably not quite as involved as I am. He looks after some more of the marketing and sales elements. Right. And then my father still has an active role in an advisory sense, and a minor shareholder. Right. But it's, you know, mainly operationally run by myself. Got it. And how about the actual – do you have a CFO that reports to you, or? We have a business manager, and, you know, he looks after a lot of finances, a lot of the accounting and that sort of thing. So I guess he's like a CFO. Right. So now you're basically fully integrated in the sense that you're on farms, right? You're actually growing this stuff, processing it, and then shipping it out. That's right. This China ore distributed domestically? Yep. And would your plan be if you were going to – in China, let's talk about China for a second, because I personally think that's a massive market. I'm a big believer in the Chinese story going forward, okay? So would you be looking to develop the products here, and then ship them there raw and process them in China, or actually have them land in China and grow them in China? The hard thing with organic products, especially in the dairy industry, is that because we can't use as many preservatives, it's harder to keep them for longer. They perish quicker. Right. So we have a disadvantage, I guess, if we don't – I believe if we don't move some of our facilities to China. And we'd certainly be able to get fresher products, and we are about fresh products, by having some facilities over there. But then there's – you know, we're not familiar with that land. It would take a bit of time to get up the experience curve over there. Right. So, you know, there are some natural advantages to being there, but there's also some disadvantages. Right. Let me ask you a question. Have you guys considered actually trying to partner up with someone that's purchased an existing small producer of organics in China and kind of then use your technology? This way you have sort of a stable foothold already there, and then you can grow their business versus trying to start from scratch at all? Look, I've certainly played with the idea. I'm very cautious about it, just because we're a family business. We build a lot on trust. Organics companies don't tend to collaborate all that well. They tend to kind of keep a lot of their secrets to themselves. But, I mean, I'm not close to the idea, but I just have some reservations about that. I mean, the reason I say it is because, you know, one of the things that we do, we specialize in, is, you know, we're – as a global merchant banker, we have strategic alliances all over the world, and especially in China. Yeah. So one of the things we could do is actually introduce you to kind of various people along every element of the supply chain, whether it's simply purchasing an organic, you know, concern, or simply, you know, getting you in touch with the right people for trucking, right people for any part of production, and, of course, distribution. So kind of to help you there, you know, just to kind of put you in touch with the right people operationally. If that would help you kind of make a decision, at least give you more of a knowledge base to what you really need to do to get yourself into China without, you know, kind of stumbling and falling on your face. Look, I mean, networks like that will obviously be useful. Right. This idea of getting into a partnership with another company, I'm not sure. I mean, is that the sort of thing you think – No, I mean, listen, here's what I do. I'm a believer in what you weigh all your options, right? I totally get that, like, there's a certain culture that made you guys what you are, right? And one of the great risks about China is it's a very different culture, okay? So there's two issues that you face when you go to China. Number one, okay, you have to say, well, is my culture going to play well in that country? Because some people just work here, don't work well in China, right? And the other thing is, yes, my culture, in fact, will work well in China, but there's some sort of, like, disconnect between what you – the way you think you're saying it to them and the way they're perceiving it. So it's important, whatever you do, what I would recommend, whether you want to control every last ounce of the supply chain, you need to have local Chinese people there who know the market, who know the people, who know the kind of the social demeanor there to make sure that the message that has been so successful here in Australia gets out in China. Does that make sense to you? Yeah, it does. What do you think would be some of the cultural barriers for a business like mine moving into China? I think that, number one, you know, it used to be, like, that China had this whole big, like, you know, the sage white man, you know, we want to know what the white man is doing. That was, you know, a big thing when they felt like they were behind. Now there's been, like, almost a tip where they feel like they're the emerging dominant power and almost like they are the wise ones and they know it all. So yet they, in truth, know, of course, they don't know everything, right? So there's a sort of cultural gap of you being able to educate them but at the same time making them think it's their own idea. Like, giving them the facts so they come to the conclusion you wanted them to come to in the first place. And it doesn't happen so much, it doesn't do much with, like, production or marketing, okay? And as you guys know, you're not just producers, you're marketers, okay? So you've got kind of both elements of that equation wrapped up. Now, again, like, obviously, since I'm a banker, I'm not in the organic food business, but one thing I do know is there are certain core distinctions that run through every industry, whether it's your industry, whether it's computers, you know, whether you're selling automobiles, okay? So what we try to do, again, we have a client like you. We don't look at things, you know, just, you know, hey, they're organic, so that's separate. It's something sort of global, like, for instance, Mary, Don, you know, right? One of the things we did for Mary is we were able to save her a tremendous amount of money domestically and overseas on our commodities hedging, okay, and on some of our currency swaps that she was doing. And the reason we did that is because we understand there are certain peculiarities to her industry, but at the same time, there were also some commonalities that apply to all industries. So we're able to come up with a model that directly suited her needs that would address. She has similar, not exact, similar concerns in the sense that she produces too, a little bit different, in a different industry, but she's producing, not sure what she's going to sell. So it's important that she actually has access to her supply chain, but it's not, doesn't end up stuck with two months of inventory, right, which is even worse for you because it's perishable, right? But I guess you need to kind of ultra-adjust in time inventory strategies, right, to drive yourself to market. So I think for you, if I, like, listen, I know over the long term we can do a lot of stuff for you, but I think I can best serve you by just starting off doing one thing for you, okay? And then let me just start and try to do one thing for you really, really well. Like, I don't want to interfere what you do with Titan. I'm sure they're great and everything. I know them. They're a very good, reputable company. I respect them. But we specify in something a little bit different. And one of the first things I'd love to try is take a look at exactly what you're doing with your commodities, the hedging strategies and the currency stuff, with the stuff you're doing both in Singapore, Hong Kong, and in China, okay? And I want to get in there right away, straight away, and I want to go in there and give me a shot to beat it. Let me work on it. Give me 30 days. I'll do my trade small. Start small. Don't stop what you're doing. Put a small amount of your trades through me and then analyze in 30 days the percentage gain. And if I'm even half as good as I say I am, believe me, you'll be moving all your business over to me after that. That sound fair enough? Well, I mean, I'm not particularly worried about where we're at in that space. I mean, what particularly do you want to be doing? Well, let me ask you a question. First of all, does the overall idea in terms of, you know, of us advising you, not just in one area but all areas, make sense to you that it could be an asset over the long run? Does that appeal to you? Well, I guess it certainly does. It just depends on, you know, what it's going to cost us. Right. No, exactly. And, of course, cost always in the end comes down to it. But it's not just so much cost. It's also the value you get from the cost, right? One of the things we pride ourselves on, okay, just, you know, as a company, and the true beauty of what we do is that every transaction that we do with you, okay, we're looking always at two things. A, to keep costs down as much as possible. Anything, whether it's brokerage, hedging, helping you purchase an asset you didn't think you could afford, helping you expand into a market, going public perhaps, okay, getting a bridge loan in a foreign market. Of course, we always look at cost, okay? But we also look at the three to five years down the road, okay? Because sometimes the cheapest money is not the best money. So, of course, we'll lay both options out to you. I'll say, listen, you can do it this way and save yourself, you know, three basis points. Or you can maybe pay two basis points more, but you'll be in a launch with the top people in China, okay, that'll be more flexible with terms, and also allow you to grow, or facilitate you to grow to where exactly. This is not going to be a $50 million company forever. Obviously, it's going to be a $250 million company. So, we look at both the short-term and long-term. Does that make sense to you? Do you like that problem? I mean, look, in theory, it sounds good. But, I mean, you know, at the end of the day, it sounds like you deal with a lot of big companies. And, you know, we're not a huge company. You know, it's a pretty simple business model, actually. So, I'm just wondering if it's a little bit too much and too complex for us. Right, right. We've run it pretty successfully in the past by following a pretty simple model. Right. So, you know, I'm just not sure. Let me say this. I hear what you're saying. And I like to pride myself on being a guy that takes medium-sized companies and turns them into big companies. And that's really how we make our money. You know, all big companies once were medium-sized. Yeah. Once small companies, right? Yeah. And the same dynamics that apply to a business at your size. It's no different for a $50 million or a $500 million company. Yeah. It's a different way of thinking. And I think in some levels, and listen, I know. That's why I said to you, I'm not looking to interfere with relationships that you have right now. Because I think that a smart business person, you guys are obviously smart. You know what you do well, right? To throw the baby out of the backboard would be ridiculous. That's why if I came in saying, fire this guy, fire him, I don't want that. Okay? What I want to be is the guy. I don't want to be the guy that took you from $0 to $50 million. I have those people. I want to be the guy that takes you from $50 to $500 million. Okay? In that area, I know I can be a major asset to you. Because we can do for you besides, you know, anyone trading commodities. And that's over the long term in the way of taking you public. Find you bond financing and notes that you need for, you know, overseas transactions. We can be an asset to your company over the long term. And I just personally just, you know, I'll do that myself. You know, I pride myself on, you know, holding my client's hands every step of the way. You know, I deal, as you know from Mary, only on referral. You know, I'm not a cold calling machine. Okay? It's all long term relationships. And I know this. I'm going to be judged basically on one trade. If I say, hey, let's do some business together. Give me a shot for 30 days and I'm wrong and I stink. You'll fire me as your, what are you, we'll never speak again. We'll shake hands, you know, hey, you know, it didn't work and that's that. Right? This is, you know, my commission on 30 days of business and this is, if I stood with the firm and the government, I can't think why not for lunch in Australia. I'm not getting rich. Okay? But I know this. If you see what I could do for you in one month, just small, we're not going to get rich or poor, but the percentage gain. Okay? You'll see I have a broker that was willing to work for you, hard a few more diligently than anyone ever has. And all I ask is that then down the road when I really kind of get into your business and see, you know, the bigger opportunities, you give me a shot bigger and better down the road. That's not fair enough. What do you think is possible? 30 days? I mean, how much can you, can you do in a month? Not a question of money. It's a question of percentage savings. In other words, listen, let me ask you a question right now. How much are you probably hedging on a monthly basis right now? I'm not sure on a monthly basis. We're about, about 77% of our debt is unhedged. Okay. So I think that means about 20, 22 million of our overall debt is hedged. 22 million is hedged. Okay. And how much do you think you're hedging? Right now? I'm not sure on a monthly basis. We're about, about 77% of our debt is unhedged. Okay. I'm not sure on a monthly basis. We're about 77% of our debt is unhedged. Okay. So I think that means about 20, 22 million of our overall debt is hedged. 22 million is hedged. Oh, annually? Yeah. Okay. So you have about 20 million that's, so you said how much is unhedged? About 70% is hedged? No, unhedged. Unhedged? Yeah. Okay. So about 20, 22 million is hedged? Yes, that's correct. Okay, great. Okay. So you have about 35 or 40 million unhedged, correct? No, we've got about 150 million that's unhedged. No, we've got it in terms of our debt. What's your revenue? What's our revenue? I'm talking the revenue. Right. So this year just gone, 27 million. Okay, right. 27.5 million, year just gone. So here's the thing. I look at that just so you know. Okay. One of the things that a lot of people overlook is that the day-to-day foreign currency exchanges that occur to what you're doing in China and when it comes back to here and vice versa, Singapore, Hong Kong. The biggest foreign currency exchanges that are happening in the world right now, and I don't want to say fraud, but let's say the biggest way for you to get clipped as a businessman is in the foreign currency markets. It's the wild west there, okay? And what we do, okay, is we are actually, we'll sit you with cost of money. In other words, we don't mark up our trades, we're going to basically buy and sell your money for you on the exchange in real time, okay, and the amount of money that saves you percentage-wise is staggering. Now, again, I'm not saying you've got to make 10 million extra on your bottom line, but what it will show you on a very riskless way allows me to show you that when you say, hey, I'm doing it this way right now and this guy came in with a very small transaction and show me I could save literally 30 or 40% more annually on this amount of money, that just shows you I'm a guy that knows what I'm doing, and after that, once I kind of earn your trust, then let's kind of talk bigger and better where I could really save you bigger money down the road. We could use that as a benchmark for future business, all I'm asking for is this. One shot, okay, let me just run 30 days edging your money, show you how you can kind of navigate through the currency markets here in a more effective, elegant way, and believe you'll be very, very impressed. Yeah, look, I mean, it sounds promising. I guess I'm just a little bit cautious. I don't know anything about your company. I don't know if you know this, but the farming industry is built very heavily on trust and loyalty. I mean, the banking relationship I have now has been built up over many years, plus legacy through the family. A lot of farmers get involved in banks, new banks and new organizations, and they're with them through the good times, and then they finish them during the bad times, so I don't know anything about you guys. Let me ask you a question, honestly. If I'd been your broker for the last three or four years, making you guys money on a consistent basis, I mean, let's say I ran a couple years of hedging strategies for you, did some bond offerings for you, kind of just did everything exactly right, you probably wouldn't be saying, let me think about it, right? You'd say, Jordan, just take over the hedging. Am I right about that? Look, if we had a relationship, yeah. Of course. I get that. You don't know me, and I don't have the track record. So let me just reintroduce myself to you a little bit and tell you about myself, what I stand for. Again, my name is Jordan Belfort, and I've been with LMK for about six years now, okay? And I'm one of the top salesmen at the company, and I am a salesman, by the way. I pride myself on actually going out there and going after the people that I know I can help, okay? But one thing I do do is I put my clients' needs above everything else, and I work literally round-the-clock tirelessly. I'm not an analyst, I'm not an investment banker, okay? But I literally will go at it. Like I'm a researcher of these people, and I will find the absolute best person in my stable. Again, I'd say the three areas of excellence, right? Banking, finance, and asset management, right? I will literally go and comb 3,500 employees to find the exact person that knows your business well, the exact program that best fits your needs, and I keep it simple. I'm here to not just put you into any program, but to hold your stand hand every step of the way, guide you in, guide you out, okay, have a phone call away. And as far as LMK goes, again, long-term relationships, that's all we can build them. We're, I think, the oldest or second oldest merchant bank in all of Australia, in business since 1886. So obviously, we didn't get to where we are by burning our clients, okay? And we didn't get there by working on 15 or 30-day trials here, okay? And then saying, see you later. Obviously, you know, we have earned our client's trust by being right, by being diligent, by not risking their money, okay? And by also being there when there is a problem. So again, all I'm asking for is this, I mean, let me put it this way, what's the worst that can happen? Let's just say that I'm wrong, right? Let's say you give me a month, okay, and we hedge, you know, we run $5 to $10 billion through a hedging strategy here, okay? And let's say at the end of the day, you don't make any more money, let's say you lose one basis point down the line, I'm wrong, you say, Jordan, you know, you're just full of it, it didn't work, and you fire me, is that going to put you in the poor house as a company, honestly? Look, probably not. I mean, I have to see the numbers, but yeah. Yeah, it's not going to kill you, right? Right. And on the upside, let's say I am right, which I know I am, okay, and I can show you a 25% return. And you're like, Jesus Christ, this guy actually saved me, you know, $27,000 on a small amount of money. It's not going to make you the richest company in Australia, right? Right. Not going to make you rich, not going to make you poor, but it will do. And it will serve as a benchmark for future business. And then you'll know you have a guy that knows what he's doing, okay? And from there, we can work bigger and better down the road. So all I'm asking for, again, is this, one shot, give me 30 days, okay, if I'm wrong, you fire me as your broker, okay? But if I'm right, not only am I going to want you to do bigger and better, I'll put some referrals too, because that's my business truly for us. Does that sound fair enough? Give me a shot. So look, it sounds interesting. Here's my concern. Okay. So we get into business, who else am I going to be dealing with? You're a big company. Am I going to always get you each time? I mean, you're going to bring another product specialist. I don't feel trusted. I know what it's like with bigger banks. That's why we prefer to keep with a small relationship bank. I don't want that hassle. I totally get that. And by the way, just so you know, LMK is interesting for one sense, but we are a big bank, but we're not an ANZ or an NAB where it's so ridiculous and impersonal, okay? Where it's like, you're dealing with a thousand faces and the customers, you call the recording up and like press one. Oh yeah. We can call you between 12 and 1201. Right? It's not that, right? We're a merchant bank and it's a big difference, which is more of like a family banking model, which is why I really believe it fits so well with your business model and the organics, right? Because we are an older line. We start off in fact in the cattle. We actually start off in commodities. That's why we built our business around commodities and from there we went into banking as a result of the hedging. So that's why we're the number one company about hedging and commodities, which is why I think it's such a perfect fit, but in terms of just, you know, in terms of me, you'll only be dealing with me and if you have, if there's someone else I want you to meet, they'll be with me. In other words, if I say I found a guy who's like has a new algorithm that's going to allow us to make an extra seven basis points a month on the term, I'm not going to say, Hey, you guys come with me. I'll have him come with me or we can have dinner once, whatever it might be, but it's not going to be 30 faces. There's going to be me and only someone else if I believe that person, okay, can help with the conversation. If you only want to meet me, Hey, you know, we can just be the two of us. But again, all I'm asking for is this, I'm asking to get married right now. Okay. I believe in starting small because I know I can prove myself to you. Now if I was here saying to you, I want all your business fire tight and do this, do that, right. You'd say, get the fuck out of here. Right. Okay. But I'm not saying that. What I'm saying is that I'm confident if you just see a little bit of what I could do, we can use that as a benchmark to go forward. So again, I'm asking for one shot, 30 days and believe me, you're going to be inclined to life. Sound fair enough? Perfect. So let's open up the account now. There we go. Okay. Okay. That's a classic straight line sale.