Whats next for Blue Sky?, page-31

The problem is that we know that BLA have been heavily reliant on their ability to originate and fund new investment opportunities to continue to generate one-off fees and build on their recurring management fee base. The bits and pieces of news over the last week suggest that they are struggling to raise capital for new opportunities and have had to shelve a couple of deals as a result. You would have thought that their brand name is probably irreparably damaged at this point which makes it all even harder to raise new capital.

We also know that their recurring management fee income is at present not sufficient to meet their ongoing expenses, so they are not turning a profit once the "revenue" on performance fees from unrealised assets is excluded (as it always should have been).

Therefore, my prediction for this business is in the absence of a white knight rescuing them is a long slow decline over the next few years as they manage out their existing portfolio of assets.

Of course, there's the possibility of a faster end if any of the following happen:
- They run out of cash because they don't cut their operating costs hard enough
- They get hit with massive class action lawsuits that mean they can't pay their debts as and when they fall due
- They get partly or fully acquired at a value that a third party would be willing to pay (which at a guess would be less than their current share price)

So to answer the question, all I will say is that there is more value in their shares now they are $1.50 than there was at $14. But it still doesn't make them a good investment.