a new ron brierley plaything?, page-15

dang it…..been active follower of both these. Can't figure upside yet with INE other than possible momentum from followers of the "old bugger", who has lost some shine & perhaps may not have what it takes anymore(?). A bunch of shares thrown into the ring didn't give any clue about direction/strategy..

AYT - had an in depth look at this last year and following it - this was a good performing trust that was started by Bendigo and Adelaide Bank. They tried (but failed)to bring it in house at some cost I think as it was doing pretty well and maybe wanted it all for themselves (or possibly to ring-fence possible liability issues around the MIS schemes). So then they changed tack - whacked the MIS with $12m more impairment in 2010 then went down the path to liquidating and return of capital. (readers will note some sarcasm here - the trust was run by bankers & I suspect the loans were liquidated as they were repaid and probably rolled over / renegotiated back in house - most were pretty good e.g. lending on margin for shares etc. )

Anyway I showed this to a mate in funds industry Oct of last year - then SP 25c & NPV 31c. I figured it was pretty solid, would provide a good divie and with most of the assets planned to be returned I figured on things taking a year and the returns would be :
1.8cdiv = 7.2%
31c capital return = 24%

I figured what would happen was that the 68% write off (value $23m less provision $16m net $7m) they made on the MIS loans would be the kicker, i.e. you’d expect a good portion to turn out OK, which would lever up on the new, reduced, net asset base. Just the sort of “hidden” asset a Brierley type loves.

Additionally AYT has had a party, Ayersland, who have been steadily accumulating at the time, and now up to 19.34% as at today.

So it turned out in the last year it returned
2c div
29c capital return
and SP today with the left over assets is still at 3.5c

All in all lowish risk, good return but wasn’t enough to fire me up.

But I just don’t see where they will get more value out of these loans – there’s not enough info to see how much more value is there – it’s a pure gamble, not something I thought these guys do.

there is another left-of-field possibility of why an asset depleted AYT.AX might attract 2 suitors,but only my musing at the moment....involving legal action.....I will see how it plays out