From a Well known share advisory back in March 2018: Blue Sky Alternative (BLA) $10.40 / -9.01%; This was the target of a ‘big short’ piece from a research house today with Glaucus Research suggesting the stock is actually worth <$2.66 a share, a fraction of its current value – nothing like an inflammatory note to get the mkt excited.
Firstly, the short thesis on BLA is not new with discussion of this floating around the market for some time. The fact that it’s now getting airtime through a reasonably well recognised research firm clearly adds to the strength and thus the market’s reaction. The report highlights a few things that really, we should already know, however here is our take.
This is an extremely complicated company with more than 80 different funds underneath it’s umbrella , a huge variety of assets, and a complex mechanism of collecting fees between them. Simply put, we find this hard to reconcile which I guess is the crux of the research report. To dumb things down though, I’ve always thought of an asset manager simply in the context of rising asset prices and cheap money. If the cost of capital is low and asset prices are rising, then all in good, BUT if the cost of capital rises which coincides with declining asset values, then things can unravel. Over the past few years the drivers of BLA earnings (cheap money and rising asset prices) have been incredibly strong, however it's our belief that we're at a turning point, and for that reason we have no interest in BLA, irrespective of whether or not todays research piece is accurate or not.
BLA Price at posting:
$2.59 Sentiment: None Disclosure: Not Held
