There was nothing fundamentally wrong with the company's investment capability, it was undone purely by it's non-diverse wholesale investor base in its managed funds.
Put it this way. $1 of cash was combined with a $3 margin loan. The $4 was invested in an Everest Fund and leveraged by the fund 50:50 to give $8 in assets under management.
So when the unit prices drop by 12.5%, the investor's equity is wiped to nil. It's not hard to see how the margin calls quickly add up to cause the dramatic reduction in AUM you see today.
EFG Price at posting:
49.0¢ Sentiment: None Disclosure: Not Held
