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BLA, BLUE SKY ALTERNATIVE INVESTMENTS LIMITED
Mags
post Posted: Dec 30 2016, 10:04 AM
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Thanks nipper, I don't hold or follow blue sky: But have a mate bang on about how good it is. I generally find the model repulsive as a listed entity. When I read those debt levels you have in that article, my suspicions are confirmed. A risky, risky play for a retail investor, and another IPO sure to be missing from the ASX in 10 years.

Oh well, a fool and their money are easily parted.

 
nipper
post Posted: Dec 29 2016, 04:10 PM
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QUOTE
A number of private equity businesses operated by Blue Sky Alternative Investments, one of the country's only publicly listed alternative asset fund managers, have "very stretched" balance sheets and are highly leveraged, according to a confidential research note circulated by Diogenes Research. The note, published weeks after The Australian revealed the financial pressure on a number of Blue Sky's investments, is based on private information obtained by Diogenes which casts doubts over the sustainability of the fund manager's business model.

Blue Sky investments analysed by Diogenes include retailer Lenard's Chicken, which it suggests is almost entirely funded by debt, while debt owed by the Foundation Early Learning business is approaching 10 times its annual earnings. Blue Sky invested $20 million in Foundation Early Learning last year.

Diogenes, an independent equities research firm established by former Goldman Sachs JBWere partners Matt Cook and David Roberts, declined to comment on whether the note was prepared on behalf of a client. But its publication comes at a time of growing scrutiny of Blue Sky's business model, with short interest from hedge funds standing at about 3 per cent of the company's total securities and with the share price falling from $8.46 in August to $7.05 on Friday.

Blue Sky managing director Robert Shand rejected the Diogenes note, and said it had "a wide range of factual inaccuracies" and included "statements that are inconsistent with their own report". Mr Shand disputed details of the "very stretched" leverage, and said both Foundation Early Learning and Wild Breads, another business owned by Blue Sky, had debts in total of less than two times their annual earnings.

The Diogenes note, which runs over a dozen pages, is highly critical of other aspects of the Blue Sky business, including its reliance on so-called Level 3 Assets, which are typically illiquid and difficult to value using market measures. The report notes that valuation techniques have changed for assets owned by Blue Sky over the years, including for the company's e-commerce business aCommerce, which this year will be valued using future earnings rather than sales, which is how it was valued last year.

Mr Shand's remuneration was also criticised, with Diogenes noting he had been issued 1.3 million share options, for which the primary vesting condition was that funds under management would grow to $5 billion by 2019.

Blue Sky, a manager of venture capital and private equity money and a real estate investor with apartment and student accommodation businesses, has grown rapidly, with assets under management rising from $200m four years ago to $2.4 billion.

In recent days Blue Sky sold Water Utilities Australia to Colonial First State Global Asset Management, a rare trade in that market.

"Management is clearly incentivised to focus on growing (funds under management)," the note reads. "Overall, we think the risk/reward is poor over the medium term given concerns about the sustainability of (Blue Sky)'s business model."

Mr Shand said the incentive structure "was specifically designed to align management incentives with shareholder outcomes and includes several hurdles to ensure management will only benefit if shareholders do". Four "reputable broking researchers" — Morgans, Shaw & Partners, Canaccord Genuity and Ord Minnett — have far more bullish views of the business, and "we would therefore recommend a high degree of caution in relying on (Diogenes') conclusions", Mr Shand said..
The Australian

http://www.theaustralian.com.au/business/p...985694e3eb443d6



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time."
- Dr John Hussman

“If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions.” ― Michel de Montaigne

Said 'Thanks' for this post: Mags  PeterH  
 
nipper
post Posted: Dec 29 2016, 04:10 PM
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Posts: 2,968
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QUOTE
A number of private equity businesses operated by Blue Sky Alternative Investments, one of the country’s only publicly listed alternative asset fund managers, have “very stretched” balance sheets and are highly leveraged, according to a confidential research note circulated by Diogenes Research.The note, published weeks after The Australian revealed the financial pressure on a number of Blue Sky’s investments, is based on private information obtained by Diogenes which casts doubts over the sustainability of the fund manager’s business model.

Blue Sky investments analysed by Diogenes include retailer Lenard’s Chicken, which it suggests is almost entirely funded by debt, while debt owed by the Foundation Early Learning business is approaching 10 times its annual earnings. Blue Sky invested $20 million in Foundation Early Learning last year.

Diogenes, an independent equities research firm established by former Goldman Sachs JB­Were partners Matt Cook and David Roberts, declined to comment on whether the note was prepared on behalf of a client. But its publication comes at a time of growing scrutiny of Blue Sky’s business model, with short interest from hedge funds standing at about 3 per cent of the company’s total securities and with the share price falling from $8.46 in August to $7.05 on Friday.

Blue Sky managing director Robert Shand rejected the Diogenes note, and said it had “a wide range of factual inaccuracies” and included “statements that are inconsistent with their own report”. Mr Shand disputed details of the “very stretched” leverage, and said both Foundation Early Learning and Wild Breads, another business owned by Blue Sky, had debts in total of less than two times their annual earnings.

The Diogenes note, which runs over a dozen pages, is highly critical of other aspects of the Blue Sky business, including its reliance on so-called Level 3 Assets, which are typically illiquid and difficult to value using market measures.

The report notes that valuation techniques have changed for assets owned by Blue Sky over the years, including for the company’s e-commerce business aCommerce, which this year will be valued using future earnings rather than sales, which is how it was valued last year.

Mr Shand’s remuneration was also criticised, with Diogenes noting he had been issued 1.3 million share options, for which the primary vesting condition was that funds under management would grow to $5 billion by 2019.

Blue Sky, a manager of venture capital and private equity money and a real estate investor with apartment and student accommodation businesses, has grown rapidly, with assets under management rising from $200m four years ago to $2.4 billion.

In recent days Blue Sky sold Water Utilities Australia to Colonial First State Global Asset Management, a rare trade in that market.

“Management is clearly incentivised to focus on growing (funds under management),” the note reads. “Overall, we think the risk/reward is poor over the medium term given concerns about the sustainability of (Blue Sky)’s business model.”

Mr Shand said the incentive structure “was specifically designed to align management incentives with shareholder outcomes and includes several hurdles to ensure management will only benefit if shareholders do”. Four “reputable broking researchers” — Morgans, Shaw & Partners, Canaccord Genuity and Ord Minnett — have far more bullish views of the business, and “we would therefore recommend a high degree of caution in relying on (Diogenes’) conclusions”, Mr Shand said..
The Australian

http://www.theaustralian.com.au/business/p...985694e3eb443d6






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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time."
- Dr John Hussman

“If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions.” ― Michel de Montaigne
 
nipper
post Posted: Dec 1 2016, 11:53 AM
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BLA is holding its annual investor briefing in Brisbane this morning, providing an update on its portfolio of businesses and its outlook.

QUOTE
Blue Sky, part venture capital fund, part private equity and real estate investor, has delivered rapid growth, with assets under management rising from $200 million to $2.4 billion in four years. [The briefing] could prove a colourful ­affair — Blue Sky has assembled a high-powered panel including Harvard University entrepreneurship head Josh Lerner and former Young Australian of the Year Jessica Watson.

But underneath Blue Sky's success — its share price has risen 174 per cent from $2.78 at the start of last year to $7.62 — is a more complicated landscape of un­evenly performing investments — some flourishing, others sluggish, others, such as Shoes of Prey, much worse.
- and so it is (colourful) - down about 6% as the day progresses. Some vultures are gathering:
QUOTE
....A copy of Blue Sky's most recent accounts, annotated by a hedge fund that does not have a position against the company, and reviewed by The Australian, show concerns about how the fund manager values assets, particularly as performance fees are often based on rising valuations.

Short-selling has increased from negligible in March to about 3 per cent of Blue Sky's shares last week. Red flags pointed to by short-sellers include the one-year increase in receivables from $15.6m to $54.4m, likely performance and management fees from funds yet to be paid......

In August, Ord Minnett's Nicholas McGarrigle downgraded Blue Sky to hold, noting that while it was "well positioned in the growing Australian alternative investment sector" he found "limited valuation headroom".

"We run 60 assets — you show me a stockbroker or a fund ­manager who gets 60 out of 60 calls right and I'll show you a liar," CEO Rob Shand said..

{oh well, the 10 Bag tag is elusive}



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time."
- Dr John Hussman

“If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions.” ― Michel de Montaigne
 
nipper
post Posted: Nov 18 2016, 08:37 AM
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In Reply To: nipper's post @ Oct 13 2016, 09:11 AM

Our business grew at approximately 50% in FY16
• Underlying NPAT: Up 57% from $10.4 million to $16.3 million
• Fee-earning AUM: Up 56% from $1.35 billion to $2.1 billion at 30 June 2016
• Underlying revenue: Up 44% from $43.6 million to $62.8 million
• EBITDA margin: Grew from 35.5% in FY15 to 39.0% in FY16 (and moving towards 50% as business scales)
• AUM to NPAT conversion: Conversion of ~1.0% of average fee-earning AUM to NPAT expected to continue
• Cash flow conversion: Improved from 59% in FY15 to 71% in FY16 as our business matures

Investment returns over 10 years are 16.7% p.a. net of fees
• Realised 29 investments since inception, with our realised track record superior to our overall track record
• Comprehensive review of returns since inception undertaken by Ernst & Young at the end of FY16
• Our track record is a key source of competitive advantage and is difficult to replicate

Fee-earning AUM grew to $2.4 billion at the end of Q1 FY17 (up from $2.1 billion at 30 June 2016)
• Fee-earning AUM to exceed $3 billion by the end of FY17
• Targeting $5 billion in fee-earning AUM by end of FY19and $10 billion shortly thereafter

AUM from all investor segments has grown
• Institutional investors: Have attracted capital from 10 institutions (both domestic and offshore)
• Wholesale/sophisticated investors: This network remains our core and continues to grow rapidly
• Retail investors: Excess demand for recent BAF raise reflects strong demand for alternatives from retail investors

FY17 earnings guidance: anticipate underlying FY17 NPAT of $24-26 million



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time."
- Dr John Hussman

“If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions.” ― Michel de Montaigne

Said 'Thanks' for this post: mullokintyre  
 
nipper
post Posted: Oct 13 2016, 09:11 AM
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In Reply To: nipper's post @ Oct 3 2016, 01:11 PM

Only if you're interested, BLA presentation out is worth a look to see a pathway for part of the allocated investment dollar.


Returns, returns, returns: Continue to deliver great returns (and access to Alternatives) to all investors
• Continue to lead the Alternatives market in Australia: Cement our position as Australia’s leading diversified alternative asset manager
• Growth to $10b+ in AUM (would still represent <2% of the Alternatives market)
• Trusted partner to Tier 1 institutions: Will expand partnerships with institutional investors, while always retaining diverse sources of capital
• International expansion: Spearheaded by North American business (incl. Cove), may move into other geographies selectively (esp. with a distribution focus)
• Asset class expansion: May expand into other Alternatives classes (but won’t go outside Alternatives)



--------------------
"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time."
- Dr John Hussman

“If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions.” ― Michel de Montaigne
 


nipper
post Posted: Oct 3 2016, 01:11 PM
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Blue Sky share price since IPO @ $1.00 and the emergence of shorting activity



--------------------
"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time."
- Dr John Hussman

“If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions.” ― Michel de Montaigne
 
nipper
post Posted: Aug 20 2016, 12:15 PM
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In Reply To: nipper's post @ Aug 19 2016, 10:28 AM

QUOTE
Mark Sowerby is stepping down from the Blue Sky Alternative Investments business he founded in 2006 to focus on his family and charitable works after the company posted a record net profit of $10.5 million. Robert Shand, a former Bain & Co consultant who joined the business in 2010 and has been chief operating officer since 2013, will take over from September 30.

Mr Sowerby, 45, built the Brisbane-based business from start-up to Australia's only listed funds manager focused on alternative assets, with $2.1bn of funds focused on private equity, real estate, infrastructure and other real assets, up from $1.35bn a year earlier.

Yesterday he paid credit to Mr Shand for the result, noting that for the past two years he has been pulling back from running the business to focus on building its presence in New York and train for a famous swim across the English Channel last year. "I haven't been running the business day to day for the past 18 months and I have to say it has been doing remarkably well without me,'' Mr Sowerby said.

Investors were shocked, however, marking the shares down 10 per cent after they briefly touched a record high of $8.99 at the open.

Shaw and Partners analyst Martin Crabb said Mr Sowerby had been the face of the business since it was founded, in a similar way to Platinum founder Kerr &shy;Nielson, and it would take investors time to accept his departure.

"Those investors who put in for the $67 million raising in May probably got a bit of a surprise,'' Mr Crabb said. "But the company has got pretty good bench strength.''

Mr Shand, who spent his early career consulting to the private equity industry on deals in London, Tokyo, Sydney and Johannesburg, said Blue Sky was still "undeniably a fast-growing company" and ready to deploy $62m in cash on the balance sheet for co-investments to facilitate deals for its funds.

Fee-earning funds under management rose 55 per cent to $2.1bn — hitting the milestone a year ahead of a prediction made in 2012 when the company floated — and the illiquid nature of 88 per cent of those funds provided a guaranteed revenue stream for the company.

Total income rose 44 per cent to $62.8m. Performance fees more than doubled from $8.8m to $18.7m, with Mr Crabb predicting the results would become less lumpy as the company continued to grow.

Investors were shocked, however .... especially the buyer of the line of 50,000 that went on after 3pm on Thursday, at $8.69. One could say Caveat emptor, but there is a lingering odour, with the news being announced at 9.50am next morning



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time."
- Dr John Hussman

“If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions.” ― Michel de Montaigne
 
nipper
post Posted: Aug 19 2016, 10:28 AM
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In Reply To: nipper's post @ Aug 19 2016, 09:51 AM

and then the founder and CEO goes and resigns
QUOTE
Whilst Mark Sowerby, as founder and the initial visionary of the business, has driven much of the early strategy and growth of the business, it is the Blue Sky team, and in particular our leadership team or 'Partners Group', which has driven growth over the last three years
market doesn't like it



--------------------
"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time."
- Dr John Hussman

“If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions.” ― Michel de Montaigne
 
nipper
post Posted: Aug 19 2016, 09:51 AM
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Posts: 2,968
Thanks: 1126


QUOTE
Blue Sky Alternative Investments Limited (ASX: BLA) announced its results for the year ending 30 June 2016, reporting an underlying Net Profit After Tax of $16.3 million (up 57 per cent from $10.4 million in FY15) and a 44 per cent increase in revenue to $63.0 million (up from $43.6 million).

Fee earning Assets Under Management (AUM) at 30 June 2016 grew to $2.1 billion, up from $1.35 billion at 30 June 2015. As expected, a number of investments in private equity and private real estate were successfully exited throughout the year.
Since inception in July 2006, Blue Sky has generated an internal rate of return across its funds of 16.7 per cent per annum net of fees to the end of June 2016.

Managing director Mark Sowerby said the combination of a ten-year investment track record across the four major alternative asset classes, increased investor engagement across retail, wholesale and institutional clients, and continued strong deal flow would lead to further growth in fee earning AUM in FY17 and beyond.

"Reaching $2 billion in AUM this year was an important milestone for us as a business. The fact that most of this is invested in illiquid funds differentiates us from other local fund managers and provides an incredibly solid foundation for our future growth," Mr Sowerby said. "The Australian funds management industry has $2.6 trillion in funds under management today and this is anticipated to grow to $4.1 trillion over the next five years. By 2021, alternative assets are expected to be the largest investment class in Australia."

Blue Sky is Australia's only listed fund manager focused on a range of diversified alternative investments, including private equity and venture capital, real assets (primarily water and agriculture), private real estate and hedge funds.
The company will pay a fully franked dividend of 16 cents per share to shareholders (record date: 2 September 2016; payment date: 16 September 2016).

and this:
QUOTE
In the year we joined the ASX (2012) there were approximately 100 listings; of those companies, Blue Sky has the highest Total Shareholder Return (TSR) of more than 788%. Of the top 300 companies on the ASX, we have delivered the fourth highest TSR over this period behind Magellan, Dominoes and Syrah Resources.
I could also put this in fast growing small caps thread, but there needs to be a quantum leap in activity for next stage. while AUM grew from $1.35 to $2.1 Bill, note that Macquarie grew AUM by $54bill last year!!



--------------------
"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time."
- Dr John Hussman

“If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions.” ― Michel de Montaigne
 
 


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