Reports, page-5

I've gone over the numbers this morning

This is mixed for me. On the one hand I am extremely happy to see audited numbers that the money IS there, that they did make big money off their trading, that the dividend and franking were funded. There is no where to hide in a listed vehicle. Which brings us to the massive discrepancy between NTAs

For me the broader issue is that this has been a financial services play moreso than a pure hedge investment play which is what I thought it was. I personally don't care for Simonds and Hunter Hall investments, although I recognise that there is probably a strategically good reason for that.

On the hedge side, it looks like they had $8m invested, and made $4m from trading that in the HY. Extrapolate that and thats $8m or 100%, which is about where I peg these guys

The issue is the discrepancy. Which is the unlisted investments. They say around $25m, the auditor says $8.3m, which is of course problematic and will result in the share price being culled today before more light is shone and it recovers

The additional release tells us JB Financial is a $6.5m initial investment which represents 35% of that company. JB is purported to be on target for a net profit of $5,7m.

So KPMG say that 35% is worth $6.5m- purely because that is what he paid for it, vs
HML which says it is worth maybe $20m, which is a bit hard to swallow unless he acquired it cheaply.

Now, the name JB Financial/ Broking is clearly another pirate thing- John Bridgeman, which is the name of his fund manager. And I recollect I have read previously that Stuart MacAuliffe is a majority owner of that (fact check??).

So how do you acquire 35% of something on target for $5.6m NPAT for $6.5m? That suggests a valuation of $20m, which is 3 times earnings

HML have valued this at 9-10 times earnings, which for a growing fin services/ fin tech, is quite conservative

If Stuart can demonstrate this is a bona fide business and really will IPO/ in specie then this is fine

Clearly he believes he can because attached to the 4D was all about that IPO. Whether that is pure salesmanship or spelling it out/ slap in the face to KPMG we will know in a few months

Here is the breakdown I see

Cash $3m
Margin with brokers

	Column 1	Column 2
1	Cash	$3m
2	margin with brokers	$6.3m
3	Listed
4	SIO	?
5	Hunter Hall	$2m
6	Other	?
7	Unlisted
8	JB Financial (at purchase amount)	$6.5m
9	Restaurant	$300k
10	Other
11	Derivatives liability	$1.1m
12

All of this is moot because post Jan 1 a lot has happened

SUMMARY
Personally, if they can return 3x on their JB investment that's good. The other listed and unlisted i don't care for. Can't argue they haven't told us they were doing this and this is broader hedge fund play (I just thought that part was bigger) but should not have let it come to this

Could be some deep selling and triggers, people getting nervous today

Buying opportunity to re-top up? Probably, but how cheap can you get them if you wait?

HML need to come out and offer clarity on JB broking, how pumped up are those profit figures, are they really going to IPO it, and why he acquired it so cheaply. The answer to this one might be pretty straight forward seeing he owned a good slice of it himself


Edit: added DYOR of course, this is not a recommendation and so on