l have observed that BBI sp has basically not moved for a year, and well below peak of 1.80.
IFM was on Inside Business with Alan Kohler and they were discussing fees paid on infrastructure funds, and BNB and ALN and MAC are the biggest offenders in this area. Essentially they are using these vehicles to make purchases and printing scrip to pay for it.
Every time the sp moves up they buy and print scrip - this is leveraged but sooner or later one of these assets is going to fall over, and the dist is pivotal in keeping sp up.
So l see that the balance here is too risky for the reward - yield is not enough unless there is cap gain potential. high leverage, huge complexity, and big fees make this vastly different from the Prime Infrastructure that l purchased years ago. My examination of numerous MAC trusts is that they run with them while they work, rip out profits, and when inevitably things go wrong they walk away and shareholders are left holding the baby...................sooner or later something will go wrong.
The infra sector is now vastly more expensive. AIX have stated they have found nothing of value in the past 12 months. The t/o of GAS, which was at $2.18 was sold at $3.10 - way over the $2.60 est value. however l feel that BNB exist only to make deals and will offer scrip to get their fees, but not in our interests.
l will be waiting for the next deal and scrip issuance, with no doubt a cheaper buy in price. Int rates may fall, but that also means a slow economy / recession and that will devalue most of these assets.
LZ
BBI Price at posting:
0.0¢ Sentiment: Buy Disclosure: Not Held
