Large parcels being bought, page-15

Good point, however the comment was for in here as most folks in here are retail mums and dads playing or others playing with their entire life savings through SMSF funds whereas a hedge fund will have a fairly rigorous risk management and exit strategy some even go so far as using derivatives to counter any possible loss and that's not something many mum and dads can or know how to do.

You appear to have a recovery view on BAL whereas I don't have that view yet for some other reasons. The current P/E based on previous financials is now back over 10 and for a very light capital business that depends on brand that is a long time on the back of their strategy has damaged that brand and impacted revenues as a result. It also does not have a high yielding history so even putting aside the P/E ratio the EPS is at risk and the half year results may highlight that and the dividend yield will be impacted accordingly. It's NTA is about to get a beating as well as current inventories will be adjusted down if they haven't managed to reduce stock levels of inventory whether it is raw powder or finished goods. As has been stated before the quick ration is on or below the line and that is also a concern.

Now let's look at its strategy. They made a decision to shift from their historical revenue base of the grey market (diagou) with a very loyal following to a new more formal arrangement through recognised export channels into China. the strategy may have been right but the execution of shifting from one strategy to the other should have been done with as close to zero loss as possible and they could not have got that more wrong. Secondly they only have one revenue stream, being from their suite of infant powder products, and that creates a revenue risk when they either have to change their go-to-market approach for a market segment and they got caught on poor strategy execution. This indicates immaturity or naivety at the exec and or board level and current media noise indicates a mix of both.

Now lets look at external matters. They knew China was changing the regulations in regards certain dairy product and at various summit meetings they stated clearly they wanted to reduce dependency on dairy imports and that is and will continue to be ongoing up to the end of 2018. So BAL needed to review their strategy for the export market and act appropriately to reduce the impact and their geo-presence in SE Asia indicates an attempt at doing that but the growth nor the focus doesn't show up in media, product movements or their Annual Report. China has also clearly indicated for some time it wants to reduce the grey market but putting in place various ecomomic zones and for China that is a huge change as the grey market (daigou) style of trading is imbedded in their society I believe and harks back to the early Silk Road trading era and it is merely a reflection of the inefficencies that exist in more conventional retail trading frameworks that we understand due to massive lack of infrastructure, ease of access, free market business structures and a myriad of other things that China seeks to redress by 2050. BAL chose to reduce the value of the daigou and are paying the penalty.

Then we have legal firms licking their chops at the opportunity of taking a (financial) bite of BAL for some poor governance and disclosure matters and a bunch of cranky shareholders wanting to get control for their own purposes and to cap that one off the regulatory authorities raising their eyebrows and seeking some clarity of matters by the chairman and CEO.

Put all that together and yes for a hedge fund to kick in a few million on a punt of a take-over is fine, for others (retail investors) to follow them blithely with great hunks of their life savings is insanity. Those mum and dads would be better served putting into absolute return managed funds if that what they want to play and even those guys don't often get it right.