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Soren Aandahl of Glaucus Research and Rob Shand of Blue Sky Alternative Investments David Rowe
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by Joe Aston
As Ron Burgundy once said, "Boy, that escalated quickly; I mean that really got out of hand fast."
You'd forgive the perfectly sculpted troops at Blue Sky Alternative Investments for expressing similar sentiments high above Eagle Street Pier as shares in the management company and its listed investment company Blue Sky Alternatives Access Fund resumed trading on Wednesday. The former closed at $8.47, down 18.6 per cent (comfortably above Bloomberg's earlier price match predictions of $7) and the latter fell 22.6 per cent to 84¢.
It's a notable differential. The LIC, which directly controls many of the assets shortseller Glaucus questions the value of, fell 400 basis points farther than its parent and now trades at a 26 per cent discount to its own net tangible assets of $1.14 per share (as at March 13). So fair to say the market has, for now, made its feelings known.
Chief executive Rob Shand (AKA Doogie Howser, MD) called a press conference for 9am on Wednesday, promising investors – in the dark for a full week - he'd "discuss Blue Sky's response" to Glaucus. But there was zero such discussion. Shand read a prepared statement for 19 minutes, invited listeners to shoot his investor relations team an email, then rang off.
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Elaine Stead, who runs Blue Sky's venture capital arm.
After railing so indignantly against a "foreign short seller" and its "opinion piece [bearing] no semblance to reality", yet having taken so long to respond to it, what a terrible look for Shand to run from questions.
Clearly, the Glaucus analysis contains multiple factual errors. Their materiality to its thesis is limited, but they have considerably undermined the author. Shand is right that nobody operating onshore under an Australian Financial Services Licence could get away with publishing this without copping hellfire from the Australian Securities & Investments Commission, subject to the regulator not being laid up with the common cold that day.
But Blue Sky's rebuttals were equally sickly. Glaucus spent the vast majority of its 67-page paper challenging, in granular detail, the Brisbane asset manager's underlying investments and the veracity of its accounting. It beggars belief that a full week since its shares entered a trading halt, Shand judged that "we do not have time to address each of these in this call," as if he had somewhere better to be.
Instead of killing these purported falsehoods with information, he ran for cover. "We have fiduciary and other legal obligations to our investors that require investment information such as the assets we invest and the value of those assets to be kept confidential. It is therefore simply not possible for someone to find the details of these investments from publicly available information." What kind of response is "top secret" to the allegation "dodgy"?! And what about their fiduciary obligations to the owners of their publicly-traded shares?
Don't forget that a good fortnight before Soren Aandahl detonated his dirty bomb, Blue Sky cancelled (at 48 hours' notice) its results presentation scheduled for March 15 at the Sydney office of house broker Wilsons, and to be fronted by Shand and fellow executive directors Tim Wilson (no relation) and Kim Morison – the latter two having sold shares into the just-completed capital raising. Why?
In other news, another executive director, the esteemed Dr Elaine Stead, has taken her Twitter profile private, to the widespread dismay of every Australian money manager with half a sense of humour. Four weeks ago, she tweeted "I know this is not cool to admit, but I'm so low in professional confidence right now."
One salient fact that doesn't seem yet to have been digested by the capital market is that Blue Sky's chairman John Kain, an Adelaide lawyer, just so happens to be the treasurer of the South Australian division of the Liberal Party and a close ally of factional warlord Christopher Pyne. Kain was elected to the role in July last year.
Of course it is Blue Sky's August 2015 divestment of 57 per cent of portaloo business Viking Rentals to Bayfront Capital, a very modest Adelaide entity with no discernible front door, which has Glaucus hurling brown matter with the most confidence. The $11 million transaction saw Blue Sky book a 134 per cent profit on the festival dunnies play. Bayfront directors Daniel Hill and Richard Green insist they've no connection to Blue Sky (or indeed to Kenny Smyth, the Dalai Lama of waste management). In fairness, Adelaide's just a small place.
BLA Price at posting:
$8.47 Sentiment: None Disclosure: Not Held
