abn amro recommendation, page-5

I love MBL but I have great fears like some others about the underperformance of everything they have set up...and even then when you consider the global market and all the new deals coming out that they could get...they are failing time and time again to close them...

I had some good friends there and they are all overseas now...and in reality I think MBL is doing well overseas to get itself into new deals but the heart of the operation and its funds here are not performing because you cannot get the talent you had before that they now exported...I track the performance of 25 of MBL's new vehicles for fees...

MBL is a complex thing...but I agree with most analysts...until you fix the backend and start to close deals its going nowhere...

http://www.smh.com.au/news/business/production-falls-at-fee-factory/2006/06/29/1151174330062.html

Production falls at Fee Factory

June 30, 2006
Page 1 of 2 | Single page

You don't pay premium prices for ordinary unleaded performance, not even Macquarie.

THE end of the financial year is on us and it looks like the Fee Factory might not be cleaning up as comprehensively as it has previously.

Macquarie Bank traditionally pulls a motza in performance fees but Goldies analysts suggest that won't be the case this year, as is apparent in the table.

"To date, all of Macquarie Bank's infrastructure funds have underperformed their respective benchmarks and we therefore do not expect Macquarie Bank to earn any performance fees in the current period," Goldman's analysts say.

Ouch. But there's more.

"Aside from the financial impact, we believe the significant underperformance of Macquarie Bank's listed investment vehicles has longer term consequences for Macquarie's ability to rely on listed funds as a source of growth for its burgeoning equity under management," Goldies says.

"Whilst Macquarie has responded to this underperformance by focusing more on the unlisted market, the returns profile of these funds tends to be inferior to their listed counterparts, requiring Macquarie to dedicate a greater amount of its own capital for longer periods of time."

Then the clincher.

"With the focus on unlisted funds increasing, we believe Macquarie Bank is effectively becoming a private equity company which has a dramatically lower returns profile than that of a pure asset manager."

Seems a little less sheen on the silver donut. Still room for those million-dollar bonuses?
What's doing?

Nary a sound from private equity mob Affinity about its intentions for clothing and footwear company Colorado Group since it took a 14 per cent stake last week, leaving a few investors a bit toey.

Credit Suisse analyst Andrew McLennan says the takeover speculation isn't helping Colorado's structural problems.

"Colorado Group is at a crucial juncture," McLennan said, adding he's concerned about the need for substantial investment in the management team, restructuring of distribution and the need for larger brands to be repositioned and consolidated.

The talk of an Affinity buyout may have boosted the short-term share price (up about 16 per cent after its 30 per cent slump in the year before Affinity's raid) but it's a threat to addressing bigger problems.

"While the ultimate intentions of Affinity remain elusive, we believe it is appropriate to remove any discount to fair value from the share price and valuation but highlight that there remains a risk that the share price may revert to previous levels if takeover conjecture is proven to be unfounded," McLennan said.

What a difference a minerals boom makes.

While east-coast car parts retailer Repco continues to slump (off yet another 5 per cent yesterday and 30 per cent this week) in the wake of its third profit warning for the financial year last week, Perth car dealer Automotive Holdings raised its profit guidance as the west coast boom rolls on.

Automotive Holdings, an automotive retail and logistics group that operates commercial vehicle dealerships throughout Perth, raised its guidance for its first full year net profit by more than 15 per cent to "at least" $19.5 million from $16.9 million.

No worries about high petrol prices and interest rates across the Nullarbor.

As for Repco, there's a management vacuum until new boss Graeme Yeomans starts next week, with nobody saying boo.

The stock looks likely to be crowned the financial year's worst performer today, down about 60 per cent.
Badly tuned

Car radio and mobile phone retailer Strathfield Group is desperate to show it's getting things back into the black.

Earlier this week, Strathfield said it was going to report a small pre-tax profit for the second half compared with last year's second half loss of more than $11 million.

Just how small? The company put out another statement yesterday saying pre-tax second half profit is "expected to be in the range of $10,000 to $500,000".

Still, after posting a first quarter loss of $5.6 million and a second quarter profit of $2.1 million, our quick abacus work still puts that as a full year after tax result somewhere south of break-even. (At its half-year results, Strathfield said depreciation and amortisation alone run at $3.7 million per year. It's also paying 10 per cent interest on a $5 million convertible note).

As recently as March, auditors Deloitte Touche Tohmatsu said: "There remains significant uncertainty whether the consolidated entity will be able to continue as a going concern."

Might explain why Strathfield said earlier this week that it was borrowing more than $3 million in a rather unusual loan from two of its directors.

Strathfield's accumulated losses since listing have now topped $60 million. Boss Gerard Frack didn't return calls.
A pretty Pebble

Although Rio Tinto's still sitting on the sidelines of the big-league North American mining takeover festival, it did dip into Alaska in a smaller fashion yesterday.

The miner took a 10 per cent stake in Canadian explorer Northern Dynasty Minerals for $C87.5 million ($107 million) and has bagsed rights to half of future share placements.

The prize is Northern Dynasty's world-class Pebble copper-gold-molybdenum project in Alaska, which is undergoing a feasibility study. Pebble is expected to cost $US2 billion ($2.75 billion) to develop and won't begin open cut production until at least 2013.

It should have a 35-year mine life with annual production of 550,000 pounds of copper, 600,000 ounces of gold and 20 million pounds of molybdenum planned.