What killed Blue Sky Alternative Investments? Some mix of tall poppy syndrome and a short-selling thesis, with the company "cleared" by regulators and in no fault at all.At least, that's what venture capital boss and former director Elaine Stead reckoned. On Wednesday, she published a blog post announcing her redundancy from the $479,000 a year job she held at the now-defunct fund manager."Over the past 18 months, I was a part of one of Australia’s largest public company value meltdowns, the result of devastating activist short attacks on our parent company," she wrote. "The real victims of this, are of course our investors and shareholders. They have paid an incredibly high price."They sure have. But Blue Sky doesn't get to dodge responsibility on this.Not every target of a short attack ends up in administration. What made the attack so lethal to Blue Sky was its long investors realising the firm could only survive as long as they were willing to pump cash in. Achieving this was made more difficult by short interest, but the shorts didn't create the vulnerability. Blue Sky's business model, in other words, was a mirage, at the heart of which sat a cash furnace.To keep that furnace fed, it overstated the value of the internally valued assets under its stewardship. Former chief executive Rob Shand claimed it had $1 billion in private equity assets. When almost a year later, the to-that-point highly secretive fund was forced to break out its financials in unprecedented detail, that figure had declined to $558.1 million. And even then, it was puffing its real estate assets to $2 billion by consideration of $763.5 million in undrawn debt.Elaine Stead ran Blue Sky's venture capital exposure. AFRBut Stead feels no guilt about this, personally or on behalf of a business that lost its way. She admitted as much in a podcast interview/therapy session with marketer Jason Dunstone a few weeks back."These poor people have had their wealth destroyed [through] no fault of theirs, and no fault of the company, as ASIC has now cleared us," she told him.ASIC didn't "clear" Blue Sky. ASIC did, a week before the company went into receivership, decide not to take further action on its probe. And in March 2017, it dropped a similar probe into the accounts of Slater and Gordon, so make of that what you will.In Stead's world, it was tall poppy syndrome that made it vulnerable. "First we were the underdog that was championed, then you get to a success level where people try to pull you down."Stead, who registered a corporate vehicle called Human Venture Capital back in June, also told Dunstone that Australian business can be unduly reluctant to hire those with splotches on their resumes. When things get tough, she said, they might appreciate the experience.Of course, learning from experience would require those who fail to possess some capacity for honest appraisal of what went wrong the first time. In Stead's case, that seems some way off.
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