Steve Johnson from The Value Fund (a spin-off of Intelligent...

Steve Johnson from The Value Fund (a spin-off of Intelligent Investor) posted an article on his blog, comparing AJA & GJT. It is good piece of research.

http://blog.intelligentinvestor.com.au/bristlemouth/why-galileo-lies-in-astros-dust/

The point he made is the debt structure (non-recourse vs recourse) caused the huge difference between the two companies. However, I believe the gap also exists in the other capability of the management:

1. AJA was able to off-load properties at a premium to book value consistently, while no transactions from GJT. Although selling down portfolio in the low end of the cycle is not ideal, it is still a better option compared to the horrific deal that GJT is suffering from.
2. GJT got the lifeline from an European rescuer (with a knife...), which indicates that GJT couldn't get ANY deal from Japanese lenders. I suspect GJT's management lacks "connections" in the Japanese business community, which seems to be a strength of Eric Lucas.

Anyway, GJT does look cheap, but I would feel much safer owning AJA shares. Even the leverage is high, I still believe that if the debt doesn't kill you, it will make you rich. :)

Cheers and DYOR.

Jacky