To simplify the problem with Blue Sky investments are their valuations.
You see in a bull market which we have no-one cares, because everyone accepts the value BLA puts on their investments and these are checked by Ernst & Young who are looking over their shoulder.
The problem comes when there is a market downturn and analysts and the investing public start asking questions like "well how do you arrive at these valuations and can you cash them up for that figure today or in a months time". The honest answer is no we can't. So then the question is well what are the valuations now worth if you can't cash them up. In some cases it can take many years to unwind some investments.
Similar type companies to Blue Sky go out of their way to ensure analysts are fully briefed on valuations and why investments have been made, Blue Sky do not and are secretive.
Infratil in New Zealand is a similar type company to Blue Sky and they go out of there way supplying information to analysts.
Babcock & Brown again had similar type investments to Blue Sky and look what happened to them. I quickly add that I am not suggesting Blue Sky is in financial difficulty.
The fundamental flaw in Blue Sky, great in Bull run but no-one will want them in a market down turn as you cannot value their assets, so you cannot put a fair value on their share price.
BLA Price at posting:
$5.38 Sentiment: Sell Disclosure: Not Held
