more trouble or more media beat up, page-3

Courier Mail
TUE 29 JAN 2008

Page 052

Manager stung by exposure to MFS

By Ben Butler

"I'm sure we've made money (on the sale). We've been in there a long time" - Portfolio manager Sam Baillieu
A BOUTIQUE fund manager run by members of the Baillieu and Myer families has been stung by the crisis enveloping the Andrew Peacock-chaired financier MFS.
Until recently, Opis Capital had about $16.5 million -- 5.5 per cent of the $300 million in funds it manages -- invested in MFS shares.
Opis, whose directors include Charlie Baillieu and Sidney Myer, continues to manage the $11 million MFS Dynamic Growth Equity Fund on behalf of MFS.
The Melbourne-based fund manager's exposure to MFS helped drag the return from its Dynamic Equity Fund down to negative 3.4 per cent, and its Premium Equity Fund down to negative 3.6 per cent, for the month of December, its latest monthly newsletter reveals.
Portfolio manager Sam Baillieu said the shareholding and funds management were "completely independent''.
"We had lawyers look over it, compliance looked over it, not because we were worried about it, but because we triple check everything we do.''
He said Opis had sold the last of its stake in MFS last week, while Opis talked up MFS's prospects as recently as the end of last month.
In a quarterly update to investors dated December 31, the company said MFS's business was "directly unaffected by funding issues'' and "rebounds could be expected at half-year results in February''.
Nevertheless it had sold down its stake to reduce exposure to finance and property businesses.
Directors of Opis, along with Charlie Baillieu and Mr Myer, include Robbie Frost and Dean Fergie.
The Baillieu family is also in a joint venture with MFS spin-off MFS Diversified to develop part of the family's Eynesbury station, 40km west of Melbourne, into a 2900-block residential estate worth $1 billion.
Last week, MFS Diversified moved to distance itself from MFS, reaffirming its solvency and kicking former MFS director Michael Hiscock off the Diversified board.
Sam Baillieu said the MFS shares had been "inherited'' through Opis's holding in BreakFree, a tourism operator MFS took over in a $225-million all-scrip deal in 2005.
"I'm sure we've made money (on the sale),'' he said.
"We've been in there a long time.''
He said MFS's looming debt deadlines had prompted Opis to sell its shares because it was no longer worth the risk.
MFS was suspended from the stock exchange last week, the company revealing it has $1.69 billion in debt, $220 million of which must be repaid within the next three months.
Mr Baillieu said he did not know if MFS could recover or what would happen to the fund Opis manages on its behalf.