reality check - let's discuss the fundamentals, page-4

Hi PViews,

good post, and as much as I would love to reply to every line in your post individually as I have some pretty strong feelings opposing a fair number of your points, I have promised my family a holiday, so sitting here in front of the computer will be no different from our weekends back home.

Chances of business prospering at best 50/50...Pviews, I am not taking a bet on HFA that they will emerge as the top funds management business in Australia at the end of the GFC...I am simply asserting that their business, at this very point in time...with an assumption for loss of a further 20-30% of AUM is still, substantially more valuable TODAY, that the 20c the market is valuing it at.

I bought my first 100,000 shares in HFA a few years ago now, at over $2 a share. Back then, I was buying the promise of a future stong business, with plans to take over the world, etc etc......today, we are buying a business priced for destruction.

Do I think they will survive....definately.

Do I think once they unfreeze their funds, that the majority of the money will stay put.....definately.

Think about it, the funds will be frozen until credit markets thaw, and equity markets will have made some form of recovery. HFA has already demostrated to their investors, supporters and financial planners that they are a less risky mananger to manage your money than the average long only manager that has lost 55% of capital. (see last few ASX presentations for this comparison.)

So when the redemption freeze is lifted, most of the money will remain...I am sure of that. Most of the money that is coming out of the market has already left the market...this is a fact.

Your points regarding debt....not really an issue here. The point about Westpac wanting to be big in this space, BT have AUM of over $80B that they manage themselves directly, then many times that through their platforms AUM via BT Wrap....HFA is insignificant to their business.

Once the GFC is sorted, and the debt needs to roll over come 2012, they will get refinance of debt at any Australian Bank.

Your point about some assets in the Toxic camp...can you please point me to where to have read this???? First I have heard of that.

HFA avoided CDO's, HFA avoided Madoff. LHP reviewed Madoff's operations and it did NOT stand up to their screening process. I am of the belief that LHP are a great manager of money...and have done a great job. Compare them to their peers....yes hedge funds are designed to provide investors with absolute returns...this is true. However, and to quote management on this, they are designed to do this when markets rise and when markets fall. What we have seen is not simply markets falling, but we have witnessed markets failing.

In summary, assess the business right now, not where we hope it might get to in 2 years. My post a few weeks ago looked at the numbers on todays figures and price to earnings. And in my view, the value is in excess of $1....hence why I have been so active in buying.

I am not trading HFA, and the manipulation this week gave me the opportunity to buy some more. It also gave me comfort in that I am NOT the only one who see's the value....very little volume fell out when they were shaking the tree as hard as they did this week....very little volume.

Think about it, the stock price goes up 350% in 2 weeks, and all they could do was shake 10m shares out....most of which they had to sell back themselves.....nice work.

Sorry, could go on for ages, but the pool is calling me.

Good luck.

Kiril.

I hold.