shorting here, page-8

The full broken comment was:

“While we believe the hedge fund “short MQG” arguments do not bear closer scrutiny the direction of MQG's price is telling us MQG is broken. With the hedge funds driving the agenda, it is hard to identify a catalyst to turn MQG’s price direction around but we note binges of short selling have previously been followed by bouts of short covering. With MQG now trading below any of its previous trading bands and at 1.06x net asset backing of A$32.16 (vs NTA of A$29.45) we believe MQG now offers compelling value it is hard to identify a catalyst to turn around sentiment, particularly following the S&P ratings outlook downgrade”

Agree its hard to identify the catalyst for turn around...but also agree that valuation looks compelling. The numbers might be a quarter out of date, but my swag suggest we are currently trading at a position that is 25% below analyst earning expectations for this FY ($4), with no future growth factored in should the economy bounce back (i.e. assume perpetual EPS of $3 and a discount rate of 10% = $30). That makes the current price a decent entry price in my opinon. If the market recovers or stabilises in H2 2009, and we hit $4 EPS this year, I think we are looking at $45 - $55 by end 2009.

But for those who think the direction of MQG's price (or the irrationality of Mr Market) is of any relevance, then maybe the model is broken.

Rgds,
FG