the more tv ads the better lol?

Cross your fingers http://www.theaustralian.news.com.au/common/story_page/0,5744,15574502%255E16942,00.html

FRANK Sources, contemplating a short position or two in US real estate stocks, was moved to cast his furrowed brow over the accounts of one local player, Australian Capital Reserve (ACR).

You may recall some time ago we ruminated over the investment worthiness of ACR's "deposit notes" which are often advertised on television. The boys from ACR have raised $230 million via these ads, touting an 8 per cent to 9 per cent return.

In turn, the boys have used this money to fund their property development activities. Amid the downturn in property development, Frank Sources opines that these boys need a lot of money to refinance, just to stand still.

On Sources's numbers, ACR's equity of $9.9 million supports $209 million of liabilities of which $208 million is debt and $102 million is repayable within 12 months.

This provides a book debt to equity ratio of 21:1. That's some leverage, especially in view of the asset revaluations. Book equity as a proportion of total book value of the firm is 4.5 per cent. Most banks have Tier 1 equity of 6-9 per cent.

Moreover, the liabilities of ACR's parent, Castle Investment, outweigh assets by $13million. In the present climate, and with $102 million in current liabilities, ACR has a significant reinvestment risk.

Investors, and ASIC, had better cross their fingers and hope the boys know what they are doing. Last year's management fees of $4 million suggest the boys are paid enough to do a good job.