Those who say "what has changed in the company" are almost making a self-denial statement so they can continue to hold. The Coy has not changed but the market has re-rated it, and does not like it.
Just what is wrong?
The Coy. has too much gearing.
They have huge liabilities ($13b+), and assets of about $15.5b.
The market is saying many of the assets are overvalued and in others they paid too much. In other words the balance can be tipped the other way - if and when the assets are re-valued. Were current interest rate trends accounted for? BNB have $11.5b in interest bearing liabilities.
The model that appeared to work before could become unstuck in the present climate. So the market says.
If you like the stock then read the Annual Report - it's scary stuff to me. The complexity is staggering - the commissions, the fees, the structure - but take the fluff away and where is the real business?
The Coy - are they are in self-denial too - why do they keep going back to the well. Working the same model even though there are a dozen Coy's using it that are facing wind-up right now.
Can you turn such a huge ship around? I doubt it.
The damage is already done. Is it time to pull your money from the funds?
The one positive - the quality of the assets might just save them.
BNB
babcock & brown limited
