I must say that this stock totally confuses me.Potential buy...

I must say that this stock totally confuses me.

Potential buy signals:

- ongoing accumulation occuring by large holders

- and the accumulation appears (but not necessarily) internationally based. Why is this important? The hedge fund market in the US has turned and growing again, whereas this is not the case locally. Thus, hopefully these investors are better informed than us locals

- I expect (but only a guess) that we will see some performance fees flowing again in this half year. From a past look, I think some funds may be back above high water marks

- rising A$ reduces the debt liability (yet there is a flip side)

- as mentioned above, US hedge fund market is growing again and LHP offer a managed account program, which provides greater transparency for insto investors

- the lack of disclosure by HFA adds to the conspiracy theory of a MBO. At an absolute minimum they should be providing quarterly FUM numbers.


Potential sell signals

- HFA seems to be asleep locally. They have gone from mega profile to no profile. Some instos are looking at hedge funds, FoFs and managed account programs, but not once have I heard HFA or LHP mentioned

- if HFA locally is on a slow death, then all the value is LHP. Uncertain whether LHP has turned the corner yet.

- if the value is in LHP, then rising currency is not good

- I think it is better to think about enterprise value (debt + equity) rather than just equity, as these companies really shouldn't be carrying much debt IMO. Thus EV is $200m to $250m. Thus, would want to see a sustainable profit of say 10% plus...$20m to $25m+

- Very hard to know whether this will be achievable. Margins are falling in this sector, and they may temporarily get the benefit of legacy products, it is not sustainable. Just as importantly, every dollar they lose that is high margin, will require much more dollars (could be 2,3,or 4 times the dollars) to just stand still in terms of revenue

- I don't think they will be able to pay dividends in the next two years as Westpac's debt will have priority

- the directors aren't buying


Anyway, just my thoughts and very difficult to know which way to jump on this. Happy to sit on the sidelines as the buy signals are primarily speculative.