So the gist of the shorter's case is falling asset prices have a negative impact of CGF's capital requirement's triggering a capital raising = lower share price.
@donnyk01
To be honest, I am just speculating here, and I have no idea what the gist of the shorters’ case could be; why, of all the questionable businesses that are listed on the ASX, one would want to focus on shorting this one at its current price, quite simply escapes me.
Having said that, asset prices do have a direct impact on capital adequacy ratios, therefore I do feel it is important to run the maths as a sanity check.
So when CGF reports it half year results in Feb we hope to see the PCA ratio between 1.30 and 1.60 to signal the all clear?
Yes, it will be important to check where the PCA ratio is. From my estimates, a small deterioration is likely, but definitely not to an extent that changes the investment case for CGF; in particular, as things currently stand, I do not expect to see the PCA ratio anywhere near levels that could make a fresh capital raise necessary or prudent.
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