"What you haven't been able to reconcile is why Macquarie have taken the trouble to invest $6m (which admittedly is not a lot for Macquarie) in a "dud business" as you describe it?"
Thats not factually correct, I did and have reconciled why, I just haven't shared it on HC. Sadly there are very few investors here, but more so speculators. People who buy into a business without understanding what they are buying, and what they are paying for it.
I know this very well, as I use to be like that too. Having lost a substantial amount of capital in recent years, I now try to understand what I am buying just a little better.
The YBR business model is simply an attempt to build a large lending business, a Wizard mark II if you like. He is doing this under the facade of financial advisory....but truth be known Bouris himself knows he will never achieve this IMO.
The business was seeded with a large amount of money borrowed, and used to buy a financial planning book. Look at his numbers, that business isnt growing and will never do much more that wash its own face. Bouris is hoping to attract enough franchise owners so that each of their small contributions to HQ overheads, including his $750K contract are covered. Only after all of those expenses are paid for, can shareholders hope to see any free cashflow?
Sorry but I have deviated from your statement....Pre GFC, Macquarie spent a fair amount of cash (much more than $6m) to create a distribution team. This team where NOT dealing direct with the coal face, being customers or mum and dads...but were attempting to solicit business from the broker segment. When the GFC was only starting, MQG shut down this entire division, making everyone redundant. With their cost of funds going through the roof due to the margins blowing out in the securitised funding market where they got all of their capital from, the clients of brokers who had MQG loans had their loans rise to levels substantially higher than the big 4 banks.
Now that the calm has returned, MQG need to get distribution, and this time, the brokers who were all burnt by MAC BANK are not welcoming the bank back with open arms, hence why MQG needed to find a distribution army to sell their loans.
They did this in the 90's with Aussie John, who initially sourced all his cash from MQG, and hence MQG are looking to score the same runs they did then, this time with YBR.
Small investment for them really to have an army of loan salesmen selling your product ahead of anyone elses.
I have a minority shareholding in 2 successful lending businesses in Sydney, and anyone of our brokers could get a much sharper deal for their clients then YBR can offer their clients under the MQG white labeled product.
Lets see what their numbers look like through out the year.
Best of luck with your investment.
Kiril
YBR Price at posting:
54.0¢ Sentiment: None Disclosure: Not Held
