Fallen short of market expectations: Down 7.9% on April 16, 2018, Blue Sky Alternatives Access Fund Limited, a listed investment company that has exposure to a diverse range of alternative assets including private equity, real assets and private real estate, has been embattling with the rising concerns over meeting its disclosure requirements. Recently, the Alternatives Fund reported a decrease of 0.3 per cent in pre-tax NTA ($1.1385 per share) in March and this movement was primarily driven by the payment of the 1.0 cent fully franked interim FY18 dividend. The impact of the dividend was partially offset by the positive investment performance from the Blue-Sky Water Fund and as well as by the accrual of the quarterly distributions from several investments. The Group received exit proceeds from one residential development project. A contract for the sale of Gundaline Station has been signed and is subject to FIRB approval. The Alternative Fund’s investment in the BlueSky Water Fund increased by 1.5 per cent in March. The Company issued 124,176 fully paid ordinary shares at an issue price of $1.12 per share. With regards to the allegations made by Glaucus Research on the company’s means of operating the business, wherein assets under management and fees have been said to be inflated, Blue Sky noted the second opinion from short seller Glaucus that raised no new allegations and does not identify any information, which was not previously disclosed or was disclosed with some errors. BAF confirmed that it was complying to its corporate governance policies and procedures such as Alternative Fund’s published Investment Valuation Policy.
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Pre-Tax Net Tangible Asset Performance (Source: Company Reports)
However, the Group admitted that it has fallen short of the market expectations about transparency of dealing into the assets. BAF also stated that the underlying profit for 2017-18 could go down significantly against the previously suggested figures, at the back of the negative sentiments floating across the market. In the past six months, the stock price declined by 21.2 per cent but witnessed an increase of 5 per cent in the past one week.The stock is to be “avoided” at the current market price of $ 0.870.
Given the entire episode, the importance of proper disclosure has again won over many things. It is worth noting that to regain confidence of the shareholders, the group mentioned to have management valuations of 90 separate assets slated for review by independent external entities; but is reluctant to go for the review of the value of each and every asset by an independent accounting firm that has not worked for the company on any prior occasion.
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