- Shares in Blue Sky Alternative Investments will remain in voluntary suspension while the ASX reviews its response to a research note from short-sellers Glaucus Research that triggered a sell-off in the stock last week.
- The Australian market is eagerly awaiting Blue Sky’s response to the note, which argued the company had over-valued its fee-earning assets.
Shares in Blue Sky will remain suspended from trading while the ASX reviews the fund manager’s proposed response to an analyst report alleging fee-earning assets are significantly overstated.
“The suspension is requested to enable the ASX to complete its review of the proposed response the Company has provided to an opinion (Shorter Opinion) published by a US based short seller,” the company said today.
In a note to investors, Blue Sky managing director Rob Shand said: “Given the circumstances and nature of Blue Sky’s response, the ASX will review the document in detail prior to public release. Blue Sky has therefore requested a voluntary suspension of its shares until the ASX has completed this review. Blue Sky’s voluntary election to suspend trading is a matter of process.”
The company went into a trading halt last week after its shares fell 13.4% to $10.40 on news of the research by Glaucus.
In an initial response, Blue Sky said the Glaucus Research note had inaccuracies.
“There are a large number of factual inaccuracies throughout, including the assertions raised in relation to how Blue Sky calculates and reports its fee-earning assets under management, its investment performance and its fees,” the company says.
Glaucus disclosed it was short Blue Sky Alternative Investments and valued the shares at $2.66, or about three-quarters lower than recent trading levels.
“We believe Blue Sky $BLA compensates for its overstated fee earning AUM (assets under management) by charging clients egregious management fees,” said Glaucus in a series of tweets.
“Based on our analysis, we estimate that $BLA Blue Sky’s real fee earning AUM is at most $1.5 billion, 63% less than Blue Sky’s reported figure.
“Over time, when Blue Sky $BLA inappropriately inflates the value of unrealised investments, its receivables balloon with uncollected performance and management fees and cash flows deteriorate despite record paper profits.”