# BNB - Babcock & Brown



## Dakaz (23 December 2004)

I watched BNB double their IPO price over a 2 month period, I then bought a few shares. Now since they have announced they are creating a LIC, the shares have slowly gone down.  Can anyone please tell me why the LIC is effecting the Share price and 2) in their opinion is it worth holding on to them??
Thanks


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## RichKid (24 December 2004)

*Re: Babcock & Brown (BNB)- advice*

Financial advice cannot be given without the appropriate licence- so please don't ask for advice here as most people aren't legally able to provide advice, nobody wants to get into trouble or cause any bad publicity for this site (or its administrator). 

[Maybe all newbies will have to go through a brief training statement which cautions against asking for advice before being able to post or sign-up??- over to you moderator/Joe/Stefan]

I can only post a guess here and that is that maybe people bought on the news/rumour of the LIC and then sold to take profits?? Don't know, just a guess.


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## It's Snake Pliskin (23 April 2005)

*BNB Babcock and Brown*

One for the fundamentalists.
As a value investment who sees this stock as a good long term buy and does anybody know what its intrinsic value might be? How does this stock stack up against Macquarie Bank for example?


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## RichKid (19 October 2005)

*Re: Babcock & Brown (BNB)*

One big fall, might be easing off now but another small decline isn't out of the question as there's a congestion area nearby. I note a recent broker valuation was at about $8.


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## Yippyio (20 October 2005)

*Re: Babcock & Brown (BNB)*

Two weeks ago a broker came out with a valution for BNB, which was sub $8 and then yesterday ABN AMBRO gave it a buy recommendation and a valuation of $ 20 ???, beats me.


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## kerosam (20 October 2005)

*Re: Babcock & Brown (BNB)*

heard about the sub $8 value on bnb from a former broker friend as well. and he used to work for AMBRO.


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## Scratch (20 October 2005)

*Re: Babcock & Brown (BNB)*

........................and there I was with $$$s in the bank, testing the winds of fortune, looking at charts and reading forums...............AMBRO $8 - $20 ........wot chance has this little fishy??   :goodnight   

Disclaimer:

Who me??  Aren't you supposed to know something first??!!!


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## Yippyio (21 October 2005)

*Re: Babcock & Brown (BNB)*



			
				Scratch said:
			
		

> ........................and there I was with $$$s in the bank, testing the winds of fortune, looking at charts and reading forums...............AMBRO $8 - $20 ........wot chance has this little fishy??   :goodnight
> 
> Disclaimer:
> 
> Who me??  Aren't you supposed to know something first??!!!




Agreed, down 5% in a day, does not take much to spook this stock.


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## It's Snake Pliskin (21 October 2005)

*Re: Babcock & Brown (BNB)*



			
				Yippyio said:
			
		

> Agreed, down 5% in a day, does not take much to spook this stock.





It's getting closer to it's value, but not there yet!


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## Yippyio (21 October 2005)

*Re: Babcock & Brown (BNB)*

Depends who's recommendation your going with, I think it's over sold and going to bounce but then I am biased.


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## It's Snake Pliskin (21 October 2005)

*Re: Babcock & Brown (BNB)*



			
				Yippyio said:
			
		

> Depends who's recommendation your going with, I think it's over sold and going to bounce but then I am biased.




I am going with reality. They are modelled like MBL but their off shoots are not that productive yet. One only made its first investment last month. Risky was the evaluation I remember vividly.


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## Yippyio (26 October 2005)

*Re: Babcock & Brown (BNB)*



			
				Snake Pliskin said:
			
		

> It's getting closer to it's value, but not there yet!




Agreed, it's not there yet. Probably $20, $22. Did I hear $50


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## It's Snake Pliskin (26 October 2005)

*Re: Babcock & Brown (BNB)*



			
				Yippyio said:
			
		

> Agreed, it's not there yet. Probably $20, $22. Did I hear $50




You're a funny man.

Good luck to you if it does get back there.


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## BraceFace (26 October 2005)

*Re: Babcock & Brown (BNB)*



			
				Yippyio said:
			
		

> Agreed, it's not there yet. Probably $20, $22. Did I hear $50




I'm with you Yippy....
This one is a keeper.


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## RichKid (25 November 2005)

*Re: Babcock & Brown (BNB)*

BNB appears to be consolidating after that recent correction,  next stop should be the all time highs if it gets on with it. Like the previous ledge in the previous run up I expect this to break upwards strongly as that's the general direction of the trend and prices don't tighten up like this for long. Currently testing the lower boundary of support. Has been strong so far but this week suggests it isn't quite there yet, once the last of the weak hands are shaken out it should do well. Another easy one to place a stop with. 

No chart posted yet, maybe someone else can oblige with support levels etc or I may post one later.


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## mit (25 November 2005)

*Re: Babcock & Brown (BNB)*

RichKid,

I bought BNB a few days ago on the Breakout. At the moment it is just hovering above support. Doesn't look Bullish to me atm, although I hope you are right

MIT


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## RichKid (25 November 2005)

*Re: Babcock & Brown (BNB)*



			
				mit said:
			
		

> RichKid,
> 
> I bought BNB a few days ago on the Breakout. At the moment it is just hovering above support. Doesn't look Bullish to me atm, although I hope you are right
> 
> MIT




Hey Mit,
Well I could be wrong, that false breakout is just an upthrust (or so says the swing trading info I've been reading), I've seen them in these patterns before (but my experience is limited so don't place too much importance on my view). The main attraction to me is that it appears to have completed the correction and is providing an easy stop loss position with a well defined range, some people may try to shake me out of this (the instos) but there's nothing I can do now but watch and wait for a further signal- I hold.


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## mit (28 November 2005)

*Re: Babcock & Brown (BNB)*

Just blew past my stop, so I am out.

MIT


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## RichKid (29 November 2005)

*Re: Babcock & Brown (BNB)*



			
				mit said:
			
		

> Just blew past my stop, so I am out.
> 
> MIT




Ditto with me mit. Just remembered that when you have a false breakout of the range (an upthrust) it's likely to retest the opposite border of the range. Maybe I'll wait for a reversal bar next time. Still, it could easily have bounced off support and broken upwards again. Just traded it as I saw it, will remember what I forgot next time to select an even lower risk entry. This sucker is still on my watchlist.


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## mit (30 November 2005)

*Re: Babcock & Brown (BNB)*

I think it was a valid set-up. Just didn't work this time unfortunately. It ended pretty strongly on Monday and I was tempted to give it a little more room. Luckily I followed my rules and got out.

MIT


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## waytogo (8 January 2006)

*Re: Babcock & Brown (BNB)*

BNB has been lolling around $17 over the holiday break.  Last week it had a bit of a spurt up to around $17.50.

BNB's reporting period ended 31 December, with the result probably due around February - anyone have any technical analysis suggesting  a break out pattern will form?


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## michael_selway (5 August 2006)

*Re: Babcock & Brown (BNB)*



			
				waytogo said:
			
		

> BNB has been lolling around $17 over the holiday break.  Last week it had a bit of a spurt up to around $17.50.
> 
> BNB's reporting period ended 31 December, with the result probably due around February - anyone have any technical analysis suggesting  a break out pattern will form?




BNB dropped a bit today, maybe the below



> Date: 4/8/2006
> Author: Robert Clow
> Source: The Australian --- Page: 29
> Babcock's wind farms in Spain, Germany and Lake Bonney have generated $A10m less revenue than forecast. $A9m were due to delays in its acquisition of three Spanish farms. The rest was caused by winds blowing at just 58% and 92% of the average speed. Babcock also has several US wind farms. The company's share price closed $A0.02 lower at $A1.45 and its EBITDA is expected to fall to $A51.5m, from its previous forecast of $A62.2m
> ...




thx

MS


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## billhill (12 October 2006)

Broke through resistance at $20.50 on heavy volume yesterday after a period of consolidation. Is up more then 2% today on a gap. Look for it to test long term resistance at $22.00. And its about time!


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## Sultan of Swing (12 October 2006)

Anyone got on any ideas about this one? I've held a few for a little over a year and don't intend selling in the near future as I tend to hold long term. 

Having said that, that can obviously be fatal to profits as I've found out a few to many times.


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## Nick Radge (12 October 2006)

This was sent yesterday...







*BOTTOM LINE * 
*11/10:*
EW Trend: Corrective (?)
Price Trend: Up
Trend Strength: Strong
Broker Consensus: Strong BUY
*20/9:*
EW Trend: Corrective
Price Trend: Down
Trend Strength: Weak
Broker Consensus: Strong BUY 

*LAYMANS ANALYSIS * 
*11/10:*
VIDEO ANALYSIS (1 mins 58 secs)
Today's 4% surge, high close and high volume put my "want" of a continued dip well out of the picture. Whilst it's technically still possible, its now, more or less, improbable. Whilst we have seen high volume days before, the price relationship shown today is nothing short of very bullish. It's extremely probable that the BNB trend will now resume after its 4-month pause and that new high is close by. I would expect the immediate targets are just through $24.00, but the larger targets extend well beyond that should we see continuing signs of bullish behaviour.  On the flipside, any failure and subsequent break back below the late September lows of $19.22 would suggest the original weakness is back in favour. 
*20/9:*
VIDEO ANALYSIS (1 mins 40 secs)
Prices continue to meander and I still think they'll travel a touch lower before resuming the upward trend. I note with interest that the Brokers have moved their rating to the highest level of Strong BUY. Whilst this does fit the larger bullish picture I've been preaching for some time, its only appropriate so long as $15.75 is not broken (yes, $15.75 is a long way off). Today's weakness does reinforce my thinking that we'll trade lower over the coming weeks so if you are interested in BNB, I believe better levels will become available shortly. The lower $18.00 area should now offer very strong support and I would expect prices to reverse from those levels and move higher.

*TECHNICAL DISCUSSION 
11/10:*
The June highs had been labelled at wave-(i) or -5. Continuing with the impulsive theme, the pattern since then can only be a nested impulse. The reason is that wave-(ii)'s cannot be resolved in the form of a triangle. Therefore, the August lows are deemed a wave-(ii) and we're now sub-dividing higher in a new structure whereby today takes the shape of a wave-iii. Following this smaller structure, the wave-iii target is $22.00 and the wave-v is a little over $24.00. The June 30 highs were $22.00 so the termination of wave-iii should be anticipated as weaker hands take profits. Bullish. 
*20/9:*
The corrective pattern continues to take shape, slowly but surely. The wave-c/wave-a equilibrium is at $17.35 which is just a touch lower than a support band running back to earlier this year. Even so, this "general" area will offer support and we should expect the wave-(ii) to terminate in that region. If that in fact does occur, then the upside potential for BNB is very large. One thing at a time, so look for that weakness over the coming weeks, then look for evidence of a turn higher into wave-iii. The main reason why I think prices will travel lower at present is because the area between wave-a and -b was choppy in nature and not impulsive. That activity suggests corrective movement and as we know, wave-b is a corrective wave.


_This post may contain advice that has been prepared by Reef Capital Coaching ABN 24 092 309 978 (“RCC”) and is general advice and does not take account of your objectives, financial situation or needs. Before acting on this general advice you should therefore consider the appropriateness of the advice having regard to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision. 

Past performance is not a reliable indication of future performance. This material has been prepared based on information believed to be accurate at the time of publication. Subsequent changes in circumstances may occur at any time and may impact the accuracy of the information._


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## sleeper88 (20 October 2006)

looks like it going up..past $22 and at all time high


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## billhill (11 November 2006)

Wow. There seems to be no stopping these guys. About to float a power fund, finished raising 300million pounds for an infrastructure fund in europe and are part of a consortium that won the 3.6 billion dollar contract to supply trains in NSW. This all in the last couple of weeks. At the rate their going they'll be calling Macquarie a mini Babcock and Brown.


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## sleeper88 (11 November 2006)

your sure right, been holding this for over a yr now, anyone lucky enough to get into this one during their llisting on ASX for $5 per share, a while back?


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## billhill (11 November 2006)

yeah i've been holding since they were $11. definitely a long term play. Can't imagine what these will be worth 5 years from now.


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## michael_selway (11 November 2006)

billhill said:
			
		

> Wow. There seems to be no stopping these guys. About to float a power fund, finished raising 300million pounds for an infrastructure fund in europe and are part of a consortium that won the 3.6 billion dollar contract to supply trains in NSW. This all in the last couple of weeks. At the rate their going they'll be calling Macquarie a mini Babcock and Brown.




dont forget AFG and MFS!

thx

MS


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## billhill (15 November 2006)

Another day and the anouncement of another fund. This time in singapore. This company is truly turning into a global force in investment banks.


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## billhill (17 November 2006)

Anyone got any idea about the big jump in price so far today. up $1.27 last i checked.


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## sleeper88 (17 November 2006)

i think it's following MBL's lead, good market sentiment for investment banks atm. it funny that so far, you and i are the only people commenting on this great stock.


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## billhill (17 November 2006)

Yeah i know. Everyone is so crazy about mining stocks they seem to ignore every other sector. Oh well when the mining boom finishes we'll make all the gains because of our clever positioning in sound good stocks with real not speculative potential.


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## Sultan of Swing (17 November 2006)

I don't have much else to say but WOO HOOOOO!!!!!   

As I said in an earlier post, bought a little over a year ago and up 40%+ after today. Not as spectacular as some mining stocks but I feel comfortable with them. I'm also thinking about doubling my position as I'll hate it if it does do as well as MBL over the next few years and I haven't got a bigger chunk. It must be the greed thing again.  :

They seem to have good management that have a proven track record, a good return on equity for the little info they have on them at this stage and being global, have good growth prospects. 

But then, I don't know much and am just along for the ride.


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## michael_selway (17 November 2006)

sleeper88 said:
			
		

> i think it's following MBL's lead, good market sentiment for investment banks atm. it funny that so far, you and i are the only people commenting on this great stock.




hey i hold BNB at $13!

*EPS(c) PE Growth 
Year Ending 30-12-06 110.2 20.8 43.1% 
Year Ending 30-12-07 132.8 17.3 20.5% 

Earnings and Dividends Forecast (cents per share) 
2005 2006 2007 2009 
EPS 77.0 110.2 132.8 155.0 
DPS 23.0 34.3 42.2 50.0 * 

thx

MS


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## Nick Radge (17 November 2006)

Well done Sultan. Nothng feels better than getting that moves smoothly. Here are my comments from a week or two ago...



*BOTTOM LINE * 
*8/11:*
EW Trend: Up
Price Trend: Up
Trend Strength: Strong
Broker Consensus: Strong BUY
*27/10:*
EW Trend: Up
Price Trend: Up
Trend Strength: Strong
Broker Consensus: Strong BUY 

*LAYMANS ANALYSIS 
8/11:*
VIDEO ANALYSIS (1 mins 30 secs)
We didn't get to see the micro triangle form but the dip was spot on a typical decline at this stage of the trend. We've now surpassed those recent highs as BNB puts on 6% in just a few days. We should continue higher for a brief week or so, possibly as far as *$24.50* before we get a reasonable corrective movement. A nimble trader looking for a quick move could buy on a break of today's high but must keep close tabs on any weakness entering. The general market is showing some signs of a dip and with BNB hitting these highs for the 3rd time there is a chance of failure. I also note the small gap left from yesterdays strength which in theory should be filled with a reasonable level of probability. The weekly chart looks great, especially if this week can close firm. 
*27/10:*
VIDEO ANALYSIS (1 mins 56 secs)
I hinted at new highs several weeks ago and we've now got them, but I feel there is certainly more upside yet. I have indicated on the chart that we may see a quick dip next week to complete a micro triangle, but volume/price relationship today was very strong so I'm not sure if we'll get that dip just yet. As discussed in the last review, the next immediate leg higher could see prices push through to $24.50 before a reasonable corrective move, but even then, any declines should be short lived. At this rate we could continue all the way to $27.00, quite possibly more. Yet again we see a classic example of a possible micro triangle forming at an old high. Time and again this occurs as weaker hands can resist but take profits. It gives the market pause before moving higher, but it also offers a low risk entry point. Watch for the completion of the triangle this coming week and expect a quick surge higher. 

*TECHNICAL DISCUSSION 
8/11:*
The wave-iv correction has completed in a 3-wave movement and bounced off the 38.2% retracement level. I think it says a lot when the stock shows strength on a negative day and a day when interest rates have risen. BNB is usually susceptible to interest rates because of its exposure to infrastructure. all in all, today was more positive than perhaps what is shown via price action. The 61.8x wave-iii targets $24.50 and showing some confluence is the 61.8x the larger degree wave-1 target at $24.00. Remember that the 61.8x wave-1 is the area I look for as the wave-3 terminal point. I am more conservative than most, but it's a good sign of proportion when different waves show similar targets. 
*27/10:*
The pause here at the old highs suggests a minor degree wave-iv triangle is under construction. Today did show solid buying interest so we'll need a down night tonight in the US to see this pattern complete. A positive lead from the US tonight will simply see prices shoot higher without the triangle completing. Today shows a high close on reasonably good volume. This during general market weakness today is a very good sign for the bullish outlook, so the completion of the triangle will hinge on the US tonight. The minor degree targets of 61.8x wave-i suggest $24.50. The equidistant wave-i/-v relationship occurs at $22.73 assuming the pivot low this week was wave-iv. Bullish.


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## It's Snake Pliskin (5 March 2007)

Just closed my short position with a profit @$25.04


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## joslad (5 March 2007)

Seems to be a bit suspect at the moment - ann coming??  Maybe.  Jumped over 70c although slipping back.

May end up being a good decision to cover...


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## billhill (5 March 2007)

I think i found your announcement. BNB team with singapore power to buy alinta.
http://www.theage.com.au/news/Business/Alinta-may-get-9-billion-offer/2007/03/05/1172943344903.html


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## joslad (5 March 2007)

Yep, thats the one.  I was watching bloomberg today when they were referring to that story, and suggesting an announcement would be made next week.

BNB have issued an announcement today, saying the speculation by bloomberg today, was without foundation - or words to that effect.


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## It's Snake Pliskin (9 March 2007)

Any reason for the higher volume today other than people buying in? It somewhat stands out.


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## theasxgorilla (9 March 2007)

*********************
 Babcock & Brown – Successful Completion of Book Build
International investment and advisory firm Babcock & Brown (ASX: BNB)
announced today the successful completion of an accelerated global book build
of shares sourced from Babcock & Brown employees. Under the book build
approximately 19 million shares were sold at a price of $25.20 per share by
employees.
Phil Green Chief Executive of Babcock & Brown said, “The book build process
has given us the opportunity to expand our institutional shareholder base. The
significant support from offshore institutional investors, following a recent
international road show, is particularly pleasing in light of the recent volatility in
global equity markets.
“Babcock & Brown did not raise any new capital in the book build process. As
outlined in our recent results presentation we have significant financial capacity
from a range of existing sources and have no current intention of issuing new
equity in relation to any specific transaction currently being considered.
However we are continually considering new opportunities and depending on
the structure and timing of any new transactions do not rule out the possibility of
issuing additional capital if appropriate. As stated many times previously,
Babcock & Brown will only raise further capital if we are confident that we can
earn an ROE on the incremental capital within our target range of 25-30%.
***************


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## barnz2k (17 May 2007)

didnt know anything about this stock but saw it as a 'related thread' and it looks interesting.
if you count the recovery form a drop, its gone up almost 30% in the last 3 months!

thats enormous. any thoughts on the future of this stock?


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## sleeper88 (17 May 2007)

barnz2k said:


> didnt know anything about this stock but saw it as a 'related thread' and it looks interesting.
> if you count the recovery form a drop, its gone up almost 30% in the last 3 months!
> 
> thats enormous. any thoughts on the future of this stock?




BNB and MBL are Australia's 2 largest investment banks, i missed out on MBL when i was cheap..but i didn't make the same mistake with this one. Been holding BNB for close to 2 yrs now and it's one of my fav long term stocks. current payout ratio is fairly low but with tremendous growth potential/prospects..the capital gains on this stock more than makes up for it


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## billhill (17 May 2007)

barnz2k said:
			
		

> thats enormous. any thoughts on the future of this stock?



 I totally agree with sleeper. Top notch management. This is probably my favorite long term stock. holding 2 years.


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## barnz2k (17 May 2007)

im holding off of buying any more stock just now waiting to sort some shyt out. but hell if it kept up that run. Maybe it will drop back a little again and let me buy in.

Curious, what was it at 2 years ago when you guys got in?

btw thanks for fast repsonse!


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## billhill (17 May 2007)

I bought in at $11.00. I would wait until the next market correction and then stock up. Should be able to get them at a better value then at the moment.


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## sleeper88 (17 May 2007)

$14.10 for me, i wonder if anyone has been holding since the IPO in Nov 04, back then shares where issued at $5..listed at approx $8. It has come along way in less than 3 years


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## Mumbank (17 May 2007)

I missed out on the IPO but bought at 8.45 and then 9.75 and still holding.  At the time I promised myself I'd buy more before they went over $12 but of course I kept buying other stuff.  Anyway I'm more than happy to be holding my little parcel which I will continue to hold long term.  Certainly if there is a correction and it gets back below $30 I'll pick up another small parcel (certainly smaller than those I picked up just after the IPO.


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## Ang (17 May 2007)

If you are looking for a very well plased subsidery or off shoot of BNB try BBI I have had it since it was in the low $1 mark and now $1.95 ready to crack $2. BNB has spinned off all its assets into various stock like BBI and the capital Growth is great and yield is also grat with the spin off stock. Another spin off stoc is BBW an i only wished I bought some of those when they were $1.5, hit $2.07 today, with both BBI and BBW going to goin enourmosly from the new buy out of Alinita @ $16.46 / share. I ham hoping BBI and BBW will be $5-$10++ stock in the next 2 yrs.
kind reg
ang


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## sleeper88 (17 May 2007)

Ang said:


> If you are looking for a very well plased subsidery or off shoot of BNB try BBI I have had it since it was in the low $1 mark and now $1.95 ready to crack $2. BNB has spinned off all its assets into various stock like BBI and the capital Growth is great and yield is also grat with the spin off stock. Another spin off stoc is BBW an i only wished I bought some of those when they were $1.5, hit $2.07 today, with both BBI and BBW going to goin enourmosly from the new buy out of Alinita @ $16.46 / share. I ham hoping BBI and BBW will be $5-$10++ stock in the next 2 yrs.
> kind reg
> ang




i agree with you totally..but u left out BBP..it has also been a performer although i sold it just under $3


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## barnz2k (18 May 2007)

Great info!
Cheers guys.

Il keep an eye on BNB and its subs, maybe go shopping in the next sale, i mean correction haha

you guys must be stoked - 200% increase in under 3years!! amazing.


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## billhill (21 May 2007)

Speculation mounts that Babcock and Brown will bid for the eurotunnel against maquarie bank and goldman sachs. 

http://www.bloomberg.com/apps/news?pid=20601085&sid=aqaIAP9wyjE4&refer=europe


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## sleeper88 (25 May 2007)

Upgrades 2007 profit forecast to $550m (35% growth on 2006),  with EPS approaching 30% if this target can be achieved


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## Ang (25 May 2007)

barnz2k said:


> Great info!
> Cheers guys.
> 
> Il keep an eye on BNB and its subs, maybe go shopping in the next sale, i mean correction haha
> ...




BBI is cheap now while they recieved bad news that they were not accepted in the take over. Those bloody commissioners, what right do they have. Anyway they have not changed their profit projections.
I am hanging in there.
Kind regards
ang


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## barnz2k (27 May 2007)

Cheers Ang!
I was actually looking at the chart on Friday and thinking about it.
I got a letter about more MBL shares for $87 (its currently 89 and was almost 100 a week ago) so im thinking about it - but Im leaning towards BNB IF i get something - my money situation is still uncertain

If BNB arent successful at this bid maybe MBL is and il win either way hahahah


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## michael_selway (27 May 2007)

barnz2k said:


> Great info!
> Cheers guys.
> 
> Il keep an eye on BNB and its subs, maybe go shopping in the next sale, i mean correction haha
> ...




Please dont forget AFG, MFS & MBL!

thx

MS

*BNB - Earnings and Dividends Forecast (cents per share) 
2006 2007 2008 2009 
EPS 115.4 151.3 178.7 203.0 
DPS 36.0 47.0 55.2 62.8 

EPS(c) PE Growth 
Year Ending 30-12-07 151.3 20.7 31.1% 
Year Ending 30-12-08 178.7 17.6 18.1% *


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## hypnotic (20 June 2007)

Hey all just looking at the chart for BNB,

I am still new to charting but looks like it has double bottomed. 

MACD have just crossed although volume is low...

Just passed its all time high too. 

Looks bullish, i am in just to test this charting theory. :

Hypnotic


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## billhill (11 July 2007)

share price appears to have stalled lately. Found this which isnt very good news.



> Eircom in bid to avert strike action
> 
> Eircom management will today table new proposals to unions in a bid to avert a strike which could paralyse the Republic's fixed-line telephone network.




http://www.ireland.com/newspaper/breaking/2007/0711/breaking12.htm

Note for those who don't know eircom is owned by BNB


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## barnz2k (31 July 2007)

down almost 10% over the last week. might be good time to get in.
see what spare change I can find..

(while thinking I should not buy shares before moving to london without a job but also not caring so much lol)


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## Kravis (1 August 2007)

great thread.
I am also a long term holder of bnb. I got in at the float and havnt looked back or sold since.
Phil and his team are first class and i wouldnt sell this stock when there is so much talent at bnb. Remember MBL back in 2000/01 was trading at 21-22 at the time of the Sydney Airport takeover and Alan Jones saga. The perception of the public kept the stock steady. 
I believe the same thing is happening at bnb. They just took over Alinta! Look at the assets they hold, predominately energy. These assets are core and pure. 
Let this market hype pass and ignore sentiment. If you have spare change continue to top up sensibly.


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## barnz2k (2 August 2007)

Noticed yesterday there was always huge volume.
Just people scared by the falling price and similar concerns with mbl?
However BNBs ann suggested they have an insignificant part in it and should not  be affected in the same way.

I think I will try and get in today or tonight when I can sort some cash out.


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## barnz2k (3 August 2007)

Well hopefully this is the bottom cause im in now 
Was hoping for just a slight increase today but down slightly.
See how things go monday morning!


----------



## Lachlan6 (3 August 2007)

What started this fall was quite possibly the nastiest of divergences in the OBV. This is such a clear sign that the insto's are heading for the door, for whatever reason to switch elsewhere. It occured on the three seperate highs in May and June, which led to BNB getting severly punished. It has capitulated now to a support level which may hold it up in the interim and dont be surprised to see a small bounce from here. The other interesting thing about this level, is it is exactly the 50% retracement level from the similar capitualtion in 2005.

However surely the long term picture is still rosy at BNB, just look at the projected profits. So although the short term doesnt look amazing (apart from a likely bounce) if there is a reversal around these levels, it may be a good low risk entry point for a long term hold.


----------



## barnz2k (6 August 2007)

Another dollar or 4.11% down today. 15% in one week!
Volume picked up again today also to 4mil.
But again, its along with the rest. Be an interesting week!


----------



## DOC (10 August 2007)

hi,
i was lucky enough to get in at IPO for $5 and sold at around $15. thnks trcom.
But currently hovering around again with the rest of the vultures for another buy oppertunity. looks like support around $25, but with tonights news from the US:

<Aug. 9 (Bloomberg) -- BNP Paribas SA, France's biggest bank, halted withdrawals from three investment funds because it couldn't ``fairly'' value their holdings after U.S. subprime mortgage losses roiled credit markets. 
The funds had about 1.6 billion euros ($2.2 billion) of assets on Aug. 7, after declining 20 percent in less than two weeks, spokesman Jonathan Mullen said today. The bank will stop calculating a net asset value for the funds, which have about a third of their money in subprime securities rated AA or higher. >

looks like i'll fly around a few more times before jumping in.

still a great stock with good core values, management, and future earnings.

cheers,
Doc

DO YOUR OWN RESEARCH, SEEK PROFESSIONAL ADVICE FROM A QUALIFIED PERSON. NOT ME!


----------



## DOC (10 August 2007)

Come to think of it, i'm better off buying shares in Mcdonalds (MCD). they are the only thing thats up on the US market at $51 and at around 52 week highs.
Man I should have known those burgers would turn out to be good for you somehow!
Seriously, I know we are not looking at US stocks, but this ones got some merit!

Bring back the hamburglar and grimas!

cheers,
Doc


----------



## kerosam (10 August 2007)

with the DOW down early, i think BNB might take a hit when they open. tomm... using incredible chart, its touching the low of its long term uptrend (5th May 2005)... support is $24.90.

comments? first time commenting on a chart. be gentle.


----------



## BIG BWACULL (10 August 2007)

kerosam said:


> with the DOW down early, i think BNB might take a hit when they open. tomm... using incredible chart, its touching the low of its long term uptrend (5th May 2005)... support is $24.90.
> 
> comments? first time commenting on a chart. be gentle.



Personally the dow being down will give us all a punch in the face  AGAIN  But im in the marathon and not a sprinter so, 
Oh well Bye Now :hide:


----------



## barnz2k (10 August 2007)

BIG BWACULL said:


> Personally the dow being down will give us all a punch in the face  AGAIN  But im in the marathon and not a sprinter so,
> Oh well Bye Now :hide:




Down 6.8% now, But as BBW says, im in it for longer term and I think once all this gets sorted out bnb will continue uptrend. and BNB stated last week they have insignificant exposure relating to sub prime market issue.


----------



## golfmos123 (10 August 2007)

Good time to go long (ish) on BNB INMO.  Have jumped in today for a big lick of stock (for me!) under $24, just can't see it falling much further unless the DOW has another coronary shortly.  Don't forget this stock has been in the $34's only a couple of months back and little has changed with fundamentals.  Alinta takeover news will of course help.

I'm in it to try to make a relatively easy 10-15% in just a few weeks and gracefully (and gratefully) exit again.  I just don't think this can go wrong short term from $24 or long term either for that matter, it is just too good a business.

Am I too bullish here????


----------



## nomore4s (10 August 2007)

golfmos123 said:


> Good time to go long (ish) on BNB INMO.  Have jumped in today for a big lick of stock (for me!) under $24, just can't see it falling much further unless the DOW has another coronary shortly.  Don't forget this stock has been in the $34's only a couple of months back and little has changed with fundamentals.  Alinta takeover news will of course help.
> 
> I'm in it to try to make a relatively easy 10-15% in just a few weeks and gracefully (and gratefully) exit again.  I just don't think this can go wrong short term from $24 or long term either for that matter, it is just too good a business.
> 
> Am I too bullish here????




You're a lot gamer than I am thats for sure, with the financial sector copping a hiding lately (not just here but in overseas markets as well) there could be alot more downside to come yet. 
The FTSE is currently down 3%  and the Dow looks like opening another 100 points down, so Monday might not be a good day for us either.

There seems to be a bit of panic in the world markets atm, which means no matter how good the fundamentals are the price could drop. Also maybe $34 was overpriced? (not saying it was or wasn't just asking the question)

Good luck with your trade.


----------



## reece55 (10 August 2007)

golfmos123 said:


> Good time to go long (ish) on BNB INMO.  Have jumped in today for a big lick of stock (for me!) under $24, just can't see it falling much further unless the DOW has another coronary shortly.  Don't forget this stock has been in the $34's only a couple of months back and little has changed with fundamentals.  Alinta takeover news will of course help.
> 
> I'm in it to try to make a relatively easy 10-15% in just a few weeks and gracefully (and gratefully) exit again.  I just don't think this can go wrong short term from $24 or long term either for that matter, it is just too good a business.
> 
> Am I too bullish here????




Golf,
You could equally say that BNB was a $5 float some 2.5 years ago, so why shouldn't it go back to $15????

Investment Bank + Liquidity crisis = losing money on investment.

Just my 2 cents though.....

Cheers


----------



## Kravis (11 August 2007)

Fear is a powerful dictator during times of exeburence.
We must remember Babcock and Brown have been around along time, since 1977. We must remember that they have a superior management team run by the best mind in the financial game (Phil Green). We must remember that they are continuously (and yes during these 'sub prime' times) buying quality assets (Alinta/Portuguese toll roads).

The bigger long term picture is better to envisage rather than the short term squiggly line that the charts produce. This is a business that owns and operates quality assets run by high calibre people who have their net worth in the business. Running with the herd short term is the easy option. Standing away from it and cutting out the noise is hard to do, but essential during these times especially for the long term quality businesses.


----------



## Boggo (14 August 2007)

My  worth, its gotta be near the bottom (didn't someone say that earlier  )

Big sellers and big buyers, obviously two opposing views of what its worth.

Mike


----------



## tcoates (14 August 2007)

As indicated in the eureka report today (?) fundamentals don't count for much a the moment - there appears to be a mass exodus. And companies cant put out statements like 'business is fine - same as yesterday' each day.

Tim


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## Kravis (14 August 2007)

"And companies cant put out statements like 'business is fine - same as yesterday' each day." 

Why not?
Irrational selling is exactly what is needed to buy into companies that have sound management are profitable and great continued growth for the long term. The whole point is to be greedy when others are fearful but the hard part is determining when to ignore the herd and buy and hold quality.


----------



## vishalt (15 August 2007)

i cant believe it, just months ago i was looking at BNB at $32 and saying "i shouldve just held on to it when it was consolidating at $19, SILLY ME!" - and its almost back lol. 

i've been following these guys for ages - and as another poster mentioned - BNB management are very good and experienced, and that was proven when they beat superpower Macquarie Bank for Allinta. 

im accumulating these will all come back even if itll take several months. 

next stop $18 and then the drops stop (i hope)


----------



## hacheln_mice (16 August 2007)

Kravis said:


> "And companies cant put out statements like 'business is fine - same as yesterday' each day."
> 
> Why not?
> Irrational selling is exactly what is needed to buy into companies that have sound management are profitable and great continued growth for the long term. The whole point is to be greedy when others are fearful but the hard part is determining when to ignore the herd and buy and hold quality.




--------------
You are right, BUT there is no need to try and be a hero by stepping in front of a freight train.  _It's better to be a little late than a little early in this sort of environment._  The next fib retracement support should be at 18.7.


----------



## sleeper88 (16 August 2007)

hmmm..my beloved bnb..is sinking fast..approx 70% of my on paper profits have been erased!!!..time for me to reassess my position


----------



## Mumbank (16 August 2007)

Yep it certainly is time to re-assess.  BUY MORE !!!!  This is an outstanding price for this stock.  I know the world is in a state of panic, but its just a hiccup that had to happen IMHO.

As the great KP said, buy when everyone is selling and sell when everyone is buying.


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## hacheln_mice (16 August 2007)

A picture is worth a thousand words, and so here's a chart of BNB for your viewing pleasure.  Personally, I think 18.7 should hold, but nothing is for certain.

Lol, minutes after saying 18.7 should hold, it goes sub 18!!! Talk about panic.

Good luck to those holding this.


----------



## sleeper88 (16 August 2007)

Mumbank said:


> Yep it certainly is time to re-assess.  BUY MORE !!!!  This is an outstanding price for this stock.  I know the world is in a state of panic, but its just a hiccup that had to happen IMHO.
> 
> As the great KP said, buy when everyone is selling and sell when everyone is buying.




Well u gotta be very brave to top up now..im gona sit on the fence for a while..i've lossed enough and im not willing to take the risk in this kinda market..its gona take a hell lot longer for the markets to recover..many investors are scared sh_tless..time to build up my war chess..and look to re-enter after the panic is truely gone. Its better to follow the crowd..rather than be the brave on in situations like this..(but then again..fortune favours the brave)


----------



## barnz2k (16 August 2007)

never thought it would get this low, almost half of its recent high of $35.

and yeh its gonna take longer than thought to recover I think.

Just hope it DOES recover and all this clears up soon.

I definately jumped the gun on this one.

But, still, I think their fundamentals are still strong, and once (if?) the market gets back to trading on something other than fear and rumors, it will be strong.


----------



## Kravis (16 August 2007)

"BUT there is no need to try and be a hero by stepping in front of a freight train."

Hero?
I guess I might be missing something or maybe not just not smart enough to know when to pick the bottoms, but then again im not a trader. But I just could be speaking of holding BNB since listing and see no reason to be fearful. 
The point in making is that if you buy quality it really doesnt matter what price you get if you are a long term investor have no 'exit' strategy. Be it 26 a few days ago or 19 today or 15 tomorrow. 
Anyway, I enjoy the posts.


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## FlaminInvestor (21 August 2007)

hey

just bought at $20.50! 

Couldnt be happier! it went up about 3.5% today on my buy!

Cant believe the doom sayers, BNB are a good stock.. just now its at a GREAT PRICE!!!

lol i would piss myself laughing if Macquarie made a bid for them at this lower price..


cheers


----------



## barnz2k (21 August 2007)

im still way off on my buy in which was far to early at $26. Still they were Pushing $34 not that long ago. Ill be happy if they get back up to around $30 in the not so distant future. Wait.. thats almost 40% from its current position... maybe ill be waiting a while..
And might see further lows yet..

In it for the lonig run i guess!

LOL@ MBL buying BNB


----------



## golfmos123 (21 August 2007)

Same story for me too - got in just last week at high 23s and thought it an absolute bargain as have been watching for a while.  Then last Thursday came and $$ went!!

I'm only was only in this one for a relatively easy 10-15% but now things have changed that's for sure.  Still, it's a high qual stock and it can only go up from here.....


----------



## Boggo (21 August 2007)

Bought into BNBIMA instalment at 1.17 and again at 0.72. Went against my policy of buying on the way down but in the case of BNB I make an exception.

Expiry of Dec '07, they may soon announce a dividend for Oct or Nov.

Mike


----------



## Nicks (21 August 2007)

Firstly, I cant see MBL making a bid for BNB due to ACCC (that rhymes!).

Also, MBL is a garbage stock, an Enron waiting to happen. Often referred to as a House of Cards - they re value their assets and then leverage against the revalues to boost EPS and pay dividends - totally unsustainable and bordering on negligent.
BNB on the other hand is quality. They simply do their business and do it welll with out any of the hidden black box magic of Macquarie. They invest, make money from management fees and returns on their investments and funds.
In short, BNB good, MBL bad.

DYOR, my opinions only.....


----------



## barnz2k (22 August 2007)

Nicks said:


> Firstly, I cant see MBL making a bid for BNB due to ACCC (that rhymes!).
> 
> Also, MBL is a garbage stock, an Enron waiting to happen. Often referred to as a House of Cards - they re value their assets and then leverage against the revalues to boost EPS and pay dividends - totally unsustainable and bordering on negligent.
> BNB on the other hand is quality. They simply do their business and do it welll with out any of the hidden black box magic of Macquarie. They invest, make money from management fees and returns on their investments and funds.
> ...




Pretty much why I wanted to get in on BNB and jumped gun. More I saw/read about BNB they just sounded more... professional.. Their anns were more often and made more sense to me as well, something I really liked about th em. 

Just wish Id got out of MBL at $100 and used that cash for my BNB buy in.

Recovering strong again, currently $22.8.
Thats 20% in 3 days.


----------



## DOC (29 August 2007)

barnz2k said:


> Pretty much why I wanted to get in on BNB and jumped gun. More I saw/read about BNB they just sounded more... professional.. Their anns were more often and made more sense to me as well, something I really liked about th em.
> 
> Just wish Id got out of MBL at $100 and used that cash for my BNB buy in.
> 
> ...




Hi,
I was wondering of what peoples thoughts are on these two investment banks, namely BNB? What price range do you think they may trade between for the rest of the calender year?
And Barnz, you bought MBL at $100, I still think MBL have a great model for success with some definite upside in them at these prices, but at $100 was it just a punt or something else?

I bought BNB at 18.83 on that sea-saw day the other week, IMO the only way is up for these guys. Anyway time will tell. Maybe a long time at that.

Thanks for the interesting posts.

doc


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## Ken (29 August 2007)

I see BNB and MBL being determined by what happens in the US

This stocks are now the scape goat for any US falls.

So in effect BNB and MBL might just be some extra leverage to the DOW in the short term whilst everyone has Sub-prime on their minds.

Was much the same with BHP and the price of Copper when BHP was $24.00

Copper falls by 5% Bhp falls by 5%.....  

Even though BHP was more than just copper.

Thats the way it all works....

Long term, you would think they have enough cash to make it grow thus creating shareholder wealth.


----------



## barnz2k (30 August 2007)

DOC said:


> Hi,
> 
> And Barnz, you bought MBL at $100,
> 
> doc




No i bought in at $81, I wish I had SOLD at $100, would have been a nice fast 20%. I didnt sell as I had planned long term and thought it would settle back to around $90.. no idea it would hit low 60s just weeks/months later!

I still pretty much had the general public view of MBL, and that it would stay strong. So like I said more I learned about it bnb sounded better.

Now I agree with Ken though - even though its not really justified for BNB as they have less interest in the area to be affected - they are coping it, right or wrong. So if/when/where this all settles will playa big part in it. Long term though, as long as something major doesnt happen, I see them continuing up in the end.

But there has to be better stocks for short term - out of the financial sector all together!


----------



## reece55 (1 September 2007)

Nicks said:


> Firstly, I cant see MBL making a bid for BNB due to ACCC (that rhymes!).
> 
> Also, MBL is a garbage stock, an Enron waiting to happen. Often referred to as a House of Cards - they re value their assets and then leverage against the revalues to boost EPS and pay dividends - totally unsustainable and bordering on negligent.
> BNB on the other hand is quality. They simply do their business and do it welll with out any of the hidden black box magic of Macquarie. They invest, make money from management fees and returns on their investments and funds.
> ...




Nicks
From an accounting perspective, I couldn't agree more with you here...

To me, BNB is the pick of the investment bank style entities (i.e. MBL, CGF, AFG, etc). There are two things that really stick out for me here with BNB that make them a class above the rest - 

1). Their earnings are clearly transparent and their disclosure, even down to a business segment basis, is exemplary. Mark to market revaluation are at a minimum, there satellite funds have a clear distribution policy that pays distributions from OPERATING CASH FLOW (unlike the other mob of crooks). All in all, they are capturing recurring annuity style income that is based on sound fundamentals. 

2). They always deliver to the market. When they set market guidance, they deliver. 

I'm not sure this is the stage in the investment cycle that you want to invest in it, but clearly in my mind this is a must have in a long term portfolio (Super, etc).

The other reason why MBL could never take out BNB is that it is almost 45% owned by it's staff - I don't think they would ever resolve to be taken over (well, over Phil's dead body anyway)!

Cheers


----------



## DOC (11 September 2007)

reece55 said:


> Nicks
> From an accounting perspective, I couldn't agree more with you here...
> 
> To me, BNB is the pick of the investment bank style entities (i.e. MBL, CGF, AFG, etc). There are two things that really stick out for me here with BNB that make them a class above the rest -
> ...




Yes and another 40% is probably owned by the eastern suburbs mafia,  but who knows.


----------



## voigtstr (16 September 2007)

Its still good value at the moment isnt it?
Thinking of buying some on Monday (unfortunately not cashed up enough for 2k, will prolly get 1.2k worth)


----------



## dj_420 (20 September 2007)

Has anyone noticed the rather large buys sitting on BNB this morning?

That top bid at $26 is around an $18 million dollar transaction, hedge funds, institutions, or deep pockets buying in? The top four bids bring in around $20 million of value.


No worries... just found out it is options expiry, i thought something crazy had happened! like the all ords would open up 5%


----------



## roland (8 October 2007)

Just sold my BNB @ $29.70 up 20% for me in a month. I have a real issue with taking profits, but have so often seen these things zoom up and then come crashing down.

I am now sitting on a wad of cash looking for a home - is this "sellers remorse"

Would like to get some opinions on knowing when enough profit is enough, or when to take the profits. (of course the obvious answer is never enough).


----------



## dj_420 (8 October 2007)

A number of brokers have $36 targets on BNB, I personally will be waiting for BNB to break old highs then sell. Still a lot of room to move.

This stock has recovered very well from correction.


----------



## roland (8 October 2007)

dj_420 said:


> A number of brokers have $36 targets on BNB, I personally will be waiting for BNB to break old highs then sell. Still a lot of room to move.
> 
> This stock has recovered very well from correction.




Yes, I agree that it has further to go - but isn't it better to grab a few profits on a good rise, then buy back on a dip. It just can't keep going up 2% per day forever......


----------



## dj_420 (8 October 2007)

roland said:


> Yes, I agree that it has further to go - but isn't it better to grab a few profits on a good rise, then buy back on a dip. It just can't keep going up 2% per day forever......




Lol, yes I agree with that. I have great entry on BNB at 20.40 from correction so I am quite willling to hold for now.


----------



## roland (12 October 2007)

roland said:


> Yes, I agree that it has further to go - but isn't it better to grab a few profits on a good rise, then buy back on a dip. It just can't keep going up 2% per day forever......




I wonder if this is the dip I was waiting for? Anyone have thoughts on how far BNB will fall? A chart on BNB would be nice with some commnets. Thanks


----------



## barnz2k (22 October 2007)

nothing in here for a week.
Wondering how well they will hold up today if there is a big fall following the US. They got hit hard last time unfairly, but the US fall isnt a direct blame on the industry this time so maybe not as harsh?


----------



## nikkothescorpio (22 October 2007)

I would be amazed if BNB isn't one of the most heavily sold off stocks on the ASX today.

Right or wrong it will be clobbered today as its very US sensitive - mayabe less so with the sell off of some of its US exposure that i believe was annouced recently.  I'd be looking for it to be back at the $24 mark during this week.


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## TheAnalyst (26 October 2007)

BNB is looking really good....should see some good rise from here.....it is coming into its season now......and its earnings is still growing from the last couple of announcements...its even had its ABC wave hello..


----------



## roland (26 October 2007)

TheAnalyst said:


> BNB is looking really good....should see some good rise from here.....it is coming into its season now......and its earnings is still growing from the last couple of announcements...its even had its ABC wave hello..




Yes, it's a pity the dividend return sucks, otherwise I would hold longer. I am happy playing the swings. With the upside potential there is almost no risk. BNB is one hell of a great stock


----------



## L plates (27 October 2007)

TheAnalyst said:


> BNB is looking really good....should see some good rise from here.....it is coming into its season now......and its earnings is still growing from the last couple of announcements...its even had its ABC wave hello..




Yeh, I agree. As a new student of EW I actually took this trade believing that the (a) (b) (c) has just completed  wave (4) and is now going on to wave (5). I'm thinking that up to about $35 is possible, there may be some resistance at $30. Should be interesting day on Monday as Friday's vol was very high and it closed near its high for the day

748 - 2794	4:10:43 pm	2900	121,237	4	$3,515,873	47
A good strong purchase at $29.00 after the close.

Cheers


----------



## michael_selway (28 October 2007)

L plates said:


> Yeh, I agree. As a new student of EW I actually took this trade believing that the (a) (b) (c) has just completed  wave (4) and is now going on to wave (5). I'm thinking that up to about $35 is possible, there may be some resistance at $30. Should be interesting day on Monday as Friday's vol was very high and it closed near its high for the day
> 
> 748 - 2794	4:10:43 pm	2900	121,237	4	$3,515,873	47
> A good strong purchase at $29.00 after the close.
> ...




Yeah its not bad, maybe getting a bit expensive if u look at short term

*Earnings and Dividends Forecast (cents per share) 
2006 2007 2008 2009 
EPS 115.4 163.8 193.9 216.9 
DPS 36.0 50.7 59.6 67.8 *

thx

MS


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## TheAnalyst (31 October 2007)

Well, it broke $30 today, and once again the earnings forecasts are to be ignored on this stock, as they are always out doing something new, so the earnings forecast cant be taken as gospel.....same happens to MacQuarie Bank.


----------



## L plates (31 October 2007)

Yep, it looks all good to me. 
To me the push above $30 confirms a wave (5)
All other indicators that I use are looking strong.
First target (after next resistance of $32.40) around $32.70 Any thoughts?


----------



## TheAnalyst (31 October 2007)

To me all evidence points to a preAugust price recovery, and then to break its previous share price high.


----------



## ehwebba (8 November 2007)

good buying BNB now i thinks, 27ish seams like a bargain, looks like 35 in the near future , i know that ill be in there. sounds interesting eh


----------



## Mr_T (21 November 2007)

What is going on with this share?

It seems to keep dropping.

Most frustrating thing is that we hear very little from this firm, except when they have an announcement to make about an acquisition, etc.


----------



## profithunter (21 November 2007)

Speculation a major australian bank is about to announce sub prime losses

"Trinh added that currency markets were unsettled Wednesday, with the Australian dollar rallying against the U.S. dollar in early trading before selling off on market talk that a major Australian bank could be about to announce losses related to investment in U.S. sub-prime mortgage securities."

I dont know about this - BNB said they dont have exposure


----------



## Mr_T (21 November 2007)

profithunter said:


> Speculation a major australian bank is about to announce sub prime losses
> 
> "Trinh added that currency markets were unsettled Wednesday, with the Australian dollar rallying against the U.S. dollar in early trading before selling off on market talk that a major Australian bank could be about to announce losses related to investment in U.S. sub-prime mortgage securities."
> 
> I dont know about this - BNB said they dont have exposure




What? Are you saying there's a risk BNB has material sub-prime exposure, despite their denials to the contrary?


----------



## roland (21 November 2007)

No matter where you look, which broker you reference or which report you read - BNB is an absolute bargain.

Even last night when I received my Comsec report, they are suggesting that BNB is an extremely rare chance not to be missed. The target 12 month target now stands at $35 with an expected 12 month SP earnings forecast exceeding 30%

In my opinion, and fall now is an opportunity to grab some more stock. If necessary, I'll be selling other non performing stocks to follow BNB down. It's a pity that the dividend return is not so good 

BNB is tied to the bad taste of sub prime and is put into the same box as others in the financial tagged stocks and suffers accordingly. Funny thing is, BNB is relatively un-exposed to sub prime lending and probably shouldn't be punished as badly as it has been.

The BEI satellite is being seen as a peripheral failure and got punished. Coinmach seemed like a pretty good investment to me - but got punished again today, I guess share holders don't like seeing money being spent which is pretty odd when you hold shares in a company where this is their core business.

The market responded a little better with the Melbourne Children's Hospital deal.

I didn't check, but was told by a trader friend of mine that Macquarrie is being treated similarly.

IMO BNB is a buy, buy, buy - there is no need to take a loss on this baby.


----------



## Mr_T (21 November 2007)

roland said:


> No matter where you look, which broker you reference or which report you read - BNB is an absolute bargain.
> 
> Even last night when I received my Comsec report, they are suggesting that BNB is an extremely rare chance not to be missed. The target 12 month target now stands at $35 with an expected 12 month SP earnings forecast exceeding 30%




Any chance of cutting and pasting an important paragraph or two of this report? Would be much appreciated if you could.


----------



## roland (22 November 2007)

Mr_T said:


> Any chance of cutting and pasting an important paragraph or two of this report? Would be much appreciated if you could.




Here you go:

Opportunity to profit from fear

Australian investment banks have underperformed the market since the onset of the subprime turmoil. Sentiment has been dragged down by record losses in US and European banks. This is an extraordinary buying opportunity for some stocks in this sector.

Investment banks around the world have been hit by a crisis of confidence. US banks have so far written off over US$50B worth of mortgage-related losses in 3Q, and the market is expecting further write-downs over the coming quarters, up to a possible tune of US$200B if not more. The
trouble is no one, including the banks themselves, can quantify the full extent of their losses with any certainty, as the market for these investments has all but dried up.

With so much uncertainty hanging over the market, investors appear to have lumped all investment banks into the same boat, and we believe this is an opportunity to profit from fear. Most Australian investment banks, particularly Allco Finance (AFG) and Macquarie Group (MQG), have been
oversold even though they have little or no direct exposure investments that are primarily responsible for the massive write-downs in Europe and the US.

If anything, most in the sector have issued relatively positive outlooks, although these were laced with caution. The reason why AFG, MQG and Babcock & Brown (BNB) are relatively insulated from the sub-prime mess is because they mostly deal with physical assets. For instance, a large part of
BNB and MQG’s business is based on buying and “repackaging” infrastructure assets, while AFG is predominantly into leasing aircrafts and ships.
This is not to say their businesses are without controversies. BNB and MQG have received criticisms over underperforming satellite funds. This has prompted BNB to propose buying over Babcock & Brown Environmental Investments (BEI). The offer is valued at $0.508 per BEI share, but this is
unlikely to please all, since some paid $1.75 or more at its IPO.

The perception of the potential lack of acquisition opportunities has also weighed on the investment banks. However, we would not be surprised to see a pick up in acquisition activity, as there are still plenty of good infrastructure assets globally that are there for the taking.

Since all three investment banks rely heavily on overseas credit markets to fund activities, investors have been worried that the credit turmoil would impact their bottom lines. Although the cost of debt has risen worldwide, the banks do not seem to have much trouble raising funds. Last week, MQG
successfully closed a loan syndication healthily oversubscribed.

Meanwhile, MQG faces other challenges. A large portion of its revenues comes from share marketrelated activities, such as brokerage and M&A advisory and underwriting. In revealing its record $1B 1H08 profit, MQG said that its profit was boosted by unsustainably strong equity markets.

While we have factored this into our model, we note that MQG is well placed to profit from the booming Asian economies and there is likely to be continued strong demand for its M&A advisory services. BHP Billiton’s bid for Rio Tinto could spark more consolidation in the industry, while the Utilities sector is another that could experience a pick up in merger activity in the months ahead.


----------



## Mr_T (22 November 2007)

Thanks Roland!

It's much appreciated. What is interesting is that the report acknowledges that in the short term there will be a fall, but says the fundamentals are there for a medium term rise.


----------



## roland (22 November 2007)

Mr_T said:


> Thanks Roland!
> 
> It's much appreciated. What is interesting is that the report acknowledges that in the short term there will be a fall, but says the fundamentals are there for a medium term rise.




Yes, in my opinion, it is a very exciting chance to grab some more stock if you have the $$$'s. I did this last time it came down to this level and sold as it started climbing again. My method with BNB is to play the dollar movements and buy as it falls. It takes a lot of my capital, but I am confident that any fall is only temporary.

This is just my trading style with this stock and not a recomendation - please do your own research


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## Mr_T (23 November 2007)

I'd be interested in hearing what people's views are of the announcements of the last few days. Anyone have some knowledge about these projects that they would like to share?


----------



## RichKid (23 November 2007)

As a caution, consider the fact that some stocks can wallow far below their perceived 'value' or broker valuation, just as much as they can fall far below apparently strong technical 'support'. Anything can happen.

As someone studying to be a technical trader, I will be observing the nature of the test and response of the market as we travel towards those recent lows- an area, presumably, that is considered to be a 'value' buying zone as evidenced by the strong price rejection at those lows (consider some of motorway's descriptions of Wyckoff style tests in his various posts). 

Market participants can and do panic and sell assets at any price when they finally succumb to the weight of their losses, not knowing what else to do they sell in grief and misery. Whether this is rational behaviour or not matters little, but it is common place as many stock charts will show (also see the comments by ASF posters in the major stock threads (with the most participants) here on ASF and compare their sentiments to the price charts- merely anecdotal but useful). 

Elliott Wave theorists, especially those at Elliott Wave International, and some of the posters here on ASF use sentiment indices as a guide as well, although I'm unaware of any broadbased surveys or accurate sentiment indicators for the Australian Market. So, IMHO what counts is shown on the stock chart.

It may well be that the powerful buyers who move markets have decided that their buy level is well above the August lows so the nearby price levels are worth watching. OTOH they may believe that although it is below fair value they can get it even cheaper than at the recent lows. This is a highly liquid stock, especially after the release of more shares since listing, and worth studying to learn about how markets trend.


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## roland (23 November 2007)

RichKid said:


> As a caution, consider the fact that some stocks can wallow far below their perceived 'value' or broker valuation, just as much as they can fall far below apparently strong technical 'support'. Anything can happen.
> 
> As someone studying to be a technical trader, I will be observing the nature of the test and response of the market as we travel towards those recent lows- an area, presumably, that is considered to be a 'value' buying zone as evidenced by the strong price rejection at those lows (consider some of motorway's descriptions of Wyckoff style tests in his various posts).
> 
> ...




Wow, what a response Richkid, makes me sound very simplistic. I am an emotional trader - wouldn't know the first thing about charts 

What I do know is how a stock trades almost every second of the day - since my work allows me to have my eyes glued to the chart - I could almost tell you about every trade that was made with all of my stocks on my watchlist. 

This develops into quite an aptitude in picking up what is happening from a trade by trade perspective - totally non technical! Now adding my own research, reading every snippet of news, soaking up all the broker consensus I can find of the stock in question, you start to develop a "feeling". Now if I could combine the technical side with this - wow, I think I would have it all.

In my mind, there is no way known to man, short of war, famine or natural catastrophe that will stop BNB from going above $30 in the not too near distant future. How much I can capitalise on this is determined by how much further it will drop and how much of some other dog stock I am willing to let off it's leash 

My opinions only - OK


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## RichKid (23 November 2007)

roland said:


> Wow, what a response Richkid, makes me sound very simplistic. I am an emotional trader - wouldn't know the first thing about charts
> 
> What I do know is how a stock trades almost every second of the day - since my work allows me to have my eyes glued to the chart - I could almost tell you about every trade that was made with all of my stocks on my watchlist.
> 
> ...




Hi roland,

We are actually using different methods to make money from the market (or lose it as I often do!), as long as we come out ahead in the long run and meet our investment goals then all is well! I'm not disparaging your method but merely describing a bit of mine. It's good to avoid another fundamentals vs TA debate as there are many posts on that on ASF already. 

There are technical traders watching BNB too so my post might awaken a bit of interest in them. I do look at fundamentals as a filter when looking at the risk profiles of co's so I have an interest in some broker reports. Most long term investors don't use stop losses so the levels I've described above are less relevant to these investors- but very important to technicians who use stops. On a personal note,  I'm in no way suggesting that you are prone to buy or sell in an emotional mess or through ignorance; many people in the markets (including exponents of TA) do panic but I can see from you posts that you are likely to make a decision carefully after due consideration and according to your style.

All the best with BNB guys, whichever way you trade it, always enjoyable to discuss stoxxxxx!!!


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## roland (23 November 2007)

RichKid said:


> Hi roland,
> 
> I'm not disparaging your method but merely describing a bit of mine. It's good to avoid another fundamentals vs TA debate as there are many posts on that on ASF already.
> 
> All the best with BNB guys, whichever way you trade it, always enjoyable to discuss stoxxxxx!!!




RichKid, I didn't consider myself disparaged in any way and hope you could summarise your thoughts in a less technical way. I've now got $90K tied up in BNB, so I am all ears (or eyes in this case)


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## RichKid (23 November 2007)

roland said:


> RichKid, I didn't consider myself disparaged in any way and hope you could summarise your thoughts in a less technical way. I've now got $90K tied up in BNB, so I am all ears (or eyes in this case)




glad that's ok....guess it's hard for a technician to be less technical, I do tend to rant a bit. I'm basically looking for this counter-trend on the weeklies and monthlies to end so that I can go long, currently looking for evidence that the ct had ended. All the best with your position!


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## michael_selway (24 November 2007)

RichKid said:


> glad that's ok....guess it's hard for a technician to be less technical, I do tend to rant a bit. I'm basically looking for this counter-trend on the weeklies and monthlies to end so that I can go long, currently looking for evidence that the ct had ended. All the best with your position!




*Earnings and Dividends Forecast (cents per share) 
2006 2007 2008 2009 
EPS 115.4 165.0 195.8 221.8 
DPS 36.0 50.7 59.6 67.8 *

Not too bad actually



> Date: 21/11/2007
> Author: Nigel Hopkins
> Source: The Australian Financial Review --- Page: 8
> Adelaide is a leader in Australia's commercial real estate market. Itsgreen credentials have been noted by the Green Building Council and the PropertyCouncil of South Australia in 2007, such as holding 81,000sq m of office spacewith high Green Star ratings. There is also speculation that the Babcock &Brown and Hines Group's Conservatory mixed-use development will become amarket leader under the Australian Building Greenhouse Rating (ABGR)


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## Mr_T (25 November 2007)

michael_selway said:


> *Earnings and Dividends Forecast (cents per share)
> 2006 2007 2008 2009
> EPS 115.4 165.0 195.8 221.8
> DPS 36.0 50.7 59.6 67.8 *
> ...



It's very good.

Only problem with forececasts are that they are just that: forecasts. In reality the future is never that predictable. Yes, the near future is fairly predictable, but the further away something is in time, the less predictable it becomes.


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## Mr_T (29 November 2007)

It's incredible. The rest of the market goes down, BNB goes down with it. The market goes up, BNB hardly moves.

I wonder if there's something they are hiding. The official forecast figures are all sugar and spice, yet the downward trend of the share price indicates that some people might know something we don't (I am suggesting this as a possibiliy, not a certainty).


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## roland (29 November 2007)

Hang in there Mr T, there are knowns that are known, some uknowns that are known and some unknowns that remain unknown or something like that.


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## Mr_T (29 November 2007)

roland said:


> Hang in there Mr T, there are knowns that are known, some uknowns that are known and some unknowns that remain unknown or something like that.




Roland,

Are you trying to tell us something that you know that we don't? If so, could you give us a hint?


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## thierry (29 November 2007)

Yeah, disappointing performance today.. It usually follows the market, or at least does what MQG does.. 

There was some negative news on one of their investment arms, and the bailout of their environmental fund.. that's probably what is holding them back at the moment unfortunately.


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## Mr_T (30 November 2007)

Another day where the market is up and BNB is down. How depressing.

BNB directors, I sincerely hope you aren't keeping things that should be public knowledge from the public.


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## roland (30 November 2007)

Mr_T said:


> Another day where the market is up and BNB is down. How depressing.
> 
> BNB directors, I sincerely hope you aren't keeping things that should be public knowledge from the public.




Mr T, if you read back a page where I posted the Aegis report, you will notice that there is an expected weakness right now - even down to a low of $24.60. Until the SP consolidates around this level (or even lower) then you would expect some weakness and volatility.

I would agree with the Aegis research that we are sitting in a good opportunity for accumulation for longer term growth. Right now is probably not the time for short term trading.

Just my opinion OK


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## Mr_T (30 November 2007)

roland said:


> Mr T, if you read back a page where I posted the Aegis report, you will notice that there is an expected weakness right now - even down to a low of $24.60. Until the SP consolidates around this level (or even lower) then you would expect some weakness and volatility.
> 
> I would agree with the Aegis research that we are sitting in a good opportunity for accumulation for longer term growth. Right now is probably not the time for short term trading.
> 
> Just my opinion OK



Yes, you are right. Just that I still have bitter memories of investing in ION a few years back, where the directors kept coming out with "everything's great" when it clearly wasn't. 

Anyway, it's way up now compared to earlier on today, so that is a relief.

BTW, i'm not a short term investor, but short term downward fluctuations still hurt like hell.


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## roland (30 November 2007)

Mr_T said:


> Yes, you are right. Just that I still have bitter memories of investing in ION a few years back, where the directors kept coming out with "everything's great" when it clearly wasn't.
> 
> Anyway, it's way up now compared to earlier on today, so that is a relief.
> 
> BTW, i'm not a short term investor, but short term downward fluctuations still hurt like hell.




I'm a short term investor as well and sold some BNB at $26.00. If the stocks I hold go backwards - then I become a long term investor


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## Mr_T (30 November 2007)

According to this article (by the great Alan Kohler) some of the shareholders of BNB's spin offs are unhappy with the amount those spin offs pay BNB in management fees.

This raises a few issues:
a) What portion of BNB's profit is from management fees from companies it has a minority interest in (ie spin offs)?

b) To what extent is that portion of the profit in jeapordy from other shareholders of those spin offs taking actions like these ones are?

These are very important issues.

Here is the article

http://www.businessspectator.com.au...cash-cow-9EVWV?OpenDocument&alerts&loc=center

Kicked by a cash cow

The attack by London hedge fund Pendvest Capital on Babcock & Brown Capital (BBC) is a wake up call for both Babcock and Macquarie Bank about the fees they pull out of their infrastructure funds.

Not that hedge funds like Pendvest and is parent Capvest don’t usually have some pretty ritzy fees themselves, of course.

Pendvest was founded by County Cavan-born Seamus Fitzpatrick, and has now bought 5.21 per cent of BBC.

Yesterday Pendvest called an extraordinary general meeting of shareholders to vote on a return of capital, the sale of its major assets and/or the winding up of the fund, as well as the renegotiation of its management agreement with Babcock & Brown.

It’s all rather shocking and inconvenient for the happy fee-merchants at Babcock. If vulture hedge funds start spoiling the party by demanding wind-ups, where will it end?

Seamus Fitzpatrick claims that shareholders in BBC have had a minus 10 per cent return from their investment since the fund went public in 2005, while the ASX/S&P 200 index has grown by 69 per cent.

At the same time Babcock & Brown has apparently pulled $122 million in management fees out of the fund, having put in $200 million at the beginning – a return on investment of 61 per cent over two years.

In a scathing letter to Babcock & Brown management, Fitzpatrick points out that BBC shares are trading at less than half analyst valuations of the business based on a break-up. The stock was trading this week at $4.45, while Credit Suisse recently valued the assets at $11.50 per share.

Yesterday’s notice of meeting from BBC contains three key resolutions: a capital reduction of $2.13 a share and capital return of the same amount, or $425 million; the “sale, IPO or spin-off of the company’s investments in Eircom (the Irish telco) and Golden Pages (the main Israeli directories business) and/or the winding up of the company”; the renegotiation of the terms of the “preferred adviser agreement” with Babcock & Brown.

BBC owns 57.1 per cent of Eircom, in the books at $448 million, and other “associates of Babcock & Brown own another 7.9 per cent. The rest of the company is owned by former employees through a share ownership trust.

By the way, yesterday Eircom put a proposal to the Irish Government to split itself into two divisions – retail and wholesale. It’s a bit ironic because Australia’s telco, Telstra, is fiercely resisting the same thing.

Anyway, the appearance of Seamus Fitzpatrick’s fund on the BBC register demanding the sale of Eircom and/or the winding up of the company is a fascinating development for all infrastructure funds.

There would be many of them, especially those owned by both Babcock and Macquarie, where the fees paid to the manager ensure that the net asset value of the fund is less than the market value of the assets inside it.


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## roland (30 November 2007)

Valid point Mr T, but you name one "service" provider where the customers are happy about the fees charged.

Both Macquarrie and Babcock & Brown, amongst others, are in the business of making money. BNB have been in the investment bussiness for over 30 years and I am sure that this is not the first time that complaints have been raised.

I am sure that the comments are valid and the management of BNB and others are always treading a fine line between maximising profits for themselves and their shareholders alike. On the other hand they have to price their services accordingly to maintain competiveness and to attract the investors for their satellites.

Being a shareholder, I am not unhappy that they charge a premium and of course from a long list of investment fund managers there will be always some who complain.

I am confident the management of BNB have the expertise to handle this kind of criticism.


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## Mr_T (30 November 2007)

roland said:


> Valid point Mr T, but you name one "service" provider where the customers are happy about the fees charged.
> 
> Both Macquarrie and Babcock & Brown, amongst others, are in the business of making money. BNB have been in the investment bussiness for over 30 years and I am sure that this is not the first time that complaints have been raised.
> 
> ...




At the risk of sounding like a selfishl p*i*k, frankly speaking, I am not concerned about this from an ethical point of view. My concern is 100% based on this as a possible threat to BNB's future profitability. If:

a) These fees are a major portion of BNB's profit; and

b) The shareholders of these satellites find a way to reduce the fees;

then it might have a material impact on BNB's share price.


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## roland (30 November 2007)

Mr_T said:


> At the risk of sounding like a selfishl p*i*k, frankly speaking, I am not concerned about this from an ethical point of view. My concern is 100% based on this as a possible threat to BNB's future profitability. If:
> 
> a) These fees are a major portion of BNB's profit; and
> 
> ...




Hey being selfish and looking after one's self and where you put your hard earned $$$'s is well justified.

BNB Environmental was a good example, the SP suffered a little on this news. and BNB did the ethical thing on offereing to buy it back and fix it up - albeit at a much lower cost than the IPO - but that's business....

Personally I don't think the fees are the major income earner, I would be more inclined to think that assett growth and dividend return is the major focus and revenue earner.

Mr T, any news you find and highlight is good for learning more about our investment - much appreciated.  Being a trader you learn to use both good and bad news. I try to be in a position with BNB where news, good or bad, is an opportunity to either buy or sell. I took today's SP rise to sell a lower parcel and make a profit. I have some higher cost parcels, so I'll hold until my next sell target. If it falls on Monday - I am set to buy again.

I feel with BNB over analysis would be more suited to investors, but I would like more volatility - it's a lot more fun


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## roland (3 December 2007)

Yo, Mr T - seems like we have more good news today. Another Infrastructure Fund finalised and good to see it over subcribed once again. Go BNB!


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## Mr_T (3 December 2007)

Then why did the share price go down when the news is good? Maybe the news wasn't considered that materiel.


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## roland (3 December 2007)

Why does any stock go down on good news? Look at Oxiana today, more copper, more income, stock's SP goes down - go figure....


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## thierry (3 December 2007)

Why does this share get affected by the sub-prime issues.. 

Does anyone know if any important events/agm, announcments etc are scheduled in the next few days? 

Someone posted a broker review of bnb few posts earlier.. I'm interested in knowing what the other brokers are saying about bnb?


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## vishalt (4 December 2007)

thierry said:


> Why does this share get affected by the sub-prime issues..
> 
> Does anyone know if any important events/agm, announcments etc are scheduled in the next few days?
> 
> Someone posted a broker review of bnb few posts earlier.. I'm interested in knowing what the other brokers are saying about bnb?



Because B&B is essentially an investment bank (albeit an infrastructure accumulating one) and you have to remember that the market has a bandwagon mindset and they'll abandon a whole asset class when **** hits the fan (like subprime). 

*Key Dates - www.babcockbrown.com.au*

Final Results 2007               21 February 2008
Annual General Meeting      30 May 2008
Interim Results 2008            21 August 2008

Dates are indicative only and subject to change


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## bewick (4 December 2007)

vishalt said:


> Because B&B is essentially an investment bank (albeit an infrastructure accumulating one) and you have to remember that the market has a bandwagon mindset and they'll abandon a whole asset class when **** hits the fan (like subprime).
> 
> *Key Dates - www.babcockbrown.com.au*
> 
> ...




BNB - UBS has a price target of $36

UBS Investment Research
Babcock & Brown Limited
R aises US$800m US Infrastructure Fund
 First close of the Babcock & Brown North American Infrastructure Fund
BNB has announced a further diversification of its capital sources, with the
successful first close of a wholesale (unlisted) infrastructure fund focusing on
North American assets. This is particularly encouraging given market concerns
over investor demand for infrastructure assets in the current environment. We
expect the US$800m initially raised for BBNAIF to be expanded in coming
months with final close potentially up to US$2 billion.
 Ongoing wholesale fund raisings
We expect BNB to achieve further wholesale fund raisings in coming months. The
European Infrastructure Fund (BBEIF) is expected to reach a final close of around
â‚¬2 billion (currently â‚¬1.6b). BNB could also look to launch new funds with a
broader investment mandate (eg infrastructure, real estate and private equity)
similar to its current Babcock & Brown Global Partners vehicle.
 BNB’s business continues to rapidly develop
In recent weeks it has also listed Babcock & Brown Air on the NYSE, sold down a
US retail property portfolio and continued to expand its development pipeline.
 Valuation. Maintain Buy Rating and $36 Price Target (SOTP based)
BNB’s share price has been highly volatile over the last few months given market
sentiment. It is now trading on just 13.5x FY08E despite increased confidence in
its medium term prospects. Drivers: (1) Strong EPSg despite market movements
(2) Expanding capital base & AUM (3) Diversified revenue. Risks: (1) Volatile PE,
especially in the current environment (2) interest rate and market risk.
Highlights (A$m) 12/05 12/06 12/07E 12/08E 12/09E
Revenues 833 1,293 1,920 2,453 2,787
EBIT (UBS) 339 544 835 1,164 1,345
Net Income (UBS) 252 407 608 741 851
EPS (UBS, A$) 0.75 1.17 1.65 1.99 2.28
Net DPS (UBS, A$) 0.23 0.36 0.52 0.64 0.73
Profitability & Valuation 5-yr hist av. 12/06 12/07E 12/08E 12/09E
EBIT margin % 33.3 42.1 43.5 47.5 48.3
ROIC (EBIT) % - 25.1 21.9 21.7 20.2
EV/EBITDA (core) x - 12.6 12.8 10.1 9.3
PE (UBS) x - 17.0 16.5 13.7 11.9
Net dividend yield % - 1.8 1.9 2.4 2.7
Source: Company accounts, Thomson Financial, UBS estimates. (UBS) valuations are stated before goodwill, exceptionals and other special items.
Valuations: based on an average share price that year, (E): based on a share price of A$27.18 on 23 Oct 2007 23:41 EST
Jonathan Mott
Analyst
jonathan.mott@ubs.com
+61-2-9324 3864
Chris Williams, CFA
Analyst
Chris.Williams@ubs.com
+61-2-9324 3968
Arvid Streimann, CFA
Analyst
Arvid.Streimann@ubs.com
+61-2-9324 2189
Global Equity Research
Australia
Diversified Financial
12-month rating Buy
Unchanged
12m price target A$36.00/US$32.12
Unchanged
Price A$27.18/US$24.25
RIC: BNB.AX BBG: BNB AU
24 October 2007
Trading data (local/US$)
52-wk range A$34.63-18.80/US$29.23-14.57
Market cap. A$8.86bn/US$7.91bn
Shares o/s 326m (ORD)
Free float 34%
Avg. daily volume ('000) 2,898
Avg. daily value (A$m) 71.5
Balance sheet data 12/07E
Shareholders' equity A$2.17bn
P/BV (UBS) 4.4x
Net Cash (debt) (A$2.65bn)
Forecast returns
Forecast price appreciation +32.5%
Forecast dividend yield 3.0%
Forecast stock return +35.5%
Market return assumption 11.5%
Forecast excess return +24.0%
EPS (UBS, A$)
12/07E 12/06
UBS Cons. Actual
H1E 0.68 - 0.47
H2E 1.00 - 0.70
12/07E 1.65 1.63
12/08E 1.99 1.90
Performance (A$)

BNB’s Balance sheet capacity
We estimate that BNB now has around $9.1 billion of capital available to fund
future asset growth both on its own balance sheet and within its Specialist Funds.
If we assume that this capital can be geared around 2:1 (in line with many
infrastructure and property assets) this implies that BNB has the ability to
acquire around $27b of assets.
This capital funding is split with around $2.4 billion from BNB’s balance sheet
and $6.7 billion from uninvested equity and potential debt in Specialist Funds.
These are facilities already negotiated with interest rates locked in over the
medium to long-term. We believe that this funding capacity assists in addressing
markets concerns regarding the lack of capital post US sub-prime mortgage and
credit market volatility.
Today’s wholesale raising further illustrates BNB’s capital strength


----------



## thierry (5 December 2007)

Thanks for your posts.. that is reassuring .. I was starting to wonder if there was something about bnb i didn't know .. Today was a better day.. and the ~25 appears to be a bottom.


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## HRL (5 December 2007)

I read the same from both Aegis Research and Reuters this morning.  I thought it might be re-rated last month when it dropped from a buy to a hold so stayed away but was a little confused when the 12mth forecast stuck at $36 and reco now back to buy with the fundamentals confirmed.  Infact, according to Aegis nearly all the B&B companies are rated highly at the moment which is encouraging.  In particular BNB & EBB.  Hard to tell where the bottom is at the moment though.


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## thierry (10 December 2007)

It's strong today although the market is not.. market sentimemtn for this stock appears to be picking up.


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## L plates (11 December 2007)

Another very strong day for this stock.

Some big trades very late in the day

2604	4:12:49 pm	2812	270,000	32	$7,592,400	(1 trade)
 2407	3:48:46 pm	2823	290,000	1	$8,186,700	(1 trade)

from Stockness Monster. 

So anybody have any thoughts on this? 

Cheers


----------



## overule (17 December 2007)

Are you guys filling up ? or do you think the fall going to continue ?   Any advice will be good.


----------



## Treloarasaurus (17 December 2007)

I topped up last thursday. Not the best move in hindsight but will hopefully pay off in the long run.


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## overule (17 December 2007)

BNB dropped more than 5% today.. I went in. It's scary. 

I am in for longterm. Hopefully it works out.


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## mrgroundwork (17 December 2007)

bnb is the perfect stock to buy on down days... gets overly hammered every time the market jitters... and is one of the first stocks to bounce back hard... 

anyone remember the sub $20 days several months ago?


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## DOC (22 December 2007)

mrgroundwork said:


> bnb is the perfect stock to buy on down days... gets overly hammered every time the market jitters... and is one of the first stocks to bounce back hard...
> 
> anyone remember the sub $20 days several months ago?




hi,
yes i do remember that day very well, some idiot turned off the futures market for some routine maintenance, and in that 2 hour period the market went crazy. i was lucky enough to buy a small tranch of BNB at 18.83. by the time everyone realised the mistake at the asx, the stock was back up over $20. 

cheers,
doc


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## Mr_T (23 December 2007)

I'm a bit worried here.

In today's Herald Sun, Terry McRann writes http://www.news.com.au/heraldsun/story/0,21985,22963910-36281,00.html

"SHARES: Wall St is headed for a fall, possibly a biggish one. Because we don't have the same problems and the resources sector is likely to remain reasonably healthy, our market is more likely to drift lower. As we see with Centro, some stocks are far more vulnerable. Those with big borrowings, directly or indirectly exposed to US property."

Doesn't BNB fall into this description? It certainly has big borrowings, and has exposure to US property.

Any thoughts?


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## tronic72 (23 December 2007)

Mr_T said:


> I'm a bit worried here.
> 
> In today's Herald Sun, Terry McRann writes http://www.news.com.au/heraldsun/story/0,21985,22963910-36281,00.html
> 
> ...




For every article I see on doom and gloom, I see another for a continued boom. Especially commoditities. See below:

http://au.biz.yahoo.com/071223/30/1jizk.html

I'm more concerned with out reliance of commoditities in proping up the Aussie Market. I've start diversifying more than I have in the past (was heavy on metals).

I think the article you mentioned could have been written by a politition as it says a lot but commits to nothing. I do agree that the future for 2008 is uncertain but..... Derrrr!!!!!


----------



## Mr_T (23 December 2007)

tronic72 said:


> For every article I see on doom and gloom, I see another for a continued boom. Especially commoditities. See below:
> 
> http://au.biz.yahoo.com/071223/30/1jizk.html
> 
> ...




The article was written by Terry McCrann, who is a very clever man. Of course his comments that the future is uncertain are obvious to some, but it needs to be said, some readers (especially the type that read the Herald Sun/Sydney Telegraph) might be under the delusion that there are those that really know the future!

I am looking for comments comparing the similarity and differences between BNB and Centro. Of course, it goes without saying that BNB is in a whole range of industries that Centro wasn't, but there are still some similarities.


----------



## prana (3 January 2008)

Bringing this back into the spotlight. I have no issues with the fundamentals, big fan of the sector and the business. I'd like to know if any technical chartist opinions on the wedge formation that appears to taper to $26.80 mark. Are there are indications of the direction this breakout will be ? 

Not that it really matters, I'm a long term holder but curiosity kills the inquisitive  ....


----------



## Go Nuke (4 January 2008)

I bought in at $27 but then got out at the high $26's.

I bought based on the high buy reccomendations through Commsec, but was put off with its slow advance up.

I'm no tech chartist but I personaly think it could go either way at this stage.
Very tight cosolidation going on with the MA's.
Volume has dropped off though.
MACD is almost into the positive territory.

 I wouldn't look at BNB till I knew which way its going to go.
Thats my thoughts anyway


----------



## 2BAD4U (4 January 2008)

I'm only new to charting so do with my observations what you will, however my indicators are still showing weakness in BNB.  The main one being that price and volume have been moving in opposite directions (a bearish sign). At this stage I don't see a reversal and am expecting it to break the lower support line on Monday but will wait to see the candle formation and volume before making a call on if it is a break or a test of supply.

Cheers
Warren


----------



## VViCKiD (16 January 2008)

Man !!! this one is really getting hammered !!!
anyone have any comments ????
I am wondering if I should sell out and accept my 10K loss...


----------



## roland (16 January 2008)

VViCKiD said:


> Man !!! this one is really getting hammered !!!
> anyone have any comments ????
> I am wondering if I should sell out and accept my 10K loss...




yep - I've got a comment I am extremely unimpressed with BNB - sold the last of them today and put 'em into something that's going to pay some decent dividends. If this wasn't a friendly and repectable forum I probably would add a few cuss words here and there!


----------



## DowJones (16 January 2008)

I think BNB is a great company, trading at 27 only a couple weeks ago. The credit crunch and weaker US economy has caused sentiment on leverage companies to fall dramatically - i.e. Allco, Mac Bank, Challenger and Babcock.

Ageis has a BUY recommendation and a 12 mth target $37.44... It has potential but may not be the best value stock or that is going to rebound quickly

Even the baby is being thrown out with the bath water...


----------



## DowJones (16 January 2008)

I actually topped up and bought somemore today at 21.xx... now it lower, you can never pick the bottom!!

So many 'cheap' stocks, not even dough placed on the side...


----------



## roland (16 January 2008)

DowJones said:


> I actually topped up and bought somemore today at 21.xx... now it lower, you can never pick the bottom!!
> 
> So many 'cheap' stocks, not even dough placed on the side...




If I had some dough on the side, I would have done the same thing. Unfortunately I had to use BNB as my dough on the side for other opportunities - ho hum


----------



## VViCKiD (16 January 2008)

Yeh same. I topped up @ $22 just 2 days ago. 
I was cheering yesterday and now i am all depressed bout this stock.. 


$37 price target ? man... that seems a bit high.


----------



## DowJones (16 January 2008)

I think the target is a bit rich as well. Maybe $30 is attainable, but with the market shape as it is, it will take time.

BNB still has no issue raising capital for its infrastucture projects and they recently sold some infrastructure to a European buyer.


----------



## mrgroundwork (16 January 2008)

BNB typically rises as quick as it falls... so will be nice to catch the rebound...

i checked bloomberg terminal yesterday and consensus on all the major analysts recs was a 12mnth target of low 30's...


----------



## roland (16 January 2008)

mrgroundwork said:


> BNB typically rises as quick as it falls... so will be nice to catch the rebound...
> 
> i checked bloomberg terminal yesterday and consensus on all the major analysts recs was a 12mnth target of low 30's...




I agree, problem is that at 21 bucks or so a share, it ties up a lot of capital. I tried to hold my BNB, but a thousand BNB = around $21,000 which is a lot of small cap buys - I sold BNB, not because I don't have faith in BNB, but because I needed the dollars. Damn shame really


----------



## VViCKiD (16 January 2008)

I agree ... if i had more capital i would like to pump in more @ $21 a share...
I am holding gold and oil stocks... i am thinking of selling some of my other stocks for BNB... 

I am hoping to hold on long enough to receive the divies... 
wat does everyone think the divies might be ?


----------



## barnz2k (16 January 2008)

they are still buying up, and im sure I saw an article yesterday about how they are even less effected  by the subprime issue than noted before, but I cant see it now. So that should be a good thing!

I have faith in BNB and still hold, but damn its getting harder and harder to keep the faith!


----------



## VViCKiD (16 January 2008)

I agree... would you be able to tell me when those price forecasts were made ??

I mean in light of what's happened, it seems like that is really hard to see happening...


----------



## VViCKiD (21 January 2008)

can any body tell me why this stock is getting ridiculously hammered ?
It has dropped 50% in the last few months !! 
that is insane !


----------



## tronic72 (21 January 2008)

Could be worse. Have a look at todays action on AFG. 27% last I looked. Glad I sold all my stock recently, was getting to risky with all the Sub Prime uncertainty.

Risky times.


----------



## ged (21 January 2008)

its got an bid for $19.06 atm, sounds like a bargain?

i held this stock about 10 months ago, and got a ride from $26 all through to $31 then sold it taking a small profit, and watched it crash to $18 in july, but it sure did recover quick. seems its back at $18. might see what happens at the end of today and decide tomorrow if i should pick it up again.


----------



## Go Nuke (21 January 2008)

Yes I was just wondering that myself...Hands up who's game to think $18ish is the bottom???:bounce:

The "buy" recommendation on Commsec has not changed 1 bit over the last couple of months.
I think perhaps people will wait and see what BNB does with this port business in the U.K first.


----------



## L plates (22 January 2008)

Down 14.4% on the open !!!!
This is utter madness
This company has been going from strength to strength
Complete panic
Madness


----------



## L plates (22 January 2008)

God

Whilst typing it dropped again down to 16.3%
Insane, no other words to describe this tragedy.
People are just getting out at any cost for no good reason.
Stupidity


----------



## Judd (22 January 2008)

L plates said:


> God
> 
> Whilst typing it dropped again down to 16.3%
> Insane, no other words to describe this tragedy.
> ...




What you actually mean is that you have never seen this sort of thing before.  Imagine what it must have been like during 1972-74.  And yet people think October 1987 was a big one.


----------



## barnz2k (22 January 2008)

OMG. Im not even gonna look.
Seriously ppl, HTFU! World's gone crazy man.
When are we going to see an upward movement?!


----------



## nikkothescorpio (22 January 2008)

Spewing to just miss it at low $15's....damn need to be faster!

Some stops really musta got hit by that bungee effort!


----------



## sideshowbob (22 January 2008)

low 15's .... plenty of time now!

U bargain hunters...... were saying BNB at $20 is a bargain a few days ago.


----------



## nikkothescorpio (22 January 2008)

I still think she's got scope to go down further tomorrow - I mean I doubt you'd regret getting in at these levels - so maybe a few parcels would be better as it does tend to shoot back hard - see this morning went from $15.50 to $17 in a minute or so.


----------



## bruham (22 January 2008)

G'day all,


I've traded BNB three times in three days, hoping that I'm hitting the bottom each time I've traded.
Instead of buying shares, I should switch to CFDs, go short, this being the opposite to my share buying.This would create something like a option straddle.
I might even be able to pull back some of my loses I had from this trade..

It just takes a cool head at this time. Here's hoping I have one.

bruham.


----------



## ged (22 January 2008)

your right, i thought $20 was a bargain, then $18, now $15. jeez. 

this....is....MADNESS haha

i think we should definitely keep a watch on this. i still think its a bargain though im just worried how far it will far before it will pick up.


----------



## michael_selway (23 January 2008)

ged said:


> your right, i thought $20 was a bargain, then $18, now $15. jeez.
> 
> this....is....MADNESS haha
> 
> i think we should definitely keep a watch on this. i still think its a bargain though im just worried how far it will far before it will pick up.




I think these BNB & MBL shares are all going to get hit big time, like CNP, MFS, AFG etc

*Earnings and Dividends Forecast (cents per share) 
2006 2007 2008 2009 
EPS 115.4 166.6 197.7 224.9 
DPS 36.0 52.4 59.8 70.3 *

thx

MS


----------



## mrgroundwork (23 January 2008)

michael_selway said:


> I think these BNB & MBL shares are all going to get hit big time, like CNP, MFS, AFG etc
> 
> *Earnings and Dividends Forecast (cents per share)
> 2006 2007 2008 2009
> ...




Surely you would have to give a bit more reasoning than that... 

There are quite a few fundamental differences between those guys and CNP, MFS, AFG... the market can be irrational, but isn't stupid...


----------



## Ken (23 January 2008)

Chart wise there are so many stocks being technically short sold and fast.

If MQG breaks under $55 you would be going short on it all the way down to $47-$48, then the next stop is $32.

It would be very painful, but chartwise they are the next stops on the way down.

Look at ZFX it has fallen to $8 in a month.

Fundamentals mean nothing in a bear market.

Which is what a 20% + fall is... so they keep telling us..


----------



## pch (23 January 2008)

Actually, fundamentals equally mean nothing in a bull market too 

I have always done better in bear years when there is more of a focus on value, rather than the flavour of the month sector.


----------



## Ken (23 January 2008)

What !IF!


This bear market is something that we have never seen before.

Is it possible to have a market that is just so volatile due to all the technology, that the market just finds a level and stays choppy.

Or does human emotion mean uncertainty sends stocks south!


----------



## tronic72 (23 January 2008)

Ken said:


> What !IF!
> 
> 
> This bear market is something that we have never seen before.
> ...




Really interesting point Ken. I was just talking to someone today about just that point. How many of the recent sells have been due to pre-set stops and margin calls or margin loan calls? I think it's a look at how the stock market can crash or crash more severely for no good reason.


----------



## ithatheekret (24 January 2008)

michael_selway said:


> I think these BNB & MBL shares are all going to get hit big time, like CNP, MFS, AFG etc
> 
> *Earnings and Dividends Forecast (cents per share)
> 2006 2007 2008 2009
> ...




Thoroughly agree Micheal . B&B must at the very least be worried by the Yen loan book . Not quite sure about the Everest (EBB) fund though , I do remember the market cap being somewhere around $400M last year , been continuing the journey south ever since it paid the last div . Chart screams worry , even though it managed to get the snorkel above the $1 line .


----------



## Bushman (24 January 2008)

mrgroundwork said:


> Surely you would have to give a bit more reasoning than that...
> 
> There are quite a few fundamental differences between those guys and CNP, MFS, AFG... the market can be irrational, but isn't stupid...




Ha - all of a sudden a debt based asset acquisition model is akin to the anti-Christ. 

6 months ago it was being lauded as MCG delivered a $1b plus profit. 

This whole 'gearing is the end' obsession is ridiculous. Debt is the basis of the capital markets. Without it, nothing would be built. Debt markets will recover over time and the bigger players (BNB, MCG) are in the best position to ride it out. 

By the way, Merril's have warned off a couple of lpt's with overseas exposure and high gearing - IOF & MDT. A case of buyer beware in the current market.


----------



## kengaikl (29 January 2008)

I reckon this stocks AFG no.2 the way the share price is going. No matter how much they up their profit guidence their shares end up falling. CFD traders get hit by this stock on a daily basis with their volitile/crazy swings.


----------



## tronic72 (29 January 2008)

kengaikl said:


> I reckon this stocks AFG no.2 the way the share price is going. No matter how much they up their profit guidence their shares end up falling. CFD traders get hit by this stock on a daily basis with their volitile/crazy swings.




I've stopped trading CFDs for this exact reason. 

The rise & fall of stocks such as AFG, MQG & BNB are simply based on fear. Personally I think it's a really good time to diversify or top up. I recently purchased TOL for $10 & AFG for $1.85 and since then the miners continue to suffer. TOL for example was at 10 prior to the crash. I posted a request for information as to why the stock crashed but never got a reply. Since then it's climbed back to over 20% and AFG is over 100%.

If you are keeping stocks long term, just buy them at a price you think is fair and hold. Watching the current price movement will give long term investors an ulcer.


----------



## TheAbyss (30 January 2008)

Interesting reading regarding Tricom and a link to the Allco margin call due to ANZ being reluctant to give them any more chips to play with.

Anyone have any thoughts regarding whether Tricom had a few issues surrounding BNB and having to sell holdings in BNB? My reasoning is that if ANZ said "no, we wont be giving you any cash right now" were Tricom forced to drop a bundle of BNB onto the market which then caused BNB to fall lower than it should have and thus cause it to be undervalued? Will we see a take up in BNB or did we see it when the BNB sp jumped back up from $15?

Am i looking for things that are not there?

http://www.theaustralian.news.com.au/story/0,25197,23129469-5013408,00.html


----------



## Aussie2Aussie (31 January 2008)

TheAbyss said:


> Interesting reading regarding Tricom and a link to the Allco margin call due to ANZ being reluctant to give them any more chips to play with.
> 
> Anyone have any thoughts regarding whether Tricom had a few issues surrounding BNB and having to sell holdings in BNB? My reasoning is that if ANZ said "no, we wont be giving you any cash right now" were Tricom forced to drop a bundle of BNB onto the market which then caused BNB to fall lower than it should have and thus cause it to be undervalued? Will we see a take up in BNB or did we see it when the BNB sp jumped back up from $15?
> 
> ...




I would be very surprised if BNB is not being sold down because of leveraged exposure through Tricom, same goes for many of the banks and blue chips that have been sold down over the last few days.

Problem is, when will the enforced selling stop? 

$500 million is 10% of the daily turnover of the market.....but of that $500M and total turnover, probably 50-60% is blue chip, which means we are now talking 20% of those shares traded as possibly being infected by Tricom.

Bet Tricom wished the Dow went up last night.


----------



## thierry (31 January 2008)

BNBs timely responses to marke shows a well managed entity.. 

Not to sure what are the implications at the end of the press release.. if someone can explain that'll be great. 


ASX Release
31 January 2008
International investment and specialised fund and asset management group
Babcock & Brown (ASX: BNB) today clarified its relationship with Tricom
Equities (Tricom) in light of media reports over the last few days.
Phil Green CEO of Babcock & Brown said “I am confident that Tricom will work
through its current issues successfully. However in response to market
concerns, Babcock & Brown advises it is not a material creditor of Tricom and
our business is in no way impacted by the difficulties facing Tricom. Babcock &
Brown’s relationship with Tricom encompasses traditional stockbroking and
capital market services. In this regard we confirm the following:
• Neither Babcock & Brown, nor any of its senior executives, have extended
cash facilities to Tricom.
• Neither Babcock & Brown, nor its senior executives, have equity in the
Tricom business.
• Babcock & Brown has no current dealings with Tricom in relation to any of
its equity investments in its managed funds.
“Babcock & Brown currently holds one stock loan position with Tricom in a non
Babcock & Brown related stock, an approximate gross position of $50m and a
borrowing from Tricom of approximately $10m. In addition Tricom holds
convertible notes that Babcock & Brown owns in a listed entity, with a face
value of circa $10m, which are currently being redeemed by the issuer.


----------



## DowJones (13 February 2008)

Does anyone know of why Babcock is being sold off? Is it a case of 'throwing out the baby with the bathwater' in financials?

They have good analyst recommendations. Last trading at $17.55 when it was at about $28 before the Jan rout. All of this is on sentiment and debt fear. But has the company changed materially?

The results come out soon... anyone think they'll do well?


----------



## TheAbyss (13 February 2008)

Dow, i am of a similar opinion however they have been trending downwards since the first sniff of sub prime last june. I want to get in on BNB however the chart says not yet. I am thinking that if CBA show margin declines tomorrow BNB will go lower with CBA however, should CBA surprise we just might see BNB go up with it.

MQG is a better guide for BNB than CBA as i am sure we all know. I am looking for a change in the financial sector sentiment on good news from CBA tomorrow or a continuation of the slide.


----------



## VViCKiD (13 February 2008)

does anyone know when the results are due out ? 
how do u find out on comsec when the results are due out ?


----------



## prana (13 February 2008)

VViCKiD said:


> does anyone know when the results are due out ?
> how do u find out on comsec when the results are due out ?




Here
21 February 2008 

- this your answer is too short means its difficult to answer questions directly, so I have to add some random jibberish.


----------



## VViCKiD (13 February 2008)

thanks prina ... can anyone tell my why this one is getting hammered ? It really doesn't make any sense to me ....


----------



## Kalmsg (13 February 2008)

Spoke to a broker and he believes that BNB has a way to fall in this market yet and could test the 13 dollar levels and maybe even the 12 dollar levels in coming months ahead.

He also sees macquarie suffering the same fate for a while and could test the mid 45 dollar levels in coming months ahead if this bear market continues as it is believed it will.

Very interesting times ahead.


----------



## VViCKiD (13 February 2008)

damn... .that's some terrible news... 
in it for the long run but this is really testing my nerves.


----------



## prana (13 February 2008)

'never ask a barber if you need a haircut' tuggawar between that an 'get out while you still can'. I'm happy to hold but brokers make money from your transaction, surely they're going to take extremes, so you can buy back again when they see it recover. If $12 is the lowest it will go, then I'd be laughing. I'll put an buy order in tomorrow at $12 and wait for the party to come. In fact, if he's really that accurate, he could make a lot of money, why not stall at buying shares? Write out a call option at that price.

But wait, he's just like you or me, fact of the matter, he too cannot see the future, it makes no sense where he pulls those numbers from (maybe support lines?) but whatever it is, he won't cry from your lost, he'll only laugh from your trade. I'd forget those numbers and worry about the business conditions going forward instead. If your broker told you business conditions will definitely suffer from a lack od M&A or there's going to be a disaster in funds and infrastructure, it's hell of a lot more value than "the stock may reach $12" cause it may not, and he certainly cannot know that for sure.


----------



## 3MT (13 February 2008)

don't forget about the 1 Billion $ worth of stocks coming out of escrow this week. (late last). That could add some downward pressure in the coming days/weeks, depending on how desperate the holders want to cash out.

If you believe in this thing long term, then stop refreshing the comsec screen


----------



## thierry (13 February 2008)

both BnB and MQG are seriously undervalued.. I think problems with companies like AFG are reducing inverstor sentiment in these 2 stocks.. 

BnB has plenty of capital to pick up companies now at cheap prices.. unfortunately their good buisness is not necesarily reflected in the share price we see.. 

Sure there might be less M&A activities, but there will be a few companies needing financial backing to stay afloat.. BnB and MQG in prime position to pounce on these.. 

-------------------my opinon only------


----------



## barnz2k (14 February 2008)

3MT said:


> If you believe in this thing long term, then stop refreshing the comsec screen




LOL. Easier said than done. especially with too much time haha.
I'm really thinking about avoiding all stock news for a year and see what happens haha


----------



## blinkau (14 February 2008)

I purchased a decent parcel of BNB only to find out SGB will no longer lend against it there goes that large buffer I had in place, just a though for anyone who might be purchasing on a SGB margin loan. Even after informing them they still havent updated their online acceptable securities list I wonder how many other people have been caught out.


----------



## mrgroundwork (14 February 2008)

wow... that is pretty big to wipe the lending rate of an asx top50 company... understandable there is problems, like a Centro, but Babcock is still in good shape...

st george will lose customers over that...


----------



## overule (14 February 2008)

Got put options today. I have a feeling this stock will drop like crazy but will do  well in the long term.


----------



## VViCKiD (20 February 2008)

crap... i wish i bought some puts as well .... 
aahhhh ... can anyone tell me why this one is getting hammered so much ?


----------



## michael_selway (20 February 2008)

VViCKiD said:


> crap... i wish i bought some puts as well ....
> aahhhh ... can anyone tell me why this one is getting hammered so much ?




Do you know what, in a a week's time, today's rpcie could be considered quite high 

*Earnings and Dividends Forecast (cents per share) 
2006 2007 2008 2009 
EPS 115.4 166.6 197.7 224.9 
DPS 36.0 52.4 59.8 70.0* 



> Date: 8/2/2008
> Author: Paddy Manning
> Source: The Australian Financial Review --- Page: 77
> Credit Suisse banking analyst, James Ellis, has issued a note discussing theprospects of Allco Finance and Babcock & Brown. Ellis has suggested that thetwo Australian companies could face substantial provisions against the decliningmarket value of their co-investments in real estate funds, should they followthe lead of Macquarie Group. Specifically, Ellis claims Allco's 2007-08 netprofit could be affected to the tune of $A118 million, if it is forced to markto market co-investments in its managed funds


----------



## VViCKiD (20 February 2008)

We might need to wait a week. The report comes out tommorow... 
I am really dreading this.. I hate this stock...


----------



## vishalt (20 February 2008)

I'm going to B&B report to cover this tomorrow. 

Anyone have any particular questions? I'll be happy to ask lol, I personally want a comment from them after investor confidence in their business model has been shot down. I think SGB and CMC cut margins to BNB and the stock has been the most smashed after Alllco and MFS.

You know its funny, I called MFS, BNB, AFG and MQG up at work and asked them if they want to participate in naming their weekly hires for a weekly story. 

MFS BNB AFG refused to participate and they are pretty horrible with dealing with the media and rather secretive, so I dare say these companies are not transparent. 

MQG on the other hand is great with the media and stock has fared better and they participate in our "name who ya hired" section.


----------



## reece55 (20 February 2008)

michael_selway said:


> Do you know what, in a a week's time, today's rpcie could be considered quite high
> 
> *Earnings and Dividends Forecast (cents per share)
> 2006 2007 2008 2009
> ...




The accounting issue Credit Suisse are referring to is impairment of associates in accordance with AASB 128 'Investments in Associates'. I suspect you will find that BNB have a buffer here - after the August correction, BNB still had about a 15 - 20% buffer of market value > book value. Even if this amount is lower and there is an impairment trigger event, Babcock and Brown has a very good argument to say the assets are not impaired at present. In summary, I would think it would be unlikely this will affect BNB results tomorrow - whilst it's not the right time in the cycle to buy BNB, they are easily my favorite player in the diversified financial sector....

Allco on the other hand is completely rooted...... But hey, nothing I haven't been saying for months.....

Cheers


----------



## roland (20 February 2008)

VViCKiD said:


> We might need to wait a week. The report comes out tommorow...
> I am really dreading this.. I hate this stock...




Know how you feel VViCKiD, I got all excited with BNB when I picked up some at a low and made some good profits on the highs. I gave up a few dollars ago, and decided to get into the peripherals such as BBW and BBP. The dividend yield is a whole lot better if you get stuck and have to hold. BNB really ties up a lot capital with close to no dividend yield.

There is nothing wrong with BNB, they are a great company and you will do well if you are patient. I'm not so patient - so got burnt


----------



## reece55 (20 February 2008)

vishalt said:


> I'm going to B&B report to cover this tomorrow.
> 
> Anyone have any particular questions? I'll be happy to ask lol, I personally want a comment from them after investor confidence in their business model has been shot down. I think SGB and CMC cut margins to BNB and the stock has been the most smashed after Alllco and MFS.
> 
> ...




Vishalt
Just because MQG has a great hand on the media does not mean they are more transparent....

BNB is much better disclosure wise than MQG ever have been (certainly from an accounting view)....... MQG just have a nice bankroll to fund a media campaign to let everyone know everything is ok....

Plus, MQG does have the advantage of having a funds management and broker arm, which arguably are less cyclical than BNB's strictly investment banking business...

Cheers


----------



## L plates (20 February 2008)

I'm dreading tomorrow. How far will it tank? God only knows, 10 - 20%  ?
What the hell might as well go a good 50%.

I regret the day I ever purchased this damn @#@&*^& %%$#@ #$# 'ing stock


Makes me so mad


----------



## prana (21 February 2008)

Results ! NPAT to members +70% to BNB 58% ROE 32.4% div 33cents from 21cents

Outlook for 2008 growth is around 15%


----------



## thierry (21 February 2008)

great results.. they've got enough cash to ride out credit woes.. and could actually make the most of everyone else's credit woes. 

hope the sp performs as good as the result


----------



## barnz2k (21 February 2008)

prana said:


> Results ! NPAT to members +70% to BNB 58% ROE 32.4% div 33cents from 21cents
> 
> Outlook for 2008 growth is around 15%




If this isn't enough of a reason to stop those F****rs from hammering the price down i dont know what is. This stock is solid let it get back up there!!


----------



## Nicks (21 February 2008)

reece55 said:


> Vishalt
> Just because MQG has a great hand on the media does not mean they are more transparent....
> 
> BNB is much better disclosure wise than MQG ever have been (certainly from an accounting view)....... MQG just have a nice bankroll to fund a media campaign to let everyone know everything is ok....
> ...




Agree Reece. It has been consistently noted that BNB do not 'fund' increases in profit, assets or dividends through asset revaluations, nor do they loan against them. Maquarie do. To me this is dangerous and even more compounded in a volatile market with tight credit.

Stranegly BNB are not the ones holding up. Eventually fundamentals and reality need to kick in and I think you will see some significant positive reratings of this stock, meanwhile Maquarie can't keep its risky business af profiting from revaluations and intangibles going and could get hurt severely.

This makes BNB my stock of choice. No riskiness, no 'revaluations' to increase book figures, no loans against revaluations. Just solid investment business. Investment in 'tangibles'. At this price all the fear mongers are doing us a favour.

Time will show.


----------



## michael_selway (21 February 2008)

prana said:


> Results ! NPAT to members +70% to BNB 58% ROE 32.4% div 33cents from 21cents
> 
> Outlook for 2008 growth is around 15%




Wow they beat 2007 forecasts by a bit, but 15% forecast appears to be lower than previusly forecasted etc

*EPS(c) PE Growth 
Year Ending 30-12-07 166.6 9.2 44.4% 
Year Ending 30-12-08 197.7 7.8 18.7% 

Earnings and Dividends Forecast (cents per share) 
2006 2007 2008 2009 
EPS 115.4 166.6 197.7 224.9 
DPS 36.0 52.4 59.8 70.0 *

thx

MS



> Date: 18/2/2008
> Author: Matthew Cranston
> Source: The Australian Financial Review --- Page: 55
> Three cattle stations in Australia that are among the nation's best andbiggest are on the market. "Wollogorang Station" in the NorthernTerritory is expected to be sold for in excess of $A50m, with investment bankBabcock & Brown a possible investor. The property of 705,700ha, with roomfor some 50,000 head of cattle, also has great tourism development potential.The "Scheelite" breeding and fattening facility on King Island in BassStrait is being divested by Oakey Holdings, a subsidiary of Nippon Meat PackersAustralia, for $A18m. Finally, a cluster of beef cattle properties in SouthAustralia known as "Sheraco Group" is likely to fetch $A20m


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## Mr_T (21 February 2008)

michael_selway said:


> Wow they beat 2007 forecasts by a bit, but 15% forecast appears to be lower than previusly forecasted etc
> 
> 
> MS



Yeah, but they have always exceeded their forecast. By memory, wasn't their forecast at the beginning of 2007 for a 20% rise during 2007? This was upgraded over the course of 2007.


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## vishalt (21 February 2008)

They smashed estimates. 

I was in during the conference call and geez you talk about "media grilling the board" - well Phil Green hits back and totally redfaces the journos. He's pretty passionate about the business and its clearly believable in as stated in the report that people are selling the stock indiscriminately.


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## reece55 (21 February 2008)

vishalt said:


> They smashed estimates.
> 
> I was in during the conference call and geez you talk about "media grilling the board" - well Phil Green hits back and totally redfaces the journos. He's pretty passionate about the business and its clearly believable in as stated in the report that people are selling the stock indiscriminately.




Yep, good ole Phil Green is a magnificent leader, but I think the best thing if you actually listen to his teleconferences is the down to earth way he relays the results of the business. No matter what your understanding of corporate finance, he explains it extremely well.

Plus, as you say Vishalt, he loves stirring up the media..... I haven't listened to the results briefing, but in the half year he told them he was surprised that anyone was still interested in the business in light of the way people were selling his stock..... 

Cheers


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## thierry (22 February 2008)

BnB have presented some great results and shown a low level of debt which is what the market wanted.. going at lenght to distance themselves from afg would have also helped the stock get back in favour. Hopefully it does get back into favour over the next few days and the market starts valuing it at what it is really worth. up another 6% today.. still a long way to go imo.


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## VViCKiD (22 February 2008)

I'm in at $19... so still copping a punishment.... I hope this one goes all the way back up to $30... hehehehehe it was at highs of 30+ just last year... 
So praying for the best here...


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## Mr_T (22 February 2008)

According to this Crikey article (available to Crikey subscribers only) Babcock DO revalue assets and add this to their profit. Also, they seem to do so in dubious circumstances.

Here it is:

Friday, 22 February 2008

Michael Pascoe writes:


Beware the financial press falling over itself to heap praise on financial engineers – which is exactly what happened after yesterday’s Babcock and Brown results.


Phil Green was at obvious pains to distance his millionaire factory from the likes of Allco and MFS with a very rich set of numbers – a net profit of $643 million that meant a bonus pool for the lucky execs of more than half a billion dollars. Nice.

But different strokes for different folks. Rather than lapping up Phil’s damning of hedge funds, I was looking for his commentary on the US residential housing market crash, given that BNB plunged $1.6 billion or so on American flats and condos at the top of the market.

I naively thought there might have been a little write-down in the present circumstances, or at least a careful warning about what might be ahead. After all, there was that little Business Week cover story last month suggesting US residential property could fall by up to 25 per cent – and then it would only be back to its long-term trend.

No such write-down from BNB though – quite the opposite. That profit bottom line looked good, but $100 million came from the simple business of revaluing property upwards.

In the present climate, that’s an amazing achievement, especially as the aforementioned US residential stuff represents most of BNB’s real estate investments. But that thought doesn’t seem to have occurred to the cheer squad.

Babcock and Brown’s accounts show it started 2007 with $266 million worth of real estate held as investment property. It then proceeded to buy another $2.2 billion worth. It "deconsolidated" $739 million, pulled in another $11 million from "assets under development", threw in $10 million in capitalised expenditure and therefore had a portfolio of some $1.56 billion.

And then, with property prices falling hard and fast in the US and Europe, Babcock and Brown topped the portfolio up with a $100.6 million "net gain from fair value adjustments" – which means they decided it was suddenly worth $100 million more within months of being purchased.

Gee, they really must be real estate geniuses to achieve that sort of performance so very quickly in crashing markets. All hail BNB – and don’t think too much about the numbers.


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## prana (22 February 2008)

Pretty good volumes today, on the upside, it exchanged over 4M, that's not too bad. I dunno, perhaps I'm being naive but I pay no attention to the media. When all is good, you hear nothing, but when prices plunge, suddenly a barrage of -ve news appears after the fact, always playing hindsight and tag. What's the good in that? 

You really have a choice in stocks, if you like it, you open a position. If you don't like it, you don't. How hard is this concept? And if you picked it up at $18, and it became a victim of short selling, then just let it be. If you believe the intrinsic value is high and you are comfortable with it,  then so be it. If you bought a computer for $2k and suddenly you find some store liquidating it at $1.4k cause they're going out of business, do you suddenly drive yourself into the concrete wall over it? I can understand it if you're a trader, or a very greedy investor. But 20% downside in a market like this, is soft. 

I think this thing has now completed a double bottom at the same levels, would be interesting to see if it's able to carry momentum to keep its head above these $14 levels with ongoing volatility.


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## vishalt (22 February 2008)

Here's the article I did, journalists who weren't there at the conference catch Phil Green's fury which are in some of the quotes below: 

He literally froze cold any journalists who dared presume any bad debt/margin links.



			
				Investordaily said:
			
		

> Investment firm Babcock and Brown's (BNB) chief executive has defended his company's business model after returning a 58 per cent rise in profit to $643 million for 2007.
> 
> BNB chief executive Phil Green attributed the rise in profit to revenue generated from buying infrastructure assets and higher management fees.
> 
> ...


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## Mr_T (24 February 2008)

Regarding Michael Pascoe's article that I reproduced above:

I did some research and went looking through BNB's recent reports. What he says may in fact be correct. What he says about the revaluations IS correct - they did occur. What is in issue is whether the revaluations take account of current true value. If they don't then BNB's Profit has been over stated.

What I have written is after looking at their results. I am happy to be corrected on any errors:

REVALUATION OF ASSETS
On the Appendix 4E of their accounts for 2007, page 68, there is an item of Revenue (which adds to profit) listed as "Fair value movement on investment property" in the amount of $100,631,000. 


WHAT HAS BEEN REVALUED?
What exactly does this refer to? Some clues as to what this is referring to appear in the following:

Page 2 of "Full Year Results 2007 Announcement" attributes part of the increase of the revenue in the Real Estate division to the following:

"an uplift arising from the development of an Asian self storage portfolio.......and an uplift in the value of the BNP Residential Property portfolio in North America."

The "Full Year 20007 Results Presentation" also refers to "uplift in value" of Asian self storage and BNP Property in the USA in a few places.

So the $100M in revalued assets (which has increased profit) is due to 2 things:
a) its Asian self storage portfolio; and
b) rise in value of American BNP property 

HOW MUCH OF THIS REVALUATION IS DUE TO ASIAN SELF STORAGE AND HOW MUCH IS DUE TO THE AMERICAN BNP PROPERTY?
Nowhere is it explicitly stated how much of the $100m is due to the revaluation of the Asian self storage and how much is due to revaluing the BNP Property in the USA.


LETS EXAMINE THE REVALUED BNP PROPERTY A BIT MORE
Since the BNP Property in the USA is more worrying of the 2, lets focus on that one.

Page 21 of the "Full Year 20007 Results Presentation" refers to
 "The revaluation of the BNP multi-family portfolio in the US as disclosed at the interim result."

Frankly, IMHO this comment raises some red flags. It bascially implies that the revaluation was done before mid year, and so does not take account of events of the second half of 2007.

Page 23 of "Full Year 20007 Results Presentation" justifies this higher value given to the BNP properties by stating the following:
"The total investment is currently valued in excess of $1.8bn and includes nearly $1.5bn of non-recourse, debt. We remain very comfortable with the valuation of this portfolio on our balance sheet for a number of reasons including:
• Occupancy rates across the portfolio are well in excess of 90% and they have continued to experience strong NOI growth of approximately 4%.
• We acquired older properties in the high growth Sunbelt states. Our average price per unit for both deals is well below replacement cost for newly constructed comparable units.
• We financed our purchase primarily with 10yr fixed rate debt with a weighted average coupon of 5.65%. This debt is interest only and assumable.
• On December 21, 2007, we closed a sale on two properties from our Alliance portfolio at a cap rate of 5.43% based on in-place trailing 12 months NOI. We believe the assets in the BNP portfolio, which are on the balance sheet at an approximate 5.75% cap rate, are superior to the assets sold. At the end of the period Babcock & Brown’s direct and indirect equity in the portfolio was $136m."


NOT GOOD ENOUGH
Not good enough BNB! If you are going to revalue property in a falling market (as is the case of the American BNP property) you really need to give more detail than you have.

I find this troubling and I want to find out more. Any suggestions how/where I can do so?


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## reece55 (24 February 2008)

Mr_T said:


> Regarding Michael Pascoe's article that I reproduced above:
> 
> I did some research and went looking through BNB's recent reports. What he says may in fact be correct. What he says about the revaluations IS correct - they did occur. What is in issue is whether the revaluations take account of current true value. If they don't then BNB's Profit has been over stated.
> 
> ...




Mr. T
With all due respect, the results announced are Appendix 4E style and as such, do not require the same level of disclosure as a full annual report in accordance with Corporations Act. I suspect the answer will come by either emailing their investor relations department if you are a shareholder or waiting for the full statutory accounts (due at the latest by 31 March 08).

Bare in mind that if you add something like this back (and I certainly do when I am valuing the Company), the effect on the bottom line would be about 70 Mil due to the tax effect. Granted, that's a big move, but even with an add back like that the result in my view is fairly robust. I still think that revaluations of investment properties should be taken to a reserve until realised, but good ole AASB 140 'Investment Properties' says otherwise. Note that this is the only item of PP&E that you can take through the P&L, the investment banks fought hard for that to be inserted into our Australian framework. 

I'm glad that people are starting to read the financials of Companies again however, it's about time people started questioning the crap we accountants have been feeding the market in the last 3 years! 

Cheers


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## reece55 (24 February 2008)

Looking through the 4E again, I am a little more concerned about that valuation now.......

Have a look on page 79 in the notes section - the large majority of the valuation is at Director's valuation (like 1.3 Bil!!!!)....... ughhhhh god I hate that word in financials.... I will be looking closely at the statutory accounts to see how they determined the "directors valuation"....

Cheers


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## Mr_T (24 February 2008)

Recee55: Just how concerned how you? 

Do you take the view that if BNB have been "economical with the truth" on this issue, it raises a whole lot of other questions?


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## reece55 (24 February 2008)

Mr_T said:


> Recee55: Just how concerned how you?
> 
> Do you take the view that if BNB have been "economical with the truth" on this issue, it raises a whole lot of other questions?




Well, I'm not overly concerned (happy with the rest of the financials thus far after a cursory glance), it is however a large increase in property holdings to shelve on your balance sheet when the **** has fallen out of the housing market, particularly in the US

They do note that two of the properties obtained from the original portfolio were sold at a cap rate of 5.43% and their valuation is at 5.75%, so depending on how long they intend on holding them, it could be close to the mark. They have time on their side in the fact that the debt attached to the acquisition is fixed for ten years and interest only......

However, I would have thought that the value would have gone down, not up, in light of the sub prime. Hence why I will be looking closely at the disclosure in the full report.

Cheers


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## Mr_T (24 February 2008)

Reece55:

As I said earlier, the revaluation seems to have been made in the first half of 2007.

From page 63 of the Appendix 4D of the INTERIM 2007 report it states there has been a profit of 62,698,000 on the BNP property (I assume this was on revaluation). 

This on a property bought on 28 February 2007. It seems a bit strange that it went up in value in so few months. Even though the subprime crisis wasn't apparent in the first half of 2007, property prices were on the most part falling.

On the other hand, it is possible that they snapped up a bargain. If this is the case, you'd think they would be more open about it.

By the way, if you want to see the apartments that we are discussing, have a look at http://www.bnproperties.com/ . From there, can see the apartments and what rents they are seeking. Wonder if mortgage problems in the USA have caused an increase in rental demand for this type of apartments?


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## reece55 (24 February 2008)

Mr_T said:


> Reece55:
> 
> As I said earlier, the revaluation seems to have been made in the first half of 2007.
> 
> ...




Hi Mr T
Not denying that a large part was done in the first half. What I was pointing our was that they have achieved a revaluation for the year of about say 8% on the whole portfolio, which under normal conditions wouldn't be so far from the mark, but in the current environment does look a little cooked (i.e., I would have expected lower revaluation in second half and therefore less than 63 Mil rev booked through the P&L for revaluations)...

I will take a look at the link and see whether we can't match them to current market conditions...... BNB may have got a bargain, but I highly doubt BNP would have just given it to them for a song!!!!

Cheers


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## Mr_T (24 February 2008)

Assuming the rentals cited on that website are monthly (not weekly) looks predominantly like low rent apartments.

Some say that demand for renting such apartments is now high due to so many people losing their homes. 

Which of course doesn't mean that the capital value of those apartments hasn't fallen.


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## reece55 (24 February 2008)

Mr_T said:


> Assuming the rentals cited on that website are monthly (not weekly) looks predominantly like low rent apartments.
> 
> Some say that demand for renting such apartments is now high due to so many people losing their homes.
> 
> Which of course doesn't mean that the capital value of those apartments hasn't fallen.




Yes, the rent looks pretty cheap to me, at max 3 bedrooms in good sections of America, they are looking at around $230 per week..... Even for someone living here in Adelaide SA, that seems pretty cheap to me (then again, Aussie rents are stupid at the moment)......

So, in summary, feeling a lot better now after taking a peek at the properties, but it would be nice for them to give us a bit better disclosure on the valuation...

Cheers


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## Mr_T (24 February 2008)

I'm glad these issues are being discussed here. They are very important.

The interior of the apartments looks pretty average to me. Certainly not slums, but hardly premium housing. Which in the current market is probably a good thing.

I wonder how the capital value of such properties has held up in the USA?


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## Mr_T (27 February 2008)

This is VERY worrying. Have a look at this.

http://business.theage.com.au/whos-next-for-financial-judgment-day/20080227-1v3x.html

If Babcock's satellites keep sinking  (they had a good day yesterday), this could precipitate a downward spiral in confidence which could zap the upstream profit flow to the bank. As Babcock's model is predicated on ripping out unrealistically high fees early, they could be in trouble if the new strategy to shift to a wholesale global infrastructure fund model takes time to evolve.

Both Macquarie and Babcock overpay for assets and load them up with debt. In the early years they often pay interest only and therefore display a higher cashflow,  hence more income back to the bank. If asset prices fall, though, which they appear to be doing, this game is over. Shrinking confidence and investor support combined with the demand from wholesale investors for more skin in the game will make things very messy.

The revaluation game in property is over: vid Centro.

Babcock however shelled out $1 billion last year at the top of the market for US real estate then casually booked a $100 million revaluation to profit even though property prices were dropping in the US and Europe.

More interesting is Note 30 on interest bearing liabilities, buried deep in the bowels of the accounts. Current liabilities - usually more visible in the balance sheet - stand at $2.9 billion. That would suggest $2.9 billion in debt needs to be rolled this year.

Among the total liabilities is ``OTHER secured by marketable securities'' of $631 million (up from $328 million).

The note says  ``OTHER: Babcock & Brown has short term loans that are secured by marketable securities. Several of the marketable securities are accounted for using the equity method because of the size of Babcock & Brown's ownership interest. The loans are repayable within one year''.

One can only assume that these marketable securities are the various Babcock trusts. Has Babcock borrowed against its satellites? If so, BBI is down 20 per cent since December, BBW down 20 per cent, BBP is off a tad more and BJT is roughly even.

And these are presumably the most marketable securities in terms of liquidity.

On top of that operating cashflow was $507 million in the red (up from just negative $76 million), total liabilities stood at $13.1 billion while the finance bill was a hefty $662 million. On those numbers things are starting to look positively Allconian - although the structures are simpler with less cross-collateralisation.

Still, and this is where accounting is so grand - depending on one's perspective - Babcock managed to book a net profit of $639 million and predicted more of the same.


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## reece55 (27 February 2008)

Mr_T said:


> This is VERY worrying. Have a look at this.
> 
> http://business.theage.com.au/whos-next-for-financial-judgment-day/20080227-1v3x.html
> 
> ...




Mr T
I'm not so worried personally.........

In regards to the 2.9 Mil in current loans, it is hard to tell whether this is loans that are required to be rolled over this year, or whether items such as the Corporate Facility which have no fixed term and available at relevant market rates. Often whilst these are termed current because they have no fixed term, in reality BNB may be able to have the loan as long as it likes. I will await the final report to review.

Re the 630 Mil secured by marketable securities, it would seem logical that they would leverage their investments in associates against debt to obtain the yield differential. Net investments in associates was 1.9 Bil, so it's not like they are lacking collateral on the loan..... No problem here IMO.

Re the negative operating cash flow, the answer is pretty obvious - there was a net gain of 766,099 on the sale of assets. They obviously pay their staff bonuses, asset management costs and transaction and promotion expenses relative to this profit. But the cash flow attributable to the net gain is in investing activities. Now, you could argue that they will be hard pressed for this all to occur again at the same level, but the relevant expenses associated with the transactions will also not be there and they are sitting in operating cash flow -'s.

I don't think we are looking at an Allco here - AFG cross collateralised and used their own shares as collateral in their sattelite funds and ripped huge fees for complicated financial instruments. BNB sells infrastructure to its funds that have predictable cash flows and does it in a transparent fashion. This is not to say that BNB won't have a harder time making money, but at the end of it all, they have a stable set of satellite funds that have, so far, stood up t o the credit crunch......

Cheers


----------



## Mr_T (27 February 2008)

Reece,

Thanks very much for that.

At the top of Note 30 of the Appendix 4E it says:

"Babcock & Brown has a $2.35 billion revolving line of credit of which
$2,109.8 million (2006: $798.5 million) was drawn at 31 December 2007."

Could this be what you are referring to?


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## Mr_T (28 February 2008)

12 minutes into the Final Year 2007 webcast, Phil Green says the following:

"As at Dec 31, we had $240m of unused corporate facility and $364m of unrestricted cash. We have a three year Evergreen corporate debt facility whic is due for extension coming up now and we are confident that will be extended. We also already have approvals from some banks to actually increase that facility and one bank to join that facility which will increase our capacity at least in line with thecurrent covenants as obviously our net assets increase with retained earnings."


Not sure what to make of this, though the words "we are confident that will be extended" aren't quite as assuring as if he had said "we have received a new debt facility".

Still very worried.


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## Mr_T (3 March 2008)

Interestingly the guy who wrote the above article who described BNB as Allcoish is now backing down on this claims.

His name is Michael West (the journalist). He appears to now realise that BNB had 2.6 billion dollars in cash. Guess that should take away any fears we have of it being insolvent.

http://business.smh.com.au/a-sense-of-irony-helps-at-babcock/20080303-1whm.html


The issue facing Green and other leveraged deal-doers in the market is that the rumours are unlikely to go away for some time. Such is the nature of the beast, the sheer breadth of the operations.

As far as the Babcock structures go, there is nothing like the complexity or cross-collateralisation of Allco. They are even, generally, more transparent than Macquarie Group entities - certainly less complex in the satellites.

Still, while the overall liquidity position of Babcock & Brown appears to be comfortable with $2.5 billion in cash as BusinessDay has revealed, there are margin loans over the parent's holdings in the satellite trusts falling due this year. They are manageable at $631 million but way higher than last year's $328 million.


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## Mr_T (7 March 2008)

Why is this share still dropping???

NOT happy!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

If anyone has any recent broker reports, that would be much appreciated.


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## ghostworld (7 March 2008)

Mr_T said:


> Why is this share still dropping???
> 
> NOT happy!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
> 
> If anyone has any recent broker reports, that would be much appreciated.




I believe the falls are broad based declines in financial stocks. The more complex the structure, the higher the decline. 

Same can be said for most macquarie stocks. Have a look at MAP. I can't see the main reason for the big decline.


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## mrgroundwork (7 March 2008)

Mr_T i have looked at all the broker/analyst recs on the bloomberg terminal... pretty much 90% of the analysts in Oz have buys on it with consensus price forecast of about $30...

if i get time on Tuesday i'll upload the full list of all the brokers, their PX target and rating...

either they have their head up their a*se or BNB is being sold down without justification...


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## YELNATS (7 March 2008)

Mr_T said:


> Interestingly the guy who wrote the above article who described BNB as Allcoish is now backing down on this claims.
> 
> His name is Michael West (the journalist). He appears to now realise that BNB had 2.6 billion dollars in cash. Guess that should take away any fears we have of it being insolvent.





Apparently Mr Michael West is in some bother on a number of fronts. City Pacific are looking to take him to court over his inaccurate writings concerning them.


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## reece55 (7 March 2008)

Anyone see BNB's statement just after market close....

Phil Green is pouncing on the Rubicons just after Allco sold the whole lot down, announcing a 5% stake in all three..... As I have said many times, whilst all diversified financials are going to suffer in the near term, I believe that this one will end up coming out trumps.... the first move in what I envisage with BNB swooping on prey that are being sold down due to ludicrous leverage..... 

Cheers


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## nitpra (7 March 2008)

These are the broker reports released on 29th Feb.

Citi  29-Feb-08  1  Buy, High Risk  $26.41  
Merrill Lynch  22-Feb-08  1  Buy, High Risk  $31.80  
UBS  22-Feb-08  1  Buy  $30.00  
Credit Suisse  22-Feb-08  1  Outperform  $25.00  
ABN Amro  22-Feb-08  1  Buy  $22.50  59.8%  
Aspect Huntley  15-Jan-08  1  Upgrade to Buy from Accumulate  -  -  
Deutsche Bank  13-Dec-07  1  Buy - Re-Instatement of Coverage


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## Mr_T (8 March 2008)

If you read BNB's announcement on Friday regarding that they are not being subject to margin calls, they are basically admitting that they need to top up their margin loans to keep their LVR's at acceptable levels.

I wonder how long they can keep doing this.

Should we be worried?


----------



## michelacuna (10 March 2008)

reece55 said:


> Anyone see BNB's statement just after market close....
> 
> Phil Green is pouncing on the Rubicons just after Allco sold the whole lot down, announcing a 5% stake in all three..... As I have said many times, whilst all diversified financials are going to suffer in the near term, I believe that this one will end up coming out trumps.... the first move in what I envisage with BNB swooping on prey that are being sold down due to ludicrous leverage.....
> 
> Cheers




Hi reece55,

A question for you,
Why do you think BNB is so different than MQG? (I deducted this from your posts at the MQG forum and here).
As far as I can see BNB model was inspired by the MQG model and both revaluate their assets (BNB only real estate but that’s about one third of their business).
Yes, BNB is more transparent in its accounts but MQG is much bigger and complex.
At the current prices both are bargains, no question about that, but are these guys really better?

Regards,


----------



## nick2fish (10 March 2008)

As far as I can see BNB model was inspired by the MQG model and both revaluate their assets (BNB only real estate but that’s about one 
Yes said:
			
		

> Nice question... especially with both companies acting swiftly today to restore investor confidence and try to stymie the ridiculous speculative short selling attacks by hedge funds.


----------



## tigerboi (10 March 2008)

I said last week this was the next house of cards to go & i see they are furiously covering their vunerable arses from the shorters hit squad,they all got the same problem,debt to expand & with the banks wanting the bat & ball back its only a matter of time before they cant take from here to prop up this staple..always very dodgy using debt...


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## reece55 (10 March 2008)

michelacuna said:


> Hi reece55,
> 
> A question for you,
> Why do you think BNB is so different than MQG? (I deducted this from your posts at the MQG forum and here).
> ...




First, lets be frank I don't think either will perform well in the current environment, hence why I chose to only trade BNB at the present stage (and I don't have an open position at present). That really is an obvious point however. Whether they are cheap now or not I guess is yet to be seen. 

Transparency is the biggest difference in my books. Clearly MacBank invented the satellite style of fund business, particularly with infrastructure. I just think BNB applies it in a more sustainable fashion. 

Put this into perspective - in each of BNB's associates presentations, they clearly break down the results for the period down to operating cash flows. In addition, there is almost always a reconciliation of how the associates will fund their distribution target and this distribution target is funded from operating cash flows. All in all, they are not afraid to let investors know how it works, what their maintenance Capex is going to be and what the business model is so we can properly assess where we are getting our high yield from. Take BBW for instance, BNB allowed investors to view their model to prove how it works, allowing us to assess if we agree with the model. What's the bottom line here - if we want our yield with BNB, you can pretty much guarantee that it won't require refinancing or asset sales to achieve it. If either are achieved, we get a bonus.

Have a look at an MQG satellite presentation - big difference here, the presentations look great, but they tell you nothing except for how fast EBITDA is growing, management metrics (i.e. traffic growth for MIG) and debt profile. All of these things do not enable you to properly assess the performance of the vehicle. I mean, how hard is it for management to spell out, via proportional share, what operating cash flow was/will be, what the maintenance capex is and how you are funding the distribution. The reason you don't see this is because they are reliant on asset sales and refinancing to achieve the yield and don't want to point it out. And then of course there are the incredibly complicated structured ways they invest in the infrastructure investments - I'm sorry, I don't care how much MQG rant and rave, there is a limit on having an optimal structure. In some instances, their satellite funds are more like diversified financial investors rather than vanilla investment unit trusts, investing in dangerous instruments like subordinated debt interest rate securities. Anyone in finance will tell you that you do not want to be holding sub debt at the moment..... And then there are the related party deals.... have a look at my comments on MAP in the MQG thread....

I could continue to rant and rave, but I think you get the picture. I think BNB are here to stay because they have a model that works and I can clearly see that on paper. MQG say trust us, we are smart, we can make it work but yet the financials give us absolutely no confidence. The numbers don't stack up and if AFG is any kind of a lesson to us all, it is complicated is not necessarily better, regardless of size.

Cheers


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## nick2fish (10 March 2008)

tigerboi said:


> I said last week this was the next house of cards to go & i see they are furiously covering their vunerable arses from the shorters hit squad,they all got the same problem,debt to expand & with the banks wanting the bat & ball back its only a matter of time before they cant take from here to prop up this staple..always very dodgy using debt...




Debt is the structure of modern day life. Money goes in and out. What has happened to all that money withdrawn from the equity markets worldwide...back to a bank of some description and then back to some investment vechile. BNB showed today that it doses not have a problem raising cash anytime and for whatever reason. Next time you switch on a light or pay a toll spare a thought for the poor debt laden company thats making it happen,cause it sure as hell ain't the government


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## blaze87 (11 March 2008)

hi, 
i'm not so sure on how options works, but bnb recently issues some new options. this seems to be a move that is detrimental to the long-term investors of bnb. im just wondering if im missing something, but i view this as an negative step of the management.


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## michelacuna (12 March 2008)

reece55 said:


> First, lets be frank I don't think either will perform well in the current environment, hence why I chose to only trade BNB at the present stage (and I don't have an open position at present). That really is an obvious point however. Whether they are cheap now or not I guess is yet to be seen.
> 
> ...
> 
> ...




Thanks for your response,

Have you had a look at BJT accounts?
They don’t generate enough cash to pay distributions and revaluate assets to fill the gap.
Also they made a big gain on derivatives (about 70 mil) that is not clearly explained.
Any concerns here?

Regards,


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## michelacuna (12 March 2008)

some more info:

The Australian

BJT revalues assets upwards by $90m

Anthony Klan | January 18, 2008

THE Babcock & Brown Japan Property Trust has announced a $90 million boost in its property values amid a local market increasingly concerned about aggressive property valuations.

The trust announced that it had revalued 17 assets, delivering a 5.3 per cent lift in its total portfolio value to $1.77 billion.

Speaking from Japan yesterday, Babcock Japan Trust managing director Eric Lucas said the valuations were based on the improving strength of the Tokyo retail and office property markets.

"The Japanese market, which had been going down for the past 15-16 years, has turned the corner in the past two to three years," Mr Lucas said.

He said the group had never used inflated valuations but in the broader marketplace "certainly some valuers are more aggressive than others".

Babcock Japan Trust said its revaluations were expected to reduce the company's total debt from 64 per cent of its value to about 61 per cent.

While that level of debt would be considered high by Australian standards - at about the level of the failed Centro Properties Group - Mr Lucas said it was not high in the context of extremely low Japanese interest rates.

"Our property yields are substantially in excess of our cost of debt, which means we have a very different proposition to groups holding 60 per cent debt (in an environment) where there's very little gap between the cost of debt and property yields," he said.

"The debt service coverage ratio (a measure of a company's ability to pay down debt) of BJT is still higher than it is for the average of all other LPTs in Australia."

Mr Lucas said Babcock Japan Trust's assets were roughly split between retail and office properties with a small number of residential assets.


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## reece55 (12 March 2008)

michelacuna said:


> Thanks for your response,
> 
> Have you had a look at BJT accounts?
> They don’t generate enough cash to pay distributions and revaluate assets to fill the gap.
> ...




Hi Michael
Indeed, I have had a look at BJT's accounts.

Like just about every property trust in the world, BJT's distribution is not 100% financed from net receipts from rental receipts inclusive of the entities management fee. The net income after the asset management fee is about 50% of the distribution paid. To combat this, in the past BJT have underwritten the DRP. However, looking through BJT's balance sheet, they have plenty of surplus cash to service this commitment. This is also evident because they have been buying back shares and have recently repaid a bridging facility to bring down gearing. Even with these two adjustments, I would have thought they had enough cash to ride out any issues in the event the brokers decided not to underwrite further distributions.

As for the big gain on derivatives, not quite sure where you get that number. I have a net loss of 16.2 Mil for the half, but a 36.3 gain in the prior period. BJT hedges out both it's capital investment and underlying distribution in 3 years in advance and due to the interest rate differential is paid a handsome sum for doing so.

As for whether the revaluation is accurate, I have no idea - I'm not a property man myself. Looking through the value by reference to yield, the average yield in the portfolio is about 5.3% which I think is a little low, but Japan is a bit of a different beast - you have to bare in mind that the weighted average interest rate of their debt is about 2.2%, which would be about average for Japanese debt, so relative to the cost of debt the yield is ok (300 BPS). To achieve the same thing in Aus, the yield of the property would have to be about 11% - do you know of any 12% yielding commercial property in Aus? Japanese real estate values have also experienced a very long and protracted contraction post their asset boom, so they may be due for an increase. But most of this is speculation.

So all in all, BJT looks fine to me because of the jurisdictions financial metrics - if they were in Aus, this thing would be a CNP!

Cheers


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## michelacuna (13 March 2008)

reece55 said:


> Hi Michael
> Indeed, I have had a look at BJT's accounts.
> 
> Like just about every property trust in the world, BJT's distribution is not 100% financed from net receipts from rental receipts inclusive of the entities management fee. The net income after the asset management fee is about 50% of the distribution paid. To combat this, in the past BJT have underwritten the DRP. However, looking through BJT's balance sheet, they have plenty of surplus cash to service this commitment. This is also evident because they have been buying back shares and have recently repaid a bridging facility to bring down gearing. Even with these two adjustments, I would have thought they had enough cash to ride out any issues in the event the brokers decided not to underwrite further distributions.
> ...




Thanks.
BJT big gain on derivatives: 2007 Annual Report, Income Statement page 82
Back to BNB I would say this company looks solid, I agree with you that in the short term they will have some issues but they will be ok in the long term.
Regarding why I believe this stock is cheap. At yesterday’s closing price of 15 it has a PE of 8.43. If I use for example the RBA cash rate as a reference 7.25% at the moment I would have a comparison PE of 13.79. BNB PE is about 60% of that value. That means that the market is pricing this stock as its earnings will drop about 40% and will stay there. Interestingly enough, that is the percentage of their whole Real Estate or Infrastructure business, so the market believes that one of this will disappear entirely? For me, that is a gross overreaction, but as you pointed out, only time will tell. Maybe in a few years time we will look back and will say: “BNB? 2008 and 2009 were the years to accumulate that stock”, but that as well is speculation. 

Regards,


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## Mr_T (15 March 2008)

I suspect this  Bear Sterns thing will mean further losses in BNB's share price. I realise that that BS and BNB are fundamentally different businesses. However, BS's problems will be seen as reflecting/creating further problems in the credit markets. This will impact on BNB's share price.


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## Sean K (15 March 2008)

Mr_T said:


> I suspect this  Bear Sterns thing will mean further losses in BNB's share price. I realise that that BS and BNB are fundamentally different businesses. However, BS's problems will be seen as reflecting/creating further problems in the credit markets. This will impact on BNB's share price.



All the financials will be effected. I think there will be an awesome investment opportunity in these beasts once the dust settles. A once in 20 year opportunity perhaps. Maybe a few more skeletons yet though...


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## Garpal Gumnut (15 March 2008)

kennas said:


> All the financials will be effected. I think there will be an awesome investment opportunity in these beasts once the dust settles. A once in 20 year opportunity perhaps. Maybe a few more skeletons yet though...




Its not looking very healthy, possibly heading for a 100% retracement, a weekly shows a 1,2,3 down. 

? What did it list at and what did the smart money get it for before listing. 

Some of its assets are ok I'm told,  but like all these financials its gearing and market perception are a worry.

gg


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## Real1ty (16 March 2008)

kennas said:


> All the financials will be effected. I think there will be an awesome investment opportunity in these beasts once the dust settles. A once in 20 year opportunity perhaps. Maybe a few more skeletons yet though...




Absolutely spot on kennas, but the time to jump in is certainly not now.

Of course picking the bottom is impossible but once it "appears" the worst is behind us then you description of a "once in 20 year opportunity" will be there for many that normally wouldn't be invested in this sector.


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## tigerboi (16 March 2008)

kennas said:


> All the financials will be effected. I think there will be an awesome investment opportunity in these beasts once the dust settles. A once in 20 year opportunity perhaps. Maybe a few more skeletons yet though...




very true on this mob,once the dust settles which will be?? there will be opportunities, yep your a lot gamer than me,too risky for my liking as i still think they may be rearranging the deck chairs on the BNB titanic, however they did react swiftly to a possible attack from the long short-short long gang,i would think the sentiment to these types of set ups will see the price head much lower,i reckon they where very lucky they werent among the hit squads early victims, as it gave them much needed time to re-borrow & spread it,interesting to see how they go in the next 3 months...tb


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## Bolivia (17 March 2008)

correct me if I'm wrong, but according to market watch, BNB has significant corporate debt which IS related to market capitalisation. It is my understanding that their covenants would be breached if the market cap goes under $3 Bill for a period of at least 3 months. 

If this is true it would be like a red rag to a bull for the hedge funds. 

Are many people aware of this? It would definately affect my decision on whether to buy BNB

(I am neither long or short BNB)


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## Mr_T (17 March 2008)

Bolivia,

If this is true then it sounds very worrying.

Do you have a link for this by any chance?


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## treefrog (17 March 2008)

Bolivia said:


> correct me if I'm wrong, but according to market watch, BNB has significant corporate debt which IS related to market capitalisation. It is my understanding that their covenants would be breached if the market cap goes under $3 Bill for a period of at least 3 months.
> 
> If this is true it would be like a red rag to a bull for the hedge funds.
> 
> ...




so, at $10 she's gone?  - bumping along the 12.20 platform today, looking for a crack to slip through - agree the hedgies will be greasing the gaps


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## Mr_T (17 March 2008)

Frightening, but 3 things to consider:

a) Do we know for a fact there is such a covenant?

b) At least it's over 3 months, that definitely gives some breathing space.

c) In reality, banks will not enforce such a covenant if the business is otherwise healthy. Not because they are nice people, but simply because it is in their interests to have their debts paid back in an orderly manner. Once the company stops trading as a going concern they know they will be unliikely to get all their money back.

Having said that, if this is true it will put lots of downwards pressure on the share price.


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## X888 (17 March 2008)

Bolivia said:


> correct me if I'm wrong, but according to market watch, BNB has significant corporate debt which IS related to market capitalisation. It is my understanding that their covenants would be breached if the market cap goes under $3 Bill for a period of at least 3 months.
> 
> If this is true it would be like a red rag to a bull for the hedge funds.
> 
> ...




Bolivia,

Yes... please I would also like the link to this as I hold many BNB.

I had a look at Marketwatch but could not find anything.

Thanks


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## Mr_T (17 March 2008)

I believe that BNB staff are due to receive their bonuses by the end of the month. I wonder if there is any chance the company will do the right thing by shareholders and not give them this year.

I also wonder what effect such a decision would have on the share price.


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## prawn_86 (17 March 2008)

Mr_T said:


> I believe that BNB staff are due to receive their bonuses by the end of the month. I wonder if there is any chance the company will do the right thing by shareholders and not give them this year.
> 
> I also wonder what effect such a decision would have on the share price.




If i worked for BNB and they withheld bonuses i had worked hard for i would be mighty pissed off.

It is not the vast majority of the employees fault the SP is falling. I think you need to look after employees before your shareholders.

Easy exec bonuses and performance 'hurdles' are a different matter though...


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## Mr_T (17 March 2008)

It's not the employee's fault that the SP is falling? Are their problems 100% the result of bad luck?

If the previous post about a covenant is correct then it will be clearly in the employees' interests to not get bonuses. They are better off not having bonuses and at least having a job.


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## prawn_86 (17 March 2008)

Mr_T said:


> It's not the employee's fault that the SP is falling? Are their problems 100% the result of bad luck?
> 
> If the previous post about a covenant is correct then it will be clearly in the employees' interests to not get bonuses. They are better off not having bonuses and at least having a job.




Your 2nd point i can accept, however i think with holding bonuses would be a very short term fix in current market climate, imo.

No it is not the employees fault the price is falling. 99.9% of their employees have very little direct influence over the SP.

People like:
traders who have been profitable all year for the bank

the IT guy who has done his job nicely all year

the middle management who has kept costs under control

an analyst who has highlighted good opportunities and warned of possible problems

Why should all these guys not recieve bonuses?


The fall in SP is mainly due to market sentiment. Have BNBs profits fallen dramatically? (i have no idea i dont follow them)

Point is, if anyone is to blame it is senior management (thats why they get paid the big bucks, to take the blame), however sentiment has also played a HUGE factor in the SP performance


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## X888 (17 March 2008)

Employees are getting bonuses but just not as much as they should be...

But it's to do with any company, Computer sales down... profit share will be lower


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## Mr_T (17 March 2008)

Well this is getting frustrating. All we hear from BNB is sugar and spice and how well things are going. And the market keeps selling it down.

I am finding it increasingly harder to believe that the market doesn't have some basis for dumping this stock. I don't think that the excuse of "market sentiment against financials" is as believable as some would like to think.


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## ROE (17 March 2008)

Mr_T said:


> Well this is getting frustrating. All we hear from BNB is sugar and spice and how well things are going. And the market keeps selling it down.
> 
> I am finding it increasingly harder to believe that the market doesn't have some basis for dumping this stock. I don't think that the excuse of "market sentiment against financials" is as believable as some would like to think.




Bear Stearns said everything was cool last week before it went Belly up this week  ... In this environment I don't think people will takes management word for it especially when your model is based on a lot of cheap debt.


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## Mr_T (17 March 2008)

ROE said:


> Bear Stearns said everything was cool last week before it went Belly up this week  ... In this environment I don't think people will takes management word for it especially when your model is based on a lot of cheap debt.



But doesn't Phil Green have a reputation as a man of honesty (unlike his brother Max Green who was murdered in Cambodia over 10 years ago for embezzling $40 million)


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## Bolivia (18 March 2008)

Just a follow up on the info about loan covenants -

This info was on "market talk" on Iress. They do not archive this stuff so I can't post the link. I don't know how credible this info is??

To clarify what was said:

A review event would be caused on B & B debt if market cap falls below $3 Billion for a period of 4 months (I think i said 3 before but i have confirmed that it said 4).

That puts it about 10.20.

Like I said before, I don't hold BNB and I'm not short either. Just letting you know.


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## michelacuna (18 March 2008)

I found this link, same info.

http://www.egoli.com.au/egoli/egoli...EA76-4822-9B28-A77BFEFA6319}&Section=Warrants

CitiWarrants: Babcock & Brown - Converts Market Sentiment into a Business Cost
18/03/2008

Taking a hit for the Satellites ”” Despite having the balance sheet capacity to repay satellite margin loans and maintaining belief in the fundamental value of these entities, BNB has bowed to market pressure and refinanced margin loans against its satellite investments at a heavy cost, converting a potential timing issue into a real business cost, reflecting an unusual sign of desperation.

High Interest Rate + a 4% Option ”” Terms weren’t disclosed but likely involve an interest rate of >10%pa, plus an option over 14.3m shares, albeit at a strike price of $23ps. While a seemingly desperate move, it at least reassures of the group’s long-term commitment to its satellites, while shareholders would presumably accept this option being exercised given the current share price.

Market Cap Clause ”” BNB also disclosed a market capitalisation clause with respect to its corporate debt facilities which provides for a review event should the group’s market cap fall below “a little over $3bn” for 4 consecutive months.

Negotiating a Debt Expansion ”” Despite this, BNB continues to reiterate that its banks remain supportive and it is currently negotiating an expansion of its corporate facilities which may include a lowering of the market cap review level, albeit at a likely higher interest cost.


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## Mr_T (18 March 2008)

I think they're refinancing about $450m aren't they? I guess if the debt covenant gets evoked, they can dip into their $500m of bonuses. As I said in an earlier post, better for employees to give up their bonuses than not to have a job.


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## Mr_T (19 March 2008)

A most disappointing day for BNB. Whilst a 6.7% rise might look like a good result, the reality is that this has to be looked at compared to other financials. Macquarie was up 13.7%, the Big 4 banks were up 6.7 - 8%. BNB has got a bigger battering than all of these in the past few weeks, now it is not "catching up".


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## roland (19 March 2008)

If anyone is interested, this is what FAT Prophets have in today's report:

Babcock and Brown (BNB)
As shown on the chart, Babcock and Brown has breached major support at $14.85, touching a low of $11.90 this week. This is some 65% below the all time high of $34.78 from June 2007. Although losses have already been substantial, at present, the trend remains down and additional falls appear likely in the near term.


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## VViCKiD (19 March 2008)

does anyone have any recent broker recommendations on this ? 
i have quite a few of these stocks and am getting really burnt by them.. 
it's so frustrating !!!


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## reece55 (19 March 2008)

VViCKiD said:


> does anyone have any recent broker recommendations on this ?
> i have quite a few of these stocks and am getting really burnt by them..
> it's so frustrating !!!




Ignore the brokers, history proves they are a little slow in downgrading assumptions in a bear market (mainly because there main purpose is to provide a reason for their broking dept to sell the stock to investors)....

I am a fan of this business, but the chart continues to scream sell unfortunately.... todays open at 14.20 and rapid sell down doesn't inspire me..... I still continue to believe it will be around for the long run, but it's going to take a long time to shake the negative momentum........ I would prefer to watch it hit above $15 and stay there before I would consider a position...... if at all with banks of all shapes and sizes imploding.....

Cheers


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## Mr_T (21 March 2008)

Reece, I wouldn't mind hearing your opinion on this.

The Business Spectator has a nice new interview with Phil Green:

http://www.businessspectator.com.au/bs.nsf/Article/KGB-INTERROGATION-Phil-Green-CV4VJ?OpenDocument

There is one thing about this interview that concerns me, were Robert Gottliebsen asks Phil Green about their notes. I didn't realise that these notes yield 30%, and I'm not that satisfied with Phil's answers.

Here is an extract:

RG: Why do you think your listed notes yield around 30 per cent. Do you think that might have something to do with the 78 per cent look through gearing?

PG: Look, we think that in this market there is an enormous amount of dislocation in valuation. We think they probably trade at that because of very low liquidity. I mean if you look at the volumes, the amount of actual debt that’s traded over the last month at that price, I don’t think it adds up to a lot in a month.

RG: Why don’t you buy them back? At that price.

PG: Because we don’t want... because at this point in time, you know, we want to preserve our liquidity to grow our business… on the one hand you say you say we should be de-gearing, on the other hand you want us to increase our gearing.

RG: It’s just the amount – the 30 per cent tells you that the... it’s a very high figure and anybody… 

PG: Robert... Robert... in this market if people want to judge the sustainability and the strength of our business off the back of where our hybrids trade on very thin volumes then that’s their judgement. All we can do is deal with our business, run our assets, manage our balance sheet in the way that we think is most effective. 

There may be a point in time where... the best thing we can do with our cash is buy back our notes. ...We manage our balance sheet the way we think it’s best managed and at the moment notwithstanding where those are trading, the rate of return that we get on supporting our development business in wind energy is still much higher than buying back those notes.


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## thierry (21 March 2008)

Thanks for posting the interview.. 

I was surprised when bnb did not climb back in % terms as much as Macquarie bank.. and then it gave up all the gains yesterday.. 

is 10 dollars a significant value for the stock price.. If BnB is only 50% geared.. then why is it being hammered.. does anyone know what the employees are thinking, given they own a fair chunk of the company? 

Can someone explain to me look through gearing? It didn't make sense what was said in the interview. What is the actual amount of gearing of BnB?


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## reece55 (22 March 2008)

thierry said:


> Thanks for posting the interview..
> 
> I was surprised when bnb did not climb back in % terms as much as Macquarie bank.. and then it gave up all the gains yesterday..
> 
> ...




It seems some people on the sidelines without knowledge of credit markets or even pricing of debt instruments should not be making these kinds of comments. The person interviewing Phil Green obviously has absolutely no idea, only that the yield is now about 30%....

First, lets actually understand the instrument issued, they are unsecured subordinated cumulative resettable notes. It has always surprised me how unsophisticated the Australian market has been with these kinds of issues in the past. BNB are giving you 2.20% above BBSW (Australian Bank Bill Swap Rate) and you are taking on: debt, that in the event of default, ranks BEHIND that of all creditors other than those creditors who have specifically requested to be ranked further down the chain or the ordinary shareholders. I don't know about you, but even before this crash in debt markets, 220 bps really isn't enough to essentially be taking an equity tranche in a debt issue. AFG's Mobius trust used to love investing in these kinds of instruments and even they were smart enough to request above 500 bps, even without the conditions we have today.

So first factor is that in my view, the instrument should have traded well below par from the beginning. Next point, consider the conditions we are now faced with. Spreads between AAA - BBB have widened to ridiculous levels depending on the firm. Now consider the Bear Sterns incident - does it really surprise anyone that they are trading at low levels in light of the security provided. Because, to me, it seems fairly logical thats where they are. As for whether Phil would want to buy them back, do you really think he is going to be dumb enough to issue another say 80 Mil BNB shares that are going to further depress the BNB share price? Although, considering the discount they are trading at, it could definitely be beneficial to convert them to scrip because they would actually have a gain on disposal of debt securities (hilarious)...

Enough of my rant, personally I wouldn't pay much attention to the interview because obviously the interviewee has absolutely no idea... As for whether I would rushing out to buy BNB scrip, as I have said previously, I would be looking for a break of $15 and start to see some support for the stock. Because regardless of the fundamentals which I think long term are strong, people don't like this stock at the moment. Bare in mind it's 3 return since listing is still over 70%!!!!!! It's been a rocky ride so far..

Cheers


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## Mr_T (22 March 2008)

Lets use a term deposit as a benchmark. If you stick money in one, you'll get about 7% interest. Close to 100% safe.

Clearly, this kind of unsecured note is going to pay a higer rate. But so much higer? An extra 23 percentage point?

Using a crude analysis, does that mean that the market thinks there is a one in four chance BNB will be unable to pay its debts (ie become insolvent)?  Or even taking into account that risk is "overstated" in markets now, does it mean there is a one in five or one in six chance?


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## reece55 (22 March 2008)

Mr_T said:


> Lets use a term deposit as a benchmark. If you stick money in one, you'll get about 7% interest. Close to 100% safe.
> 
> Clearly, this kind of unsecured note is going to pay a higer rate. But so much higer? An extra 23 percentage point?
> 
> Using a crude analysis, does that mean that the market thinks there is a one in four chance BNB will be unable to pay its debts (ie become insolvent)?  Or even taking into account that risk is "overstated" in markets now, does it mean there is a one in five or one in six chance?




I'd say that it's pretty hard to actually value a debt instrument like this because there is no underlying security or credit rating provided. BNB itself has a BBB rating, but your not actually getting that in this issue because the notes are sub debt. My personal view would be that the pricing is more to do the fear in holding any sub debt, specifically if the underlying entity is an investment bank (i.e. Bear Sterns syndrome).

In saying all this, the pricing is extreme - only timbercorp's debt is priced cheaper in amongst the convertibles - as the debt is convertible into BNB scrip based on a VWAP calc and the share price is so gappy, could be conversion risk. 

By the way thierry, look through gearing is where you analyse a company's debt after factoring in investments in associates, JV's and other structures. For example, BNB holds an interest in BBI, which is held as an asset in the balance sheet at cost +/- share of profit/(loss). Look through gearing is where you factor in say BNB's proportional share of BBI's gearing... So the 78% number probably would be more accurate... Points however to anyone who can calculate MQG's look through gearing...

Cheers


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## Surfer35 (23 March 2008)

Reece,

Where did you get the info that Mobius was an investment vehicle?

Mobius was an issuer of sub-prime and non conforming RMBS (and not a very smart at that).

Cheers.


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## Mr_T (24 March 2008)

Thanks for your comment Reece.

Next concern: I hear that Babcock and Brown Power has something like $3.1b of debt that will need refinancing soon.

This article says that http://www.theaustralian.news.com.au/story/0,25197,23385762-5012439,00.html

"ANOTHER Babcock & Brown entity that will remain a focus of attention is Babcock & Brown Power, which is set to refinance a big wad of debt within the next few months. 

While chief executive Paul Simshauser has told the market he has received underwriting offers for a $3.1 billion debt refinancing, the market will remain nervous until the deal is done." 

Question (to REECE): does the fact that they have recieved underwriting offers mean the refinancing is a "sure thing"?


How likely is it that they won't be able to? If they can't, will it be a domino effect, ie the end of the whole Babcock empire?


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## reece55 (24 March 2008)

Mr_T said:


> Thanks for your comment Reece.
> 
> Next concern: I hear that Babcock and Brown Power has something like $3.1b of debt that will need refinancing soon.
> 
> ...




Hi Mr T.
Those concerns have been out there in the market place for a while, hence why BBP has gone from the lofty heights of plus $3 to 1.50 ish at the bottom.

Attached is an article on the underwriting process Link

Obviously obtaining debt at the moment is a difficult process. For those who don't remember, BBP is basically a portfolio of electricity generation assets previously owned by AlintaAGL. These are very high quality power generation assets that traditionally attract small margins above BBSW. I say traditionally, because at the moment we are faced with anything but a normal debt market.

In summary, in answer to your question Mr T, I would think that they will be able to obtain the finance (BBP's assets have almost guaranteed cash flow, we aren't running out of the requirement for electricity and banks love making a margin on predictable cash flow assets) , but the crucial question is at what price? BBP is structured 1 part equity 3 part debt, so any changes would impact the ability to provide distributions. At the moment the vehicle yields about 17%, but that only requires a 2.5% change in interest rate to be bumped down to 7%. 

I always thought that the Alinta transaction was going to cause BNB a few headaches, looks like it certainly has. Hopefully by April they will be able to alleviate fears out there in the market place.

Cheers


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## Mr_T (25 March 2008)

Thanks Reece. I can't thank you enough for your generosity you have shown time and knowledge wise on these forums.

One small question: In an article a month ago, it said concerning BNB:

"For although the old financial-engineering model - of fee-laden retail trusts - is finished, the wholesale model should take up the slack and deliver growth. This is the guts of the story. As with Macquarie, retail is ex-growth and the blue sky is now in packaging up infrastructure assets for global institutions. This is the wholesale model."

I'm glad to see BNB is not concentrating on fee laden retail trusts as much anymore. But I'm not exactly sure what is meant by wholesale trusts? And who are these "global instiutions" that the author is referring to?


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## thierry (25 March 2008)

up 15% today... and approaching the 15 dollar mark zone.. 

Lets see what it does in the next couple of days... 

What would be more damaging to the BnB share price, an american recession or lack of credit?


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## overule (25 March 2008)

I think BNB is trying to look for an upward trend.
Looking good at the moment.
Hopefully it recovers.


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## Sean K (25 March 2008)

overule said:


> I think BNB is trying to look for an upward trend.
> Looking good at the moment.
> Hopefully it recovers.



Trying, but needs to make a higher low and high and beat those resistance levels. _Potential_ bottom at 12 but still too early IMO.


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## Mr_T (25 March 2008)

A *good* day for BNB with a 17.7% gain, but lets not get overexcited. Bottom line is that shares that were seen as most vulnerable to the credit crunch in general had the best gains. For instance, Allco doubled in price today, whereas Macquarie, which is seen (rightly or wrongly) as less vulnerable than BNB had a 11.7% gain.


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## reece55 (25 March 2008)

Mr_T said:


> Thanks Reece. I can't thank you enough for your generosity you have shown time and knowledge wise on these forums.
> 
> One small question: In an article a month ago, it said concerning BNB:
> 
> ...




No worries Mr. T, that's what this forum is about.... plenty of people on here have shown me the same input, so it seems only fair that I would reply with the same.......

Wholesale trust are where the investment vehicles are unlisted and owned by fund managers and global pooled funds. The theory around is that listed markets have the potential to be too volatile and due to the fact that many are special strategies that are hard to understand, that the funds are generally misunderstood and therefore become undervalued. Personally, I think that is a load of bullocks - if you think that the RMBS disaster was a problem, imagine if the investment banks were able to run riot in unlisted funds that our super was invested in. Just imagine MacBank - all of a sudden, their FUM would be investing in products issued by other firms that were buying into their infrastructure trusts - talk about an even BIGGER conflict of interest and no disclosure requirements. To me, the wholesale option is the worst scenario, where our investments will be worth, well, whatever Macquarie say they are worth. And if the investment manager is getting kickbacks (the wholesale fund), they will only be too happy to show a blind eye. But this is only my view, would be worth a chat on another thread.

BNB movement today - I am with Kennas, still requires more work but good to see it close at $15. I would like to see it go a bit further, then retest $15 and bounce back higher - this would generate a lower low and higher high and this stock can start to get some $$ back. It was also good to see it bounce more than MQG, which itself has had a good couple of days of late.

Cheers


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## Mr_T (26 March 2008)

Will cashed up middle east and Asian sovereign funds be buying these wholesale infrastructure assets?


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## Mr_T (26 March 2008)

And a related question - will the fact that BNB has a reputation as a firm that is dominated by Jewish people affect whether middle eastern sovereign funds will deal with them? Clearly it will have no affect on the Chinese/Asian funds.


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## Mr_T (27 March 2008)

Is this some kind of joke? BNB make an unannounced capital raising. Once companies do this, you know you can't trust them anymore.

Just last month Phil Green in the results announcement said this company would be considering funding some of its employee bonus share scheme with a share buyback. Now they're issuing shares?? 

How does he expect us to trust him after this?

Might be time for me to cop the 60K loss by selling at this price and buying something with a better future - like BHP.


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## Aussiejeff (27 March 2008)

Mr_T said:


> Is this some kind of joke? BNB make an unannounced capital raising. Once companies do this, you know you can't trust them anymore.
> 
> Just last month Phil Green in the results announcement said this company would be considering funding some of its employee bonus share scheme with a share buyback. Now they're issuing shares??
> 
> ...




_Trust NO-ONE..._

Believe me, I know how you may feel.

I trusted VRE (like a fool) and blew $60k to the wind within the space of a few days... at least you have a decision you can make... 



AJ


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## reece55 (27 March 2008)

Mr_T said:


> Is this some kind of joke? BNB make an unannounced capital raising. Once companies do this, you know you can't trust them anymore.
> 
> Just last month Phil Green in the results announcement said this company would be considering funding some of its employee bonus share scheme with a share buyback. Now they're issuing shares??
> 
> ...




Mr T...
I appreciate you may be frustrated, but I think it's fairly obvious that the capital raising was required to approve the new debt facility. Regardless of what Phil Green feels, the Company is at the mercy of it's financiers and if they set a specified debt to equity ratio, then BNB must comply. Bare in mind the facility has gone from 2.3 - 2.8, so a 20% increase in facility with a 5% increase in share capital. Provided that they invest it appropriately, it will provide them with the ability to grow. Put it to you this way, would you prefer to be able to sell your shares at 14.50, or a lot less because if they didn't get the new facility, that is what you would be faced with....

Personally, I view this as a positive for the group - yes, it dilutes profit a little bit (about 5% placed here under listing rule 7.1) but enables them to move forward. After all, it was the facility that has been spooking the market for quite a while....

As for BHP having a better future than BNB, I guess that depends on your outlook for Commods - personally I wouldn't be sticking my money all in that pie a the top of the cycle.....

Cheers


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## Mr_T (27 March 2008)

I guess what I am saying is - why didn't Phil bring up the possiblity of this happening at the results announcement last month? I'm sure he knew it was a material possibility at the time.

What happened to full and frank disclosure?

This and their $100m USA property revaluation raises all kinds of red flags - I think to myself, what else are they hiding there?

As for commodities being at the top of the cycle, yes it is possible. Though I have been to China many times for work. Let me tell you, things are growing there at a million miles an hour. New buildings going up everywhere all the time, its huge peasant population becoming city dwellers, people starting to be able to afford cars (so they can spend all day in their traffic jams instead of their efficient subway systems). And they're still in the early stage of their development.


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## reece55 (27 March 2008)

Mr_T said:


> I guess what I am saying is - why didn't Phil bring up the possiblity of this happening at the results announcement last month? I'm sure he knew it was a material possibility at the time.




Whilst I do think that is a fair question Mr T, Phil would be likely to hide under the incomplete and confidential section of the continuous disclosure rules (LR 3.1)...

What I would be frustrated with if I was a shareholder was that they didn't go into trading halt yesterday, which in my mind should have been done whilst they were finalizing the placement. Because the market was misinformed yesterday.....

Cheers


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## Mr_T (28 March 2008)

reece55 said:


> Mr T...
> I appreciate you may be frustrated, but I think it's fairly obvious that the capital raising was required to approve the new debt facility. Regardless of what Phil Green feels, the Company is at the mercy of it's financiers and if they set a specified debt to equity ratio, then BNB must comply. Bare in mind the facility has gone from 2.3 - 2.8, so a 20% increase in facility with a 5% increase in share capital. Provided that they invest it appropriately, it will provide them with the ability to grow. Put it to you this way, would you prefer to be able to sell your shares at 14.50, or a lot less because if they didn't get the new facility, that is what you would be faced with....
> 
> Personally, I view this as a positive for the group - yes, it dilutes profit a little bit (about 5% placed here under listing rule 7.1) but enables them to move forward. After all, it was the facility that has been spooking the market for quite a while....
> ...




Hi Reece, 2 points:
a) I listened to the market briefing on their Website. Phil emphasised that the banks did not require the capital raising. He actually claimed that the banks knew about it the same time everyone else did. He said he did it because the market feels more comfortable with a lower gearing ratio at the moment.

This in itself raises a milion and one questions.

b) The capital raising is bigger than it looks. Apart from the capital raised already, BNB wants to change the ratio of cash:shares in its bonus towards more shares and less cash. This is in itself an "in house" issue of capital, because it means more shares on issue and less cash.


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## thierry (2 April 2008)

Good day today.. let see what it does tomorrow.. still way off the 20 dollar mark... 
anyone got any broker price targets on this stock.. (not that it means much these days).. 

Also I would like to know the probability of this stock dropping below $10.00?


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## VViCKiD (9 April 2008)

*BNB Dividends*

Has anyone recieved their BNB dividends yet ? If so, which bank are you with? I have not received mine yet and I am with CBA


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## Mr_T (10 April 2008)

Yeah, I got my divs from my BNB shares which have now been sold. Just checked my account today.

So glad I sold my BNB at $14.50, took the loss and bought BHP at $35.50 a couple of weeks ago as I suggested in a previous post. I really think BHP is the wave of the future.

As for BNB, once the company starts spinning to the Nth degree, as BNB are, it's really time to abandon the sinking ship. Asset revluations for American real estate that go into a P & L (yeah, right), raising the possiblity of a share buy back at the annual results presentation and then conducting a a new share issue a month later, etc etc - How can we trust these people?


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## mrgroundwork (10 April 2008)

does that mean you will no longer be posting your hysteria in this thread? if you were that bitter about the way the company was run you should have bailed a long time ago...


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## reece55 (10 April 2008)

mrgroundwork said:


> does that mean you will no longer be posting your hysteria in this thread? if you were that bitter about the way the company was run you should have bailed a long time ago...




No need to be mean there Mr Groundwork.... Mr T was just venting his thoughts....... 

However, Mr T the underlying point he (Mr Groundwork) makes is something to consider.... The old rule of only investing in Companies you can understand certainly applies here, the more you seemed to understand the Company (BNB), the more you were uncomfortable...


Technicals here are not looking at all healthy, I was hoping for some support to be found at the 14.50 - 15 level, but she fell straight through on Monday... Here's hoping $12 can hold........ 

Cheers


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## VViCKiD (10 April 2008)

Do you guys think that it is mainly sentiment affecting the price of this stock ? it seems to me the underlying fundamentals have not changed that much at all. Their last quarter report was pretty in line... i don't see reason for such punishment on this stock.


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## Mr_T (10 April 2008)

mrgroundwork said:


> does that mean you will no longer be posting your hysteria in this thread? if you were that bitter about the way the company was run you should have bailed a long time ago...




Yeah, you're right, I was more than a tad hysterical at times. I had 6000 BNB shares, and hated seeing my money go down the drain.

I was hoping that I was wrong and that it would bounce back. They didn't, and I don't believe they will bounce back in any meaningful way.

Didn't realise you were such a perfect investor yourself - am I to assume that you are a very very rich then? Or you hoping to become rich via continuing to hold your BNB shares? 

Talk about shooting the messenger.............


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## Mr_T (10 April 2008)

VViCKiD said:


> Do you guys think that it is mainly sentiment affecting the price of this stock ? it seems to me the underlying fundamentals have not changed that much at all. Their last quarter report was pretty in line... i don't see reason for such punishment on this stock.




I believe that the fundamentals are not healthy. When a company needs to revalue real estate in such a dubious manner to get a healthy looking profit, it shows that something is lacking. There is plenty of other spin coming from the company, some of which I have previously mentioned, but plenty of other stuff.

Does a healthy company need to spin?

We are living in a different world that we were a few months ago. Plentiful debt, rising asset values are no longer the norm. Furthermore, investors are more and more cynical about satellite funds paying huge fees to their creator.

Just like a few years back manufacturing was on the decline in Australia, I believe that this is the time for Babcock style companies to be on the decline.


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## Mr_T (10 April 2008)

reece55 said:


> No need to be mean there Mr Groundwork.... Mr T was just venting his thoughts.......
> 
> However, Mr T the underlying point he (Mr Groundwork) makes is something to consider.... The old rule of only investing in Companies you can understand certainly applies here, the more you seemed to understand the Company (BNB), the more you were uncomfortable...
> 
> ...




Point taken, and I agree with you Reece.

As for Groundwork, I've seen some of his past posts. He got margin called on Challenger. So he's probably just bitter about losing most of his money and wants to find an outlet.


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## mrgroundwork (11 April 2008)

haha relax Mr T I am flattered you have checked up on my posts... seems your emotions are getting the better of you... perhaps, share trading isn't for you?

my point is the fundamanetals of how BNB have done business have changed vey little over the past few years... it seems there are a lot of investors (yourself included) who turned a blind eye to how they do business when you first invested or when the share price was going along nicely at $20-35... 

i made some big money trading BNB last few years... I am sitting on some big losses this year... for me the goal posts havent changed though, i have understood the risks with their business model from day dot... i still have confidence in the company so the whilst the current SP concerning, it doesnt change anything for me personally (i am trading medium to long term)...

As for you point about margin calls in the CGF thread you tracked down... as i mentioned in that post, it was in reference to the correction in August last year, so i doubt i am still upset about it... also note, that you get margin called on your whole portfolio, i chose to sell CGF at twice the value it is today... thus making the point that it was a "blessing in disguise"...

anyway, let's get back to talking BNB...


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## Mr_T (11 April 2008)

mrgroundwork said:


> haha relax Mr T I am flattered you have checked up on my posts... seems your emotions are getting the better of you... perhaps, share trading isn't for you?
> 
> my point is the fundamanetals of how BNB have done business have changed vey little over the past few years... it seems there are a lot of investors (yourself included) who turned a blind eye to how they do business when you first invested or when the share price was going along nicely at $20-35...
> 
> ...





Hmm, I don't doubt the margin call was a blessing in disguise, bottom liine is that once someone gets margin called one thing is for sure - they don't have much equity left (by definition). Which means they don't have much wealth left in comparative terms.

You can criticise me, abuse me, say what you want. Bottom line is that I clearly have done much better in creating wealth with shares than you have. I have never been anywhere near a margin call, and despite making a 60K loss on BNB have done very well in the market in recent years. Even this year has not been too bad in net terms with the recent rise in BHP.

All the abuse and nastiness in the world won't give you your money back. 

Yes, lets get back to BNB. I'll say a bit more later, for now I want to point out some more of their recent "spin".

I listened to the recording on their website regarding their new debt and equity raising.

I found the following comments a bit  strange, and have put my thoughts in brackets. 


15:15
Person on phone: "to what extent the equity raising was a trade-off to increase in margin?"

Phil Green: "the banks found out about equity raising the same time you did. It was not part of the approval at all"


(I find it strange that the banks were not informed about the equity raising beforehand. A bit unbelievable? If it is true, I don't think that the banks would be happy about not being previously informed)




17:20
Person on phone:
"Could give more information about asset sales you have penciled in for 3 months...are we talking more about wind asets?"

Phil Green: "We don't necessarily expect the wind asset sales to be completed by the end of June" 

(But hold on, didn't BNB and BBW just a while ago say there were going to sell wind assets to "prove" to the market that BBW's assets were being undervalued by the market?)



34:48:

Phil Green:  there's been a lot of talk and focus on our us multifamily portfolio. That continues to perform strongly in almost perfect macro conditions for that portfolio where tenants that may have been aspirational and got subprime mortgages and gone and bought their own homes can't do that. Obviously there is still household creation in the
US, that hasn't slowed down. With young people leaving home, immigration, etc, in terms of the location, they are in the south, in areas where the economy is supported by energy and soft commodities.There have been no material increases in unemployment which we admit could lead to delinquencies in rental payments. But at the end of the day, people try to pay
the rent, whatever their economic circumstances. And the reality is we're seeing increasing vacancies, increasing rents, and in fact, I've seen a couple of recent analyst reports..

(This is regarding the American portfolio that was revalued upwards of $100m in their P & L when American property values are going South.  Nowhere does he try to even defend the revaluation. Just goes on around the issue and talks about issues that aren't in dispute, eg, that the rental return is good. No one disputes the rental return, it's how he got the $100m in revaluation that we are interested in.)


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## mrgroundwork (11 April 2008)

Mr_T said:


> You can criticise me, abuse me, say what you want. Bottom line is that I clearly have done much better in creating wealth with shares than you have.




haha MR T all i can say is your posts are always entertaining... keep building that wealth mate, you are doing a great job... 

as for the comments... phil green is all over the shop... he complained that the market doesnt understand and undervaslues BNB, but he keeps sending out bamboozling messages and contradictions like you have highlighted... at times like these we can't afford for the market to lose any more trust in BNBs management...


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## Mr_T (11 April 2008)

mrgroundwork said:


> haha MR T all i can say is your posts are always entertaining... keep building that wealth mate, you are doing a great job...
> 
> as for the comments... phil green is all over the shop... he complained that the market doesnt understand and undervaslues BNB, but he keeps sending out bamboozling messages and contradictions like you have highlighted... at times like these we can't afford for the market to lose any more trust in BNBs management...




Shall do so mrgroundwork ...I've always been strong on resources in the last few years (partially b/c I've been to China for work quite a few times and seen what is happening there)...but if  resources start doing badly and I lose most of my money, I'll take your example when that happened to you and start being nasty and patronising to people on forums!! Hopefully this will help me make me feel better about being such a loser. And if it doesn't I can always accuse the market of not correctly valuing my shares.

Now back to BNB: IMHO, if Phil Green was more open about the problems in BNB, talked about it in a more balanced way and presented a fairer set of financials, he would have much more credibility. If his general approach was "there are big problems here, this is how we are approaching them....." rather than "everything is excellent, we're just misunderstood" I think the market would be more likely to take him seriously. I realise that he is acknowledging there are some problems, but frankly, his mild acknowledgment does not reflect the severity of the problems. Hell, he won't even admit that some of their major assets have dropped in value, still spinning the line that infrastructure asset values are as strong as ever.

Which is a pity. Cause until recently, Mr Green had a reputation as a man of great integrity.


I will say this much positive about BNB: the people running it and many of its staff are very very aggressive and clever. Possibly clever enough to adapt to the new world that we live in. Just possibly.


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## mrgroundwork (11 April 2008)

Mr T alright alright... i get it.... you win at the interweb, trading & life... can't a poor guy like me just be friends with a wealthy guy like you?  perhaps you can lend me some seed capital to reinvest back into Challenger or Babcock?


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## eclipse (12 April 2008)

BNB has taken a big hit of late, seems there is no real recovery in sight, not unless the credit crunch eases in the short -term.


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## overule (12 April 2008)

I am holding this stock for few more years so I am not that fuss about it.
Yes, i never expected BNB to be hit as hard.


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## VViCKiD (14 April 2008)

damn.... BNB hit hard severely again... I hope this can stay above $10... my 2 biggest holdings BNB and LGL have been hit like crazy recently ...


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## ithatheekret (15 April 2008)

Good debate in this thread .

The market is always the decider when it comes to share price , unfortunate as it is sometimes . The BNB model as I see it , leans more to the side of cash flows rather than debt levels of assets under ....... management .

For a company that thinks it's not an investment bank , it's leveraging and CDO's make me wonder sometimes , what they think they are then ..........

One would think they'd best keep the cash flows strong based on the model gearing . 

Each time I look at it though , those gearing levels tweak a hinge in my neck ....... so to speak , when I compare them against other asset buyers gearing levels .

The gearing level makes me think they are a mainstream leverage manager , if not an investment bank .

Sure looks like an investment bank though and looks like a mini Mackers to me , hence the mini price at present  nah , it hasn't gotten back to issue levels , still up what 120 % , or around there .

I think the market is just saying they are on edge with companies with high debt levels , especially ones that look like a .... claytons bank ??? 

The entire model confuses me , so I suppose some of the market must be confused too . But when in doubt , the market generally does not hesitate .

Refinancings etc. have taken there toll on most market participants in the sector , even the big four , ........... so why not BNB ?


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## L plates (17 April 2008)

Very high volume today with a narrow bar hanging around its low.
 A very large trade went through at 9.19am this morning

7	9:19:55 am	1280	4,050,000	920	$51,840,000	1

From Stockness Monster


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## Mr_T (21 April 2008)

I put this on the Macquarie portion of this forum. Since BNB and Macquarie have many similarities (though many differences as well) I've put it here as well:

The Economist has written an EXCELLENT article on Macquarie this week. Luckily, it's available online for free.

http://www.economist.com/finance/displaystory.cfm?story_id=11052919


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## thierry (1 May 2008)

Will this share break the 15 dollar mark and for a new support? 

At the moment it seems a bit of a dud.. although there is a lot of fluctuation without any significant movement..


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## thierry (4 May 2008)

seems to have broken through a 15.70 barrier.. will be interesting to see what it does now..  as it appears credit markets are beginning to stabilize.. but who knows... 

If any charting expert would like to give an opinion on key price points of this stock that will be great.


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## legs (6 May 2008)

I managed to average my price down to $14.99 so I hope it can hold over $15 and then continue on the wave upwards. I'd like to see $20 by end of June.


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## Mr_T (9 May 2008)

Comsec Margin Lending are not allowing any further lending for BNB.

Sounds like they still consider it a big risk.


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## nick2fish (10 May 2008)

Love to have a look at commsec's approved securities list, is it one page or two?   Actually I did and BNB are still being advertised as approved (70%).
You would think they would update it or place a special announcement on the entry point


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## Mr_T (11 May 2008)

The approved securities list hasn't been updated yet since the announcement.


If you have a margin lending account, after you log in clock on "Margin Lending" (where it has your loan balance, etc).

It says:

Please note that the lending ratios on Trafalgar Corporate Group (TGP) and Reckson New York Property Trust (RNY) have been reduced to 50%. Furthermore, the lending ratio on Dexus Rents Trust (DXRPA) has been reduced to 70%. Please note that the lending ratios on Petsec Energy Limited (PSA), Housewares International Limited (HWI), Cellestis Limited (CST), Structural Systems Limited (STS), Mortgage Choice Limited (MOC), Babcock & Brown Limited (BNB) and Gindalbie Metals Ltd (GBG) have been capped with no further lending permitted.


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## nick2fish (11 May 2008)

Thanks Mr T, I am with ANZ but I am pretty interested in changes to margin lending approved securities. It is interesting commsec's view on BNB and the others as well. Cheers


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## mrgroundwork (11 May 2008)

it no longer has an LVR next to it when you bring up a snap quote on commsec...

they would have to be VERY VERY confident there is something VERY VERY wrong with BNB to do this... i would take a rough guesstimate that around 5-10% of their margin lending clients probably hold this stock... they are running the risk of pissing off a large number of clients who may take their business elsewhere... they must have their reasons... watch this space!

meanwhile they are still lending 70% on Macquarie which is arguably as risky as BNB


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## hangseng (11 May 2008)

Hey there BNB holders.

I am seeking information on the tie up between BNB and Westnet rail and was wondering if anyone has heard/read of Westnet rail in the Mid West region of WA. I understand that BNB own Westnet Rail or at hold a controlling interest.

I am being a bit cheeky as I am a holder of GBG shares and I heard an unconfirmed 'whisper on the Terrace' that GBG will benefit from the new rail that is planned.

Any information greatly appreciated.


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## nick2fish (11 May 2008)

Pure speculation, but it is not coincidental that the Lincoln analyst report last week expressed concern over BNBs operating cash flow. I did not have access to this report, but heard also they gave MQG a "Strong" bill of health. 
Concerns about BNB's gearing levels don't appear to be dissipating anytime soon despite concerted attempts to persuade the markets otherwise 
Where there is smoke there could be fire....though the jurys still out for mine


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## Mr_T (11 May 2008)

What I find interesting is that Comsec are still lending for BNB's major satellite at 70%, specifically:
BBP
BBI
BBW


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## reece55 (11 May 2008)

Mr. T
It's because the decision to remove BNB from their margin lending list had nothing to do with their fundamental valuation of the business and everything to do with the volatility....

Margin lenders don't make assessments of the prospects of a Company, they determine the amount of security required to lend against a share relative to its risk, or volatility. Clearly, as is evident from the chart, BNB has been a volatile beast - hence why they have canned it from the system.

Cheers


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## Mr_T (11 May 2008)

Reece,

You appear to suggest that a share's market value in no way reflects a company's fundamentals. I would suggest that whilst there might not be a perfect correlation, the two ARE very strongly related. Otherwise, getting above market return would be easy, just invest in shares whose share price undervalues its fundamentals - but the evidence clearly suggests that is a near impossible task for anything but a handful of people.

BNB's satellites have been very volatile as well, so I think it is odd that lending for them is still allowed.


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## stoxclimber (11 May 2008)

That's not what he's suggesting at all - he's saying that the decision to remove BNB from the list was due to volatility in BNB's share price over the last 6 months. ComSec doesn't look at the company and say we only think its worth $5, so we're not allowing lending - they look at the high volatility in drops and worry that it'll wipe out investor equity and that they won't be able to recover their loan.

So what reece is saying is that ComSec have looked at BNB and seen, say, 50% p.a. volatility, and decided that its not worth the risk of lending. Nothing to do with what the fundamental business is worth compared to market prices.


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## Mr_T (11 May 2008)

stoxclimber said:


> That's not what he's suggesting at all - he's saying that the decision to remove BNB from the list was due to volatility in BNB's share price over the last 6 months. ComSec doesn't look at the company and say we only think its worth $5, so we're not allowing lending - they look at the high volatility in drops and worry that it'll wipe out investor equity and that they won't be able to recover their loan.
> 
> So what reece is saying is that ComSec have looked at BNB and seen, say, 50% p.a. volatility, and decided that its not worth the risk of lending. Nothing to do with what the fundamental business is worth compared to market prices.





Fair point stoxclimber, I misunderstood what he said. 

But do we know for a fact that margin lenders don't look at a company's fundamentals, amongst other things (such as its volatility) when deciding to whether to allow lending on the security of that share?


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## VViCKiD (22 May 2008)

Anyone know why this one got hammered today ? there were no announcements at all and it still lost ~7%!


----------



## dj_420 (22 May 2008)

VViCKiD said:


> Anyone know why this one got hammered today ? there were no announcements at all and it still lost ~7%!




BBP got hammered due to finance issues and as a consequence BNB also got sold off. BBP as subsidiary needs to sort out its debt issues to steady the ship.


----------



## TheAbyss (22 May 2008)

Also right or wrong, BNB is compared to MQG often. MQG is being belted at the moment so BNB are out with the bath water to some extent.


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## Mr_T (22 May 2008)

Whenever I'm deciding whether to hold or selll a share, I always ask myself the following:
"if someone asked me whether they should buy this share, what would I tell them?". If my hypothetical answer is I would say don't buy it, then I sell my shareholdings in the comany.


----------



## Bomba (22 May 2008)

I had a small holding in BNB last week. At the time the share price was $15.80. I was going to put a sell order in for $16.40 but accidently put my sell order in at $15.40 without realising.  To my surprise i received a contract note via email telling me i had sold X number of shares at $15.80.  At the time i was cursing because i sold at a small loss.  I guess what has eventuated over the past few days this had turned into a blessing.


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## Garpal Gumnut (22 May 2008)

Mr_T said:


> Whenever I'm deciding whether to hold or selll a share, I always ask myself the following:
> "if someone asked me whether they should buy this share, what would I tell them?". If my hypothetical answer is I would say don't buy it, then I sell my shareholdings in the comany.




Very wise thoughts Mr.T and difficult to remember in a bull or a bear market.

BNB looks from this chart to be in some strife. Its dropping like a stone and gapping on higher volume.

If it breaks down through the $11.50 line , an old resistance area from Dec 2004/ March 2005 then many of the not inconsiderably large number of buyers from March and April of this year, will jump ship and the price will plummet further. Enclosed is a daily chart over the last 12 months.

gg


----------



## Garpal Gumnut (23 May 2008)

Its gapped down again and spinning with high today equidistant from present price of 12.97 and the low for today so far. Volume is already higher than yesterday. Interesting to follow down. 

I usually trade on weekly charts but daily moves are exciting. How do day traders keep sane !!

gg


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## Garpal Gumnut (23 May 2008)

The intraday on BNB over the last 5 days has a certain symmetry about it.

Interesting times for BNB. Where will it go next week?

gg


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## vishalt (23 May 2008)

This is not a good sign fundamentally if it breaks below those April lows..

I think BNB got ripped on after what happened to BBP.


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## Garpal Gumnut (23 May 2008)

vishalt said:


> This is not a good sign fundamentally if it breaks below those April lows..
> 
> I think BNB got ripped on after what happened to BBP.




Agree, and if it breaks below those April lows* and * goes below that $11.50 old resiatance a gozillion stop losses from funds will kick in and it will go who knows where.

gg


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## BraceFace (24 May 2008)

Garpal Gumnut said:


> Agree, and if it breaks below those April lows* and * goes below that $11.50 old resiatance a gozillion stop losses from funds will kick in and it will go who knows where.
> 
> gg




I for one, would see anything sub $12 as a magnificent buying opportunity for BNB.
In comparison to the overall market since the start of the year, BNB has been hammered and arguably oversold. Same goes for Macquarie bank. Financial market jitters prevail and nervous investors have put their money into resources instead. Fair enough, but as volatile as BNB is at the moment, and as treacherous it is for short term players, current prices seem to be pretty good for the long term investor.


----------



## Sean K (24 May 2008)

BraceFace said:


> I for one, would see anything sub $12 as a magnificent buying opportunity for BNB.
> In comparison to the overall market since the start of the year, BNB has been hammered and arguably oversold. Same goes for Macquarie bank. Financial market jitters prevail and nervous investors have put their money into resources instead. Fair enough, but as volatile as BNB is at the moment, and as treacherous it is for short term players, current prices seem to be pretty good for the long term investor.



Could be, but who's to say how far the knife will drop? In all probability, this will eventually recover, but there's still a chance of a complete implosion. 

This is one of the worst charts on the ASX.


----------



## vishalt (24 May 2008)

I won't invest in this simply because I'm scared it'll go under. 

Even if it does look good on the charts and extremely cheap and its a good business.


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## Mr_T (24 May 2008)

vishalt said:


> I won't invest in this simply because I'm scared it'll go under.
> 
> Even if it does look good on the charts and extremely cheap and its a good business.




Now that they're refinanced their debt it's very unlikely that they will go under.

What I think bothers the market is the neverending "blue skies" messages coming from BNB which appear to have little bearing to their real world problems.

Lets see them come out and say "we revalued property upwards that we in fact made a loss on - this will be accounted for as a cost in this year's Profit & Loss". Lets hear them say "our profit predictions are unrealistic, times are tough, we are revising them downwards". I think the market will react positively to such transparency and openess if it feels this is going to be their new habit.

As it is, there's a lot of justified scepticism out there to the opaque structure that BNB is. Yes, I realise Macquarie is infinitely more opaque, but they also have some things going for them that BNB don't.


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## barnz2k (24 May 2008)

Could this hurt BNB on monday? That they are willing to fund B&B Power if they dont get refunded from the banks?
http://business.smh.com.au/babcock-pledges-cash-for-bb-power-20080524-2htp.html



> Babcock is willing to provide assistance if necessary to protect the value of Babcock Power's assets, Phil Green, chief executive officer of Australia's second-biggest investment bank, said today


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## Mr_T (31 May 2008)

So did anyone go to the AGM? I would have gone had I still been a shareholder.

Stephen Mayne recorded an interesting question he made during the AGM, available on http://www.maynereport.com/images/2008/05/30-138V0YRJP00.mp3

Basically, he suggested that the satellite fund model has had its day.


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## vishalt (1 June 2008)

Mr_T said:


> So did anyone go to the AGM? I would have gone had I still been a shareholder.
> 
> Stephen Mayne recorded an interesting question he made during the AGM, available on http://www.maynereport.com/images/2008/05/30-138V0YRJP00.mp3
> 
> Basically, he suggested that the satellite fund model has had its day.




Is that Stephen Mayne's voice? Whoever it is has a great point with the mothership/satellite approach.


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## Mr_T (1 June 2008)

Yes, it's Mayne's voice doing the asking. Green does the initial answering, then Babcock puts in his bit afterwards.


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## Mr_T (2 June 2008)

This is from Crikey, subscriber only:


Macquarie does nothing as Babcock reviews everything

New Macquarie Group CEO Nicholas Moore pioneered the listed infrastructure fund model with two deals: the 1994 float of Hills Motorway Group housing Sydney’s M2 tollroad and the 1996 float of Infrastructure Trust Australia (now Macquarie Infrastructure Group) after the $4.85 billion purchase of Victoria’s Loy Yang A power station.

Fast forward 13 years and 6 months from the Hills Motorway compliance listing and Macquarie is the world’s biggest owner of infrastructure. There are literally dozens of listed and unlisted infrastructure funds around the world controlled by Macquarie and its various imitators, many of whom are also Australian.

MFS and Allco were the last two impersonators and both are now on their last legs, leaving just Babcock & Brown and, to a lesser extent, Challenger, fighting on in the space.

Shares in most of the funds, along with the Macquarie and Babcock parent companies, have tanked in recent months but Macquarie isn’t taking a backward step.

Indeed, the Millionaire Factory has just elevated Nicholas Moore to be CEO of the whole group and Macquarie Airports chairman Max Moore-Wilton responded with this belligerent spray when I suggested at the recent AGM that the third party listed fund model was dead. MAP shares have since fallen further to a 40% discount to net tangible assets but Moore-Wilton doesn’t see the problem.

Contrast that with Babcock & Brown CEO Phil Green who responded to a similar comment about the broken model at his AGM on Friday by welcoming the suggestion and admitting everything was on the table for review. You won’t hear too many mea culpas quite like that one. 

Green later backed off at the post-AGM press conference, according to Stuart Washington’s report in The SMH on Saturday.

One explanation of the different approaches is that Babcock doesn’t have Macquarie’s market and balance sheet strength to withstand the current onslaught.

Whilst the Millionaires Factory was quite happy to let its Macquarie Fortress fund collapse, which it almost did, Babcock rapidly stepped in to privatise Babcock & Brown Environment at 50c a share, half the float price.

And now we have the prospect of Babcock bailing out its power fund, suggesting there is some sort of implied guarantee of support from the parent.

Asked what legal obligations the parent had to bail out Babcock & Brown Power, Green said there was none. Listen carefully to his language. 

So why’s he doing it? It’s called reputational damage. Investment banks are capitalised reputation and Babcock simply can’t afford BBP to fall over.

But the market is very unhappy as Babcock & Brown shares tumbled 4% to a 3 year low of $11.97 in morning trade. Macquarie is also off 2% today but it remains 15% above the recent low it hit in March


----------



## VViCKiD (3 June 2008)

Bell Potter has a 12 month price target of $25 on this stock as of 30th of may. What does everyone think ?
 I've been a long time investor of this one and have been hit hard...


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## Mr_T (3 June 2008)

VViCKiD said:


> Bell Potter has a 12 month price target of $25 on this stock as of 30th of may. What does everyone think ?
> I've been a long time investor of this one and have been hit hard...




I think like most stockbrokers, they have their heads up their rear ends. They either in denial or just not being honest.


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## VViCKiD (3 June 2008)

Surely this one has to be oversold... my God this is crazy.....   Does any one have any opinions on this stock or MQG ? There hasn't beeen any anouncements yet it's sold off like crazy


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## nick2fish (3 June 2008)

VViCKiD said:


> Surely this one has to be oversold... my God this is crazy.....   Does any one have any opinions on this stock or MQG ? There hasn't been any anouncements yet it's sold off like crazy




I hear you and feel your pain. IMO it is grossly underrated and oversold but in saying that I feel that a turnaround for this spanked baby is in the very distant future 
If you don't want to sell at a loss just delete it from your portfolio so you don't have to watch it die little by little each day:
I disclose holding both BNB & MQG and to taking strong anti-depressants


----------



## Bomba (3 June 2008)

i couldn't take the heat any longer so i sold out my remaining holdings this morning.  End of financial year is coming so pererhaps some people are taking their losses to offset against their gains.


----------



## barnz2k (3 June 2008)

VViCKiD said:


> Surely this one has to be oversold... my God this is crazy.....   Does any one have any opinions on this stock or MQG ? There hasn't beeen any anouncements yet it's sold off like crazy




After seeing what happened in US last night I guessed this would happen, not becaue it is directly related but that damn sentiment again. I too hold MQG and BNB, maybe the turn is a bit far off, But i just cant see these guys staying down forever, surely they can adapt to changing situations. They just dont seem to get any sympathy in the market though!


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## VViCKiD (3 June 2008)

I agree... these 2 have been gang-raped like there is no tommorow. I think it's primarily sentiment that's affecting this stock... BNB has a PER of ~6 now !! wtf !?!?!!  wat a joke... maybe once they begin selling off infrastructure and reducing gearring, will the market sentiment improve again.. anyone know when they are due to sell wind farm facilities ?


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## mapna (3 June 2008)

Just be patient my friends, it would not be that bad. Just the market panic driving a big sell off. It will be Ok in next few weeks.

If you do have cash on hand, hold on to it. You would get rewards.

IMHO. DYOR.


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## VViCKiD (4 June 2008)

crap... another down day for BNB ..... this is driving me crazy... getting close to my stop-losss at $10
i can't believe this one... at least MQG is recovering... I can't think of any logical reason for the selling... Does anyone know when they are scheduled to be selling off their windfarms ?


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## thierry (4 June 2008)

Just curious.. Is it possilbe for BnB to become and Allco? .. 

I don't know why it is being sold off like it is.. but at the same time.. it's not giving people a lot of confidence to buy in.. other than it being dirt cheap...


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## barnz2k (4 June 2008)

finally listened to that mp3 question yesterday, interesting. At least they getting it out there. Maybe what BNB really needs is to be separated a bit from MQG? Which may happen if they change their structure/plans a little, and it wont get quite as hammered a long with MQG.

It probably doesnt recover as much as MQG because of its size and not as big reputation?? But cops = flack as mqg damnit! thats not fair


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## thierry (4 June 2008)

http://www.businessspectator.com.au...arie-eyeing-Babcock--Brown-FA27U?OpenDocument

MQG bidding for BnB!! amazing!


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## Mr_T (4 June 2008)

I doubt there is any truth to the rumour. Certainly the market doesn't seem to believe it going by BNB's share price performance today.


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## roland (4 June 2008)

gee, I don't know how you guys are managing to stay sane with holding BNB. I ditched at an average of $23 and still managed to lose $10K

I just got stung big time again with BBP - makes me wary of anything with Babcock in the name. I'm still, however, with BBP, since the dividend yield (if it holds) is pretty decent.

I've learnt something about my trading with BNB and BBP and it's not good ... I get emotionally attached, and it seems the bigger the investment, the harder it is to say enough is enough.

You also have to do the math, a 20% fall requires a 25% rise just to break even - food for thought.

On the other hand, the further BNB falls, the better value it becomes.

I wish all holders the best of luck, but keep in your head that protecting your capital is paramount ... you can always come and play another day


----------



## X888 (4 June 2008)

thierry said:


> Just curious.. Is it possilbe for BnB to become and Allco? ..
> 
> I don't know why it is being sold off like it is.. but at the same time.. it's not giving people a lot of confidence to buy in.. other than it being dirt cheap...




I'm assuming people are getting margin called and hitting their stops.

Doesn't help when funds are shorting it.

I've been buying up quite a bit since low 12.s


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## vishalt (4 June 2008)

Hedge funds: Making retail investors miserable since 1999.

This company does not deserve to lose this much value, its a good business managed by good people. 

The media are handing free ammo to the hedge funds, things are horrible out there in financial-land.

Me and my Dad thought we lost out on BNB two years ago when it was at $14.


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## Mr_T (4 June 2008)

Stop blaming hedge funds & margin calls people.

Reality is that Mr Market has spoken, one does not argue with him.

BNB has engaged in some very dodgy practices. It lost substantial amounts of money on US real estate, yet pretends they have risen in value and puts it as a revenue item in their P & L.

The price keeps going down, Uncle Phil keeps telling us that there's nothing but blue skies. Staff keep taking huge bonuses.

It's an opaque, opaque structure.


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## roland (11 June 2008)

BNB getting smashed again. Below $10 for the first time since May '05 

Anyone want to have a go at picking the bottom ?


----------



## haunting (11 June 2008)

My read.  Based on the earlier triangle breakout, the target at or around 9.90 has been reached today intraday wise. The next possible low of 9.38 is based on the 2month+ channel breakout. Further down at 8.87 is the low made back in '05.

Depending on how the stock closes by eod, my take is the bottom is very very near. Moving forward there's a good chance that this stock will be making a base at around this price level 9.00-9.40.

ps: I don't hold this stock and I could be wrong.


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## freddy2 (11 June 2008)

Mr_T said:


> Staff keep taking huge bonuses.




If what is written below is true, the fair value of BNB stock is $0. Eventually all equity will be transferred from shareholders to employees through bonuses. In effect BNB has taken shareholder money to invest, with huge rewards for winning and little financial loss for losing.

http://business.smh.com.au/a-sense-of-irony-helps-at-babcock-20080303-1whm.html

March 3 2008 

This year's bonus pool is $573 million to be divvied  among 1200 employees.

The bank pays out around half of its gross profit to executives


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## Mr_T (11 June 2008)

freddy2 said:


> If what is written below is true, the fair value of BNB stock is $0. Eventually all equity will be transferred from shareholders to employees through bonuses. In effect BNB has taken shareholder money to invest, with huge rewards for winning and little financial loss for losing.
> 
> http://business.smh.com.au/a-sense-of-irony-helps-at-babcock-20080303-1whm.html
> 
> ...




If I was to describe BNB management in one word, it would be ARROGANCE.

Thank god I sold my stake at 14.50 a few months ago and invested it in a company that actually produces a positive cash flow (BHP).


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## roland (11 June 2008)

*Notice of ceasing to be a substantial holder*
To Babcock & Brown Limited (BNB)
ACN/ARSN 108 614 955
1. Details of substantial holder
Name Barclays Group lodged by Barclays Global Investors Australia Limited
ABN 33 001 804 566 (Barclays Global Investors Australia Limited)

The holder ceased to be a substantial holder on 06 June 2008

Can't blame them, sold off 104,719 shares @ $13.57


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## sardines (12 June 2008)

I thought I had read somewhere that around $10 is the trigger point for some large stakeholder's margin calls...can't find the story again but someone please help post a link if you've got it.

I'm starting to watch BNB more around these price levels, but feel that I should wait at least 3-4 weeks for any skeletons to come out of the closet first. :hide:

So far haven't heard of large scale redundancies in the Aussie investment banks - either management is right and there's still a future for the compnay, or it's wrong & the market is calling their bluff.


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## rub92me (12 June 2008)

I read this morning in a Sydney Morning Herald article that their bank financing is conditional on a market cap of 2.5 billion, which equates to a shareprice around 7.50. If that's the case, things could get very scary for BNB pretty soon as today's lead from the US suggests that the financial sector could be in for another hiding today.


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## Sean K (12 June 2008)

I've had this on my close watch list as a potential bottom pick once the dust settles and the hedge funds change their bias, but really, who's to say where this could go. Scarey stuff for any mum and dad, buy and holders..

Can't load charts at the moment, but I doubt you'd see a worse one in a top 100 company.


----------



## bluey (12 June 2008)

Hi all,

I bought into BNB at 12.29 hoping for a bounce at support.. None forthcoming - so I bought in more at 10.00 and 9.50 yesterday..

Couldn't take the heat this morning - and sold off at 8.20...

Thought I'd just share my pain...


----------



## bowseruni (12 June 2008)

I share your pain, i got in at $13 and turned the light off at $10.46....lucky for me i didn't keep buying more stock like you


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## Mr_T (12 June 2008)

Doesn't BNB have a "market value" clause in its debt covenant, where the lenders can take a range of actions (including nothing) if its market value drops below a certain amount?

Surely it must be getting close to being triggered.

Edit: I think it's 2.5 billion for 4 months.


----------



## mfp (12 June 2008)

bluey said:


> Hi all,
> 
> I bought into BNB at 12.29 hoping for a bounce at support.. None forthcoming - so I bought in more at 10.00 and 9.50 yesterday..
> 
> ...




I also share your pain bluey. I bought this stock for the first time at yesterday's close 9.52 hoping to sell on open today for a profit, ended up selling 8.02. What a disaster and what the hell was i thinking?


----------



## cameron_bol (12 June 2008)

Does anyone think this stock has a chance of a rebound or is sell the general concensus?                               .

Edit: Oh, and I'm not asking for financial advice, just trying to gather a general opinion.


----------



## rub92me (12 June 2008)

cameron_bol said:


> Does anyone think this stock has a chance of a rebound or is sell the general concensus?                               .
> 
> Edit: Oh, and I'm not asking for financial advice, just trying to gather a general opinion.



Too early to tell really. So far I'm seeing a high volume sell-off. If it ends the day above 9.00 on high volume then that would be a relatively positive sign. I'm not holding and won't be buying this today that's for sure...


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## Mumbank (12 June 2008)

I bought these just after the float at $8.00ish and then topped up in January at $16 thinking how smart I was to have sold half my oilsearch holding to buy more BNB!!!!!!!!!!   This is very demoralising, and I just can't bring myself to sell them now at under $8.  I can't believe they won't rebound. I think I should just stop watching everything at the moment, its gut wrenching. 

I'm worried, but I have confidence they will come back. I can;t do much else.


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## cameron_bol (12 June 2008)

Briefly dipped to 7.70, getting a little hairy. What's the worst case scenario here? The banks review B&B's debt terms forcing a fire sale of their assets. Would this just mean a bigger subsequent hit to B&B's share price or something worse? 

As an aside, I just had a quick look through their Annual Report and my oh my, their exec's get paid well...


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## ROE (12 June 2008)

That what happen when you are funded by leverage and debt.
Centro, ABS, Alco, BNB and MQG they all have a common theme


----------



## awg (12 June 2008)

one potentially unpleasant outcome for potential new buyers is that if some covenant is breached, they may announce a trading halt.

then probably re-open lower

forgive my ignorance, but what happens to day short sellers with open positions, if that happens? 

tony


----------



## YELNATS (12 June 2008)

awg said:


> one potentially unpleasant outcome for potential new buyers is that if some covenant is breached, they may announce a trading halt.
> 
> tony




Trading status was changed to "pre-open" for a while in the last hour but now is back to "normal". No announcement. A little strange?


----------



## awg (12 June 2008)

an insignificant ann at 1.15 re gas  mou from icn

most probably caused that "pre-open" status to show

regards tony


----------



## YELNATS (12 June 2008)

awg said:


> an insignificant ann at 1.15 re gas  mou from icn
> 
> most probably caused that "pre-open" status to show
> 
> regards tony





Yes probably, it's trading normally now. I guess a few of us are a bit jumpy about BNB at the moment, maybe awaiting an announcement.


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## Mr_T (12 June 2008)

From http://business.theage.com.au/babcock-nears-meltdown-20080612-2ped.html


Babcock & Brown shares are getting smashed on speculation of hedge funds shorting the stock into oblivion - into the hands of its bankers, that is.

A Babcock spokeswoman has confirmed that if Babcock shares fall to $7.50 that would trigger a $2.5 billion market capitalisation review clause with its syndicate of banks.

The upshot would be a total collapse in market confidence as Babcock would be in a similar basket to Allco and Centro - in the hands of its bankers. The banks would then have four months to do their review


----------



## Awesomandy (12 June 2008)

awg said:


> an insignificant ann at 1.15 re gas  mou from icn
> 
> most probably caused that "pre-open" status to show
> 
> regards tony




It gave us a chance to grab lunch, I suppose.  
Considering that at the moment, there are around 200 buyers but 800 sellers (judging by the orders), it's not looking very good.


----------



## yuan84dk (12 June 2008)

Awesomandy said:


> It gave us a chance to grab lunch, I suppose.
> Considering that at the moment, there are around 200 buyers but 800 sellers (judging by the orders), it's not looking very good.




BNB felt into garbage while you were having your lunch boubt the any chance it could come back...


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## cameron_bol (12 June 2008)

yuan84dk said:


> BNB felt into garbage while you were having your lunch boubt the any chance it could come back...




Tell me about it.... Good thing I don't have much at all invested. I think I'm gonna stop looking at them, it's depressing...

Edit: Currently at 6.95


----------



## bowseruni (12 June 2008)

drop it like it's hot....$5 by end of trading day if this keeps up. surely they must bottom out soon


----------



## freddy2 (12 June 2008)

Will be interesting whether BNB will try and push the closing price to $7.50. It's over for them but I wouldn't be suprised if they tried.


----------



## yuan84dk (12 June 2008)

freddy2 said:


> Will be interesting whether BNB will try and push the closing price to $7.50. It's over for them but I wouldn't be suprised if they tried.




Sure they want to push the price back to $7.70 to get away from the review today.  But with what?  I think almighty Phil Green now really ran out of bullets!!!!

I think now BOTTOM OF BNB has to be redefined as often as every minute!!!  Well, there is always a bottom anyway n you know that?  But I dont think Macquarie Group would keep sitting aside for very long.


----------



## refined silver (12 June 2008)

ROE said:


> That what happen when you are funded by leverage and debt.
> Centro, ABS, Alco, BNB and MQG they all have a common theme




Exactly. There doesn't have to be a bottom (above 0) if the problem is insolvency. 

This is from the US, but will affect Oz.

“Ten companies now have more level 3 assets than capital,” observes Marc Faber . “The three magic words that make an asset a level 3 asset are ‘no observable inputs.’ What this means is that not only are they hard to price, but nearly impossible to sell. Recently, there’s been such deterioration in all types of mortgages that more and more assets are finding their way into this category.” 

You might guess what types of businesses are squirreling away level 3 assets, but the ratios to capital are a bit unnerving. 

“In order, they are (as a % of total shareholder equity): 

1. Bear Stearns: 313.97%
2. Morgan Stanley: 234.88%
3. Merrill Lynch: 225.4%
4. Goldman Sachs: 191.56%
5. Lehman: 171.18% 
6. Fannie Mae: 161.48%
7. Northwest Air: 142.02%
8. Citigroup: 125.06%
9. Prudential: 119.36%
10. Hartford: 108.52%.”

And remember, this is only those level 3 assets ON the balance sheet. Many institutions have stacks of toxic mortgage, credit and other swaps currently in structured OFF-balance sheet vehicles.


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## yuan84dk (12 June 2008)

freddy2 said:


> Will be interesting whether BNB will try and push the closing price to $7.50. It's over for them but I wouldn't be suprised if they tried.




As http://news.theage.com.au/business/babcock-in-good-shape-but-shares-sink-20080612-2phi.html

If it is true that the foundamental of the company is still as firm as it was, then personally I think the $7 is not resonable, and the low price would not stay long.  Price just went up a bit, probably as short selling positions are colosing out.


----------



## Tweaksta (12 June 2008)

The question is - could $6.81 be the bottom now? 

The price dipped at about 14:45 to hit $6.81 briefly and has come up a bit since then. It has now been over $7.00 for over an hour.


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## nomore4s (12 June 2008)

Tweaksta said:


> The question is - could $6.81 be the bottom now?
> 
> The price dipped at about 14:45 to hit $6.81 briefly and has come up a bit since then. It has now been over $7.00 for over an hour.




I would doubt that $6.81 will be the bottom, the bounce is probably due to short covering imo.

Would be expecting some sort of bad news to come out shortly. Surely there has to be something behind this sort of fall?

This is hardly surprising in this type of market, these types of companies have been getting hammered overseas and other companies with excessive debt/leverage have already been hammered. Highly risky investment in this environment imo.

MQG next?


----------



## Bushman (12 June 2008)

nomore4s said:


> I
> 
> MQG next?




MQG has the better balance sheet. But then again who knows what lies beneath. Trust no-one is the motto in this god awful credit crunch.  

BNB is a sitting duck now. Banks will be all over them like a rash a la Centro, AFG, ABS, MFS. Poor buggers - it was nearly bonus time too. They might be saved by their 'more opaque than AFG' structure, meaning someone can figure out what it is they are buying. But as we have seen with Centro, these banking syndicates are very difficult to deal with given there is a decided stench coming form most of their back yards as well.  

Ye gods - tread carefully people.


----------



## barnz2k (12 June 2008)

please tell me im not the only one still holding BNB  

If banks start calling in their loans.. What would happen?
We are at almost a 80% loss since the highest point. crazy.

ahh time travel. If only.


----------



## yuan84dk (12 June 2008)

barnz2k said:


> please tell me im not the only one still holding BNB
> 
> If banks start calling in their loans.. What would happen?
> We are at almost a 80% loss since the highest point. crazy.
> ...




I'm holding 1700 BNB shares including 1000 bought today @ $7.7.  Didnt wanna buy but the price was ridiculously cheap at that time.  2Hrs later, I realised $7.7 was just not cheap enough!!!


----------



## prawn_86 (12 June 2008)

yuan84dk said:


> I'm holding 1700 BNB shares including 1000 bought today @ $7.7.  Didnt wanna buy but the price was ridiculously cheap at that time.  2Hrs later, I realised $7.7 was just not cheap enough!!!




Either you have never heard what they say about falling knives, or you chose not to heed it.



I thought BNB and MacBank may have escaped the worst of it, but the crunch is back with a vengance!


----------



## kingbrown (12 June 2008)

*BNB bargain of the day ?*

Well I bought into BNB today 
Yes i may be insane  

i chased it up and down Paid $7:20  

NOTE :
Commsec, Etrade sites jammed up on the BNB market depth 
So no one could trade for around 15 to 20 mins 
Did any one else notice ??
Guess pannick set in and it was smashed again and went to 6.80  

Well as a new BNB owner 
After reading all your postings maybe i should not of purchased this bargain ?

Well i have decided to throw a life jacket on for the morning trade 
And will promtly jump the BNB ship if the price fails in morn trade 

As will thousands of other small and large punters 
if some of your dire predicions on this page come true


----------



## barnz2k (12 June 2008)

yuan84dk said:


> I'm holding 1700 BNB shares including 1000 bought today @ $7.7.  Didnt wanna buy but the price was ridiculously cheap at that time.  2Hrs later, I realised $7.7 was just not cheap enough!!!




You're a brave man Yuan.

Prawn - vengence indeed. My folio is now back to the territory it took 3 months to claw out of, and only took a matter of days to fall back to it.

Sigh.


----------



## cordelia (12 June 2008)

very sorry for those holding this stock.. I am not a holder ..if I was I would be getting my money out..what is left of it..if centro and AFG are anything to go by...


----------



## Pat (12 June 2008)

*Re: WELL THAT WILL DO ME!!UNLIMITED STUPIDITY*



mrgroundwork said:


> anyway, i wouldnt be suprised if you saw a decent size bounce in the next couple of trading days... it would be a good opportunity to sell if you are still holding IMO...



Very possible, you'd think quite a few stops where hit in the panic.

Such a shame the market now days.. everyone was making so much money 

not holding, still hope for that bounce.


----------



## michael_selway (12 June 2008)

Bushman said:


> MQG has the better balance sheet. But then again who knows what lies beneath. Trust no-one is the motto in this god awful credit crunch.
> 
> BNB is a sitting duck now. Banks will be all over them like a rash a la Centro, AFG, ABS, MFS. Poor buggers - it was nearly bonus time too. They might be saved by their 'more opaque than AFG' structure, meaning someone can figure out what it is they are buying. But as we have seen with Centro, these banking syndicates are very difficult to deal with given there is a decided stench coming form most of their back yards as well.
> 
> Ye gods - tread carefully people.




Yep dont forget CCP & CIY also!

*BNB - Earnings and Dividends Forecast (cents per share) 
2007 2008 2009 2010 
EPS 172.0 193.6 200.0 229.0 
DPS 54.4 60.3 61.5 69.8 *



> Date: 6/6/2008
> Author: Vesna Poljak
> Source: The Australian Financial Review --- Page: 56
> The listed investment fund model is not broken, according to Babcock & Brown(B&B) global head of infrastructure, Peter Hofbauer. Speaking in June 2008,Hofbauer said the model is not unique to companies such as B&B or MacquarieGroup, but is used by all institutional investors who trade shares. Hofbauersaid the only way for the model to disappear would be if it was determined thatpeople would no longer appoint others to provide services aimed at increasingthe value of their assets. Hofbauer said this is unlikely to occur in the nearfuture




thx

MS


----------



## yuan84dk (12 June 2008)

barnz2k said:


> You're a brave man Yuan.
> 
> Prawn - vengence indeed. My folio is now back to the territory it took 3 months to claw out of, and only took a matter of days to fall back to it.
> 
> Sigh.




Hey barnz2k,

I thought you were a loyal BNB buyer rite?  Saw a couple of posters of yours eariler...are you still holding any now?

Why I bouhgt these just simply because I dont think this is the end of it, of the company.  I used to pay over 20k for 1,000 shares in near past...this is really a bargin to pick.  Yea...BNB might have taken a severe hit of credit, debt and BBP that little brother...BNB is all over the news today and also would be the headlines tomorrow as well saying hedge funds, then hedge funds kick the ball back to its shareholders.  I still dont see any explaination to today, anything foundamental.

But Phil did mention one thing alrite.  While he's making $22M a year, its shareholders do experience a hardship which is share price related.


----------



## MRC & Co (12 June 2008)

*Re: WELL THAT WILL DO ME!!UNLIMITED STUPIDITY*



nick2fish said:


> ...my first loss in 3 years that I haven't been able to cover with a gain.




How do you mean?

Any capital loss you can not write off against a capital gain, you can carry forward until a time where you have a capital gain to write it off against.


----------



## barnz2k (12 June 2008)

yuan84dk said:


> Hey barnz2k,
> 
> I thought you were a loyal BNB buyer rite?  Saw a couple of posters of yours eariler...are you still holding any now?




yep still holding, Although after recent days I wish I wasnt. Even if the fundamentals are OK, both BNB and MQG have simply been hammered to a point where it is going to take a lot of work to make a recovery, if it can at all.
Id like to believe it can come back. I hope it can...


----------



## eMark (12 June 2008)

*Re: WELL THAT WILL DO ME!!UNLIMITED STUPIDITY*

Not expecting you to be an accountant or anything, but can you write off capital loss against your regular joe taxable income (ie your everyday job)?



MRC & Co said:


> How do you mean?
> 
> Any capital loss you can not write off against a capital gain, you can carry forward until a time where you have a capital gain to write it off against.


----------



## cameron_bol (12 June 2008)

*Re: WELL THAT WILL DO ME!!UNLIMITED STUPIDITY*



eMark said:


> Not expecting you to be an accountant or anything, but can you write off capital loss against your regular joe taxable income (ie your everyday job)?




Nah, capital losses can only be used to offset capital gains. You can, as far as i know, use income losses (not that you'd want to have that) to offset capital gains though, just not the other way around.


----------



## doctorj (12 June 2008)

*Re: WELL THAT WILL DO ME!!UNLIMITED STUPIDITY*



eMark said:


> Not expecting you to be an accountant or anything, but can you write off capital loss against your regular joe taxable income (ie your everyday job)?




This advice is probably worth every cent you paid for it, but generally, a realised or unrealised capital loss is not deductible against your income.

See a tax accountant for tax advice.


----------



## eMark (12 June 2008)

*Re: WELL THAT WILL DO ME!!UNLIMITED STUPIDITY*



cameron_bol said:


> Nah, capital losses can only be used to offset capital gains. You can, as far as i know, use income losses (not that you'd want to have that) to offset capital gains though, just not the other way around.




Not turning this into a tax thread. But just a really quick clarification.

Not real figures

50k profit (capital)

100k loss (capital)

How does that work?


----------



## Mr_T (12 June 2008)

*Re: WELL THAT WILL DO ME!!UNLIMITED STUPIDITY*



doctorj said:


> This advice is probably worth every cent you paid for it, but generally, a realised or unrealised capital loss is not deductible against your income.
> 
> See a tax accountant for tax advice.




It's not deductible in the sense that you can't offset it against most types of income eg salary. However, capital losses CAN be offset against capital gains. If there are insufficient capital gains in the current financial year, the capital losses can be carried forwards and offset against capital gains in a future financial year.

God I hate it when people talk like they're experts when the dont know poo.

Have a look at s 102-5 of the Income Tax Assessment Act 1997, step 2 talks about applying net capital losses from previous years.


----------



## cameron_bol (12 June 2008)

*Re: WELL THAT WILL DO ME!!UNLIMITED STUPIDITY*



eMark said:


> Not turning this into a tax thread. But just a really quick clarification.
> 
> Not real figures
> 
> ...




You wouldn't pay any tax on the capital gain (offset the 50k profit with 50k loss) and you'd have 50k deferred capital loss carried over to next financial year. I.e. you'll have 50k capital losses to offset your capital gains next year.

Edit: obviously i'm no expert and do your own research into this.


----------



## STYLSH (12 June 2008)

You make a net capital loss of 50k which will be rolled over to the following financial year.

eg if next year you make 50k capital gain, then you'll have a net gain of 0

And here i was hoping that something bad like this wouldnt happen to bnb 

[edit] beaten by 1 min

[edit #2]
I was reading the thing about "share trader" vs "share holder" in the ato site and if you are classed as a "share trader" you could use your loss as a deduction.  (BUT i could have read it wrong)


----------



## Mr_T (12 June 2008)

*Re: WELL THAT WILL DO ME!!UNLIMITED STUPIDITY*



eMark said:


> Not turning this into a tax thread. But just a really quick clarification.
> 
> Not real figures
> 
> ...





You offset the 100K loss against the 50K gain, and so have a net capital loss of 50K. This can be carried forward and used to reduce a future capital gain.

By the way, there is no 50% Capital Gains Tax discount applicable in this case for the capital gain. The 50% discount, when it applies, is applied after gains and losses have been netted off, and then only if this netted off amount results in a gain. Since the netting off process here produces a loss, there can be no 50% discount.


----------



## Mr_T (12 June 2008)

STYLSH said:


> You make a net capital loss of 50k which will be rolled over to the following financial year.
> 
> eg if next year you make 50k capital gain, then you'll have a net gain of 0
> 
> ...





Yes, that is correct, as a share trader is in the business of trading, so their losses are deductible (subject to the non-commercial loss provisions).


----------



## eMark (12 June 2008)

*Re: WELL THAT WILL DO ME!!UNLIMITED STUPIDITY*

Thanks Mr T.

So no matter how much you are taxed on your salary, you can't offset any capital losses.

....and capital losses can only be used to offset capital gains.

So in affect you can't "claim" capital losses.......no matter how substantial.

Apart from against capital gains.



Mr_T said:


> It's not deductible in the sense that you can't offset it against most types of income eg salary. However, capital losses CAN be offset against capital gains. If there are insufficient capital gains in the current financial year, the capital losses can be carried forwards and offset against capital gains in a future financial year.
> 
> God I hate it when people talk like they're experts when the dont know poo.
> 
> Have a look at s 102-5 of the Income Tax Assessment Act 1997, step 2 talks about applying net capital losses from previous years.


----------



## eMark (12 June 2008)

Mr_T said:


> Yes, that is correct, as a share trader is in the business of trading, so their losses are deductible (subject to the non-commercial loss provisions).




ok, now that is interesting.......

What makes one a share trader vs. a share holder?

What am I?

Are you saying a share trader can claim capital losses against their regular joe income?


----------



## Mr_T (12 June 2008)

*Re: WELL THAT WILL DO ME!!UNLIMITED STUPIDITY*



eMark said:


> Thanks Mr T.
> 
> So no matter how much you are taxed on your salary, you can't offset any capital losses.
> 
> ...



Yes, that's correct. In effect, capital losses are quarantined against capital gains. 

If capital losses are carried forward, there is no time limit. You can carry them forward till you use them up.


----------



## Mr_T (12 June 2008)

eMark said:


> ok, now that is interesting.......
> 
> What makes one a share trader vs. a share holder?
> 
> ...




There is no scientific formula, need to look at all the facts, especially the frequency and volume of transactions.

For a share trader, their shares are their trading stock. So their losses are not "capital losses", rather they are just plain losses, analogous to a situation that  if a hardware store you owned as a sole proprietor made a loss.


----------



## roland (12 June 2008)

*Re: WELL THAT WILL DO ME!!UNLIMITED STUPIDITY*



Mr_T said:


> Yes, that's correct. In effect, capital losses are quarantined against capital gains.
> 
> If capital losses are carried forward, there is no time limit. You can carry them forward till you use them up.




Mr_T, do you know whether you can claim back CGT paid on past profit years against current financial years losses?


----------



## Mr_T (12 June 2008)

*Re: WELL THAT WILL DO ME!!UNLIMITED STUPIDITY*



roland said:


> Mr_T, do you know whether you can claim back CGT paid on past profit years against current financial years losses?




The answer is no, you cannot. Can only use a capital loss to offset current and future year gains.

Which isn't exactly fair, but that's the law.


----------



## eMark (12 June 2008)

Mr_T said:


> There is no scientific formula, need to look at all the facts, especially the frequency and volume of transactions.
> 
> For a share trader, their shares are their trading stock. So their losses are not "capital losses", rather they are just plain losses, analogous to a situation that  if a hardware store you owned as a sole proprietor made a loss.




Thanks for your help Mr T. It really is appreciated.

Re - "their shares are their trading stock"

What does this mean?

Do you qualify as a trader (by having to have an ABN or something like that)? Which I don't

My situation is I have roughly a 60k profit for 07/08, but have losses 3-4 times that. The losses came from frequent trading, high volumes, resulting signifigant losses (not to mention stupidity)

I also have a salary (regular job - not related to trading)

Hope this helps.


----------



## barnz2k (12 June 2008)

eMark said:


> My situation is I have roughly a 60k profit for 07/08, but have losses 3-4 times that. The losses came from frequent trading, high volumes, resulting signifigant losses (not to mention stupidity)




and here I am sulking about 10K loss.. 

So Im guessing you could use 60K of your losses, picking out the shares to match closest to your profit for offset, and carry the rest of the loss into next year where you (and me  ) will hopefully have a big profit you can use it against, and continue until your profit excedes your used loss. (hmm sounds like a gambler chasing his losses the way I worded it.. but you know what i mean)


----------



## Family_Guy (12 June 2008)

As a new comer to trading shares, i really had no idea this was happening when i purchased on Wed at $9.57 thinking this was an absolute bargin. Guess i was wrong and now reading the news.com.au site, i found the reason why and how these so called vultures from OS can do so much damage. 

But you learn from experience, luckily i only bought 70 of them. I'll hold them and take a lesson, but hope to hell they climb back to prices of old.....soon.

Interestingly, i just read the report that BellPotter put out and this was one of their favoured stocks (i read it tonight)


----------



## Mr_T (12 June 2008)

eMark said:


> Thanks for your help Mr T. It really is appreciated.
> 
> Re - "their shares are their trading stock"
> 
> ...





For a share investor, the shares are their capital. But for a share trader, the shares are their trading stock. Just like for a supermarket, its food & other goods are its trading stock, for a share trader the shares are the trading stock, as they are constantly bought and sold. What an accountant would call inventory, a tax person calls trading stock.

Having an ABN doesn't make you a trader. But if you are a trader, you should have an ABN, though if you don't have one, it won't stop you being a trader. Just that all businesses need to have an ABN. But lets get the causation straight: it's that  a business should have an ABN, it's not that  having an ABN makes you into a business.

Whether you are a trader or investor depends on the specific facts of your case, it is possible that you are a trader given your frequency.

If you wish to offset share losses against income such as salary, there are 2 hurdles you need to jump:

a) Show that you are a share trader, not just an investor (ie that you are in the business of trading shares); 

AND (ie you need both hurdles)


Must show that the requirements of Div 35 of the Income Tax Assessment Act 1997 are fulfilled.

Div 35 will be relevant to ANY business that makes a loss, including one of "share trading". Basically, it says that a business can't use its loss to offset other income (such as salary income) unless fulfil at least one of following:

a) The business have made $20,000 in income (if you sold $20,000 in your share trading business, this would be fulfilled).

b) You made a profit for at least 3 of the last 5 financial year (including the current one) from your business

c) The business utilised real esate that costed at least $50K

d) the business utilisied depreciating assets and trading stock (which here would include shares, as they are trading stock) of at least 100K.


----------



## Galax (12 June 2008)

I have just seen my share plumment and i know i should have sold it when they were at $16.20 
does any one believe tomorrow they will be on trading halt and if so what could possibly be the future for them and the ones holding this


----------



## eMark (12 June 2008)

Mr T

Thankyou very much for your time and effort, and detailed responses.

I will have a closer look at this reponse in particular, and get back to you via the messaging system with any further questions I might have in coming days. Simply beacuse this is a BNB thread, and I am mindful of that.

Cheers



Mr_T said:


> For a share investor, the shares are their capital. But for a share trader, the shares are their trading stock. Just like for a supermarket, its food & other goods are its trading stock, for a share trader the shares are the trading stock, as they are constantly bought and sold. What an accountant would call inventory, a tax person calls trading stock.
> 
> Having an ABN doesn't make you a trader. But if you are a trader, you should have an ABN, though if you don't have one, it won't stop you being a trader. Just that all businesses need to have an ABN. But lets get the causation straight: it's that  a business should have an ABN, it's not that  having an ABN makes you into a business.
> 
> ...


----------



## yuan84dk (13 June 2008)

*Re: BNB bargain of the day ?*



kingbrown said:


> Well I bought into BNB today
> Yes i may be insane
> i chased it up and down Paid $7:20
> 
> ...




  Yea, same here, on the depth screen of Comsec Pro trader, the selling column was deep to my carpet!!!  There was a red cross accross the screen but didnt see an end of the whole dame thing.  I wish the stock is in oversold now.


----------



## tigerboi (13 June 2008)

*Re:NO GLOATING ALLOWED*

the news gets worse they are now on a negative list with moodys,i want folk that have lost to take it as a very learned experience...tb

$5.45 open...wow they are a gonna today..

now $4.97...


----------



## DowJones (13 June 2008)

Another interesting day for BNB, I wonder if there might be a take-over at these low prices?

A rating downgrade would be disastrous for BNB, especially if they fall off the BBB range. This would put them into junk territory as far as debt goes. 

I held this stock a while back at $21, and sold at $16 when it looked like a trend. I am astounded to what the short-sellers are doing.


----------



## tigerboi (13 June 2008)

*Re:TOO MUCH DEBT FOR A TAKEOVER*



DowJones said:


> Another interesting day for BNB, I wonder if there might be a take-over at these low prices?
> 
> A rating downgrade would be disastrous for BNB, especially if they fall off the BBB range. This would put them into junk territory as far as debt goes.
> 
> I held this stock a while back at $21, and sold at $16 when it looked like a trend. I am astounded to what the short-sellers are doing.




You cant blame the shorters as i said 3 months ago this mob will be next cab off the rank,as for t/o?whats to takeover...100% firesale must happen,you were clever only losing 25%,just amazes me why anyone would buy this junk.

the business model of rolling assets up that you dont own,borrow massively,take commissions,fees doesnt work never will...its abc again,or as yogi bera says"its de ja vu all over again!"...tb

downgrade already sitting in the anns.inbox before open

next cab off the rank...asciano


----------



## wysiwyg101 (13 June 2008)

Mr_T said:


> a) The business have made $20,000 in income (if you sold $20,000 in your share trading business, this would be fulfilled).




Appologies for continuing the tax questions but I thought I would take the opportunity to ask a question about CFD's and tax.

How do you determine what the turnover is when trading CFD's? Does the underlying value of the shares traded count as the income or is there another method.


----------



## AnDy62 (13 June 2008)

Poor BNB. I think my Nan owns these, oh dear 

Did she witness the first titanic,,, no, not quite.

My feelings go out to any holders caught up in this cyclone of shorting and debt lynching mobs.


----------



## cordelia (13 June 2008)

I am watching this being sold down like crazy and it really sucks....I don't hold but this short selling BS should be outlawed....There's no way that anything positive can be gained from this....The whole idea of selling something you don't own is just f***ed....

Sorry to those suffering from this


----------



## Fed23 (13 June 2008)

I'm look and its like the bloodbath will not end. Where this will bottom out I got no idea, but its scary.

I thought this was a good buy when it was $12, then it bounced to $16.... now after yesterday I could see this ending up like CNP and AFG.


----------



## benwex (13 June 2008)

Can someone explain to me...

Why would someone lend shares to another for them to sell into the market, batter the price down and then return them back at far lower price???

Who ever lends shares to a short sell will be getting screwed???

Anyone really understand the mechanics of short selling??

benwex


----------



## numbercruncher (13 June 2008)

*Re: TOO MUCH DEBT FOR A TAKEOVER*



tigerboi said:


> You cant blame the shorters as i said 3 months ago this mob will be next cab off the rank,as for t/o?whats to takeover...100% firesale must happen,you were clever only losing 25%,just amazes me why anyone would buy this junk.
> 
> the business model of rolling assets up that you dont own,borrow massively,take commissions,fees doesnt work never will...its abc again,or as yogi bera says"its de ja vu all over again!"...tb
> 
> ...




Yup this Business model is in its dying days, was like some sort of sick joke really, pack of locusts.


----------



## Fed23 (13 June 2008)

Could it possibly have found a bottom hover around the $5 mark after hitting $4.70.

I dont hold, but for other holders I hope it holds around this level. I don't believe any of its backer would let it go under, it's just too big


----------



## cordelia (13 June 2008)

benwex said:


> Can someone explain to me...
> 
> Why would someone lend shares to another for them to sell into the market, batter the price down and then return them back at far lower price???
> 
> ...




well I am not 100% sure on this but basically those who hold the shares (a custodian) get paid  for lending them...funds of some sort or brokers...I wouldn't  think the people who actually own the shares lend them to be sold down...... Yes only a true idiot would lend his shares to be sold down...That's what I find disturbing....

If you buy shares you don't take possession of them so to speak....so where are they? and who's doing what with them...Someone set me straight if I am wrong....Personally I would be p###ed off if my shares were lent to be sold down...But after reading below I guess it really pays to read the fine print of your brokerage agreement..still that doesn't help if other brokers lend shares but yours doesn't...

The share goes into a free fall as those who do actually own them try to get out too. I am not sure on this but it has occured to me that if the borrowed shares are sold then what if whoever really owns them also wants to sell them at the same time....Wouldn't it be possible that shares that didn't actually exist could be sold? It's a buit difficult to get your head around really..well for me it is

i found this on the net on a forum :

http://answers.yahoo.com/question/index?qid=20071105143048AAGvOZT

_I mean that a brokerage house needs to borrow shares from another investor to give to this investor so he can short the stock. But does the orginal investor have to consent to having his shares taken away?


Technically yes, but since most shares are held in brokers' accounts, the consent is automatic, according to the agreement between broker and client. the client does not know the shares are borrowed, and the broker is effectively lending his own shares._


----------



## Tweaksta (13 June 2008)

It's interesting to note that MQG is down nearly 4% as a side-effect of BNB's hammering.....but yeah 4.70 appears to be the lowest point for BNB today. They are now hovering at 5.34. 

I tend to be of the thinking that if there are so many institutions who will not allow BNB to go down the gurgler then Macquarie should also be fine in the long run.


----------



## just a thought (13 June 2008)

benwex said:


> Can someone explain to me...
> 
> Why would someone lend shares to another for them to sell into the market, batter the price down and then return them back at far lower price???
> 
> ...




I am thinking along the same lines. It escapes me. The quantities of shares being borrowed is huge therefore they must belong to some institutions , such as super fund managers. Why would any fund manager lend the shares to drive the entity down to a point of business destruction, like in the case of Centro or ABC Learning? The fund may receive back the lending fee but if the value of the shares returned have no hope of recovering then the fund would be at big loss. If our superfund managers are wiping out the value of our super investments - then the thought is pretty scary and APRA better get a move on on regulating this activity! 
Does any one have any explanation to what has been happening? Am i missing the point somewhere?


----------



## cordelia (13 June 2008)

just a thought said:


> I am thinking along the same lines. It escapes me. The quantities of shares being borrowed is huge therefore they must belong to some institutions , such as super fund managers. Why would any fund manager lend the shares to drive the entity down to a point of business destruction, like in the case of Centro or ABC Learning? The fund may receive back the lending fee but if the value of the shares returned have no hope of recovering then the fund would be at big loss. If our superfund managers are wiping out the value of our super investments - then the thought is pretty scary and APRA better get a move on on regulating this activity!
> Does any one have any explanation to what has been happening? Am i missing the point somewhere?





I don't fully understand it but it will be interesting to see if somewhere down the track someone doesn't attempt to take legal action against the practice. I don't know the legalities of shorting so can't really speculate...


----------



## ithatheekret (13 June 2008)

Tweaksta said:


> It's interesting to note that MQG is down nearly 4% as a side-effect of BNB's hammering.....but yeah 4.70 appears to be the lowest point for BNB today. They are now hovering at 5.34.
> 
> I tend to be of the thinking that if there are so many institutions who will not allow BNB to go down the gurgler then Macquarie should also be fine in the long run.





I was thinking predatory effects for a comeback at some stage , but I'd say we are sure that the model will now force writedowns of substantial and diluting effect .

Hence the run for the exits , but this has been on the wind for months .......


----------



## rub92me (13 June 2008)

just a thought said:


> I am thinking along the same lines. It escapes me. The quantities of shares being borrowed is huge therefore they must belong to some institutions , such as super fund managers. Why would any fund manager lend the shares to drive the entity down to a point of business destruction, like in the case of Centro or ABC Learning? The fund may receive back the lending fee but if the value of the shares returned have no hope of recovering then the fund would be at big loss. If our superfund managers are wiping out the value of our super investments - then the thought is pretty scary and APRA better get a move on on regulating this activity!
> Does any one have any explanation to what has been happening? Am i missing the point somewhere?



Maybe better to have a separate thread on this. APRA is not the regulator. The ASX sets the rules and ASIC is the regulator.
See https://www.asx.com.au/investor/education/basics/short_sales.htm


----------



## just a thought (13 June 2008)

benwex said:


> Can someone explain to me...
> 
> Why would someone lend shares to another for them to sell into the market, batter the price down and then return them back at far lower price???
> 
> ...




I was just explained that there are two actions in a short sell, one is to purchase a put option with a much lower price then the current share price (this sort of works as an insurance against a drop in a price) and second is to lend your shares for a fee to short sell. Thus when the price drops you would sell the put option and recover the loss in share value and also collect the lending fee. That to me clarifies why would some one lend the shares as the lender's share value does not diminish if put option is purchased to cover the loss. But the put option has to be close to the rock bottom price otherwise the lender still falls short. Which brings me to the point that the lenders and short sellers must be in collaboration in order for the lender to come out in the black.


----------



## tigerboi (13 June 2008)

*Re:GETTING BASHED UP REAL GOOD...*

I said yesterday it would close around $5.50 & that seems about right so far,gonna be some furious attempts at holding back this pounding but monday will see this in a halt for sure...then the fire sale of the assets it dont own & owes lots for...tb


----------



## MRC & Co (13 June 2008)

Anybody who goes short, has to buy back, so what is the difference?

Only people being scared out are the weak hands and 'mum and dad' investors.  

Once some of these "big bad Hedge Funds" start covering their shorts, there could well be a squeeze which will then get all those weak hands back in at higher prices.  

The share price will then slowly drift down.

Who wins?   

Think about it.


----------



## ROE (13 June 2008)

MRC & Co said:


> Anybody who goes short, has to buy back, so what is the difference?
> 
> Only people being scared out are the weak hands and 'mum and dad' investors.
> 
> ...




Short seller wins, business with flaw model lose 
Has any of these stock ever restore to the good day before the stampe?
ABS, Alco, Centro ?


----------



## barnz2k (13 June 2008)

This is just crazy. 

I was thinking about shorting last night and trying to work out in my head too where exactly those shares come from to sell.. Its like an IOU or something.

like bill borrowing fred's car and selling it to bob at a high price, bob crashes it, so bill buys it back for a lot less, then he gives it back to fred - in much worse condition than when he lent it to him but bill is the one better off??


----------



## Mr_T (13 June 2008)

MRC & Co said:


> Anybody who goes short, has to buy back, so what is the difference?
> 
> Only people being scared out are the weak hands and 'mum and dad' investors.
> 
> ...




Short sellers are very important. They

a) Give the business an appropriate scapegoat. Instead of Uncle Phil admitting that him and his team have done badly, he can try to blame the short selling hedge funds. The sad thing is people actually buy that excuse.

b) Gives investors some hope, notwithstanding it is false. If it's all the hedge funds' fault, then the problem isn't with the business or the shareholders for buying that business - it's the hedge funds!! And when they finish, the company will recover - right???


Reality isn't always pretty, but it's always there. The business model is bad, it is run in an opaque manner, there has been misrepresentations to the shareholders, management put themselves first with the bonuses, massive mistakes have been made. That is reality.


----------



## barnz2k (13 June 2008)

Citi group has down graded BNB risk rating from high to speculative and lowered their price target.

Downgrades happening arent good for BNB right now - but note that they still until recently had a price target of $25. So they had some confidence in BNB too??

from here


> Citigroup downgraded its risk rating on Babock to speculative from high. A hairy-chested punt in other words. The comments on credibility were telling.






> "We have moved from an ongoing business valuation of $25 to a price target of $6.80 based on 0.9x NTA until this issue is clarified. Our rating is now 'neutral'.


----------



## tcoates (13 June 2008)

> Who wins?
> 
> Think about it.



I figured that was a rhetorical question.

But something has to be amiss when the brokers suddenly change their outlook on the company and slash valuations (target prices) in half. There are still (?) buy recommendations on this train wreck.

* the company does not know who, but is blaming short sellers.

* one could argue a certain lack of transparency if the bosses say everything is rosy, when this cannot be the case based on the share price.

* on top of that, BNB decide to take on extra debt in UK with Angel trains.

It is unfortunate that it will the mum and dad investors that will be caught in the middle. But I suppose that is life these days.

BTW - I am not for or against short selling in whatever form. But something went amiss with this stock.

Tim


----------



## Eddyl (13 June 2008)

Does anyone know how the BNB satellite funds are structured? Is the parent company allowed to sell off assets in the satellite funds if the parent company goes bankrupt, but the smaller fund is actually operating well with good assets and little debt?


----------



## Mr_T (13 June 2008)

Stephen Mayne sums it up again as only he can:

Time for Babcock & Brown to sack Phil Green
Stephen Mayne writes:

Babcock & Brown boss Phil Green has just replaced Eddie Groves as “Australia’s most sackable CEO”, although with ABC Learning shares falling to a new record low of just 93c this morning, both should be fired forthwith.

IAG CEO Michael Hawker walked the plank last month after admitting: “I have lost the confidence of a number of our shareholders, which is not tenable for the company." 

The Babcock fiasco is 10 times worse than IAG given the whole empire has crashed even further in morning trade.

Unfortunately, Babcock still retains all the hallmarks of a private partnership with staff ownership exceeding 40% and four executives sitting on the board. It is hard to believe so-called lead independent director Elizabeth Nosworthy has the stomach to sack Green based on this argument at the recent AGM.

The five independents – Nosworthy, ASX director Michael Sharpe, former BT funds management heavy Ian Martin, German banker and Bayern Munich director Dieter Rampl, and Credit Suisse chairman emeritus Joe Raby need to step in and take control of the situation.

As Merrill Lynch noted in a report today before the latest sharemarket savaging, losing control to the banks was “a further hit to management’s already fragile credibility":

It was interesting that Trevor Loewensohn was the Babcock man quoted in the press today because he is the most senior executive who wasn’t part of the private Babcock partnership, having built his strong reputation at Schroeders, JP Morgan and UBS over the years. Loewensohn for CEO anyone?

Green also looks personally vulnerable because he is one of the few Babcock executives who didn’t sell down his stake since the 2004 float. And you have to worry about the debts accumulated buying up the following stakes in the various troubled satellites.

B&B Infrastructure: 17.78 million shares
B&B Power: 7.08 million shares
B&B Wind: 4.24 million shares
B&B Residential Land: 4 million shares
B&B Communities: 4 million shares
Green is down more than $30 million from these plays and his 12.77 million shares in the head stock are today only worth $64 million.

We’ve put together this video from the recent AGM webcast so you can see Green’s body language as he discussed shareholder equity, margin loans and his own decision not to participate in the recent dividend reinvestment plan.

Babcock’s house banker UBS has today dramatically changed its tune on the financial engineers, slashing its share price target from $25 to just $6.80.

However, UBS is talking up the prospect of a management buyout, all of which depends on the financial strength of the top 13 Babcock executives who together still owned 41% of the company after the 2004 float and have realised more than $500 million from subsequent sell-downs.

With talk of a management buyout and executives under personal financial stress, the independent directors must take immediate control of the situation.

The first step is firing Green and the second is replacing San Francisco-based founder Jim Babcock with an independent chairman.

You just can't assemble more than $50 billion in debt and destroy more than $4 billion of investor funds and expect to stick around.


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## tcoates (13 June 2008)

Mr T,

You should have included the link to the video... 

http://video.maynereport.com/Video.aspx?id=18567


Also worth a read...

http://www.sharecafe.com.au/article_air.asp?a=AV&ai=9007

Tim


----------



## rub92me (13 June 2008)

Instead of all this going on about the 'evil' short-sellers, how about just checking the facts? It's made publically available by the ASX, albeit it delayed by a day. Short selling on BNB is relatively small compared to say MQG or TLS. See link --> http://www.asx.com.au/data/Shortsell.txt


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## kingbrown (13 June 2008)

*THE NEW DOG ?*

Well i felt like i recieved a good fair kick in the back side today 

I bailed out eventually after watching that jawdropping 30% fall  on the open 
Was hard to jump ship as it sucked everything in jumped overboard in late trade 
Seemed to have quite a bit of support at $5 ?

As i only owned this stock for about 20 hrs i can now sleep easy and enjoy the rest of my weekend 

Well guys can we call this BNB mob a DOG yet ??

Good luck to you all i'am sticking to the energy stocks 

Will watch with great interest hope she has a rally


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## jayinoz (13 June 2008)

*BNB- Babcock & Brown: WHAT NOW???*

Hi, I had BNB on my watchlist when Huntleys highly recommended the company on the DAY BEFORE the downfall... 10\6\2008. 

Having seen a huge fall in 11\6 I thought- oh what a potential opportunity at $7, on a stock that was highly recommended for growth. 

Expecting a huge jump this morning I was dismayed at the drop... the stock bypassed my STOP LOSS of $6.50 and did not get triggered upon the opening today. I looked over all the info from BNB to see what the issue actually was- as well as listening to Sky biz channel + bloomberg all day. 

It is noted that short sellers had appartently noticed that they are in trouble when below 2.5 Bil $ Market Cap. Furthermore wished to push them below this trigger for X  reasons. 

Now it seems nobody really has a clue- how did this stock at $34 this time last year reach such a state with appartently good management- so Huntleys recommendation states.  WILL THIS BE ANOTHER CENTRO or RAMS FOR ME is what my thoughts have been all day.

I started to ask myself the following Q's & was hoping for others thoughts. TO SELL OR NOT TO SELL- that is the Q:

BNB falls to extreme lows triggering a review by lenders for being well below their ‘Market Cap’. Trigger point is below 2.5 billion dollars being approx $7.50 per share. Now trading at $5.25 it is far below this level. BNB is highly reliant on its name and reputation that now looks highly suspect. Yet will they die a slow death or recover. Short selling traders with another agenda have been blamed for the collapse. Are they hoping to gain from a proposed recovery or are others trying to make the company insolvant...... who knows but the more thoughts the better.

The key questions are;

1)	Can BNB recover its reputation? Or is the name beyond repair due to falling from the $34 high this time last year?

2)	Top 20 investors in BNB that will be directly affected if they have not been already? Barkleys, etc- yes?

3)	The approx 10 companies that are affiliated by name and\or BNB is a shareholder, being dramatically affected, can they recover? Or will they need to distance themselves to BNB completely, including in name?

BBP BBI BBW EBI BJT BBC EBB BLP    ETC?

4)	What are the ‘real’ assets of each company, particularly BNB? What is the business income from current investments? Other balance sheet info?

5)	What are the companies that have been affected directly in share price, unfairly by the downturn in BNB? With a high probability of a good recovery by the non-affiliated companies?


6)	Why did the whole financial market in ASX remain far lower due to the BNB saga, even after an upturn elsewhere in financial markets around the world in general?

Other views would be appreciated to make a semi educated guess and evaluate other potential opportunities. Have a great weekend.

Cheers Jeremy


----------



## roland (13 June 2008)

Well, BBI, BBC and EBB did distance themselves today in seperate statements. BBP is going to have a problem doing the same, since they were hoping to have BNB as a backstop for the shortfall in funding. Not really sure where BBW stand, since BNB seems to be playing with the sell off of some wind assets, although I believe that BBW is fully funded (correct me if I am wrong)

So the way I read it:

BBI - OK
EBB - OK
BBC - OK
BBP - buggered
BBW - OK, but to be fully clarified

the others? not sure, maybe others here can offer some comment


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## jayinoz (13 June 2008)

Yes a couple of the B's fully distanced themselves from BNB today yet the name may have caused irreversible damage. In saying that when Westpac took on RAMs, they kept the name. Fundamentally all the affiliated businesses should be fine and return to previous prices, yet who knows.

One thing is for sure is the whole series of Babcock biz's will be watch very closely by many active traders and investors for sometime to come.


----------



## Julia (13 June 2008)

*Re: BNB- Babcock & Brown: WHAT NOW???*



jayinoz said:


> Hi, I had BNB on my watchlist when Huntleys highly recommended the company on the DAY BEFORE the downfall... 10\6\2008.
> 
> Having seen a huge fall in 11\6 I thought- oh what a potential opportunity at $7, on a stock that was highly recommended for growth.



This is yet another example of the stupidity of analysts recommending a stock purely on the basis that its SP has fallen.  Usually it falls for a reason, as has been well demonstrated with this company.


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## barnz2k (13 June 2008)

I think I just solved the whole case - today is Friday. The date is the 13th.



For those already screwed by this and holding, nothing much else we can do but hold and hope? Selling at this point seems desparate. Sure it wont go another 30% on monday. *touch wood*. 

here's to more restless nights to come..


----------



## kloid (13 June 2008)

*Re: BNB- Babcock & Brown: WHAT NOW???*



Julia said:


> This is yet another example of the stupidity of analysts recommending a stock purely on the basis that its SP has fallen.  Usually it falls for a reason, as has been well demonstrated with this company.




But the company has recorded impressive earnings growth over the past few years and claims that it will achieve 15% EPS growth this year.  That and the reduced share price is in my eyes a valid reason for an analyst to put a "Buy" on it.  Analysts don't just recommend stocks purely because the share price has fallen otherwise they'd be recommending the likes of CCP, ABS, CNP and AFG.  The covenant on is worrying BUT I can't see the banks demanding repayment of their loans if there is still a viable cash producing business.

Kloid


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## theasxgorilla (13 June 2008)

*Re: BNB- Babcock & Brown: WHAT NOW???*



Julia said:


> This is yet another example of the stupidity of analysts recommending a stock purely on the basis that its SP has fallen.  Usually it falls for a reason, as has been well demonstrated with this company.




Uh huh.  What's that saying about when the tide goes out you can see who is swimming naked...or something along those lines.


----------



## Julia (13 June 2008)

*Re: BNB- Babcock & Brown: WHAT NOW???*



kloid said:


> But the company has recorded impressive earnings growth over the past few years and claims that it will achieve 15% EPS growth this year.  That and the reduced share price is in my eyes a valid reason for an analyst to put a "Buy" on it.  Analysts don't just recommend stocks purely because the share price has fallen otherwise they'd be recommending the likes of CCP, ABS, CNP and AFG.  The covenant on is worrying BUT I can't see the banks demanding repayment of their loans if there is still a viable cash producing business.
> 
> Kloid



Believe what you will, Kloid.   But for some years until recently I subscribed to FNArena who publish a daily list of broker recommendations.  I doubt a day would have gone by without more than one analyst clearly stating they were raising the recommendation to a Buy purely on the basis that the SP had fallen.

You can have the greatest fundamentals in the world, but if market sentiment has turned against you, it just doesn't matter.  Thus it has been with B & B.


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## roland (13 June 2008)

*Re: BNB- Babcock & Brown: WHAT NOW???*



Julia said:


> Believe what you will, Kloid.   But for some years until recently I subscribed to FNArena who publish a daily list of broker recommendations.  I doubt a day would have gone by without more than one analyst clearly stating they were raising the recommendation to a Buy purely on the basis that the SP had fallen.
> 
> You can have the greatest fundamentals in the world, but if market sentiment has turned against you, it just doesn't matter.  Thus it has been with B & B.




I agree, I think that most of the broker recomendations are based on the mathematics of SP versus expected published earnings etc, without taking into account the market sentiment.

Also market sentiment is going to have a more immediate effect to the published numbers


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## barnz2k (13 June 2008)

*Re: BNB- Babcock & Brown: WHAT NOW???*



Julia said:


> You can have the greatest fundamentals in the world, but if market sentiment has turned against you, it just doesn't matter.  Thus it has been with B & B.




Yep. this is why i am scared about BNB now. I held and held thinking they would eventually shake the market sentiment. But the sentiment turns negative a lot faster than it goes positive


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## kloid (13 June 2008)

*Re: BNB- Babcock & Brown: WHAT NOW???*



Julia said:


> Believe what you will, Kloid.   But for some years until recently I subscribed to FNArena who publish a daily list of broker recommendations.  I doubt a day would have gone by without more than one analyst clearly stating they were raising the recommendation to a Buy purely on the basis that the SP had fallen.
> 
> You can have the greatest fundamentals in the world, but if market sentiment has turned against you, it just doesn't matter.  Thus it has been with B & B.




If a company has great fundamentals (not saying that BNB necessarily has) then market sentiment right now doesn't matter.  It only matters to those foolish or weak enough to follow like sheep and sell.  In the long run the market will recognise a profitable and well run company.  If it takes 6 months or 5 years or 15 years then I'll wait.

Cheers
Kloid


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## Family_Guy (13 June 2008)

I had a stressful day with it. I bought 70 shares on Wednesday arvo, so not a great deal of money. Today i bought and sold BNB 6 times with $1k and made little bits at a time until i reached my goal of $290 profit for the day, thinking that if i sell my initial 70 now, then i'd come out even. But i'll hang onto them and see what happens.....better losing half than all of it, and hey, i may even end up making a profit, but that doesn't look good from what the more learnered think on here think.


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## MRC & Co (13 June 2008)

*Re: BNB- Babcock & Brown: WHAT NOW???*



Julia said:


> You can have the greatest fundamentals in the world, but if market sentiment has turned against you, it just doesn't matter.  Thus it has been with B & B.




That makes absolutely no sense as far as what actions to take.

An investor uses this market sentiment to buy in on the cheap, so a fall in the SP (purely on sentiment) to below "fair value" based on no fundamental change is a PRECISE reason to upgrade to a buy recommendation.

If you want to catch sentiment, then use T/A.  

But broker recommendations are based on the former.

Kloid is correct in this case, sorry.


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## Mr_T (14 June 2008)

Frankly, I think you people are giving brokers way way way too much credit.

You seem to think brokers make accurate, detailed analysis about a business before deciding whether to recommend it, etc.

The reality is otherwise. Frankly speaking, most brokers don't know how to accurately read a balance sheet and P & L.

Fund managers are a different matter. They have highly educated researchers, analysts, etc. Not that that helps them beat the market or anything....


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## Mr_T (14 June 2008)

*Re: BNB- Babcock & Brown: WHAT NOW???*



kloid said:


> But the company has recorded impressive earnings growth over the past few years and claims that it will achieve 15% EPS growth this year.  That and the reduced share price is in my eyes a valid reason for an analyst to put a "Buy" on it.  Analysts don't just recommend stocks purely because the share price has fallen otherwise they'd be recommending the likes of CCP, ABS, CNP and AFG.  The covenant on is worrying BUT I can't see the banks demanding repayment of their loans if there is still a viable cash producing business.
> 
> Kloid




Earnings growth my rear end.

When a substantial amount of their "earnings" comes from revaluating real estate that in reality has dropped in value one should take everything said from management with a pillar of salt.


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## MRC & Co (14 June 2008)

Frankly, I don't listen to broker valuations EVER.

However, I am simply stating how fundamental valuation works.  Choose to dismiss it if you want, or argue it, but study it yourself and you will see.  Too many people here say, "company A is worth $XXX because it is growing and the price of it's underlying is rising".  Ok, so where is the context?  There are a lot of fundamental "analysts" on here with little to no idea how to actually 'value' a company.  

I think the few here to listen too as far as actually breaking it down and whom understand the process are Rainmaker, ROE, Dhukka, TheRage, probably a few I missed.  

Brokerage firms have research analysts, the brokers themselves do not write those reports you read..........

BTW, I am not argueing the value of BNB, frankly, I have not even begun to try to do it, nor will I ever. 

I am simply stating why a company can become a "buy" recommendation due to a SP fall if no fundamentals have changed.


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## yuan84dk (14 June 2008)

*Re: BNB- Babcock & Brown: WHAT NOW???*



MRC & Co said:


> That makes absolutely no sense as far as what actions to take.
> 
> An investor uses this market sentiment to buy in on the cheap, so a fall in the SP (purely on sentiment) to below "fair value" based on no fundamental change is a PRECISE reason to upgrade to a buy recommendation.
> 
> ...




yea, exactally!  Now I reckon the reasonable question for us to ask is "What on earth is the fair value of BNB"?  With considered sentiment of market now, I can say that the current price of BNB is cheap, and it might get a lot cheaper next week if the sell-down continues.  Why there is no institution or any funds cut in to support BNB so far?  As far as i've seen, significant amount of investors are being driven by panic.  I'll hold the my position as now, I reckon it was too late to go short to protect my holdings.  I may buy more when the share price is really low.  

Let's ask this way, if you think the price could fell further, why dont you go short?  Is it just simplly because you reckon there seems no much room left for it to tank?  Then why didnt you buy and hold rite now or later after the dust settles?  If you go short,  the maximum profit sure could be calculated, but how do you know the share could fell to nothing?  I dont see ANYTHING or any fundamental coudl significantly drive down its share price.  Then what is all this?  Is the company really dying?  Is it?  Why would anyone cut a deal on anything with a dying company?  Why would any body be willing to take a BNB who is on the verge of backruptcy as a part of the acquisition?  Insurance company doesnt even give policy to anyone who is over 80 years old for god sake!!!

Therefore, I am confused by what's really going on.  But if I really have to make a choice btw buy/sell, I would go BUY rather than SELL.  Quick bounce is not likely recently.  But your profit might be doubled if it bounce back to $7.7 mark where it could escape from a review or might be higher if you hold it for a certain period.


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## Mr_T (14 June 2008)

From highly reputable journalist Michael West:

http://business.theage.com.au/wind-in-the-assets-may-avert-bb-train-wreck-20080613-2qab.html

Although panic sellers and punters on margin loans exacerbated the Babcock share-price fall, and although blame will be pointed at hedge funds' short-selling, it is the *fundamentals* that are conspiring to bring the financial engineer undone.


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## MRC & Co (14 June 2008)

I don't know enough about the BNB case, nor do I care to delve into it.  Does not interest me personally.

So I hope nobody took my posts as argueing this particular case was due to sentiment and not fundamentals, I was only argueing a simple point, as stated in the posts.

Cheers


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## Mr_T (14 June 2008)

MRC & Co said:


> I don't know enough about the BNB case, nor do I care to delve into it.  Does not interest me personally.
> 
> So I hope nobody took my posts as argueing this particular case was due to sentiment and not fundamentals, I was only argueing a simple point, as stated in the posts.
> 
> Cheers



God I hate it when people start or get into a discussion, and then after actively engaging in it say "I dont' care/doesn't interest me".

If that's how you feel, then don't discuss it in the first place. 

I find such beahviour  rude.


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## wayneL (14 June 2008)

OK free chill pills being handed out here. 

Take two and you'll feel much better.  

Onto fundamentals (disclaimer: I am like Sgt Schultz on this topic):

When there is a severe downtrend on a stock with "good" fundamentals, should we suspect that there is something in the fundamental picture that has changed behind the scenes? Ergo, that the fundamental picture available to retail investors is severely lagging?

Will we see vastly different fundamentals in BNB in the next report?

I suspect so.

BWTFDIK


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## MRC & Co (14 June 2008)

Hope those pills worked Mr T 

I only responded to the thread as the information being touted was not correct and may mislead some on F/A and how one is _meant_ to use it.  Is that rude, to enlighten people?  

I said I do not care, because I think some may have thought I was basing my statements on this particular case, which I was not.  That is as far as my contribution goes on this thread, take it for what you will.

Wayne makes a good point and is another limitation of doing F/A yourself, then again, the point Wayne made is more relevent to cases like this, which would really make an F/A analyst JUMP, whereas most broker ratings are revised after simple ebb and flow moves of the market, not outright plummets, of which are far too dangerous to touch IMO.


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## MichaelD (14 June 2008)

Hmmm. This tune sounds familiar;

ABS - $8.50 - expensive!
ABS - $7.00 - bargain
ABS - $5.00 - BARGAIN
ABS - $4.00 - BARGAIN!!!
ABS - $1.00 - Those *&^% hedge fund short sellers

BNB - $34 - expensive!
BNB - $25 - bargain
BNB - $17 - BARGAIN
BNB - $15 - BARGAIN!!!
BNB - $5 - Those *&^% hedge fund short sellers


Ahhh. It SO eases the pain of an 85% loss to blame someone else. Luckily, it's not actually a loss until you sell - it's really a good company you know.


----------



## haunting (14 June 2008)

I got eggs on my face in anticipating a bottom near around 9.0. Thought I'd like to provide some hindsight view. TA wise, the downward projections from the triangle and channel breakouts in my view were still valid up to that point, but the moment BNB revealed they might be facing some kind of margin call for capitalisation that prompted all round panic selling in the last two days, my view is TA and FA will not matter at this point.

TA wise there is no market psychology to talk about as it is preoccupied with panic. FA wise, the company and the financiers have gone into "survival" mode. The business focus has shifted from "normal" profit operation/generation to a serious review and reappraisal of the viability of the business model moving forward in a high cost low leverage business environment. The result of the exercise could be anything but the same old business model that has been operating in the last few years where cheap money was in abundance.

Out of the business reappraisal, a new business model may appear (with totally new or different market pricing), or simply the whole company is let to "die" with the financiers forcing the company into salvaging mode, that is, keeping what is good and throwing out what is bad. 

The bottom line is this - the current business model is broken and is not viable and it won't be supported by the financial backers. So it doesn't make sense to try to work the FA numbers which are based on the old model as the on going concern will be very different from the old.

At this point the only sensible thing to do is to get out. There are many examples around if you want to know what will happen next -  AFG, MFS - these two are copycats of BNB which is a copycat of MQG. CNP although is not exactly the same as BNB, but it is a proof that business model that builds on high borrowing and cheap money is not a viable going concern regardless if you have tons of good quality assets in your portfolio.

For those who are holding MQG, it's time to start thinking... hard.

jmv.


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## mapna (14 June 2008)

I reckon this is just one of events for the B&B group. Just too many bad news came out at the same time together with the uncertainty within the financial sector/inflation issues in the US.

With last nite report from the US showing the inflation was not that bad so I hope our mrkt would be much better on monday including B&B group.


Lets be positive .....

IMHO - DYOR


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## JeSSica WaBBit (14 June 2008)

Hey Michael  - add MFS to your list, i heard loads of people banging on about blaming everyone else accept for themselves, but, especially the shorters..................funny thing is, when they bought them they thought it was a bargain and they could rip a few easy bucks out of the market, how easily the hunter can turn into the hunted.................

Wont be the last time that tune is played

JW


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## Mr_T (14 June 2008)

Part of the problem is the low standard of finance journalism we have  in this country.

Apart from some notable exceptions, such as Michael West and Stephen Mayne, most journalists did not until recently hold BNB up to the scrutiny it deserved.


----------



## MRC & Co (14 June 2008)

LOL, first the hedge funds and shorters, now the financial journalists.  What is next?

DYOR is quoted for a reason.


----------



## Mr_T (14 June 2008)

MRC & Co said:


> LOL, first the hedge funds and shorters, now the financial journalists.  What is next?
> 
> DYOR is quoted for a reason.




It is the financial journalists responsibility to state things as they are. So when Uncle Phil blames the hedge funds and shorters, Mr & Ms Small Investor can say "what bollocks".

DYOR - part of that is reading the finance press.


----------



## MRC & Co (14 June 2008)

Mr_T said:


> It is the financial journalists responsibility to state things as they are. So when Uncle Phil blames the hedge funds and shorters, Mr & Ms Small Investor can say "what bollocks".
> 
> DYOR - part of that is reading the finance press.




IMHO, many will disagree, Mr and Ms small investor who have no clue about either T/A or F/A nor care to learn about it, should be searching out the best fund they can to put their money with, not listening to the financial press for 'tips'.  

DYOR means tear apart the financial statements and to learn how the company operates (from it's products, to it's growth potential or risk relating to that product, which is dynamic IMO).  Not reading the financial press.  This can usually be obtained by looking at figures and understanding the company and it's products.  

T/A research, does not involve the financial press either.  

DYOR, don't let the press do it for you, they are simply looking for a story.


----------



## Mr_T (14 June 2008)

MRC & Co said:


> IMHO, many will disagree, Mr and Ms small investor who have no clue about either T/A or F/A nor care to learn about it, should be searching out the best fund they can to put their money with, not listening to the financial press for 'tips'.
> 
> DYOR means tear apart the financial statements and to learn how the company operates (from it's products, to it's growth potential or risk relating to that product, which is dynamic IMO).  Not reading the financial press.  This can usually be obtained by looking at figures and understanding the company and it's products.
> 
> ...




I don't disagree with anything you've said, and I'm not claimng that finance press is the only research one should do. It's ultimately the responsibility of each one of us to research in what we are investing in.

I'm just saying if we had good journalism, that task would be easier.


----------



## $20shoes (15 June 2008)

looking at the larger volatile movements recently in BNB 
9.2M traded shares moved the price $3.30 on 16/8/07
4.8M traded shares moved the price $2.43 on 21/1/08
7.3M traded shares moved the price $2.65 on 22/1/08

Would anyone care to comment on why 42M traded shares only moved the share price by a $1.20 and that it finished off its lows?? Surely you could not suggest "mum and dad" investors absorbed the selling pressure...so who put a stop to the rot, and why??  That's $210mill (approx based on $5) that changed hands without pushing the price out of its Average True Range. 

I'm not into catching falling knives but was that the perfect capitulation to stronger hands??


----------



## CAB SAV (15 June 2008)

Hi, Those in BNB or interested should get transcript off ABC's Inside Business  programme this morning. Not looking good. Smoke and mirrors company.


----------



## $20shoes (15 June 2008)

CAB SAV said:


> Hi, Those in BNB or interested should get transcript off ABC's Inside Business  programme this morning. Not looking good. Smoke and mirrors company.





I'm sure the transcript does not include the following..."the media, having reported on troubles in BNB in recent weeks, continued their "abandon all hope ye who enter here" angle because they found the story sold a lot of papers. The fear they stirred up forced all the mums and dads to sell 42million shares on Friday to market makers. When interviewed, the smart money commented "yes, thanks Mum and Dad for coming to the party. We do that whole absorption thing quite a bit actually. CNP, BDG, BNB to name a few...you'd think our tactics would be pretty obvious...I mean BNB barely moved on Friday between open and close given the unprecedented volume, but people get caught up in the frenzy... its all good...sure the stock will be ratsh*t for a couple of years, but we get our stake in at bargain basement prices and we can hold on now for sunnier days. What we'll do now is just wait a few years until the financial sector is kicking ass, and then we'll start to offload to the same Mums and Dads who sold to us at $5".

There is smoke and mirrors and Friday's action is a part of that. I'm not suggesting people buy or hold, and im just an observer...I'm simply re-asking the question - why did someone absorb the supply on Friday if BNB is sliding into oblivion?


----------



## Julia (15 June 2008)

*Re: BNB- Babcock & Brown: WHAT NOW???*



MRC & Co said:


> That makes absolutely no sense as far as what actions to take.
> 
> An investor uses this market sentiment to buy in on the cheap, so a fall in the SP (purely on sentiment) to below "fair value" based on no fundamental change is a PRECISE reason to upgrade to a buy recommendation.
> 
> ...



No need to be sorry.  We simply disagree.  That's fine.
That's all I want to say but am adding this sentence in order to comply with the 100 character rule.


----------



## yuan84dk (15 June 2008)

I think now, immediate buyback would be the only option for BNB to restore confidence on short-term basis if the administration level still have faith in the business operation.  Anyway, accorrding to the last close price, it wouldn't cost them much to take in all the shares short sold to the market.  But market's over-reaction could be true.  All eyes would be on Monday's talk with its bankers.


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## Mr_T (15 June 2008)

CAB SAV said:


> Hi, Those in BNB or interested should get transcript off ABC's Inside Business  programme this morning. Not looking good. Smoke and mirrors company.




Yeah, they have a very good story on it. The model it works under and why it's breaking down are well explained.

http://www.abc.net.au/insidebusiness/content/2007/s2275073.htm


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## kenny (15 June 2008)

Thanks for the link, Mr T.

A good insight to balance all the media writeup of recent days.

Good luck to all holders.

regards,

Kenny


----------



## MRC & Co (15 June 2008)

*Re: BNB- Babcock & Brown: WHAT NOW???*



Julia said:


> No need to be sorry.  We simply disagree.  That's fine.




How do you value a company?  

So nearly everytime an SP falls, it is based on a change in the fundamental value?


----------



## Mr_T (15 June 2008)

*Re: BNB- Babcock & Brown: WHAT NOW???*



MRC & Co said:


> How do you value a company?
> 
> So nearly everytime an SP falls, it is based on a change in the fundamental value?




Every time a SP rises/falls, it is based on a change of perception of its fundamental value. This might be due to something non-entity specfic (eg a perception that interest rates will change, change in economic growth) , or something specific to that entity.

Ultimately, share value is based on current profitability and future profitability. Since future profitability is uncertain and a matter of opinion, perceptions are what matter.

In a nutshell, a company's fundamentals is not as some would suggest, something that is certain and can be clearly seen. They are a matter of opinion. Those opinions are what is sometimes termed "sentiment". It is the market's interpretation of reality that affects share price.


----------



## MRC & Co (15 June 2008)

*Re: BNB- Babcock & Brown: WHAT NOW???*



Mr_T said:


> Every time a SP rises/falls, it is based on a change of perception of its fundamental value.
> 
> Ultimately, share value is based on current profitability and future profitability.




The first paragraph is the exact answer.  Hence, you use this 'perception' to buy in cheap on a company you (or a broker) think is undervalued.  If the SP falls, a buy recommendation can therefore ensue, right?

Ultimately a share value IMHO is based on the companies current equity, current yield on that equity, and future growth expectations, extrapolated over the timeframe you are looking to invest. Discount for risk and desired return and compare to price.  A change in the number of years these expectations are assumed, vastly changes the 'value'.  Any slight change on any assumption, can greatly alter the 'value' and is a huge limitation of F/A IMO.


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## Andy_aus (15 June 2008)

Apparently you cant short BNB shares anymore.... they are maxed out 

All the hedge funds have shorted them massively.

Maybe a risky buy oppurtunity


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## Julia (15 June 2008)

*Re: BNB- Babcock & Brown: WHAT NOW???*



Mr_T said:


> Every time a SP rises/falls, it is based on a change of perception of its fundamental value. This might be due to something non-entity specfic (eg a perception that interest rates will change, change in economic growth) , or something specific to that entity.
> 
> Ultimately, share value is based on current profitability and future profitability. Since future profitability is uncertain and a matter of opinion, perceptions are what matter.
> 
> In a nutshell, a company's fundamentals is not as some would suggest, something that is certain and can be clearly seen. They are a matter of opinion. Those opinions are what is sometimes termed "sentiment". It is the market's interpretation of reality that affects share price.




Thanks, Mr_T, for saving me the trouble and saying what I would have.
I'd just add that - much as it may offend the purists - the value of a company's shares are what someone is prepared to pay for it.  No different from anything else:  houses e.g.


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## jayinoz (15 June 2008)

BNB Management must adapt and move with the current times. I feel they with sell their methanol assets to spice up their balance sheet and try to gain investor confidence. They need to restructure themselves greatly and they will. For all of those who are sticking with BNB- it should be for the long run.

In the short term they will be volitile between $4-$6 for the next few months. If the do fall, it will not be in the near future. They fundamentally need to change their biz model. Some of the smartest and brightest are appartantly trying to work on this right now. With management owning 40% is a huge enticement for them to adapt. Simply put a huge streamlining of the company and assets should take place. Change in fundamental focus on borrowings and terms of agreements. 

Yet this will be an interesting week.


----------



## theasxgorilla (15 June 2008)

*Re: BNB- Babcock & Brown: WHAT NOW???*



Mr_T said:


> Every time a SP rises/falls, it is based on a change of perception of its fundamental value. This might be due to something non-entity specfic (eg a perception that interest rates will change, change in economic growth) , or something specific to that entity.




I think that share price can fall and keep falling because people perceive that it will keep falling.  Fundamental value or projections about the impact of macro or micro economics details can and do go out the window.  

People/entities equate sinking share price * number of shares held against the ongoing impact to their balance sheet and decide that they'd rather have had yesterday's price but they'll take whatever they can get today for the number of shares held.

Curiously it's the same but opposite on the way up.  Hence we get parabolic price activity during manias.


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## roland (15 June 2008)

The ABC today didn't paint a good picture for the short term future of BNB, but you really cannot ignore the fact that BNB do have a large number of quality assets. So long as they are not forced to firesale they do retain quite a capacity for income.

The announced level, at which the refinance review was to occur, was almost like a challenge for the shorters -  a challenge that was easily achieved.

The wording of the repsonses from BNB, in my opinion, did nothing but add to the lack of confidence - rather a blase` don't care attitude. BBP did the same just a few days before, with firstly a error in the shortfall figure, then a stupid comment from Simshauser basically saying that they were spending all their time and efforts in financing efforts instead of getting on with business.

The arrogance of the responses from these two does nothing to support their cause or their shareholders.

I run my own small business and, in comparison, the way BNB operates seems to be close to the opposite to what I would have expected.

I no longer hold BNB - got out in the $20's, but have been stung badly with BBP and still hold BBW and BBI.

Could be some opportunity for a dead cat bounce but I will never put a cent back into BNB. Good luck to all holders and players.


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## MRC & Co (15 June 2008)

*Re: BNB- Babcock & Brown: WHAT NOW???*



Julia said:


> Thanks, Mr_T, for saving me the trouble and saying what I would have.
> I'd just add that - much as it may offend the purists - the value of a company's shares are what someone is prepared to pay for it.  No different from anything else:  houses e.g.




So you trade based on T/A, capturing this perception?

As you beleive value is already factored into the SP, so there is no need to 'value' a company?

It is not current profitability and future profitability, it needs context, where is it starting now?  Relative to what?

Disclaimer:  I rarely invest, only trade on T/A.


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## roland (15 June 2008)

*Re: BNB- Babcock & Brown: WHAT NOW???*



MRC & Co said:


> So you trade based on T/A, capturing this perception?
> 
> As you beleive value is already factored into the SP, so there is no need to 'value' a company?
> 
> It is not current profitability and future profitability, it needs context, where is it starting now?  Relative to what?




I study as much as I can with any stock that I buy, but it sort of goes out the backdoor when the market decides to dump the stock.

Sort of makes a mockery of the technicals and financials when the SP does the opposite to what the numbers say.


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## freddy2 (15 June 2008)

Price: Determined by supply and demand.
Value: Determined by sum of future earnings discounted for inflation and risk.


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## Mr_T (15 June 2008)

roland said:


> The wording of the repsonses from BNB, in my opinion, did nothing but add to the lack of confidence - rather a blase` don't care attitude. BBP did the same just a few days before, with firstly a error in the shortfall figure, then a stupid comment from Simshauser basically saying that they were spending all their time and efforts in financing efforts instead of getting on with business.
> 
> The arrogance of the responses from these two does nothing to support their cause or their shareholders.




The reason I got out of BNB at 14.50 is mainly for this reason - arrogant and narcissistic management that kept pretending there were no problems and kept giving themselves huge bonuses. 

I don't mind people taking huge bonuses if they have genuinely earned, but this was getting to be anything but the case.

People in power who don't admit to errors and problems seldom end up producing positive outcomes.

In retrospect, BNB management weren't even that good in their heyday, just practiced the art of financial engineering which worked very well in those good old pre credit crunh days.


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## MRC & Co (15 June 2008)

*Re: BNB- Babcock & Brown: WHAT NOW???*



roland said:


> I study as much as I can with any stock that I buy, but it sort of goes out the backdoor when the market decides to dump the stock.
> 
> Sort of makes a mockery of the technicals and financials when the SP does the opposite to what the numbers say.




What mockery?  Most true, purist F/A analysts did not want anything to do with the banking sector from what I have read, not that I am one myself.  

But it is definatley very hard to value a company and very subjective, hence why I do not use it often.  How can any profit forecasts be taken seriously in a time of such global trouble.  Risky business, definately should still use stops (wider of course) IMO if you are going to invest, then again, many fundamental investors would disagree with that.


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## johenmo (15 June 2008)

After reading all this (fortunately (??) still holding a very small parcel of shares of BNB) and being "new to the game" I take from it that "sentiment" (read irrational thought?) can over-rule any logical thoughts (a.k.a. panic sets in).  BNB were the highest risk in our "fledgling" portfolio.

Have to admit, when it start to go, I thought about selling but had bought for long term and was prepared for a slight drop.  But in that time I looked deeper and found "fundametal flaws" for any business - like unwarranted revaluing property values up.

I haven't been in the share game for long but have been working for quite a while and can read a P+L and Bal sht.

But the lesson I have learned from BNB is better than if I'd taken some course!

It's interesting to read the views.  But won't the bankers have the final say?  Even if the share price is a factor in their decision?


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## roland (15 June 2008)

I suppose, just looking at BNB's chart since June 07, it's a wonder why any of us would have put money into this stock in the first place.

In retrospect buying a falling stock such as a highly geared BNB in the current financial market where credit costs are continually stressed or rising - could only be called highly optimistic or a gamble.


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## MRC & Co (15 June 2008)

johenmo said:


> After reading all this (fortunately (??) still holding a very small parcel of shares of BNB) and being "new to the game"




Probably a good lesson learnt.

My first stock (13 years ago now), went bankrupt, didn't get a cent back and it was my ENTIRE savings as a 12 year old boy!  ha ha 

Needless to say, I avoid spec stocks now! 

Roland, when I do occassionally invest, I ensure I do not buy anything moving downwards (I will wait for accumulation and consolidation to take place, or for the stock to move upwards and make a HH, HL), just one conclusion I have come to.  Once again, I KNOW some F/A analysts who completely disagree.


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## MRC & Co (15 June 2008)

freddy2 said:


> Value: Determined by sum of future earnings discounted for inflation and risk.




But this will not take into account opportunity cost.  Nor the current position of the firm, is book already higher than the SP, or only a tiny fraction?


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## bunyip (16 June 2008)

roland said:


> I suppose, just looking at BNB's chart since June 07, it's a wonder why any of us would have put money into this stock in the first place.
> 
> In retrospect buying a falling stock such as a highly geared BNB in the current financial market where credit costs are continually stressed or rising - could only be called highly optimistic or a gamble.





Too true, Roland.... I'll never  understand why so many investors are so prone to buying stocks whose charts show a rapidly declining share price.
Nor do I understand why investors, having made the mistake of buying a falling stock, will stick with it for months or years while it continues to fall and lose them money.

If we want to make money from stocks, we need the price to rise after we buy them. (unless we're selling short, or using put options).
So if our investment must rise in value to make us money, surely it's just plain common sense to buy something that's rising in value right now, rather than buy a falling stock that might (or might not) rise in the future. 
We can still perform our fundamental analysis if we're that way inclined, just to convince ourselves that we're buying into good solid companies. But the bottom line, in my view, is that no matter how well the fundamentals stack up, the stock *must* be rising before we sink our money into it.

Coal and oil have been going higher for quite some time. Not surprisingly, my scan for uptrending stocks brings up coal and energy stock such as STO, ORG, MCC, GCL, as being star performers over the last six months or so.
Wise in hindsight? Sure, but anyone with just basic knowledge of technical analysis and chart reading could have run a software scan to find these stocks early in their uptrends. Once stocks start uptrending, they invariably make frequent brief pullbacks consisting of a few days or a week or so of falling prices, before resuming their uptrend.
Such chart patterns are easy to recognise and easy to scan for, and offer excellent buying opportunities to climb aboard these outperformes.

I no longer trade stocks - these days I find currencies to be a more lucrative trading vehicle. But in the not so distant days when I traded stocks, I used a system that was both simple and effective. 
First, I'd look at sector charts to find out which sectors were the best performers. Then I'd run a computer scan on the stocks comprising those sectors. Specifically, I set up my scan criteria to find stocks that had recently begun new uptrends, but were currently pulling back temporarily against the trend. 
As soon as the pullback ended and the main trend resumed, I was a buyer.

This very basic trading system would have put you into the bullish coal and energy stocks early in the piece, not long after they started booming.
Surely this would have to be a big improvement on getting into some dog like BNB that's falling lower week by week, month by month, with no indication of when (if ever) it might stop falling and start rising again.

The BNB chart brings back memories of similar charts of  SGW, HIH, and PAS ....all of which went broke. Many investors kept buying these stocks as they kept falling, believing they were getting a bargain. Even the intrepid Rene Rivkin, (who I'm quite sure made his money from his newsletter subscriptions and his broking business, but not from stock trading) kept recommending PAS as a buy as its stock price kept plunging.
I have no idea whether or not BNB is headed for bankruptcy. For all I know, the company could have a change of fortunes and the stock price could start climbing impressively. If that does in fact happen (and the chart doesn't exactly inspire my confidence that it will), there'll be plenty of investors patting themselves on the back, convinced they did the right thing in sticking with BNB. Little will they realise how much money they missed out on by having their capital tied up for so long in a poorly performing company, when they could have been invested instead in some of the high-performing coal and energy growth stocks.


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## Julia (16 June 2008)

Bunyip, great comments.  Thanks.

Here is an extract from "Money Weekend":



> Who’s to blame?  Is it the evil short-sellers, made up of both private investors and so-called ‘hedge’ funds?  Or is it the company itself for putting all its eggs in one basket?
> 
> Not surprisingly, for the second week running we find ourselves writing to you about Babcock & Brown. This time it’s not just Babcock’s funds under fire. Contagion has spread to the company itself.
> 
> ...




Again, I'm not able to make this post unless I add more characters.  Apparently the quoted article doesn't count.


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## Mr_T (16 June 2008)

Here's an interesting story about BNB from famous journalist Robert Gottliebsen

http://www.businessspectator.com.au/bs.nsf/Article/Babcocks-deal-addiction-FMRBS?OpenDocument

The second example of the deal making culture of the group goes back to 2003. 

An organisation of which I am not a beneficiary was looking at buying a substantial area of inner city land. Part of the land was subject to flooding, so any potential buyer had to do a lot of work to work out a way to use it. 

My organisation hired people to do the work and we knew that others were doing similar work on the field as they considered making a bid. To calculate a value, we worked out the maximum any developer could pay. In the end we found the land did not suit our requirements, so we stepped back and discovered the developers still in the hunt had come to a similar view on maximum value. 

However, I was stunned to find that Babcock jumped in and bought the land well above what we thought was the top value to a developer. 

Because their people had not been on the ground, we knew they hadn’t done the flood assessment work. They had to catch up after the purchase and as a result the land was dormant for about two years. We are talking about a property worth less than $50 million, so it was not a make-or-break deal. 

However, the transaction told me a number of things about Babcock in its early years. First, they were deal makers moving from one deal to the next. Second, while most of their deals might have been well researched, they were capable of rushing into a deal without doing the base work.

That culture makes it very hard to handle the change that has taken place in the group.


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## MRC & Co (16 June 2008)

bunyip said:


> If we want to make money from stocks, we need the price to rise after we buy them. (unless we're selling short, or using put options).
> 
> Then I'd run a computer scan on the stocks comprising those sectors. Specifically, I set up my scan criteria to find stocks that had recently begun new uptrends, but were currently pulling back temporarily against the trend.
> As soon as the pullback ended and the main trend resumed, I was a buyer.
> ...




Or spreads.

But the big question is, what criteria did you use to 'find stocks that had recently begun new uptrends'?  A % move from the low............a new higher high or higher low...........an uptrend over a given timeframe?  It's not as simple as saying you just scan for stocks starting a new uptrend. 

But I agree completely with the general idea.  I use it myself when trading.


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## roland (16 June 2008)

well, the time frame is the absolute key - isn't it....

e.g. BBI, up 20% at one stage today - I did some mechanical bot trading and got back 1% of my BBP losses

what happens with a lot of us, is that we want quick gains in a short time frame, then if it goes sour we refuse to take a loss and we either buy to average down or the stock goes into the "bottom draw, long term basket"

I am still trying to get this right, gotta learn to take a loss on the chin and get out at the right time. This to me is the hardest part of trading - loss management.


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## eMark (16 June 2008)

Mr T

From what I have read, I believe I do qualify for at least 1-2 of the extra hurdles.

You have used the word "business". Remember I don't have an ABN. Are you using the word business to describe what I do as a "business", or are you assuming I am a business?

Also one of the points mentioned making a profit for at least the 3 out of the last 5 years. Does this mean overall profit for each year (ie profit minus loss resulting in overall profit)? If that is the case I made a greater loss than profit this financial year.

Re - The business have made $20,000 in income (if you sold $20,000 in your share trading business, this would be fulfilled).

What does this mean? I don't understand it properly.

Thanks Mr T.



Mr_T said:


> Here's an interesting story about BNB from famous journalist Robert Gottliebsen
> 
> http://www.businessspectator.com.au/bs.nsf/Article/Babcocks-deal-addiction-FMRBS?OpenDocument
> 
> ...


----------



## bunyip (16 June 2008)

MRC & Co said:


> Or spreads.
> 
> But the big question is, what criteria did you use to 'find stocks that had recently begun new uptrends'?  A % move from the low............a new higher high or higher low...........an uptrend over a given timeframe?  It's not as simple as saying you just scan for stocks starting a new uptrend.
> 
> But I agree completely with the general idea.  I use it myself when trading.




Running a computer software scan for suitable stocks or markets is just about the easiest part of trading.
There are numerous scan criteria you can use to find newly uptrending stocks....if your software has good scanning ability, and you have the knowledge to come up with suitable scan criteria to feed into it.
I don't propose to go into detail here, but just briefly, you can use things like moving averages, trend strength indicators like ADX, or Hull's ROAR indictor, (if it's included in your software), among others. Suffice to say you could use any of the criteria you mentioned, plus many you haven't mentioned.


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## MRC & Co (16 June 2008)

Yes, but the question was, what do (would) you use?  To get on near the start of the oil or coal bull for example........

Personally, I use time.  

AT LEAST consolidating (forming a traditional pattern) at a 3 month high.  

However, I prefer the bull to have been underway much longer than that, 1 year +.  

The higher the % move in that timeframe, the better.  

Any break out of the pattern (preferably if volume in the pattern is favourable, for example, drying up into the flag) on high volume.  Usually, if the trade has not moved my way in a couple days after breaking out, or hit my stop, I will exit my entire position.  

Sorry off topic.


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## bunyip (17 June 2008)

MRC & Co said:


> Yes, but the question was, what do (would) you use?  To get on near the start of the oil or coal bull for example........
> 
> Personally, I use time.
> 
> ...




Yes.....off topic - detailing scan criteria is inappropriate on this thread. 
You may wish to start a new thread specific to scans...perhaps you'll generate some discussion from those who wish to divulge their scan criteria, or are interested in learning what other traders are using.


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## jayinoz (17 June 2008)

Back to BNB topic- Good 6% open today......

All the news in the media has been highly negative yet this morning Sky news had more positive things to say. Also yesterdays financial review was not completely negative.

Sure they will not turn all this around in a few days but it is not in any lenders interest to perform a review. Remembering the lenders have not even called a review yet. Appartently they are looking to get the lenders to lower the review point, yet in doing this I hope this does not leave another target on the back of BNB. 

Surely it would be in the lenders interest to remove any review. As they want BNB to be OK and if they keep up to date on payments; surely that is enough.

It like my bank have a review of my house assets, if the suburb I live in drops by X%. What does my lender care of the lowered value of my home, as long as I keep paying the repayments. Can someone pls explain this to me? Why do the lenders wish to trigger issues for a company when they have not defaulted on a payment?


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## jayinoz (17 June 2008)

Does anyone know if BNB will be giving out a dividend on the 30\6 this year?

To me BJT seems like very good value just before a dividend payout- is this trust directly related to BNB or an entity in its own right? B4 I buy in....

BNB heading towards $6 last I looked- good... now my $7 buy a few days ago does not look as stupid- yet who knows in the short term.


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## yuan84dk (17 June 2008)

jayinoz said:


> Does anyone know if BNB will be giving out a dividend on the 30\6 this year?
> 
> To me BJT seems like very good value just before a dividend payout- is this trust directly related to BNB or an entity in its own right? B4 I buy in....
> 
> BNB heading towards $6 last I looked- good... now my $7 buy a few days ago does not look as stupid- yet who knows in the short term.




Me too, I entered at $7.7 as well.  It is definitely a good thing that the market is stablising.  But now, I just wanna cut some losses.  Personally, $7.5 mark is hard to reach.   People might buy now and take profit at that price...


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## jayinoz (18 June 2008)

Does anyone know the future Ex-dividend date for BNB?

We should be getting some information in the talks between BNB Management and their banks. Anyone heard anything to date?



Good luck to all BNB holders......


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## navjit6 (18 June 2008)

Dont know exactly but going from last year adn the dividend earlier this year it should be around the end of August!!



jayinoz said:


> Does anyone know the future Ex-dividend date for BNB?
> 
> We should be getting some information in the talks between BNB Management and their banks. Anyone heard anything to date?
> 
> ...


----------



## barnz2k (18 June 2008)

gonna be a tough battle to get back up but hopefully BNB will be doing as much as they can to get some confidence back. mightnt get to $35 highs again but nice to see it still has peoples attention to move up %10 in a day..unfortunately 10% of $6 isnt same as %10 of $10...


----------



## jayinoz (19 June 2008)

Good news BNB selling Wind Energy for 3+ Billion. Maybe a good rebound especially when BNB announce their lenders are all OK.

They must change lower leverage in the medium term & get investor confidence back to get back in teens I feel.


----------



## Mr_T (24 June 2008)

I remember reading somewhere that at a recent Friday night drinks, Phil Green said the market has unfairly sold down BNB and it was undervalued.

He still doesn't get it.......it's always everyone else's fault, isn't it Uncle Phil?


----------



## Tysonboss1 (26 June 2008)

Mr_T said:


> I remember reading somewhere that at a recent Friday night drinks, Phil Green said the market has unfairly sold down BNB and it was undervalued.




I think BNB is very much undervalued, even with all the current negative reports,

I mean a 9.9% dividend and 3% p/e,.... its simply madness.

They have already begun a plan to delevaged their balance sheet, and with so many projects in the pipline and such a diverse amount of incomes streams they will be ok,

I wouldn't expect a quick recovery, but I think i might buy some BNB shares and just put them in the bottom draw for a year or two.


----------



## Mr_T (26 June 2008)

Tysonboss1 said:


> I think BNB is very much undervalued, even with all the current negative reports,
> 
> I mean a 9.9% dividend and 3% p/e,.... its simply madness.
> 
> ...




If the "e" part of the p/e was genuine, I might agree with you. But when a substantial portion of your earnings are unreal (ie due to revaluing assets that have actually gone down in value), the p/e ratio needs to be taken with a pillar of salt.

BNB is stuffed. I pity the shareholders, but have no pity for Uncle Phil and co.


----------



## prana (26 June 2008)

Mr_T can you say this again when I saved up a larger pool of money? I need ppl like you to get in at cheap prices. Thanks dude.


----------



## wayneL (26 June 2008)

Tysonboss1 said:


> I think BNB is very much undervalued, even with all the current negative reports,
> 
> I mean a 9.9% dividend and 3% p/e,.... its simply madness.
> 
> ...



I'll bet London to a brick and Mombasa to a melon that those "earnings" (and probably dividend) are substantially lower next time they report.


----------



## Tysonboss1 (26 June 2008)

wayneL said:


> I'll bet London to a brick and Mombasa to a melon that those "earnings" (and probably dividend) are substantially lower next time they report.




the EPS is much larger than the dividend so I don't think they will lower the dividend, and even if the earnings halved then thats still a price earnings of 6.


----------



## wayneL (26 June 2008)

Tysonboss1 said:


> the EPS is much larger than the dividend so I don't think they will lower the dividend, and even if the earnings halved then thats still a price earnings of 6.




Doesn't that ring alarm bells for you?

Any forensic accountants like to have a stab at current earnings?


----------



## pilbara (27 June 2008)

Mr_T said:


> ...when a substantial portion of your earnings are unreal (ie due to revaluing assets that have actually gone down in value)...



can you give a concrete example of:

1. How Babcock & Brown uses this kind of valuation? 

2. How a change in asset value is accounted as earnings?  How can something which should appear on a balance sheet be transferred to a profit and loss statement?


----------



## pilbara (27 June 2008)

jayinoz said:


> Maybe a good rebound especially when BNB announce their lenders are all OK.



It's a couple of weeks since the banks were briefed by BNB.  There's 25 banks and if any one of them had serious problems with BNB we would have heard something already.  You can't keep 25 banks quiet.  Therefore the stock price has already started to recover.


----------



## Mr_T (27 June 2008)

pilbara said:


> can you give a concrete example of:
> 
> 1. How Babcock & Brown uses this kind of valuation?
> 
> 2. How a change in asset value is accounted as earnings?  How can something which should appear on a balance sheet be transferred to a profit and loss statement?




Pilbara,

I have reproduced a cut and paste of a previous post of mine that I posted a few months back (when I still owned BNB).  Frankly, if you don't realise that BNB do this kind of stuff, you really shouldn't be holding shares in them. Buying/owning shares in BNB is only for those that have their eyes fully open.

REVALUATION OF ASSETS
On the Appendix 4E of their accounts for 2007, page 68, there is an item of Revenue (which adds to profit) listed as "Fair value movement on investment property" in the amount of $100,631,000. 


WHAT HAS BEEN REVALUED?
What exactly does this refer to? Some clues as to what this is referring to appear in the following:

Page 2 of "Full Year Results 2007 Announcement" attributes part of the increase of the revenue in the Real Estate division to the following:

"an uplift arising from the development of an Asian self storage portfolio.......and an uplift in the value of the BNP Residential Property portfolio in North America."

The "Full Year 20007 Results Presentation" also refers to "uplift in value" of Asian self storage and BNP Property in the USA in a few places.

So the $100M in revalued assets (which has increased profit) is due to 2 things:
a) its Asian self storage portfolio; and
b) rise in value of American BNP property 

HOW MUCH OF THIS REVALUATION IS DUE TO ASIAN SELF STORAGE AND HOW MUCH IS DUE TO THE AMERICAN BNP PROPERTY?
Nowhere is it explicitly stated how much of the $100m is due to the revaluation of the Asian self storage and how much is due to revaluing the BNP Property in the USA.


LETS EXAMINE THE REVALUED BNP PROPERTY A BIT MORE
Since the BNP Property in the USA is more worrying of the 2, lets focus on that one.

Page 21 of the "Full Year 20007 Results Presentation" refers to
"The revaluation of the BNP multi-family portfolio in the US as disclosed at the interim result."

Frankly, IMHO this comment raises some red flags. It bascially implies that the revaluation was done before mid year, and so does not take account of events of the second half of 2007.

Page 23 of "Full Year 20007 Results Presentation" justifies this higher value given to the BNP properties by stating the following:
"The total investment is currently valued in excess of $1.8bn and includes nearly $1.5bn of non-recourse, debt. We remain very comfortable with the valuation of this portfolio on our balance sheet for a number of reasons including:
• Occupancy rates across the portfolio are well in excess of 90% and they have continued to experience strong NOI growth of approximately 4%.
• We acquired older properties in the high growth Sunbelt states. Our average price per unit for both deals is well below replacement cost for newly constructed comparable units.
• We financed our purchase primarily with 10yr fixed rate debt with a weighted average coupon of 5.65%. This debt is interest only and assumable.
• On December 21, 2007, we closed a sale on two properties from our Alliance portfolio at a cap rate of 5.43% based on in-place trailing 12 months NOI. We believe the assets in the BNP portfolio, which are on the balance sheet at an approximate 5.75% cap rate, are superior to the assets sold. At the end of the period Babcock & Brown’s direct and indirect equity in the portfolio was $136m."


----------



## pilbara (27 June 2008)

thanks Mr T!  I've found BNB fun to daytrade lately but not yet convinced on the fundamentals.  Still I think it should rebound up to somewhere around $7.45 or whatever the number to make it slightly less than market cap of 2.5 billion.


----------



## pilbara (27 June 2008)

Regarding the "$100 million fair value movement on investment property", this relates to the following accounting policy (excerpt from 2007 Annual Report) 


> Real Estate Held as Investment Property
> Initially, investment properties are measured at cost including transaction costs. Subsequent to initial recognition,
> investment properties are stated at fair value. Fair value is based on active market prices, adjusted for any difference
> in the nature, location or condition of the specific asset or where that is not available, an appropriate valuation
> ...



In this period there were $2 billion of property acquisitions (at cost).  

The adjustment to book value (fair value) amounted a net gain of $100 million (5 percent gain) on this entire portfolio of $2 billion in property acquisitions.  

The $100 million adjustment does not relate specifically to "an uplift arising from the development of an Asian self storage portfolio.......and an uplift in the value of the BNP Residential Property portfolio in North America."


----------



## Mr_T (27 June 2008)

pilbara said:


> Regarding the "$100 million fair value movement on investment property", this relates to the following accounting policy (excerpt from 2007 Annual Report)
> 
> In this period there were $2 billion of property acquisitions (at cost).
> 
> ...




Specifically,I have found out subsequently that it relates ONLY to the BNP Residential Property, not to the self storage property. Which makes it even worse, given that the BNP property has dropped and in all likelihood is still dropping on a daily basis......


----------



## JZ009 (29 June 2008)

I think the review of BNB will never eventuate by the banks....if BNB falls, the big four will take another hit from asset writedowns....similar effect from CNP....Therefore....regardless...the banks will just keep it float on top of the water....

BNB could be taken over by other financial institutions as their seeding assets for their funds, this does sound logical to me provided that BNB is at such low share price and has attractive assets......

If any potential takeover does occur, I would be laughing at hedge funds, as they will be the ones who will be buying to cover their short positions/losses, and helping to push up the  BNB share price at the same time

I hold a small parcel of BNB in my portfolio and superfund.


----------



## clayton4115 (29 June 2008)

legs said:


> I managed to average my price down to $14.99 so I hope it can hold over $15 and then continue on the wave upwards. I'd like to see $20 by end of June.





obviously the stock price is quite far from what you hoped? did you lose much? bnb has taken a huge hit, dont think it will recover soon.


----------



## pilbara (29 June 2008)

JZ009 said:


> I think the review of BNB will never eventuate by the banks....if BNB falls, the big four will take another hit from asset writedowns....similar effect from CNP....Therefore....regardless...the banks will just keep it float on top of the water....



I think the "big 4" aussie banks are smaller players in the 25 bank syndicate which provides the $2.8 billion revolving line of credit to BNB.  Only 3 months ago BNB allowed 5 more European banks to join the 20 others, and increase the facility from $2.3 billion to $2.8 billion.  This suggests exposure of $100 million per bank.  

Recently when buying Angel Trains, BNB had no troubles organising another banking syndicate to raise 2.8 billion pounds, comprising the following financial institutions: "BNP Paribas, Banca IMI SpA, Calyon, Commonwealth Bank of Australia, DEPFA Bank plc, Dexia Credit Local, HSH Nordbank AG, ING Bank, KfW IPEX-Bank GmbH, Lloyds TSB Bank plc, Mitsui Banking Corp, Natixis, NORD/LB Norddeutsche Landesbank Luxembourg S.A., RBC Capital Markets, The Royal Bank of Scotland, Sumitomo Mitsui Banking Corporation, Unicredit Market & Investment Banking and an institutional funds manager, Queensland Investment Corporation."

Angel Trains is now owned by BNB European Infrastructure Fund, an unlisted fund.  The 2.8 billion pound loan to buy the asset does not appear on the BNB balance sheet.  However the 3.6 billion asset of Angel Trains will be included as "Assets under Management", which at 31 Dec 2007 stood at over 70 billion dollars, surely now heading for 100 billion dollars by the end of this year.

I'd say BNB is aiming for the following headline numbers in the next year or two: 100 billion dollars of Assets under Management, and 1 billion dollars profit.


----------



## Mr_T (29 June 2008)

pilbara said:


> I think the "big 4" aussie banks are smaller players in the 25 bank syndicate which provides the $2.8 billion revolving line of credit to BNB.  Only 3 months ago BNB allowed 5 more European banks to join the 20 others, and increase the facility from $2.3 billion to $2.8 billion.  This suggests exposure of $100 million per bank.
> 
> Recently when buying Angel Trains, BNB had no troubles organising another banking syndicate to raise 2.8 billion pounds, comprising the following financial institutions: "BNP Paribas, Banca IMI SpA, Calyon, Commonwealth Bank of Australia, DEPFA Bank plc, Dexia Credit Local, HSH Nordbank AG, ING Bank, KfW IPEX-Bank GmbH, Lloyds TSB Bank plc, Mitsui Banking Corp, Natixis, NORD/LB Norddeutsche Landesbank Luxembourg S.A., RBC Capital Markets, The Royal Bank of Scotland, Sumitomo Mitsui Banking Corporation, Unicredit Market & Investment Banking and an institutional funds manager, Queensland Investment Corporation."
> 
> ...




Pilbara,

I highly recommend you look at some of my previous posts, esepcially the ones I made before I sold my BNB (selling them at 14.50 and buying BHP at 35.50 with the proceeds is one of the best decisions I ever made stockwise - cause I decided to stop believing the BS from BNB management and invest in a company that actually does something productive and produces a positive cashflow).

1 Billion dollar profit? You have got to be kidding. From what? Revaluing BNB's stake in Tricom?


----------



## kloid (29 June 2008)

Mr_T, 

Is there anything else that puts you off BNB apart from the revaluation?  I've seen many posts from you and they all refer to the validity of the $100m revaluation but you don't mention anything other than that.  I agree that it would be nice to see more details about what was revalued by I have some faith in the audit process and that they would be ensuring that the assets were valued using a fair process.

I'd also like to clarify that when property is revalued the change in value _must_ be taken to the P&L (either as income or cost).  In the old days it would be taken to reserves but that is no longer the case.  I think this is important to note because it seems as though some people think that BNB are engaging in 'dodgy' accounting practices, but this is not the case.

If BNB is renting out these properties then they would be valuing based on DCF - taking expected occupancy, average rates and then projecting them out over a long-term timeframe (say 10 years plus).  The events of the last year are not really going to affect the long term value of such properties.  I guess it all depends on what timeframe you're working to - I'm looking at the long term so will hold my shares for now.

I'm interested to hear about what else puts you off Babcock other than the suspicious reval.

Kloid


----------



## Mr_T (29 June 2008)

kloid said:


> Mr_T,
> 
> Is there anything else that puts you off BNB apart from the revaluation?  I've seen many posts from you and they all refer to the validity of the $100m revaluation but you don't mention anything other than that.  I agree that it would be nice to see more details about what was revalued by I have some faith in the audit process and that they would be ensuring that the assets were valued using a fair process.
> 
> ...




Bollocks. That real estate is valued by DCF is BNB's spin, it isn't reality. The rent you collect on your estate can remain the same, if the market values your property at less than it used to, then it is worth less, you can scream DCF till you are blue in the face. Its worth what people are willing to pay to buy it.

BNB revaluing real estate is a symptom of a greater disease - delusion and opaqueness. I have raised many other points in my posts, sometimes copying articles of Michael West, Crikey, etc. Bottom line is the model BNB (and others) use is dead. The concept of spinning off satellites and extracting huge fees from them  just isn't going to work anymore, people are not interested in putting money into satellites that pay huge fees. So whilst their existing satellites will continue to exists (with lower fees as fees are partially a factor of satellite market value) there just won't be new ones under the current model. Which will put a major limit on that aspect of profit growth.

Other point that has been made over and over again is that as far as operating cashflow goes, they are clearly in the red. What kind of profit is that? In the old says, a negative cashflow from operations might have been tolerated, thesedays the market isn't so wiling to forgive. Which can only be a good thing.


Anyway Alan Kohler summed it all up recently in this article:

http://www.businessspectator.com.au/bs.nsf/Article/Beautiful-plumage-FMSYG?OpenDocument


----------



## Family_Guy (30 June 2008)

BNB bankers remove market cap clause. Perhaps a re-bound now? Glad i held onto some of these. Shot straight upto $7.44, hopefully can continue that run up.


----------



## kloid (30 June 2008)

Mr_T said:


> Bollocks. That real estate is valued by DCF is BNB's spin, it isn't reality. The rent you collect on your estate can remain the same, if the market values your property at less than it used to, then it is worth less, you can scream DCF till you are blue in the face. Its worth what people are willing to pay to buy it.
> 
> BNB revaluing real estate is a symptom of a greater disease - delusion and opaqueness. I have raised many other points in my posts, sometimes copying articles of Michael West, Crikey, etc. Bottom line is the model BNB (and others) use is dead. The concept of spinning off satellites and extracting huge fees from them  just isn't going to work anymore, people are not interested in putting money into satellites that pay huge fees. So whilst their existing satellites will continue to exists (with lower fees as fees are partially a factor of satellite market value) there just won't be new ones under the current model. Which will put a major limit on that aspect of profit growth.
> 
> ...




I prefer to have independant thought than have a bunch of journos tell me what to think.  Clearly the banks have no problem with the BNB as evidenced by the recent multi-billion dollar financing of the Angel trains acquisition followed today by the news that the debt covenance clause will be dropped and there won't be a review of the company's operations. 

As to DCF property valuations being "bollocks", a DCF valuation would be more relevant for rental properties.  The market valuation would only be useful if they plan to sell, which unless you know something that I don't is not the case.  What evidence do you have that the rentals on these particular properties have gone down so much?

Kloid


----------



## Mr_T (30 June 2008)

kloid said:


> I prefer to have independant thought than have a bunch of journos tell me what to think.  Clearly the banks have no problem with the BNB as evidenced by the recent multi-billion dollar financing of the Angel trains acquisition followed today by the news that the debt covenance clause will be dropped and there won't be a review of the company's operations.
> 
> As to DCF property valuations being "bollocks", a DCF valuation would be more relevant for rental properties.  The market valuation would only be useful if they plan to sell, which unless you know something that I don't is not the case.  What evidence do you have that the rentals on these particular properties have gone down so much?
> 
> Kloid




DCF valuations that are in conflict with what something can sell for are bollocks. Market value is market value is what it can be sold for, not sure this concept requires further explanation. It says amples about the arrogance of BNB management that they think they know how to value things better than the market. No one is alleging rentals have fallen.

According to your logic, if the value of my Melbourne house doubled, but rentals stayed the same, then the house hasn't really doubled in value. Especially if I'm not about to sell it. 

Banks are happy? The whole Angel thing was approved before the steep fall in the share price. The banks are very worried (I know someone who works in ANZ and told me that the concern is not minor), but they realise things might be a whole lot worse if they enforce the covenant, eg the market loses all faith in BNB and/or BNB is forced to into firesales.


----------



## pilbara (30 June 2008)

Mr_T said:


> 1 Billion dollar profit? You have got to be kidding. From what? Revaluing BNB's stake in Tricom?



It's done by the fees they charge for doing deals like that Angel Trains purchase.  Also the revenue streams from "Assets under Management" are huge due to the 75 billion of assets.  

An increasing percentage of these assets will go off balance sheet into unlisted funds.  BNB will get a large one-off fee for setting up these funds, and a regular funds management fee.  

Investment banking can be very profitable given the trust of bankers and institutional investors.

BNB have a huge pipeline of wind assets.  They will sell 3 billion of this soon, but that will be replaced by another asset of similar magnitude when the development pipeline brings it online.

BNB will have to writedown a lot of other assets, like the USA Real Estate, maybe by 100s of millions, and this will affect the profit/loss by maybe 250 million.

I believe BNB do not writedown their holdings in their listed funds.  These holdings have halved in value or worse, but I don't think it will affect the balance sheet.


----------



## Mr_T (30 June 2008)

pilbara said:


> It's done by the fees they charge for doing deals like that Angel Trains purchase.  Also the revenue streams from "Assets under Management" are huge due to the 75 billion of assets.
> 
> An increasing percentage of these assets will go off balance sheet into unlisted funds.  BNB will get a large one-off fee for setting up these funds, and a regular funds management fee.
> 
> ...




Lets follow this to its natural conclusion.

Who is going to buy/own these unlisted funds? Why would people buy them if these funds pay such large fees to BNB and so erode the returns of the funds?


----------



## stoxclimber (1 July 2008)

Mr_T said:


> The banks are very worried (I know someone who works in ANZ and told me that the concern is not minor), but they realise things might be a whole lot worse if they enforce the covenant, eg the market loses all faith in BNB and/or BNB is forced to into firesales.




Careful mate, you seem to be saying that you know someone in ANZ who is part of the review committee, and if he told you this non-public information, that would likely be a criminal offense.


----------



## Mr_T (1 July 2008)

stoxclimber said:


> Careful mate, you seem to be saying that you know someone in ANZ who is part of the review committee, and if he told you this non-public information, that would likely be a criminal offense.




a) No, he's not that important, not part of review committee.

b) Even if he was - how would it be a criminal offence? Please specify which criminal law he has broken?


----------



## pilbara (1 July 2008)

Mr_T said:


> Lets follow this to its natural conclusion.
> 
> Who is going to buy/own these unlisted funds? Why would people buy them if these funds pay such large fees to BNB and so erode the returns of the funds?



Institutional investors need funds like this, because:
1. an individual investor cannot afford to buy one of these huge infrastructure assets

2. an individual investor wants to own a diverse portfolio of infrastructure

3. an individual investor cannot organise a large banking syndicate to obtain a geared investement in infrastructure.

4. infrastructure is usually a monopoly with steady cash flow

BNB delivers this for a price, and their competitive advantage in this market is based more on the quality of the deals they make than the level of fees.


----------



## Mr_T (1 July 2008)

pilbara said:


> Institutional investors need funds like this, because:
> 1. an individual investor cannot afford to buy one of these huge infrastructure assets
> 
> 2. an individual investor wants to own a diverse portfolio of infrastructure
> ...




Yeah, I realise that is Uncle Phil's spin, I just wonder how it accords with reality.

Institututional investors like Chinese and Middle Eastern sovereign funds could easily afford to buy infrastructure directly. In many cases there is no need for a middle man. They are cashed up and don't need credit at all in many cases. And if they do need credit, they can get it more easily than BNB in many cases (which admittedly is not that big an achievment these days).

Furthermore, even if insitutional investors do go through BNB, it is unlikely they will tolerate the rate of fees that retail funds give to BNB. They are too smart for that, notwithstanding Uncle Phil's claim to the contrary.

Bottom line is this - institutional investors are big and powerful, there is not  much value adding that BNB can do.


----------



## blaze87 (1 July 2008)

Mr_T said:


> Yeah, I realise that is Uncle Phil's spin, I just wonder how it accords with reality.
> 
> Institututional investors like Chinese and Middle Eastern sovereign funds could easily afford to buy infrastructure directly. In many cases there is no need for a middle man. They are cashed up and don't need credit at all in many cases. And if they do need credit, they can get it more easily than BNB in many cases (which admittedly is not that big an achievment these days).
> 
> ...





It's true that institutitional investors are able to buy the infrastructure directly. However BNB does offer value, BNB has knowledge about the core areas it gotten itself into. It is able to structure financinal arrangement and  and diversify its assets to reduce the riskyness of the portfolio. You cannot just ask any random person to blindly buy infrastructure. There's so much more to buying infrastructure than say.. this looks nice, i think i take it. The whole process of buying, ie( looking at value and not just price, maintainance, financial arrangement, management, takeover and such is what BNB offer. 
I'm sure that if an institutitional investor would incurr much more cost and risk if it tried to acquire infrastructure without extensive knowledge in that particular market. 
It's like asking you to assemble a computer. Sure you might have the internet to help you. But unless u have the expertise and creditability to do it, im sure u will not take on such a tedious task. Imagine buying the components of the computers and realising later u cannot fit it. The middle man in a capitalist system acutally helps to reduce the costs than if every individual tried to do it himself. If u think about it, Woolworths is also a middle man, so is QBE, but they have been around for a long time and will continue as long as the services(benefits) outweights the cost individuals/institutional.


Debt is not neccessarily a bad thing(it's much like margin loans), but in this current market condition, the difficulty in accessing capital markets and the increased cost of debt will negatively affect BNB. That being said, it's rare to see any financial firms or real estate trust not using some form of leverage.


----------



## Mr_T (1 July 2008)

blaze87 said:


> It's true that institutitional investors are able to buy the infrastructure directly. However BNB does offer value, BNB has knowledge about the core areas it gotten itself into. It is able to structure financinal arrangement and  and diversify its assets to reduce the riskyness of the portfolio. You cannot just ask any random person to blindly buy infrastructure. There's so much more to buying infrastructure than say.. this looks nice, i think i take it. The whole process of buying, ie( looking at value and not just price, maintainance, financial arrangement, management, takeover and such is what BNB offer.
> I'm sure that if an institutitional investor would incurr much more cost and risk if it tried to acquire infrastructure without extensive knowledge in that particular market.
> It's like asking you to assemble a computer. Sure you might have the internet to help you. But unless u have the expertise and creditability to do it, im sure u will not take on such a tedious task. Imagine buying the components of the computers and realising later u cannot fit it. The middle man in a capitalist system acutally helps to reduce the costs than if every individual tried to do it himself. If u think about it, Woolworths is also a middle man, so is QBE, but they have been around for a long time and will continue as long as the services(benefits) outweights the cost individuals/institutional.
> 
> ...




Yes, I agree expertise is required. I just think that if you are a "big boy" there are many ways to acquire it. Bottom line is that wholesale investors can hire a team of experts to advise them, even if it means paying them each super high salaries - and it would still be infinitely cheaper than the ongoing "management" fees the like of BNB charge.


----------



## blaze87 (1 July 2008)

Mr_T said:


> Yes, I agree expertise is required. I just think that if you are a "big boy" there are many ways to acquire it. Bottom line is that wholesale investors can hire a team of experts to advise them, even if it means paying them each super high salaries - and it would still be infinitely cheaper than the ongoing "management" fees the like of BNB charge.




Well,
BNB are the experts. If they aren't experts, they will not be able to such a high roe every year.

secondly, "the team of experts''- mqg, any of the other investment banks comes into mind. Compare the fees between them and u see that's not much difference. Now the next question is why would investors pay such fees, the answer is beacuse they are the experts.

You can think of Investment banking as a form of outsource companies. They are efficient and can only can get efficient as time goes on.


----------



## pilbara (1 July 2008)

blaze87 said:


> BNB does offer value, BNB has knowledge about the core areas it gotten itself into.



I see this as the most valuable asset in the BNB business, truly global knowledge and connections in the core industries they invest.  If they can keep these teams of people together they will get critical mass and build a sustainable business model.


----------



## pilbara (1 July 2008)

Mr_T said:


> Institututional investors like Chinese and Middle Eastern sovereign funds could easily afford to buy infrastructure directly.



It's ironic, because Australia has its own sovereign fund (The Future Fund) but I doubt they would invest in infrastructure, because they are the government and government worldwide has given up spending on infrastructure!!


----------



## blaze87 (1 July 2008)

pilbara said:


> I see this as the most valuable asset in the BNB business, truly global knowledge and connections in the core industries they invest.  If they can keep these teams of people together they will get critical mass and build a sustainable business model.




Since people are the most valuable asset, it makes sense to pay big for salaries and bonuses as well as cultivating a sense of belonging in the company as well as being evironmentally-friendly as stated in BNB Annual report. Unless the time comes that the cost of hiring these people outweight the benefits, it makes no economical sense not to give them those monetary incentive. Think about it, no employee no money, low-quality employees= poor profits and deal-making, High-quality employee= good profits year in, year out. 

On the other hand, when the market slump, these employees also have to understand why they will be taking home a lower bonus.


----------



## Mr_T (1 July 2008)

blaze87 said:


> Well,
> BNB are the experts. If they aren't experts, they will not be able to such a high roe every year.
> 
> secondly, "the team of experts''- mqg, any of the other investment banks comes into mind. Compare the fees between them and u see that's not much difference. Now the next question is why would investors pay such fees, the answer is beacuse they are the experts.
> ...




I'll keep away from the term "efficient" as it isn't relevant here.

What the market has decided is that they (the management fees) are a rip off, ie the management fees that BNB, etc charge are not proportional to what they offer. Evidence of this is seen in the huge dive in value of satellites of BNB, Mac, etc etc. Not to mention the dive in value of the motherships.

Your comments implies that BNB and MCQ and the other set of clowns are all that the wholesale funds have to choose from in finding someone to manage infrastructure investments. They are not. These are rich organisations run by clever people, they will find a cheaper way to run their infrastructure investments (such as having it in house management).


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## blaze87 (1 July 2008)

Mr_T said:


> I'll keep away from the term "efficient" as it isn't relevant here.
> 
> What the market has decided is that they (the management fees) are a rip off, ie the management fees that BNB, etc charge are not proportional to what they offer. Evidence of this is seen in the huge dive in value of satellites of BNB, Mac, etc etc. Not to mention the dive in value of the motherships.
> 
> Your comments implies that BNB and MCQ and the other set of clowns are all that the big boys have to choose from. They are not.




First i think u need to define how is the management fee a rip-off. they are providing a service to it's satellites, but i confess there's a conflict of interest particularity in the term-mangement contracts and such.

What has gone down is the PRICE, not value for the satellties. Im unaware of the mac models so i won't touch it. However for BNB, with the exception of BBP, the other funds have not met with any problem. Investors fled from these vehicles beacuse of the general market condition and the negativity surrounding the financial sector. Just look at bear stern, a stock trading a 80 plus dollar suddenly selling for only 10 dollars. Look at allco, abs, mfs. Fear is a psychological factor that can contribute to one's trading/investing. 

Now let's go back to the DCF model u mentioned a couple of post ago.
DCF tries to make a vague estimation on VALUE. Price is what you get if u choose to sell the 'asset' now.
Now imagine if like what u said, price of ur house doubled, whilst the value remained the same, the most sensible answer would be to sell it. 
On the other hand, if price is lower than value, than therotically you will buy the asset or you can try to see check ur DCF model to see if your previous assumptions are correct.
On many occassion, they are known to move in different direction, BUT if the company is solid, price will slowly, evenutally follow value, however patience is needed. 

-think about the number of people even needed to buy 1 single infrastructure.
im sure there would be too many to count. Now u need more than 1 infrastruture and they have to be in different geographic areas. now the number of people needed just got doubled. you need people to organise these people and make sure they are trustworthy and competent, now you have even more people. now consider the ongoing maintance and security and you got urself a whole lot of people which will be rather uneconomical to hire no matter how you think about it. BNB is the company that assemble the correct people to do the job. It's not as easy as you make it sound


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## blaze87 (1 July 2008)

Mr_T said:


> I'll keep away from the term "efficient" as it isn't relevant here.
> QUOTE]
> 
> I meant efficent as they have to keep their prices for their services fair. perhaps a better word would be competitive. sorry about that


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## pilbara (1 July 2008)

Mr_T said:


> What the market has decided is that they (the management fees) are a rip off, ie the management fees that BNB, etc charge are not proportional to what they offer. Evidence of this is seen in the huge dive in value of satellites of BNB, Mac, etc etc. Not to mention the dive in value of the motherships.



I think the market has reacted to the dive in asset values and the increase in debt costs, combined with a business model that only worked when asset values were rising, and the perception that the business is new and it bought at the top of the asset bubble.


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## blaze87 (1 July 2008)

pilbara said:


> I think the market has reacted to the dive in asset values and the increase in debt costs, combined with a business model that only worked when asset values were rising, and the perception that the business is new and it bought at the top of the asset bubble.




I think they are alot of reason why people choose to sell/avoid bnb.

1) it's in a financial sector
2) it relies on debt to create deals
3) public believes the model does not work

1) nothing i can say about pt 1... no1 likes catching a falling knife
2) High interest on debt will reduce the high margins that BNB has previously enjoyed over the years. However that does not mean that they will neccessarily be making a loss on their investments. Bare in mind that they take into account of risk profile of the various projects as well as specific IRR hurdles. It only makes sense to take on the projects that generates the highest IRR given the NPV is also positive. As long as BNB has access to the capital market, it's ability to create deals will continue. As evidenced by previous annoucements, BNB has shown that it does have access to capital markets.

3) the reason why asset values are falling is primarily due to fear that these leverage companies will be unable to refinance their debt facilities or to find bankers to fund their capex. Now 1 bad apple can have a massive psychological effect on the rest of the market. 

Now this might sound strange, but i actually believe that this downturn will acutally help BNB acquire good and attractive assets at a even more attractive prices. Even warren buffet has said it, he believes the value of stocks has gotten better. As long as BNB is able to fund it's deal and able to wait it out, BNB should be able to generate good profits over the long-term


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## stoxclimber (1 July 2008)

Mr_T said:


> a) No, he's not that important, not part of review committee.
> 
> b) Even if he was - how would it be a criminal offence? Please specify which criminal law he has broken?




Its a criminal offense to disclose non-public price sensitive information in certain circumstances. See s 1043 of the Corporations Act


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## Mr_T (1 July 2008)

stoxclimber said:


> Its a criminal offense to disclose non-public price sensitive information in certain circumstances. See s 1043 of the Corporations Act




Wrong. Disclosing information by itself isn't criminal. Only if it is somehow tied with the information being used for "insider trading" is the disclosure criminal.


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## stoxclimber (1 July 2008)

That's why I said in certain circumstances. The Act does not require that you* in fact* did trade on the information. 

Criminal matters aside, it would most definitely be a breach of his employment contract, so I don't really think it's appropriate regardless to post that your mate at ANZ told you such on a public forum. But hey, he's your mate.


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## Mr_T (1 July 2008)

stoxclimber said:


> That's why I said in certain circumstances. The Act does not require that you* in fact* did trade on the information.
> 
> Criminal matters aside, it would most definitely be a breach of his employment contract, so I don't really think it's appropriate regardless to post that your mate at ANZ told you such on a public forum. But hey, he's your mate.




No it doesn't require that you trade on the information, but it requires something along those lines, eg that there is an expectation person that you tell will trade on it.

Somehow, I don't think he's going to lose his job by me posting this piece of information on a forum.......


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## Mr_T (2 July 2008)

Another brilliant recent article by Michael West regarding BNB and their neverending spin.

http://business.smh.com.au/asics-jihad-on-babcock-rumours-20080702-305r.html

ASIC's jihad on Babcock rumours

Michael West 
July 2, 2008 - 6:26AM 
The regulator's jihad on rumour-mongers is something of a Babcock-centric affair. It kicked off in March after chief executive Phil Green complained that short sellers, hedge funds and rumour-mongers were destroying his stock price.

In reality, it was unshackled greed and recklessly-leveraged empire building which had done the trick - whipping the stock way too high in the first place - and its recent thrashing through $7 a share simply proved B&B's short-sellers had it right in the first place.

Getting it right has come at a price though. A gaggle of brokers including Merrill Lynch and Lehman Brothers, and a coven of hedge funds including the James Packer-backed fund Ellerston, have had a visit from the corporate plod.

According to research from the peak super fund body, Australian Council of Super Investors (ACSI), Babcock & Brown is among the most prolific procurers of waivers from the regulators in the marketplace - second perhaps only to Macquarie when it comes to gaining exemptions from listing rules - and now it appears the relationship with officialdom is extending to investigating those market players who had the hide to call it a ''sell''.

Lehman's trading desk had sent out a note to clients on March 5 pointing out Babcock was vulnerable to $631 million in margin loans over shares it held in its satellites. They were simply doing their job; broking a story that is to their clients - and getting it right.

Around the same time, incidentally, this website discovered the same information thanks to another source. It wasn't inside information. There it was, buried in the notes to the accounts, albeit disguised somewhat, as is de riguer for the accounts of a financial engineer.

Lehman and its clients, among others, are now being investigated for transmitting Babcock's own publicly-available information.

The irony is that over the past few years, during the biggest bullmarket in Australian corporate history, there has been no investigation into the orgy of rumour-mongering which pushed share prices up - and almost always ahead of the statutory disclosures.

A casual glance at almost any chart of a share price in the lead-up to a any takeover, or similarly price-sensitive announcement will show the inside traders and the rumour-mongers getting set for the news.

The entire market is obsessed with rumours. Investigating rumour-mongers is as useful as investigating life. Every day, telephones and trading desks hum with talk of what could happen, as much as what is happening. Share prices swing as much on rumour as reality.

When ASIC investigators approached Ellerston to trawl over their trades in B&B they are rumoured to have been told politely it might be more useful to investigate B&B. Good call, though the primary task of ASIC is to help it stay alive at this point. The stakes are high.

The Ellerston anecdote is just a rumour by the way. But it is no rumour that investors had been led to believe by B&B that the market cap review clause - which sparked the latest rout in the stock - would be triggered only by a four-month share price fall below the prescribed level of $7.50 a share. In fact, it was a one day breach that had been stipulated by the banks, not four months.

That's just one dodgy incident. They are many. No one would expect the regulators to police every corporate shenanigan or even stem the rushing tide of market implosions. Markets fall.

Resources would be better deployed though than chasing Phil Green's balance sheet sceptics for getting it right. What message does this send to those who would give fearless and honest advice - buy or sell?

 What did lead to this mass destruction of wealth at B&B? Leverage, the corporate structure and a failure to evaluate risk. And now that Green has got to drag his empire back from the brink it's hardly useful to have the dealing desks as well as the analysts offside by sooling ASIC onto them.

The investigation may well turn up evidence somewhere of a short-selling conspiracy which destabilised B&B shares. Even so, it would be hard to justify the assault on the flow of information when there are so many big ticket targets for a regulator to chase.

These B&B margin loans and related party transactions - why did the risk committee sign off? Did the independent directors know about it? What of the auditors? What were they doing to justify their million dollar audit fees?

What were all the big broking houses doing with ''buy'' recommendations on B&B at $28 when the stock was $14? Why were positive B&B stories consistently leaked to selective press?

Why did ASX and ASIC approve the myriad of waivers which may now be helping to bring the externally-managed structures unstuck?

In the 1980s the regulators introduced laws to stop companies from buying shares in themselves and their related entities. Over the past few years the regulators have been granting waivers so companies can do just that. The ramifications of this folly are now in full swing


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## Mr_T (2 July 2008)

blaze87 said:


> First i think u need to define how is the management fee a rip-off. they are providing a service to it's satellites, but i confess there's a conflict of interest particularity in the term-mangement contracts and such.
> 
> What has gone down is the PRICE, not value for the satellties. Im unaware of the mac models so i won't touch it. However for BNB, with the exception of BBP, the other funds have not met with any problem. Investors fled from these vehicles beacuse of the general market condition and the negativity surrounding the financial sector. Just look at bear stern, a stock trading a 80 plus dollar suddenly selling for only 10 dollars. Look at allco, abs, mfs. Fear is a psychological factor that can contribute to one's trading/investing.
> 
> ...




Management fees are a rip off. If you don't believe me, have a read of the Riskmetrics report. It's not light reading, but well worth, available at http://www.riskmetrics.com/pdf/RMG_Infrastructure_Funds_080326.pdf

Bottom line is if they weren't a rip off and offered good value, then
a) There wouldn't need to be such a "waterproof" contract that forces BNB satellites to use BNB as a manager. If there was such good value contractual enforcement wouldn't be required, the satellites would naturally use BNB as a manager.

AND

b) The BNB satellites would have a market value similar to the net market value of the underlying assets. The reason that the BNB satellites are trading at a substantial discount to their  Net Assets is because those management fees devalue the assets. They do this because they profits less than they otherwise could be compared to if those satellities were internally managed (like normal businesses are).

Release those satellites from those management agreement and I assure you their Market Value will reflect the underlying Net Assets very quickly.

The proof is in the pudding.

Don't agree with your house comment - just because it rises in value but rent stays same isn't a sell signal. This is in fact what happened to Melbourne real estate for many years (ie house prices went up, but rent stayed the same - until the last year or so that is when rents have been rising) but a decision to sell as this process was occuring would not have been a good one.


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## pilbara (2 July 2008)

Mr_T said:


> http://www.riskmetrics.com/pdf/RMG_Infrastructure_Funds_080326.pdf



thanks Mr T for that report, it's pure gold!! Will read it carefully to better understand the "Macquarie Model".


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## pilbara (2 July 2008)

Tysonboss1 said:


> the EPS is much larger than the dividend so I don't think they will lower the dividend, and even if the earnings halved then thats still a price earnings of 6.



With guidance still for 750 million "profit", but not much recovery in share price, and no serious takeover offers made, I think the market doesn't believe this result can be repeated, even if they make the 750 million this time.   

But with 43% of the company held by senior staff maybe takeover isn't likely.

Management buyout isn't likely either because management want the riches granted to them by the stock market.


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## johenmo (3 July 2008)

I've followed this thread with interest (still having a very small parcel of BNB, and being new to shares).  But I have been through quite a bit in businesses and was working for a company when it's parent several steps removed suffered a drop in share price that forced a firesale of it's subsidiaries.

Financially the parent was fine but with high debt levels but sentiment was such that fear of the debt over-rode logic.  And that's a common theme in many threads - that all the logic (FA, TA, anything else) can go out the window if people start to worry.

After buying BNB, and then finding this forum, I looked deeper at BNB and in hidsight, wouldn't have bought it due to 1) falling sector/market 2) how similar modelled businesses were faring elsewhere in the world (indicates a change in sentiment?) 3) things that were missing from the official information (e.g. annual report) 4) what I would call creative accounting.

I don't always agree with Mr T but I think, in this case, he has more than enough grounds to be wary of BNB.  History is littered with "stock market darlings" who have gone from being a model business to a train wreck on the side of the tracks (and opposites can be found!).  NO doubt some sentiment contributed to the drop.

Management fees have to be justified.  And any one who signs management contracts such as BNB have organised (25 years) is looking for trouble.  There must be a break clause.  With anything it's the return on investment that is the bottom line.  And if the fees are at the upper end then they have to deliver.

We kept the stocks for a number of reasons - did not believe the banks would do their worst, we are looking long term (but this isn't a good stock for that IMO), investment was so small that I've treated like a lesson.  And it's been a good one.  

I now look closely at who the directors are (only gave it scant attention).  If Mr T's Uncle Phil is involved I will circle warily or go elsewhere.

The past few years have been such that it was almost too easy to get good returns.  So past performance may not be as good a guide for as newbies such myself.  I am looking for more stocks but now have a good set of guidelines to pass before consideration - using mostly FA but some TA as well.

The brokers were recommending optimistic target prices and strong buys even as it dropped.  I suspect they don't revisit/update their recommendation as often as they should - probably impossible with the # of stocks out there. Good dvice isn't cheap, so how does that value free advice?

Will follow the thread with interest...............


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## prana (3 July 2008)

Financials become unbelieveably cheap in a crash...
You'd be a genius to be able to pick the bottom
I'm no genius
Some might use the philosophy, where's theres smoke there's fire. I think that's the rule of the hindsight knight, by the time they realise the smoke is fire, they've been burnt by it too.


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## haunting (8 July 2008)

A Stupid Story that might tell the BNB investors sumthin' about BNB's modus operandi?

- _So much of Joseph's claims that the Babcock joint venture in 2005 was needed to add some sparkle to its earnings and distributions.

Putting the BNB joint venture to one side for the moment, the GPT problem today is more an issue of disparate assets, some of which the company has no control over, and the underlying assets.

One of those, last year's European acquisition Halverton, has gone from a profit maker to the tune of $26 million to a loss maker forecast at negative $15million in a matter of months.

The picture emerges of a company that has moved into everything from management-intensive US aged care facilities, to poorly performing hotels with little in the way of a unifying theme. _


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## legs (9 July 2008)

What happened at 230pm yesterday to BNB's sp? It was up all day and took a terrible tumble about 230pm. I cant see any announcements or anything untoward. MQG was down all day and didn't take a similar move at 230pm so I cant see it being related to any general market news.
Anyone?


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## prana (9 July 2008)

legs - me thinks someone read hauntings posting above and short sold a bunch more BNB's  : Pretty large volume in that transaction


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## Mr_T (19 July 2008)

As you all know, Phil Green is the current CEO of BNB.

Max Green was Phil Green's brother. In the late 90's, Max Green stole over $42million from various clients. He was acting as their solicitor.

Subsequently, Max Green was murdered in 1998 whilst staying in a hotel in Cambodia. It is suspected that the murder was committed by a hitman that was hired by one of Max's disgruntled clients/victims.

It should be noted that Phil Green had no part in any of Max Greens wrongdoing.


http://en.wikipedia.org/wiki/Max_Green
http://www.crikey.com.au/Business/2...the-murdered-solicitors-business-partner.html


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## Mr_T (4 August 2008)

This is from the Eureka Report, a subscription only service. Personally I am very cynical about what the BNB guy says. But you people can judge for yourselves. It's too long to put in one post, so I've split it up

PORTFOLIO POINT: Against a backdrop of falling US residential prices, Babcock & Brown’s portfolio has been revalued upwards. Why? Read on … 


Here’s the basic story: own one unit of US residential real estate and you’re watching the value plunge, but own 9000 and the value rose about 6% last year and is holding steady in 2008. It might sound like alchemy to a simple boy from the Queensland bush (me), but not to Eric Lucas, Babcock & Brown’s global head of real estate. 

I was troubled by the fine print in Babcock’s annual results when they were released in February, as the company claimed a $101 upwards revaluation of its investment property portfolio – mainly US residential real estate. And then Lucas was quoted in the press recently as saying those valuations were holding this year; no depreciation in US residential real estate for Babcock & Brown. 

Further, Babcock contracted to buy the bulk of its portfolio of rental units in September 2006 – pretty much the top of the US housing bubble. And the way the fine print read to me, that upwards revaluation looked like being “fair value” – the directors’ internal discretion. 

So there was only one thing to do: ask Eric Lucas to explain it. 


The interview

Michael Pascoe: At a time when the headlines are screaming about plunging residential real estate values in the US, is it rather hard to explain in layman's terms how Babcock & Brown increased its valuations last year and is maintaining them this year? 

Eric Lucas: A couple of key macro things need to be understood about the residential market in the United States. Assets we are invested in are apartments for rent, they're not residential individual dwellings or apartments for sale. They're portfolios of rental apartments and, in fact, during the first quarter of 2008, the median price per unit for rental apartments for sale in the United States as portfolios, that are purchased by portfolio investors, actually increased, notwithstanding the fact that owner-occupied residential housing prices have declined. 

There's a relationship between those two things because, clearly, as people are unable to get mortgage finance to purchase their own homes, increasingly they move to rental properties. These are seen as being defensive, therefore institutional investors that are looking for defensive real estate investments tend to gravitate towards these sorts of assets. 

When you say residential portfolios, you're talking about transactions of a large number of units in single buildings? Whole blocks of units? 

That's correct. We have an interest in about 28,000 units in the United States, of which we own 100% of 9000 units, which is the revaluation portfolio that you're referring to. That's the BNP portfolio that we closed on at the start of last year. 

Has there been much activity though in those sort of portfolios? 

There's been quite a bit of activity and one of the reasons is that, unlike commercial real estate, residential real estate – even if it's for portfolio investment – is still able to be supported by financing from Fannie Mae and Freddie Mac, so institutional investors that have allocations for real estate and are otherwise constrained by financing elsewhere have actually gravitated towards residential real estate. I'm certainly not saying there's been a boom in this investment but it has not dropped off to anything like the same extent that you've seen in commercial investment. 

My impression was there has been a big drop off … that there's actually not much activity at all, which is one of the things making it harder for valuers. 

That's definitely the case in relation to, say, office properties. It's much less the case for these types of portfolio income-producing residential assets. Outside the Babcock portfolio, we have another portfolio called Alliance, which is the first portfolio that we bought where Babcock & Brown's interest is about 25% through the GPT joint venture and we have some co-investors in there. We've sold individual portfolios out of that Alliance portfolio and the feedback from the teams is that there are still buyers out there because the transactions are able to be supported by Fannie Mae and Freddie Mac. 

Getting back to the valuation of the Babcock portfolio, which I think is your main concern and I can understand why this question comes up – and you're certainly not the first person to ask it, given the headline numbers around residential real estate in the United States – we contracted to acquire these assets in late 2006. We closed on the financing in 2007. The valuation was actually done at the behest of the lenders into that financing and this was the valuation that came out of that exercise. 

That was an internal revaluation though, wasn't it? 

It was based on an external valuation. 

Can I be clear about that? Was it an external valuation or an internal valuation? 

It was the bank's valuation, which was external. 

I don't think that was stated that way in your 2007 financial report. 

We didn't state how the valuation had been done in our annual report. 

The price at which the deal was done was set back in 2006, which was pretty much the top of the US residential real estate market, wasn't it? 

It may have been the top of the owner-occupied, single dwelling market but in the case of this portfolio, this was acquired essentially on a 6% yield. The revaluation basically took the cap rate to 5.75%. But the thing to remember about this portfolio is that since the time that we acquired it, the NOI (net operating income) that we get from this portfolio has increased by about 12%. 
How? 

By increased occupancy and reduced expenses. 

Have rents increased? 

Sorry, increase to the top line both through increased occupancy and increases in rent. 

How much have rents increased, on average? 

The gross revenue's gone up by 10%. 

So the gross revenue's up by 10%. Rents have gone up by 10% in the past 12 months in the US? 

Part of that will be rental growth and part of it will be increased occupancy since the date that we contracted to purchase the property, September 2006. 

If you had to sell those properties individually, how much cheaper do you think they'd be than what you paid for them? 

That’s not really an option in the structure in which they're held and the way they're operated. In the BNP portfolio, for instance, there are 9000 units across 35 properties. They tend to be in the south and the south-west – the sunbelt states. We're not engaged in the activity of selling them individually. That's not the plan. 

The other thing to bear in mind in terms of valuation – and this is confirmed by valuers – is that the per unit cost that we're carrying them on our books for is less than replacement cost. 

That's understandable, but if you've also cut the spend on maintenance on these units … 

I'm sorry, it's less than it would cost to build them today. 

Yes, and the maintenance on those units … they are deteriorating, that's understandable, isn't it? That's like saying a new car is worth more than a 10 year old car. 

No, that's not the point. The point is that there's constant maintenance done to keep these up to a standard where you would obtain a rental for one of these units that's not materially different from a unit that would be newly constructed. 

But you did say you've cut costs. You've cut maintenance costs? 

We didn't say we cut maintenance costs. We haven't necessarily cut the amount of maintenance we're doing on individual assets; we've cut the cost to us of delivering that maintenance and managing the portfolio. 

That $100 million revaluation last year was a large whack of Babcock & Brown's profit. 

It was $60 million. 

I thought it was $100 million revaluation. 

No, there may have been total revaluations of $100 million but this particular portfolio is revalued by $A60 million. 

That's the 9000 that are 100%-owned or the total portfolio? 

That's the 9000 that are 100%-owned. 

And so there was no revaluation of those in which you only had a partial share? 

That's right.


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## Mr_T (4 August 2008)

(second part)
So Babcock & Brown's total real estate holdings then went up by $100 million. Where else did you get an upwards revaluation of real estate last year? 

I think the major part of the balance between the 60 and the 100 would have been a revaluation of self-storage assets that we have developed in Hong Kong and Singapore, and the revaluation there takes place upon completion of the redevelopment. They’re held at cost through the redevelopment phase and then when they are open for business, they're revalued as a going concern. 

You were recently quoted as saying that you had re-examined the valuation of the residential properties and were maintaining it this year. Cap rates in the States on residential property portfolios haven't moved at all? 

I don't think I've said that. We go through a semi-annual revaluation process and in any event we revalue all assets every three years but as we go through the semi-annual they are directors' valuations, but if we have reason to believe that anything's moved by 5% we get an external valuation. That's our valuation policy for investment assets. 

Well in that case, what's been the directors' valuation – that there's been no movement in cap rates in US residential portfolio? 

At what period? 

Well I presume you would have done it before the end of June 30 given the last figures were December 31. 

Obviously we haven't announced that to the market yet, but in terms of the underlying value of this portfolio, even if there's been a modest uptick in cap rates – and I think if you talk to anyone who's active in the US multi-family for rental market you won't find anyone who says the deterioration there, if any, has been worse than modest – in the case of this portfolio, because of the ongoing increases that we're seeing in rents the ultimate impact on value might be expected not to be significant, if at all. 

I suppose people can get confused. I certainly get confused by being able to value a property based on its income stream as opposed to what the resale of a like property might be at any point in time. 

I think that you'll find that the international standard for valuation that all of the major institutional investors in Australia apply is a discounted cash flow analysis rather than comparable sales. 

Is this a bit of financial engineering that is being applied to the residential sector, which normally isn't thought of that way? 

No, it's absolutely not. It's the same standard that's applied to all assets that are held by institutional investors. 

If you had to put properties up for sale from that portfolio in the next couple of months, you are confident you could sell them at the present book value? 

Yes, that's the basis on which directors sign off on valuations. The general standard at which directors sign off on is that the valuation should reflect a sale between a willing buyer and a willing but not forced seller and I think the idea of selling 9000 apartments in two months in the current market might reflect a forced seller and so you would see that reflected in the approach of the directors back to the valuation. But the other point that I'd make about this portfolio is that it's financed on a 10-year interest-only, no covenant facility, so we are under no pressure to sell any part of this portfolio at any time for the next nine years. 

But still it's the valuation, which is nonetheless of interest given that it was such an important part of Babcock & Brown's profit and any devaluation would obviously be a major hit this year. 

It was $60 million out of an overall revenue number for Babcock & Brown last year of $1.2 billion, so it was a bit less than 5% of our revenue number. 

Do you think it would be reasonable to say something looks a little bit like alchemy when one individual unit might have fallen by 15–20% but put a thousand of them together and they've actually gone up by 6%? 

No I don't think it does look like alchemy. I think it would look like ignoring the discussion that we've just had around the other aspects surrounding this valuation and it would ignore the fact that the median price for an individual rental apartment of the type that we're invested in – and I'm not saying this is the median price in our portfolio – is about $115,000 and the median house price you will see in the Case-Schiller Index or dwelling price is substantially higher than that. 

The reality is that these assets are valued in the same way as CBD office properties, where you have large numbers of units and individual tenants. The valuations are driven by the cash flow that can be generated currently and in the future from those assets and individual houses have never been valued based on their cash flow producing capability.


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## Mr_T (7 August 2008)

Another Michael West classic:

http://business.theage.com.au/busin...20080806-3qnf.html?page=fullpage#contentSwap1

B&B's 'culture of greed'
Email Print Normal font Large font 'Don't mention this to Sydney'AdvertisementMichael West 
August 6, 2008 

Pursuit of the ''quick buck'', ''ginning up rosy projections'' on deals, making ''absurdly optimistic assumptions'' in business models, ignoring the slog of asset management and ''a culture of greed and personal greed and personal enrichment''.

These and other claims were made by a disenchanted executive of Babcock & Brown and resulted in an investigation by the firm into the activities of some of its leading executives. No wrong-doing was found. No further action was taken.

BusinessDay has obtained a copy of a memo written by an executive in Babcock & Brown's European business.

The executive wrote to the firm's management last year calling for an inquiry into ''serious violations of corporate standards and inappropriate conduct on the part of three senior individuals: Martin Rey, Christian Terberger and Artus Pourroy''.

Rey is an executive director of B&B and the head of the group's operations in Europe, the Middle East and Africa.

The email, dated April 18, 2007 and sent from Munich in Germany, contains trenchant criticism of the company's corporate culture but does not detail the alleged violations.

B&B's general counsel Margaret Cole told BusinessDay this week that an internal investigation had been conducted as a result of the allegations. The investigation by two internal auditors from London reported to the chairman of the audit and risk management committee, Michael Sharpe, and the B&B board and was concluded last September.

''The outcome of the internal audit review is that the allegations could not be substantiated, and the outcome of the external review affirmed the appropriateness of the internal review process,'' said Ms Cole.

The European division is B&B's biggest business, accounting for revenues last year of $1.3 billion (up from $761 million in 2006) and assets of $5.1 billion (up from $4.5 billion in the previous year) and run out of Germany where there are more than 40 employees. The Munich office was established in 2003, the year before the firm floated.

The memo asked for internal audit resources to be committed to an investigation and for support from the head of internal audit Michael Sharpe.

'Culture of greed'

It also detailed a number of criticisms of the group's corporate culture. These included greed, focus on bonuses and short-term rewards at the expense of asset management, lack of leadership, churning of assets and lack of risk control.



''Criticism is something which happens behind closed doors with people being clearly afraid to talk openly about potential issues (running the risk of getting punished around bonus time, etc.),'' said the memo.

''There is also a mentality to the effect that as long as you make certain senior people look good and play along, they look after you and you get rewarded accordingly come bonus time. Those people who do not agree or support a project quite often have to face negative consequences and unfair criticism. It is an environment where more than often you hear "....don't mention this to Sydney/or to such and such person....."; or ".....otherwise you will be in trouble".

There was particular mention of the renewable energy sector in Munich which was suffering a lack of leadership and defecting staff.

As long as employees were making money for the company they could get away with  ''outrageous and inappropriate behaviour towards colleagues or subordinates. People have left the company for that reason only.''

This gap was filled, wrote the author, by a ``culture of greed and personal enrichment'' where money had been spent to optimise bonuses for senior employees and ''schemes were discussed and pushed which were even from a layman's perspective "illegal".''

In the segment headed, ''Focus on bonus and short term rewards,'' the executive alleges that ''actual situations'' had been overstated in board papers and ''bad situations'' had been understated.

``There is hardly any financial incentive to follow through on a deal just completed. In other companies the acquired projects are actually required to generate a certain benchmark return before bonus pay outs take place. "You do not get paid until the project is working well for the company", that should be the standard. Instead we have created an environment where senior people are rewarded for building and ginning up rosy projections to justify their rewards.''

Real estate risks

Unless the real estate market had been booming, said the memo, the firm would be sitting on a troubled real estate portfolio in Munich. ``It is widely acknowledged that both the facts and the numbers in board papers have been consistently on the optimistic side of things (in some instances you might call manipulated).''

B&B has booked $1.1 billion of gross assets in property in Germany, excluding the GPT joint venture. Its equity proportion is $203 million. It also has property in France, Italy and Spain across residential, industrial and commercial sectors.


Since the sub-prime meltdown last year European property values have declined. The group is now in the process of selling European retail property, German office and French office and light industrial assets representing some 23% of its portfolio.

In its $6.9 billion GPT joint venture, assets under management are geared at almost 70%. Some $300 million in asset sales were realised last year, sales which B&B has said were struck ``at aggregate'' in excess of book value.

There is also a Public Private Partnerships (PPP) business run out of Germany which focuses on transport, education and health assets.

The memo had warned that there was ''a long-term risk waiting to materialise once the markets go down''.

''Why bonus pay-outs are not fully aligned to the actual/sustainable profits of the company is an open question''.

Retail and residential real estate portfolios were sold within very short time frames, the memo went on, which meant the company had become more involved in a brokering business instead of focusing on asset management and building up a long-term profitable asset base.

These problems would become visible to the market if the asset base was reduced, said the memo.

Financial engineers out of favour

Since B&B shares collapsed in May, plunging from more than $12 to below $6, triggering market capitalisation review clauses with the firm's bankers, the stock price has recovered only partially to $6.50. Concern persists about high debt levels and the sustainability of earnings in the adverse trading climate for financial engineers.

The memo noted that evidence of the group's attitude to asset management - after it had struck a deal and achieved a ''quick buck'' - was reflected in the promotion of a receptionist to the role of asset manager.

Although the attitude to asset management had improved it was still perceived to be ''a pure support function and not a profit centre...once the deal is signed...it is simply dropped in asset management's lap''.

''The fact that GPT has been partially taking over asset management functions not only is a big warning (and means we gotta (sic) share our precious fee income). It is a vote of non-confidence. It shows the lack of quality we provide, and it will come to haunt us. Once the market goes down it'll become evident whether we have used the entrepreneurial opportunities contained in the portfolios or just chased the "quick buck".''


'Never say no'

Risk management capabilities, alleges the memo, had been called a ``burden'' by one senior employee. ``And it is business wisdom that some of the best deals are the deals you do not do. But our corporate culture is such that you never say no to a deal (at least once the approval process has started)''.

It was for this lack of risk control that deal makers ''(including their favourites who cannot do any wrong) are often allowed to set absurdly optimistic assumptions for models (or not disclose material facts)''.

The disaffected executive then asked for Martin Rey, Christian Terberger and Artus Pourroy to be investigated ''in the context of the above issues'' without detailing specific allegations, allegations for which the author noted there was ''back up detail''.

''I fully realize that this process will not only be painful (as it involves also a board member) but also require resources from internal audit and support from Michael Sharpe''. The author asked to speak with Michael Sharpe personally as the allegations were ''sensitive''.

B&B review

A statement from B&B authorised by general counsel Margaret Cole said the author had identified a number of areas of concern, including remuneration and bonuses, asset control, earnings profile and risk management ``and made allegations that the named persons had in the context of these issues engaged in "serious violation of corporate standards and inappropriate conduct".

''We took and continue to take allegations such as those expressed in the email extremely seriously.  A review of those allegations was conducted by our internal audit department last year, and we commissioned an external review of  that internal audit to confirm the appropriateness of that review.''

mwest@fairfax.com.au

BusinessDay


----------



## Aussiest (19 August 2008)

BNB is a dog. Have you seen how much the share price has plummeted in the last few days?

When's it going to be de-listed?


----------



## Mr_T (19 August 2008)

Aussiest said:


> BNB is a dog. Have you seen how much the share price has plummeted in the last few days?
> 
> When's it going to be de-listed?



Some on this forum (eg me) have been trying to convey this message for quite a while. Hopefully others listened and sold.


----------



## Mumbank (19 August 2008)

If everyone is selling - who is buying?  If they are such a dog why are there buyers? Over 8 million shares sold today - someone is buying - why?  Do they know something about the results or is it just the people selling the 8 million who know something about the results?


----------



## CAB SAV (19 August 2008)

Mumbank said:


> If everyone is selling - who is buying?  If they are such a dog why are there buyers? Over 8 million shares sold today - someone is buying - why?  Do they know something about the results or is it just the people selling the 8 million who know something about the results?




It's short sellers like me. I'm not actually buying, I,m cashing in. This stock has been a short sellers dream


----------



## skyQuake (19 August 2008)

Agree, just that so many people try to buy this for a quick bounce and get burnt then stopped out. Fueling more downside...


----------



## Aussiest (19 August 2008)

CAB SAV said:


> It's short sellers like me. I'm not actually buying, I,m cashing in. This stock has been a short sellers dream




I was just thinking that, and was thinking of short selling it yesterday, but to be honest, i don't even want to touch it. It'll be a "watch this space" scenario.

Good luck with the shorting CAB SAV .


----------



## Largesse (19 August 2008)

i wonder if they are taking vacationers this summer?


anyones applications been denied?


----------



## Nicks (20 August 2008)

Management buyout? or other bank buy out? at this price they have a discount to net assets of some 1.5 Billion. Could it have dropped to a price now where a takeover is appealing? 

If you ask me, its time for Phil Green to go, and it looks like the board is finally going to take some action. At the end of the day, he was paid ridiculous amounts of money to ensure the success of this company yet it has allowed dodgy practices and vulnerable clauses and conditions in its borrowings, so the buck certainly does stop with him.


----------



## YELNATS (20 August 2008)

Nicks said:


> Management buyout? or other bank buy out? at this price they have a discount to net assets of some 1.5 Billion. Could it have dropped to a price now where a takeover is appealing?
> 
> If you ask me, its time for Phil Green to go, and it looks like the board is finally going to take some action. At the end of the day, he was paid ridiculous amounts of money to ensure the success of this company yet it has allowed dodgy practices and vulnerable clauses and conditions in its borrowings, so the buck certainly does stop with him.




"Mr Restel said Babcock & Brown's woes were not Mr Green's fault."

www.news.com.au/business/story/0,27753,24211220-462,00.html

Nonetheless, it's perception that matters, and Mr Green's departure may help to clear the air.


----------



## prawn_86 (20 August 2008)

Never have liked Phil Green, he just looks dodgy in all the photos i have seen. Like he is hiding something

72k worth went through at $8 this morning before opening. I wonder if it was just shifting between funds or if that is a buy out price...


----------



## Mr_T (20 August 2008)

YELNATS said:


> "Mr Restel said Babcock & Brown's woes were not Mr Green's fault."
> 
> www.news.com.au/business/story/0,27753,24211220-462,00.html
> 
> Nonetheless, it's perception that matters, and Mr Green's departure may help to clear the air.



Of course it isn't Uncle Phil's fault. Nothing EVER is Uncle Phil's fault. Just because he ran a country that is now in big big trouble - don't blame him, nothing to do with his decisions.

(Yes, I am being sarcastic for those in doubt).


----------



## freddy2 (20 August 2008)

Mr Restel said Babcock & Brown's woes were not Mr Green's fault. 

"The credit crunch hit at a very bad time," Mr Restel said. 
-------------------

HAHAHAHA - what a joke. Why were 100 millions of bonuses paided to employees if they aren't responsible for the results in both good times and bad? BNB was just one big free roll (heads I win, tails you lose) at shareholders expense.


----------



## YELNATS (20 August 2008)

prawn_86 said:


> 72k worth went through at $8 this morning before opening. I wonder if it was just shifting between funds or if that is a buy out price...




I see that, with a comment "Exercise Putl", whatever that means. An $8 buyout/takeover could be welcome at this time.


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## explod (20 August 2008)

freddy2 said:


> Mr Restel said Babcock & Brown's woes were not Mr Green's fault.
> 
> "The credit crunch hit at a very bad time," Mr Restel said.
> -------------------
> ...




Absolutely.  I have been reading books by insightful economists who predicted the current fianancial mess from 2002.  At a time when many of these rubbery businesses were inspired.

They ought to be hung and quartered in the town square.


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## limeymovie (20 August 2008)

This appears to now be a great buy.

What does everyone else think of the future of this company? I was going to buy in at $15 and thought that I had missed out. It now seems like Christmas with sucha  low price. It's as if you can't lose now.


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## questionall_42 (20 August 2008)

limeymovie said:


> This appears to now be a great buy.
> 
> What does everyone else think of the future of this company? I was going to buy in at $15 and thought that I had missed out. It now seems like Christmas with sucha  low price. It's as if you can't lose now.




please please enlighten us as to why this is a great buy limeymovie. I would avoid this from all perspectives - a company in decline with asset sales imminent and a business model in disarray in a bear market.


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## alleyronin (20 August 2008)

Mr_T said:


> Apologies for my typo. I meant company, not country.
> 
> Business Spectator has a few interesting articles today written by Alan Kohler about Babcock and Brown.



 I was just trying to lighten up your mood 

Kohler is probably the most astute conmmentator around and has been for a very long time. The sooner Babcock and Green step away the better it will be for everyone. I'm still sitting on a few BBW shares........ I figure they are about the safest of their funds, but even these have taken a hammering over the last couple of days


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## prawn_86 (20 August 2008)

questionall_42 said:


> please please enlighten us as to why this is a great buy limeymovie. I would avoid this from all perspectives - a company in decline with asset sales imminent and a business model in disarray in a bear market.




Not to mention crushing debt clauses and incompetent management.

Limey whats your take on things since you think it is such a bargain? I think you are still holding and are trying to get out at a higher price...


----------



## Mr_T (20 August 2008)

prawn_86 said:


> Not to mention crushing debt clauses and incompetent management.
> 
> Limey whats your take on things since you think it is such a bargain? I think you are still holding and are trying to get out at a higher price...




Not just incompetent, but greedy greedy greedy. Uncle Phil was one of Australia's highest paid CEO.

How about paying it back Uncle Phil?


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## Mr_T (20 August 2008)

alleyronin said:


> I was just trying to lighten up your mood
> 
> Kohler is probably the most astute conmmentator around and has been for a very long time. The sooner Babcock and Green step away the better it will be for everyone. I'm still sitting on a few BBW shares........ I figure they are about the safest of their funds, but even these have taken a hammering over the last couple of days




No need to lighten up my mood. I haven't owned BNB shares for a long long time. If I did, then certainly my mood would need mega lightening.


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## limeymovie (20 August 2008)

questionall_42 said:


> please please enlighten us as to why this is a great buy.




I can't believe how naive some of you people are. This was $40 a year or 2 back now it is less that $4. I call that the buy of the century. When it goes back up to $40 that will be a 1000% increase. I will become a millionaire!!


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## johenmo (20 August 2008)

Is this too little too late?

COMPARESHARES.com:
"Investment group Babcock & Brown Ltd (B&B) plans to announce an overhaul of its business when it reports its first half results on Thursday, The Australian newspaper's online business website says.

The overhaul is aimed at creating a tighter corporate structure.

As well, B&B chairman Jim Babcock and chief executive Phil Green are set to step aside, although Mr Green is expected to remain as a non-executive director, the online report says.

It also says Mr Green will be replaced as chief executive by finance head Michael Larkin."



When I read this first thought was that they were afraid the shares might go up due to the above news. LOL!!!!
"Shares in B&B were in a trading halt..."


----------



## johenmo (20 August 2008)

CompareShare.com....."recommendations" August 18
http://compareshares.com.au/black26.php

"HOLD RECOMMENDATION 

Babcock & Brown (BNB) 

Our concerns include the potential for further sizeable write-downs. The second is possibly needing to provide bridging loans to satellite funds and the third is potential further delays to asset sales. However, we believe there is substantial value in BNB's development assets. Provided the company can navigate safely through the current storm, there is value to be unlocked, although it may take time for the company to repair its reputation. Our target price is $7.50."

It seems a brave call, considering the last 3 - 6 months.

I have a tiny parcel which I held for curiosity sake.  It looks like curiosity may kill the cat!!


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## subaru69 (20 August 2008)

limeymovie said:


> I can't believe how naive some of you people are. This was $40 a year or 2 back now it is less that $4. I call that the buy of the century. When it goes back up to $40 that will be a 1000% increase. I will become a millionaire!!




I don't even know what to say 

My Mother always said ' if you don't have anything good to say then..'

So here goes: At least your cup is half full.

Maybe my AFG shares will do the same thing 

Seriously though limeymovie I wish you luck, because it doesn't sound like there's much skill if what you said above is your strategy.


----------



## aacantona (20 August 2008)

limeymovie said:


> I can't believe how naive some of you people are. This was $40 a year or 2 back now it is less that $4. I call that the buy of the century. When it goes back up to $40 that will be a 1000% increase. I will become a millionaire!!




If it were $2 and that is a pretty steep decline i still wouldn't touch it. BNB might be able to recover its value in the long term but for the moment its a sinking ship!


----------



## Judd (20 August 2008)

limeymovie said:


> I can't believe how naive some of you people are. This was $40 a year or 2 back now it is less that $4. I call that the buy of the century. When it goes back up to $40 that will be a 1000% increase. I will become a millionaire!!




Debt, debt and more debt.  It killed John Spalvin's Adsteam, totaled Alan Bond's Bell Corp, murdered Quintex and Chris fled,  Hooker Corporation and George Hurscu fled.  Further back, Cambridge Credit Corp.

WTF do you think B&B has besides assets and is (not so) slowly strangling it to death?


----------



## limeymovie (20 August 2008)

You guys seem to be putting me off so you can keep all the shares for yourself. It's not going to work. I am not that stupid.

I will be buying big when it comes out of the trading halt. I will send you a postcard from my yacht in the Bahama's next year!!


----------



## subaru69 (20 August 2008)

limeymovie said:


> You guys seem to be putting me off so you can keep all the shares for yourself. It's not going to work. I am not that stupid.
> 
> I will be buying big when it comes out of the trading halt. I will send you a postcard from my yacht in the Bahama's next year!!




Are you taking the p1ss?

I don't own any of this stock.  If I did then I would be VERY happy for there to be many people (I would say investor/trader but it doesn't seem to fit) like you propping up the price so I could make an exit.

Over the years I've made plenty of mistakes and still do now.  I have no idea how experienced you are in the market but I implore you to sit on the sidelines for a while if you are a newbie.  If you are a hard-core trader that moves millions and looking for 1% then I say do your thing because I don't play in that league.

Don't get me wrong, you might be right and BNB might take off but it is now high risk.  There are plenty of other stocks that are less risky and have only slightly less potential upside.



Anyway I'm not going to comment further, I've said my


----------



## Julia (20 August 2008)

limeymovie said:


> I can't believe how naive some of you people are. This was $40 a year or 2 back now it is less that $4. I call that the buy of the century. When it goes back up to $40 that will be a 1000% increase. I will become a millionaire!!




It doesn't occur to you that if a stock falls this far, there might be a very sound reason for it happening?


----------



## mike85 (20 August 2008)

subaru69 said:


> Are you taking the p1ss?




LOL! my thoughts exactly.
although my old man's financial advisor called him today, suggesting that he buy BNB... i would be interested to hear his reasoning behind it...


----------



## limeymovie (20 August 2008)

Julia said:


> It doesn't occur to you that if a stock falls this far, there might be a very sound reason for it happening?




I think it is just the market. There is nothing wrong with this stock, in fact most brokers have targets of between $15 and $20.

I am going to speak to my bank to get a loan to buy more of these.


----------



## Garpal Gumnut (20 August 2008)

limeymovie said:


> I think it is just the market. There is nothing wrong with this stock, in fact most brokers have targets of between $15 and $20.
> 
> I am going to speak to my bank to get a loan to buy more of these.






Julia said:


> It doesn't occur to you that if a stock falls this far, there might be a very sound reason for it happening?




Brokers, smokers and dopers.

Read the BNB posts from the beginning on ASF. Those tipping a recovery have been doing so for months.

Julia is on the money.

A chart tells it better than words, always follow the trend, this one is down.

gg


----------



## Aussiest (21 August 2008)

limeymovie said:


> in fact most brokers have targets of between $15 and $20.




Most brokers don't know what they are talking about. Smart Investor magazine was tipping this stock months ago, along with a whole lot of other people. 

Let me guess, your broker has a long position in BNB and needs the price to go back up?! You may get a bounce, i'm not sure, but going on past history, i wouldn't touch this stock with a ten foot barge pole...

Just my .


----------



## prawn_86 (21 August 2008)

limeymovie said:


> I think it is just the market. There is nothing wrong with this stock, in fact most brokers have targets of between $15 and $20.
> 
> I am going to speak to my bank to get a loan to buy more of these.




When has a stock ever reached a brokers target?

Have fun taking on debt to buy a depreciating assett, which is trending down massively and its future is clouded with covenants as it is virtually owned by the banks and has no solid debt free assets.

I have a feeling we wont see you around for long...


----------



## Sean K (21 August 2008)

Cripes, match price is $3.00 at the moment.

Good luck longs.

Grave fears that this may be the first really significant casualty of the credit crisis in Australia.

Or, it'll be bailed out in a takeover by someone picking up the scraps.


----------



## lasty (21 August 2008)

BNB
Its debt ridden
Its down here for a reason.The reason?
Its taking on water faster than it can bail it out.
Watch the spin...
They may be changing captains of the ship today but if its got a gaping hole in it, new hands on the wheel will do zero
Sell the dips !!!!!!


----------



## dhukka (21 August 2008)

kennas said:


> Cripes, match price is $3.00 at the moment.
> 
> Good luck longs.
> 
> ...




OUCH! complete elimination of the dividend. At least they are not trying to prop up a dividend they can't afford like some US institutions are doing. If this company survives it will be in a vastly different format.


----------



## gav (21 August 2008)

Garpal Gumnut said:


> Brokers, smokers and dopers.
> 
> Read the BNB posts from the beginning on ASF. Those tipping a recovery have been doing so for months.
> 
> ...




where your chart says "ppl getting out here and here", i think it would be more a case of the masses closing their shorts, rather than share holders getting out...


----------



## lasty (21 August 2008)

The question now is who is exposed in a big way to them?
ANZ no doubt but there must be more casualties.
The hunt is on.


----------



## prawn_86 (21 August 2008)

gav said:


> where your chart says "ppl getting out here and here", i think it would be more a case of the masses closing their shorts, rather than share holders getting out...




Staff and mangement own a huge % of BNB. Add some instos in there and t leaves very little to be shorted with. Remember all those short selling with CFDs are not actually taking hold of any physical stock either.

Shorting gets blamed for way too much IMO. What did people blame 10 years ago?


----------



## Sean K (21 August 2008)

lasty said:


> The question now is who is exposed in a big way to them?
> ANZ no doubt but there must be more casualties.
> The hunt is on.



I don't care too much about the instos. This was a frindge Mum and Dad stock, who have liked to buy over the past 3 years, but don't know where the sell button is. Personal wealth of some older Australians is being significantly erroded.


----------



## skyQuake (21 August 2008)

limeymovie said:


> This appears to now be a great buy.
> 
> What does everyone else think of the future of this company? I was going to buy in at $15 and thought that I had missed out. It now seems like Christmas with sucha  low price. It's as if you can't lose now.




and



> I can't believe how naive some of you people are. This was $40 a year or 2 back now it is less that $4. I call that the buy of the century. When it goes back up to $40 that will be a 1000% increase. I will become a millionaire!!.




Thus by logical progression. The best price is when the stock hits $0 when it goes bust. Good luck there.


----------



## skyQuake (21 August 2008)

limeymovie said:


> I think it is just the market. There is nothing wrong with this stock, in fact most brokers have targets of between $15 and $20.
> 
> I am going to speak to my bank to get a loan to buy more of these.




Those were issued by analysts 6-12months ago before **** hit the financial fans and huge blob landed on BNB.
A few days ago either Citi or UBS put a new price target of $1.34 on BNB.

fwiw, i think hes trolling. So no real losses there...

EDIT: Found link. UBS New target $1.24 lol
http://business.smh.com.au/business/green-to-exit-babcock--brown-20080820-3yhs.html


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## prawn_86 (21 August 2008)

limeymovie said:


> I can't believe how naive some of you people are. This was $40 a year or 2 back now it is less that $4. I call that the buy of the century. When it goes back up to $40 that will be a 1000% increase. I will become a millionaire!!




So by this theory you are buying every stock on the bourse then, and have been buying for the last 3 months or so. If you bought on open today like you said you are already down another 6%. You must be down millions by now all up...

Also, putting my mod hat on:

If you dont provide more solid reasonings with your further posts they will be removed. Saying you will on a yacht does not qualify as solid reasoning. Read the site guidelines if you havnt already.

Thanks


----------



## prawn_86 (21 August 2008)

Phil Green and Jim Babcock both stepping down. More like pushed out. Had to happen.

http://www.news.com.au/business/story/0,27753,24217332-462,00.html


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## Aussiest (21 August 2008)

Oh my goshhhhhhhh.
I wonder who'll be next?

ANZ? NAB?

I'm worried about Macquarie now... They're my broker, i'm gonna make sure i buy shares rather than CFDs till this 'crisis' is over.


----------



## Aussiest (21 August 2008)

I know this is crazy, but i wonder if it is worth taking 1,000 long on BNB right now? Afterall, it could almost be classed as a speculative stock... If it goes bust, you'll only lose around $2,500 (i don't encourage losing money, but you get my drift). 

*Disclaimer: i do not intend taking the above-mentioned position, my post is purely meant as conjucture 

I actually feel sorry for all the mum and dad investors who got sucked into this stock.


----------



## skyQuake (21 August 2008)

Id rather spend that $2500 on a holiday... Or even Blackjack.
Personally I would short _$2500 _of BNB if i was given an absolute choice of long or short. imo if you're not sure, then you're gambling.


----------



## Mr_T (21 August 2008)

OK, I shouldn't really be doing this, but I just feel an overwhelming urge to say this:

I told you so.


----------



## Aussiest (21 August 2008)

skyQuake said:


> Id rather spend that $2500 on a holiday... Or even Blackjack.




Lol. I should start a thread asking people what they'd like to spend $2,500 on rather than buying BNB shares .


----------



## Aussiest (21 August 2008)

Mr_T said:


> OK, I shouldn't really be doing this, but I just feel an overwhelming urge to say this:
> 
> I told you so.




For some reason, i always had a bad 'feeling' about buying BNB shares. Even when everybody was recommending them, _Smart Investor _and other so-called expert 'publications', i resisted. Thank goodness.

YOU REALLY HAVE TO BE CAREFUL ABOUT THOSE SO CALLED *EXPERTS *OUT THERE. Trust your instincts people (and do your own research). If you have a bad feeling about something, do not do it. They're all pushing their own agenda...


----------



## discman (21 August 2008)

> YOU REALLY HAVE TO BE CAREFUL ABOUT THOSE SO CALLED *EXPERTS *OUT THERE. Trust your instincts people (and do your own research). If you have a bad feeling about something, do not do it. They're all pushing their own agenda...




Hi Mate, I am one of those suckers who bought BNB on EXPERTS advice from SMART INVESTMENT magazine. They rate the BNB as high return and LOW risk which it was around $16. 
I got the profit "affirmed" from ex-CEO (Green), and all the ticks from other "EXPERTS" brokers before I bought....well.... still screw up, big time.


----------



## 3MT (21 August 2008)

skyQuake said:


> Those were issued by analysts 6-12months ago before **** hit the financial fans and huge blob landed on BNB.
> A few days ago either Citi or UBS put a new price target of $1.34 on BNB.
> 
> fwiw, i think hes trolling. So no real losses there...
> ...




Just curious where they get the 1.24 from? Be wiser for them to just say avoid or no valuation possible. Wonder who is buying BNB.

Brings me to another argument, now that "the herd" is clearly saying stay away from this sinking ship, is it worthwhile to punt against them? maybe with $2500 bnb could be better than blackjack.


----------



## lasty (21 August 2008)

Whats that old saying "If you try to pick bottoms you get smelly fingers".

And then there are those who have been told. "Dont touch that iron or you will burn yourself." The next minute they do.
In other words they dont listen..
The market loves people like these..Unfortunately they dont stay around long enough to make more money out of.

Ok here is a tip.... Today Babcock is gone and we are left with "Brown"
What does that remind you of?.... Say no more !!!


----------



## Aussiest (21 August 2008)

lasty said:


> Whats that old saying "If you try to pick bottoms you get smelly fingers".
> 
> ...
> 
> ...




Lol...


----------



## Aussiest (21 August 2008)

discman said:


> Hi Mate, I am one of those suckers who bought BNB on EXPERTS advice from SMART INVESTMENT magazine. They rate the BNB as high return and LOW risk which it was around $16.
> I got the profit "affirmed" from ex-CEO (Green), and all the ticks from other "EXPERTS" brokers before I bought....well.... still screw up, big time.




We've all made silly mistakes. Heck, i've made silly mistakes following my own advice :.

I think the thing is to check the investor magazine recommendations against the real results. Eg, watch the stocks for a few months to see if these 'gurus' were indeed right. And, anyway, i think it's a big smelly conspiracy... Magazine authors buy in and of course give it a good recommendation.


----------



## ROE (21 August 2008)

Leverage works both way, sadly most people only see the upside
they don't see the down side of leverage, the down side is far more uglier than the upside. 

Greed got to them and now they pay the ultimate price of losing it all.


----------



## Mr_T (21 August 2008)

Most financial journalists are pretty ordinary. Very ordinary.

However, if you read my past posts, many of the them paste the articles of Fairfax's Michael West. His articles are published in The Age (and I assume the SMH as well??). He has for a long time written artices spelling out the problems with BNB. He is one expert whose opinions are definitely worth reading.


----------



## ROE (21 August 2008)

Aussiest said:


> We've all made silly mistakes. Heck, i've made silly mistakes following my own advice :.
> 
> I think the thing is to check the investor magazine recommendations against the real results. Eg, watch the stocks for a few months to see if these 'gurus' were indeed right. And, anyway, i think it's a big smelly conspiracy... Magazine authors buy in and of course give it a good recommendation.




I think you pick better tips from this thread and MQG thread ... Myself and other start sounding the alarms last year regarding financial structure engineering that use cheap debt to grow their business and buy inflated asset to fuel further fund spin off ...


----------



## ROE (21 August 2008)

discman said:


> Hi Mate, I am one of those suckers who bought BNB on EXPERTS advice from SMART INVESTMENT magazine. They rate the BNB as high return and LOW risk which it was around $16.
> I got the profit "affirmed" from ex-CEO (Green), and all the ticks from other "EXPERTS" brokers before I bought....well.... still screw up, big time.




don't feel too bad, most of us listen to someone at some stage and lose money in the process but you got to use that experience as a learning tool and better yourself so you wont fall into the same trap... 

I don't now how much you put in but losing 10%-20% of the portfolio is no big deal, with discipline and buy stock that you truly understand their business well, that 20% will return in no time


----------



## kingbrown (21 August 2008)

limeymovie said:


> You guys seem to be putting me off so you can keep all the shares for yourself. It's not going to work. I am not that stupid.
> 
> I will be buying big when it comes out of the trading halt. I will send you a postcard from my yacht in the Bahama's next year!!





well one would think that most ppl on here do have some good advise
and you should have taken some of it today with a 33% odd drop 

BNB is now a DOG ! 
as for your statement about the boat in the Bahamas  
i can do you a good deal on an an old bath tub ?
Hey i might even give it to you for free ? 



*does any one know what exposure BNB has on our local banks ??*


----------



## Mr_T (21 August 2008)

BNB has been a dog for a long time, just that the market has only recognised it relatively lately.

Uncle Phil - why don't you for once in your life do the honourable thing and give all the bonuses etc you've made through the years back to the shareholders.

Incredible - he was one of the highest paid CEO's in Australia!!


----------



## M34N (21 August 2008)

Aussiest said:


> I know this is crazy, but i wonder if it is worth taking 1,000 long on BNB right now? Afterall, it could almost be classed as a speculative stock... If it goes bust, you'll only lose around $2,500 (i don't encourage losing money, but you get my drift).
> 
> *Disclaimer: i do not intend taking the above-mentioned position, my post is purely meant as conjucture
> 
> I actually feel sorry for all the mum and dad investors who got sucked into this stock.




Why spend $2500 now to get 1000 shares when it may get you 2000 tomorrow? 

And another stock bites the dust, only question left is what stock is next... when the bears get a hold, run. Hopefully what happened to BNB is an example to everyone here (whether they held it or not) as to the importance of having to cut your losses early and avoid this kind of fiasco.

To think this is the 2nd largest investment bank in Australia and this can happen in 2008, disgraceful. :bad:


----------



## ROE (21 August 2008)

M34N said:


> Why spend $2500 now to get 1000 shares when it may get you 2000 tomorrow?
> 
> And another stock bites the dust, only question left is what stock is next... when the bears get a hold, run. Hopefully what happened to BNB is an example to everyone here (whether they held it or not) as to the importance of having to cut your losses early and avoid this kind of fiasco.
> 
> To think this is the 2nd largest investment bank in Australia and this can happen in 2008, disgraceful. :bad:




BNB is nothing, small fries in big world.... What about Enron and Worldcom, Freddie Mac, Fannie May.
size does not matter when it comes to Crab business

Uncle Warren always said

"When a management with a reputation for brilliance tackles a business with a reputation for poor economics, it is the reputation of the business that stays intact."


----------



## M34N (21 August 2008)

ROE,

It's more in perspective of the fact that this was once one of Australia's best companies, now it's worth a fraction of what it once was due to gross incompetence from management who thought they could continue to live on a dream forever at the expense of investors who bought into the company and entrusted them. That's what's so disgraceful, and it's criminal really. But the warning signs were there, and people have known for a while about their problems and I hope all the people on here got out while they could have.

You can only shake your head in amazement, I watched this collapse today & yesterday and felt for a lot of people who may of been holding and hoping.


----------



## Garpal Gumnut (21 August 2008)

dj_420 said:


> A number of brokers have $36 targets on BNB, I personally will be waiting for BNB to break old highs then sell. Still a lot of room to move.
> 
> This stock has recovered very well from correction.






roland said:


> No matter where you look, which broker you reference or which report you read - BNB is an absolute bargain.
> 
> Even last night when I received my Comsec report, they are suggesting that BNB is an extremely rare chance not to be missed. The target 12 month target now stands at $35 with an expected 12 month SP earnings forecast exceeding 30%
> 
> ...






roland said:


> Here you go:
> 
> Opportunity to profit from fear
> 
> ...






Just a reminder that not so long ago respected brokers and tip sheets were spruiking BNB as a buy.

How do they get price targets for the stocks they try to flog to unsuspecting punters? 

At least technicians are honest, and quote fibonnaci or other extension target prices. 

Note that no brokers suggested any poor sod sell BNB, and the Aegis tip sheet told investors to buy, traders to sell and noted that fundamentally it was a buy. Their prognosis basically vindicated the Technical analysis.



gg


----------



## The Mint Man (21 August 2008)

limeymovie said:


> I think it is just the market. There is nothing wrong with this stock, in fact most brokers have targets of between $15 and $20.
> 
> I am going to speak to my bank to get a loan to buy more of these.



Never rely too much on what brokers say, too many times the so called 'experts' get it wrong or say this and that just to get their name out there. Sometimes they will own the stock giving them even more reason to back a particular share.
You also have to remember that they are probably still getting used to the new rules in the market after having years of easy gains! This market is making alot of supposedly good brokers and stock reports look VERY bad.

I don't want to sound like some of the other know-it-alls on here saying 'I told you so' (wonder if they had shorts?)  
I know what this feels like, in the last 2 years I have been stung on both BDG and even more so on MFS/OCV, and I bought MFS on takeover talk..... What I will say to the people in BNB is that you will learn more about how things work (via this experience) than simply sitting on the sidelines watching. If your gonna take anything from this situation it may as well be a good lesson!

Cheers


----------



## skyQuake (21 August 2008)

Finally had a chance to have a closer look at charts. May be capitulation today. 
Small parcel long 15min after open if structure holds should be good risk/reward... as long as it starts rallying.


----------



## Mr_T (21 August 2008)

The Mint Man said:


> I don't want to sound like some of the other know-it-alls on here saying 'I told you so' (wonder if they had shorts?)
> 
> 
> Cheers



No, I did not have shorts. If I did, I assure you that posting stuff on this forum would hardly change anything, not like it is full of high flying wheelers and dealers.Do you seriously think that what anyone on this forum does changes the price of a share?

If you had followed my posts, you would know that I lost about 66K on BNB when I sold it at 14.50. Now, that is hardly enough to make me go broke. But as I looked into their accounts & investigated things further, I found lots of half truths, deceptions and ommissions. I posted stuff on this channel because I didn't want others to lose money the way I had. If you look at past postings, you will see that I have gone out of my way to post all sorts of stuff that I researched about BNB from various sources.

I have been trying to help people. I resent your implication.

And yes, I have a right to take pride in my predictions being correct. Not all that often that I am right, so I am proud of myself when I am. I make no apology for this.


----------



## Aussiest (21 August 2008)

When brokers and columnists make recommendations, they should set stop-losses.

...............................


----------



## Green08 (21 August 2008)

When it is falling so dramatically why don't the regulators put it in a trading halt to stop (if there where) Margin calls etc.   

I was always a little perplexed that the announcement would do anything good unless the new guy has Bullwinkle type qualities - watch me pull a rabbit out of my hat.  Or for the Jesus types fish and bread from the basket For those religious people do you blame God on this one or  do you look at it as Divine Cleansing?

never Held , and Never Will Never liked their business model


----------



## Mr_T (21 August 2008)

Green: not sure why this would be beneficial for shareholders. They might want to take their losses and sell out at whatever price they can.

Just look at the poor MFS/Octaviar shareholders. Doesn't look like their shares will ever be traded again.


----------



## M34N (21 August 2008)

Green08 said:


> When it is falling so dramatically why don't the regulators put it in a trading halt to stop (if there where) Margin calls etc.
> 
> I was always a little perplexed that the announcement would do anything good unless the new guy has Bullwinkle type qualities - watch me pull a rabbit out of my hat.  Or for the Jesus types fish and bread from the basket For those religious people do you blame God on this one or  do you look at it as Divine Cleansing?
> 
> never Held , and Never Will Never liked their business model




They replaced Phil Green with Elizabeth Nosworthy, who managed to, coincidentally, lead Commander Communications (CDR) all the way down into receivership just a few weeks ago. I see a good future for her at BNB. :bricks1:


----------



## Green08 (21 August 2008)

That's a good point but I was under the understanding that regardless of up or down if the % was significant then a halt would be called.  Yes I agree it is a sad thing for people involved  with previous  companies which have gone down I feel especially for the elderly.  

My brother is a builder a very fair and honest one would do the do thing for people as a gift - no pay.  He rang me today and said he is nearly bankrupt as all the work up the coast has been cancelled by the elderly who wanted improve , extend their dream home and with the shock of super statements have far less money and have to cancel to survive.

So It is going to effect many many people in walks of life we can't imagine.  All I was asking and quite rightly is who do people blame in these circumstances.

Personally today I would put financial advisers up there with car sales men. They are out for themselves.


----------



## Julia (21 August 2008)

M34N said:


> They replaced Phil Green with Elizabeth Nosworthy, who managed to, coincidentally, lead Commander Communications (CDR) all the way down into receivership just a few weeks ago. I see a good future for her at BNB. :bricks1:



Yes, the 7.30 Report tonight drew attention to the number of companies with which Ms Nosworthy has been associated which have failed woefully.
She is also in charge of the much touted Qld Water Commission, god help all South East Queenslanders.   Why doesn't someone just damn well get rid of her?
No chance for BNB to pick itself up when they fail to replace the people who have been so implicated in its downfall.


----------



## grace (21 August 2008)

Julia said:


> Yes, the 7.30 Report tonight drew attention to the number of companies with which Ms Nosworthy has been associated which have failed woefully.
> She is also in charge of the much touted Qld Water Commission, god help all South East Queenslanders.   Why doesn't someone just damn well get rid of her?
> No chance for BNB to pick itself up when they fail to replace the people who have been so implicated in its downfall.




Couldn't have said it better myself!  Speaking of getting rid of people,......those ex-BNB leaders should be given public floggings.....performance bonuses handed back for distribution to poor shareholders.  Watch them pop up again in 10 years or less.....you know the story.


----------



## Aussiest (21 August 2008)

I have just learned from Lateline Business that Phil Green doesn't have an office in the building, but he's still on a years' wage.

What is that all about?

Pseudo re-shuffle imo. The new management doesn't seem that promising. Not very slick. It's a bit of a worry, we really don't want a financial institution in Australia to go bust. It won't do the sharemarket any good.


----------



## cordelia (22 August 2008)

3MT said:


> Just curious where they get the 1.24 from? Be wiser for them to just say avoid or no valuation possible. Wonder who is buying BNB.
> 
> Brings me to another argument, now that "the herd" is clearly saying stay away from this sinking ship, is it worthwhile to punt against them? maybe with $2500 bnb could be better than blackjack.




well if it were me ..I would sit and wait for it to find some sort of support, go sideways a bit before even contemplating buying this stock......there doesn't appear to be any reason to buy this right now....IMO


----------



## cordelia (22 August 2008)

Aussiest said:


> We've all made silly mistakes. Heck, i've made silly mistakes following my own advice :.
> 
> I think the thing is to check the investor magazine recommendations against the real results. Eg, watch the stocks for a few months to see if these 'gurus' were indeed right. And, anyway, i think it's a big smelly conspiracy... Magazine authors buy in and of course give it a good recommendation.




The only thing to do with investor magazines is use them to start a fire.......certainly don't follow their suggestions...The same goes for broker recommendations.....If you trade on these recommendations you are doomed to fail......


----------



## Logique (22 August 2008)

I admit that to buy BNB would be a leap of faith at the moment.  

It got me thinking back to 2001 when QBE dropped from $12 down to $3 in a month, and then spent 12 months trying to get above $7.  However buyers at the end of 2002 had a dream run through to 2007 where it topped out at $35.  

So you never say never. But it does look shaky for BNB.


----------



## MR_B (22 August 2008)

I held off the sell button too long. Too much faith in hearing some good news, but it never came. I won't buy this stock again. Luckily I am young and can work a second job. 70 hours a week for the next year for me. Consider how you can recatch your money before you buy this. Not that it can't go up again...


----------



## ROE (22 August 2008)

Logique said:


> I admit that to buy BNB would be a leap of faith at the moment.
> 
> It got me thinking back to 2001 when QBE dropped from $12 down to $3 in a month, and then spent 12 months trying to get above $7.  However buyers at the end of 2002 had a dream run through to 2007 where it topped out at $35.
> 
> So you never say never. But it does look shaky for BNB.





Commercial and retail insurance is a different business.

It's a very profitable business where you take the money first, you invest
and grow that money even more then when the claims comes you pay it out.
so you always have money on your hand. 
and I'm sure you have insurance you know the drill, if you claim too often they increase your premium and so that they always have a profitable margin.

BNB business is where you load up lot and lot of cheap debt and hope the debt stay cheap forever and buy and buy increasingly inflated asset to spin off fund and hope that asset generate enough income to cover debt and if it doesn't revalue the  damn asset and call that profit. 

when cost of debt rise and asset price drop = Game over.
That the sort of business you want to get involve in?


----------



## Garpal Gumnut (22 August 2008)

Jeez, its down about 10% in the first few minutes after open.

gg

Not enough characters

Its retraced to be just down 8% at 4 minutes 

gg

only 7% down at 4 minutes

only 4 % at 5 minutes

jeez this must be what its like to daytrade.

only 1% down at 6 minutes.

Time for a cuppa.

gg


----------



## skyQuake (22 August 2008)

Good bounce. Parcel at 1030 or 11am would have dont better though. Should see some short covering for a while.


----------



## Calliope (23 August 2008)

Spot on, Julia and Grace. Ms Nosworthy's efforts in SE Qld running the water commission have on occasions made her look ridiculous. There was one time when she wouldn't  face the press to justify one of her decisions and she sent her deputy along. She was filmed watching on, trying to hide behind a pillar; not an easy thing to do for a woman of her size. I weep for BNB shareholders.


----------



## JTLP (23 August 2008)

Calliope said:


> Spot on, Julia and Grace. Ms Nosworthy's efforts in SE Qld running the water commission have on occasions made her look ridiculous. There was one time when she wouldn't  face the press to justify one of her decisions and she sent her deputy along. She was filmed watching on, trying to hide behind a pillar; not an easy thing to do for a woman of her size. I weep for BNB shareholders.





LOL A+ Post...Would read again.

BNB reminds me exactly of AFG...everyone riding on potluck and hoping for 1 - 2 point gains. Cept when the thing goes into a TH and it gaps down 50%...bye bye capital!


----------



## Mr_T (23 August 2008)

There's a lot of articles about BNB around at the moment. I thought I'd post this one here. It gives a very different perspective about Uncle Phil and his deceased brother, Uncle Max.

It's from Thursday's Crikey (subscription service):

25 . The Green brothers: a tale of greed and envy
Adam Schwab writes:


On 23 March 1998, low-profile Melbourne tax-lawyer, Max Green, was found dead in a luxury Phnom Penh hotel. Green was later discovered to have been the perpetrator of a $42 million fraud and was believed to have been murdered by an investor in his Ponzi scheme.

Green had devised what appeared to be a tax minimization ruse, which ostensibly involved leasing low-cost equipment to CityLink. Green even went to the trouble of counterfeiting CityLink invoices as part of the fraud which essentially involved taking money from investors and stealing it. 

One of the more surprising aspects of Max Green’s conduct was that he didn’t really need the money. Green was married to Louise Baron -- daughter of former BRW Rich 200 member, rag-trader Nathan Barron. Barron was worth upwards of $100 million at the time of his death a few years ago. 

So if money wasn’t a prime motivation -- why would a softly-spoken tax lawyer commit such a blatant fraud? Many suspect that Max Green was motivated by more than merely money, instead, he yearned for the respect achieved by his Sydney-based brother, Phil. According to reports, Max Green had used his ill-gotten lucre to invest in Asian gem mines. 

Phil Green, like Max, was a tax accountant and lawyer. Green was a senior manager at the now defunct Arthur Andersen. In 1984 Green joined US-based Babcock & Brown, then, a small firm which specialized in aircraft leasing. From there Babcock grew into a real estate and infrastructure firm, which later specialized in creaming fees from satellites. 

While Phil was building his empire at Babcock, his less successful brother Max was working in the United States at a small fashion jewelry company called Emma Page. Max Green later returned to Melbourne and re-commenced his legal career at the small firm of Gary Shugg. A few years later Shugg was found guilty of misusing clients’ funds (he blamed Green) and the firm collapsed.

Max Green later moved to another minor firm called Coleman Aroni and commenced his massive and ultimately ill-fated fraud. (Ironically, it has been alleged that the idea for Max Green’s tax-minimization scheme involving low cost equipment purchases came from Phil, himself a tax lawyer). 

We wonder what Max Green would be thinking if he was around to read The Australian last night, with John Durie revealing that Phil Green had relinquished his role as CEO of Babcock & Brown. Only last year, Phil Green was worth more than $500 million. Now, he has been pushed from his role as CEO and his wealth is probably less than $50 million, subject to debt. 

Unlike Max, Phil Green’s corporate death has been a slow one, Babcock scrip gradually retreated from a high of $33 prior to the credit crunch as the company continued to tell investors all was well. On Tuesday, Babcock threw in the towel and requested a suspension with its scrip trading at only $3.45 -- down almost 90 percent from its highs. The company floated in late 2004 at $5.00 per share. 

Green is expected to remain a non-executive director of Babcock, however, given his role in its downfall (virtually all Babcock shareholders would be significantly down on their investment) it would appear his long term future at the firm and in Sydney business circles would be in serious doubt.


----------



## M34N (23 August 2008)

Julia said:


> Yes, the 7.30 Report tonight drew attention to the number of companies with which Ms Nosworthy has been associated which have failed woefully.
> She is also in charge of the much touted Qld Water Commission, god help all South East Queenslanders.   Why doesn't someone just damn well get rid of her?
> No chance for BNB to pick itself up when they fail to replace the people who have been so implicated in its downfall.




The only thing investors still holding into BNB can hope for now is a takeover offer, or that the people holding shorts close up and push the price up and give people a chance to sell out.

How can anyone confidently invest into this company with a woman like this as its chairperson? It's even worse that she is selected by BNB to lead the company, shows you how badly mis-managed and incompetent BNB really is. Her history alone is enough to ring alarm bells, but as they say, history repeats itself, and I'm sure with Nosworthy there won't be an exception!

Why anyone would hold this company is beyond me


----------



## Garpal Gumnut (23 August 2008)

I very rarely follow fundamental opinion but could not fail to notice in the Weekend Australian that Babcock and Brown are "Lenders exposed to millions as Tricom grates with Danes."

It would appear from the article that bnb in their wisdom bailed out Tricom earlier this year.

governance governance governance or the lack of it !!!!!

Not a wise investment.

This cookie looks set to crumble.

I couldn't be bothered posting a chart.

gg


----------



## Garpal Gumnut (23 August 2008)

Garpal Gumnut said:


> I very rarely follow fundamental opinion but could not fail to notice in the Weekend Australian that Babcock and Brown are "Lenders exposed to millions as Tricom grates with Danes."
> 
> It would appear from the article that bnb in their wisdom bailed out Tricom earlier this year.
> 
> ...




More damning comment , this from Alan Kohler,

http://www.businessspectator.com.au...-sickening-display-HQS6C?opendocument&src=rss

gg


----------



## Green08 (25 August 2008)

A little insider trading information

http://au.finance.yahoo.com/q/ait?s=BNB.AX

Have to wonder if the Directors past and present are up and down like hot cakes have to wonder why the public can put ANY faith in the B-------!

Dear Liz is a fine example of  Major Position on the Board with

9/4/08 Elizabeth Nosworthy 2,460 Direct Shares Buy 104,210  (Bit low for her new position on the board seeing as James had @7 million and was off loading) See the above link - Still holding faith anyone?????  

She did do a sell just before - They don't seem to have alot of faith in them selves (take the Paparazzi cameras for the local papers away). Seem confused poor dears

Course they could have loads more but this is the best source I know of for activity the public shouldn't know if they didn't look!  But of course it always 'seems' better when they issue stock amounst themselves for God Knows What!


----------



## pacestick (25 August 2008)

Green08 said:


> A little insider trading information
> 
> http://au.finance.yahoo.com/q/ait?s=BNB.AX
> 
> ...




Having closed down commander ecently and fouled up a queensland government department she may be some indication of what the ones p[ulling the shots i.e. banks are planning yp go


----------



## Aussiest (25 August 2008)

Garpal Gumnut said:


> More damning comment , this from Alan Kohler,
> 
> http://www.businessspectator.com.au...-sickening-display-HQS6C?opendocument&src=rss
> 
> gg




Funny that Alan Kohler has damned BNB, I could have sworn the authors of the Eureka Report were giving it a good wrap a few months ago.

I'm a bit over Alan Kohler, the Eureka Report is a whole lot of uncomitted clap trap...


----------



## M34N (25 August 2008)

Now I finally understand what BNB really stands for; cheap accommodation!







Sorry couldn't resist...


----------



## Nicks (27 August 2008)

Aussiest said:


> Funny that Alan Kohler has damned BNB, I could have sworn the authors of the Eureka Report were giving it a good wrap a few months ago.
> 
> I'm a bit over Alan Kohler, the Eureka Report is a whole lot of uncomitted clap trap...




If anyone reads the Huntleys recommednations on ETrade they are just as bad.

Strong Buy (at one point they said "Table Thumping Buy") and this was when the share price was $10-$13. They were still ging with Strong Buy at $6.50. Now they are saying - well we said it was a bit risky.


----------



## Nicks (27 August 2008)

Julia said:


> Yes, the 7.30 Report tonight drew attention to the number of companies with which Ms Nosworthy has been associated which have failed woefully.
> She is also in charge of the much touted Qld Water Commission, god help all South East Queenslanders.   Why doesn't someone just damn well get rid of her?
> No chance for BNB to pick itself up when they fail to replace the people who have been so implicated in its downfall.




Agree Julia - disappointing to see that they have just shuffled them around. GET RID OF EM!!! Replace them with the right people for this situation. Then we'll have some confidence back.


----------



## deadset (27 August 2008)

BNB seems to have stopped dropping for now.
I think you'd want to see it not drop for over a month before you even thought about considering getting in.   You'd think the new board would realise the dire consequences of any wrong moves or any dilliances now.


----------



## Aussiest (27 August 2008)

Nicks said:


> Now they are saying - well we said it was a bit risky.




They're just shameless. I wonder why they make those recommendations? Vested interest, getting their names out there.


----------



## tigerboi (11 September 2008)

*BNB-15% drop,please explain...*



tigerboi said:


> very true on this mob,once the dust settles which will be?? there will be opportunities, yep your a lot gamer than me,too risky for my liking as i still think they may be rearranging the deck chairs on the BNB titanic, however they did react swiftly to a possible attack from the long short-short long gang,i would think the sentiment to these types of set ups will see the price head much lower...tb




I see bnb got a speeding ticket today,sorry that would be the ticket you get for doing 60 in a 100 in the fast lane,in reverse ticket?

surprising over here no more supporters(hoping everone has taken the tip)looked at the price the other day at $2.34 & thought in the current market it should be 34c less at least then forgot about it.today $2.00

got a lot of work to do BNB in the next 2 years or so,i expect an even more lower sp in the next 3 months...

i'd this drop seems to come from the issue of shares at $12.00+ which where sold off no doubt...tb


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## Mr_T (15 September 2008)

*Re: BNB-15% drop,please explain...*

Looks like Uncle Phil has at last jumped ship. I wonder if they're still paying him? Would be great to know the precise reason why he left so soon after being appointed as a "non-Executive Director".


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## ronnieling (15 September 2008)

Are the BNB Convertible Notes (BNBG) still paying out Dividends for the November ex-date? Anybody know?

Their announcement in May suggests so but thats before the dividends for ordinary shares got put on hold.


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## ROE (16 September 2008)

ronnieling said:


> Are the BNB Convertible Notes (BNBG) still paying out Dividends for the November ex-date? Anybody know?
> 
> Their announcement in May suggests so but thats before the dividends for ordinary shares got put on hold.




By law as long as a company is solvent, they must pay their bond holder first
well tax man comes first then bond holder


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## tigerboi (16 September 2008)

*Re: BNb-sub $1.00*

look at it smash through a buck in reverse the ponzi of all pyramids getting it sright whack...91c...short of the century...tb


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## Mr_T (16 September 2008)

Maybe the reason Uncle Phil quit was so that he could sell his shares in BNB while they are still worth something. Admittedly his wealth has been heavily eroded, from several hundred million to only a few tens of millions. But if he waited much longer he might have ended up as just an Average Joe. with no substantial wealth And we couldn't have that. After all, Uncle Phil is special....


----------



## aacantona (16 September 2008)

*Re: BNb-sub $1.00*



tigerboi said:


> look at it smash through a buck in reverse the ponzi of all pyramids getting it sright whack...91c...short of the century...tb




any predictions as to when BNB will file for bankruptcy? - my bet is that they won't get beyond the next 90 days.


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## Nicks (17 September 2008)

Aussiest said:


> They're just shameless. I wonder why they make those recommendations? Vested interest, getting their names out there.





Hunley's had BNB as a "Table Thumping Buy" when it was around $7. Now they are saying "Risky".

I would have preferred Phil Green to have fallen on his sword (or the board to have dumped him) much sooner. What steps have they taken to reassure investor confidence??? Nothing.

Why was BNB so bullish on FY08 guidance, reaffirming it only to shaft those who trsuted this. Class action coming?

I went past the Bronze bull here in NYC off Wall St. today and I saw Phil Green riding it waving his cowboy hat around.

The other week I bumped into 2 BNB employees in San Francisco (one American and one transferred up from Sydney). Well it was an interesting convo. How bitter the American lass was when I told her it was time for Phil to take some responsibility and be sacked. I said that the Real Estate market in the US was not a wise move and as CEO he has ultimate accountability. She told me 'well it was hot for a while everyone was doing it'. Im telling you this company is in denial.... well it was for a while and now its too late. The Aussie guy was a lot more sharper. That said it is making money and is profitable so I suspect it will be grabbed up by another bank any day now as it would be a very nice addition of a complimentary business. The question is at what price?????? based on its earnings it has to be $10+?? Based on its distress??? who knows. The market has not treated BNB based on earnings but instead distress. Potential for a strong rebound when the realisation that fear has been a large factor or an impending takeover offer?? Fundamentals not as bad as the market has reacted??? If there is a takeover offer will this be enough to rocket the SP over and above this back into survival. Personally I think BNB has been over hammered and it is time for a rebound. I think MQG is well well overdue for a hammering. Many questions go begging...........


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## Nicks (19 September 2008)

Ok given the huge injections of liquidity and bank to bank lending, and the Feds move to cover banking I think BNB is not only going to survive, but once it resumes paying dividend out next year, which I assume will be lower due to the new policy of paying out of income not gearing, then BNB could reflect a much larger SP relative to its dividends. Not to mention that they are re-engineering their business model to be much safer and viable and regaining their brand back, and they are certainly still pulling in some huge and successful deals. So I guess what I am saying is that probably over the next two years I think, and hope for investors sake, that BNB could be back up to double digits. We all know that some of the share price pounding was the hedge funds pounding the stock - but yes they were taking advantage of investor sentiment (and fear) related to BNB, but this is artificial price manipulation over and above what would have been natural. The reality is that if it wasnt for this, BNBs SP would have taken a beating sure, but the companies viability wouldnt have come into question (and thereby cause this snowball affect) - and to be honest Im not sure it has. It still has bank support...... so as long as it can still pull in the deals and make money, as long as it has a Net Asset (currently 2.5B, market cap 350m) why would the banks demand? Just some more of my thoughts now the environment has changed a bit once again overnight.


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## deadset (19 September 2008)

yes, there are many good employees there that deserve a chance to build it up again.

I've spoken with some of their people thru business before, so when you put an average joe voice and face to it, I think, well what did that employee do to cause any drama's ?


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## Mr_T (19 September 2008)

deadset said:


> yes, there are many good employees there that deserve a chance to build it up again.
> 
> I've spoken with some of their people thru business before, so when you put an average joe voice and face to it, I think, well what did that employee do to cause any drama's ?




I remember earlier this year suggesting on this forum (when BNB was around $10 - $15) that its employees should not be given bonuses this year given the huge fall in its share price, to which someone on this forum answered "but that isn't fair to the employees"

The employees didn't deserve anything then, and they deserve even less now. This is a company built on hype, half truths and financial engineering. Despite its claims to the contrary, it  produces a lot of nothing.

The sooner it goes into VA/receivership/liquidation, the better. Maybe then its employees can prove themselves by doing something productive and getting real jobs.


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## adobee (19 September 2008)

so with the negativity around BNB who would be buying it today ? people who think it can pick itself up.. people in the know.. or idiots ???
If I had some indication that it could make good I would jump in .. i didnt do it with centro as I am sure people would prefer to buy the assets in a fire sale.. but BNB the banks might be better of letting it get back into shape rather than taking a big hit themselves and trying to untangle the mess...


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## psychic (20 September 2008)

The US market rallied again overnight so there is a good chance that BNB holders will feel a little better come Monday, surely the bottom has been hit


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## dhukka (20 September 2008)

Nicks said:


> Ok given the huge injections of liquidity and bank to bank lending, and the Feds move to cover banking I think BNB is not only going to survive, but once it resumes paying dividend out next year, which I assume will be lower due to the new policy of paying out of income not gearing, then BNB could reflect a much larger SP relative to its dividends. Not to mention that they are re-engineering their business model to be much safer and viable and regaining their brand back, and they are certainly still pulling in some huge and successful deals. So I guess what I am saying is that probably over the next two years I think, and hope for investors sake, that BNB could be back up to double digits. We all know that some of the share price pounding was the hedge funds pounding the stock - but yes they were taking advantage of investor sentiment (and fear) related to BNB, but this is artificial price manipulation over and above what would have been natural. The reality is that if it wasnt for this, BNBs SP would have taken a beating sure, but the companies viability wouldnt have come into question (and thereby cause this snowball affect) - and to be honest Im not sure it has. It still has bank support...... so as long as it can still pull in the deals and make money, as long as it has a Net Asset (currently 2.5B, market cap 350m) why would the banks demand? Just some more of my thoughts now the environment has changed a bit once again overnight.





BNB in its current form is toast. It might avoid outright bankruptcy but it just can't survive as is. The business model is shot and they are currently in asset sale mode at the worst possible time. Claims of share price manipulation are simply ridiculous. The market has sniffed out that this company is largely a smoke and mirrors operation based on cheap credit and ever rising asset prices. That environment has evaporated and will not return in the short to medium term.  

Sure speculators can make a buck here and there trading the swings but why any investor would want to buy this for their long term portfolio is beyond me.


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## psychic (20 September 2008)

Long-term its a good buy at current levels.  BNB listed on the market back in 2004 at $5.00, rode the bull market up to $32 and has now crash in a bear market.

Those that buy blue chips stocks in a bear market and sell at the end of a bull market stand to gain the most

The next bull market will eventually kick off and history will repeat itself.


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## psychic (22 September 2008)

Some impressive breaking news over the past 3 days makes BNB a very strong investment choice.

* A US 700 billion bail-out
* Global leaders now talking about major bail-outs (worldwide)
* Total ban on short selling
** A short-cover rally must, I stress must, take place now*
* A continued US rally into Friday night
* BNB is very much oversold on fear


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## johenmo (22 September 2008)

psychic said:


> Some impressive breaking news over the past 3 days makes BNB a very strong investment choice./
> 
> 
> 
> ...


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## psychic (22 September 2008)

The way I see it as these sorts of buying opportunities come once in a lifetime on blue chip stocks, those that bought up late last week on BNB lows(me included) will make significant gains within days/weeks.

So much happend over the weekend for BNB to stay at these low levels.  Massive global changes are being executed which will have significant impact for BNB holders.

BNB invested in a high risk market and paid way too much for some of its assest.  Banks will soon start lending again and BNB will be able to off-load some of its assest to new investors.  These assest inluding houses in the US and Europe.


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## johenmo (22 September 2008)

psychic - If I was trading then I'd agree re days.  Just today's price is a good %.  Since my time frame is longer than yours (not trading) I guess we're looking for different things.  

But people have doubts about the bailout.  
https://www.aussiestockforums.com/forums/showthread.php?t=12498
Market uncertainty has driven it down and it's still volatile.  Learners like me have to watch and learn for a while.

Good luck.


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## prana (22 September 2008)

Have I got this right? BNB asked ASIC to check who's been down ramping the business **cough**dhukka**cough** and saying it won't survive through the week. And ASIC has turned around and pointed at Macquarie ?



> "On Wednesday, ASIC said it was looking into alleged false rumours about a number of companies, naming Macquarie. "Pushing false rumours designed to harm a company, such as by forcing a share price down, is illegal," it said."




That's a big allegation by ASIC against Macquarie. If that's the case, maybe Macquarie is thinking of buying up BNB and so downramping it ? lol Funny games at play.


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## chops_a_must (22 September 2008)

psychic said:


> Long-term its a good buy at current levels.  BNB listed on the market back in 2004 at $5.00, rode the bull market up to $32 and has now crash in a bear market.
> 
> Those that buy blue chips stocks in a bear market and sell at the end of a bull market stand to gain the most
> 
> The next bull market will eventually kick off and history will repeat itself.



This is simply floored thinking.

Every business cycle sees blue chips come and go.

In order for a new bull market to kick off, new businesses and business models have to come into play, and old ones get shoved off.

If you are into that sort of strategy, you'd be looking at the level of businesses below to get into.

Anyway, I did some price targets for BNB some time ago that came back negative. I don't think it can survive.


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## Nicks (22 September 2008)

prana said:


> Have I got this right? BNB asked ASIC to check who's been down ramping the business **cough**dhukka**cough** and saying it won't survive through the week. And ASIC has turned around and pointed at Macquarie ?
> 
> 
> 
> That's a big allegation by ASIC against Macquarie. If that's the case, maybe Macquarie is thinking of buying up BNB and so downramping it ? lol Funny games at play.




Ive always thought Maquarie is dodgy. I tried to get some put options on them the other week at $48 but missed out. Im suprised they have not collapsed. They seem to me to be a lot more into the asset revaluations in the bull market than anyone else. I still think its only a matter of time. These assets must be getting lower than their geared against by now.

BNB however I think has potential and are doing the right moves to correct what needs correcting. Their only mistake, unlike Maquarie, is that they are being very transparent and open about what is going on. Personally I thnk it is a good chance at recovering strongly. It has the deals and income comging in. It just needs to gear down a bit, which it is doing, and maintain the banks support - which it has. Once the confidence comes back in again to BNB and the dividend starts flowing, people will see it as another Westpac that has rebuilt and learnt. Its probably going to be safer in the future than ever. And there is a market for an Investment bank like BNB, hence why it is still pulling in the deals which once they start paying off, things will turn around.  Anyway these are just my thoughts and of course I dont claim to be right.

Prana - do you disagree with Dhukka?


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## Julia (22 September 2008)

chops_a_must said:


> This is simply floored thinking.



Chops, given your propensity for criticising others on this forum, you may like to take another look at the above, perhaps?


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## chops_a_must (22 September 2008)

Julia said:


> Chops, given your propensity for criticising others on this forum, you may like to take another look at the above, perhaps?




I'm more than happy for people to take me to task.

The ideas around market leadership as expressed above are simply wrong on the broader scale.


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## Julia (22 September 2008)

chops_a_must said:


> I'm more than happy for people to take me to task.
> 
> The ideas around market leadership as expressed above are simply wrong on the broader scale.



You have missed the point.   Don't you find anything wrong, if you stop to think about it, with *"floored"*thinking????


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## dhukka (22 September 2008)

psychic said:


> The way I see it as these sorts of buying opportunities come once in a lifetime on blue chip stocks, those that bought up late last week on BNB lows(me included) will make significant gains within days/weeks.
> 
> So much happend over the weekend for BNB to stay at these low levels.  Massive global changes are being executed which will have significant impact for BNB holders.
> 
> BNB invested in a high risk market and paid way too much for some of its assest.  Banks will soon start lending again and BNB will be able to off-load some of its assest to new investors.  These assest inluding houses in the US and Europe.




The problem is that BNB was only ever a blue chip in drag. They got on board the cheap credit, leverage to the hilt model and it worked wonderfully whilst asset prices were going one way.  However that evironment has effectively come to an end for the short to medium term. GS and MS represent the most successful at this game and but as of today they have essentially admitted that they cannot continue in their current form and are converting to bank status. 

BNB dooes not have the same level of leverage but they suffer similar problems. Reducing leverage and significant asset sales are the only way they can survive. Nothing has fundamentally changed in the last few days to change that.


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## Bin57again (23 September 2008)

Psychic
Good pick. Soooooo obvious now that BNB would benefit from the short covering. You should be proud of yourself for being so strong in your opinion. Alas, I didn't have that foresight (didn't see your post until now). I hope you made a fine profit.
As a relative newbie (trading about 4 yrs) I'm still learning some of these tricks...
Bin


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## prana (23 September 2008)

Nicks - no, I don't disagree, it's not my place to agree or disagree. It is an observation, and I'm open minded to all these sentiments before me. I just quoted him because he was saying exactly what BNB was approaching ASIC with, not singleing anyone out for any negativity. 

Happy investing all  

But based on the overall almost overwhelming negative sentiment, I'll be taking action on this one too.  :    love net forums ....


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## sparc (23 September 2008)

There has been alot of high volume transactions lately on this stock, assuming the markets become stable, BBI would be an attractive acquisition targert given the sp and assets it has.

interesting to hear others comments.


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## Pingu (24 September 2008)

prana said:


> Have I got this right? BNB asked ASIC to check who's been down ramping the business **cough**dhukka**cough** and saying it won't survive through the week. And ASIC has turned around and pointed at Macquarie ?
> 
> 
> 
> That's a big allegation by ASIC against Macquarie. If that's the case, maybe Macquarie is thinking of buying up BNB and so downramping it ? lol Funny games at play.




Umm I may be wrong but what I understood from this announcement is that the ASIC was looking into false rumors about Macquarie, namely the story in the Australian about them having problems refinancing a $5 billion loan.

Also, an interesting alternative to BNB is their $100 notes (BNBG).  They are currently trading at around $24 (I got them last week at $14, although they went as low as $10).  If BNB survives these notes are repayable in 2015 and in the mean time they pay interest at the rate of around 10%.  You can also convert these to BNB shares around 2010 (at $100 per note and market rate for BNB shares minus about 2.5% discount).  So from my understanding, if BNB doesn't go bust these have to be paid out... and if it does go bust these rank above shares anyway, so if they don't get paid out in full, the shareholders will receive nothing.


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## Nicks (25 September 2008)

Seems there is a recovery of BNB going on. Each and every day it has been steadily moving up 15-50%. At this stage it seems to be moving up much the same way it moved down. 

I cant help but wonder if the ban on short selling, position covering and the realisation that a large part of the reason this stock was driven down by fear rather than fundamentals and short selling. Sure the fundamentals were not doing so well, but it was the sudden sheer fear and panic that has hammered it. Now that this has settled and the short selling is gone, I cant help but hypothesise if the opposite will now occur.


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## milky (25 September 2008)

hi all,
i tend to agree with you nick.
i look at bnb in a somewhat similar vain as aristocrat (all) a few years ago.
nearly colapsed , but pulled it's way out with change of management.
thou if bnb assets keep falling it will be another matter.
cnp is another one in a similar plight.
drivin down by the large bankers to a point they may buy it at a fire sale , or make more on refinancing the loans !


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## Nicks (25 September 2008)

Yep I think the exact same fear and panic that had people running for exit with BNB will also have them buying in now for fear and panic that they dont miss out on some massive gains, as we have seen in the last few days. 

This same panic buying could see BNB shoot up just as ridiculously as it went down. It would be an intesreting case study!

I mean, we all sit here thinking... circkey should I get in and buy some. There is only so many 15-50% gains in a row we see before we think we are missing out. Then we all jump in and the situation invents iteslf.


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## adobee (25 September 2008)

Well its definently shooting up !!!
about 2million buyers and 400k sellers up 40% to around 2.4 .. i jumed on at 1.40 a day ago... i think alot of being will start dumping though soon ..


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## adobee (25 September 2008)

If only I had bigger balls I would have bought heaps and i could dump now and go and by my new car !!!!!


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## adobee (25 September 2008)

Okay.. So I am in BNB deep now.. 
At $3.50 I will be buying a sports car for my girlfriend ..
At $2.00 I will be selling my car..

I am relying on approval of US / world wide rescue fund and australian banks having access to funds ...


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## Pingu (25 September 2008)

adobee said:


> Okay.. So I am in BNB deep now..
> At $3.50 I will be buying a sports car for my girlfriend ..
> At $2.00 I will be selling my car..
> 
> I am relying on approval of US / world wide rescue fund and australian banks having access to funds ...




lol... I sold mine yesterday and am kicking myself today.  Oh well.  At least I still hold the BNB notes (BNBG) with a face value of $100 (currently ~$30) so hopefully will make a good profit off those (got them at $14)


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## adobee (25 September 2008)

has it gone into  a trading halt !??!?
pleaseeeeeeee announce somthing big !!! know my luck it is probably a change in holdings for a director ... have to wait and see and nothing is up on my screen yet !!!


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## hsv2001 (25 September 2008)

It went into halt due to a asx price query, there is rumours of BNB being bid on at $2.50 ps by a european company, BNB however is unaware of this.

Marc


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## adobee (25 September 2008)

Is the Company aware of any information concerning it that has
not been announced which, if known, could be an explanation for
recent trading in the securities of the Company? Please comment
on the rumour of a $2.50 per share bid for the Company by a
European interest.
*No, the Company is not aware of any such information nor is the
company aware of any basis for such a rumour.*

Damb the rumour  I heard it was $3.50 takeover !!


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## brettc4 (25 September 2008)

If it later comes out that B&B had been in discussion or wasw approached about a potential sale/merger and hace told the ASX nothing is going on, what sort of action can, or would be taken against them.

It seems that anyone who is being pursued says nothing is going on during prelim discussion, but someone out there is making big money on it, and as such, I think the company should be upfront about it, and put everyone on an even playing field.


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## Pingu (26 September 2008)

FYI in the event of a takeover offer, if the offer is for the whole company (not just say 40%) and the board recommends it note holders (BNBG) can request exchange of there notes.  If there is an offer and the offering party gains over 50% of BNB then note holders can also request exchange.

Given todays price for the notes (~$33) if there is a takeover (or just an offer recommended by the board for the whole company) the notes effectively triple in value.


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## Nicks (26 September 2008)

adobee said:


> Okay.. So I am in BNB deep now..
> At $3.50 I will be buying a sports car for my girlfriend ..
> At $2.00 I will be selling my car..
> 
> I am relying on approval of US / world wide rescue fund and australian banks having access to funds ...




Wow you are crazy! Buy it for yourself. Looks like the panic buying on BNB is kicking in. I think people are betting on this returning to its $10+ fair value now that shorting is out of the equation.


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## adobee (26 September 2008)

at $3 we were getting close to a 'corrolla'

I think it will die back a bit now to lunch as there will be alot of people who jumped in first thing in panic and then jump out worried it is going to tumble back down.. after lunch i think there could be a few parties starting to accumulate and hold again.. I am not sure of the time frame for US to crunch and finalise the rescue package but if it can come to further fruition today / we will hopefully see the dow jump again tonight leaving us in a good position for the open on monday (by this time i am sure there will have been alot of press and articles in the media about BNB bouncing and its potential to come back and 100% increases which will grab some attention..


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## adobee (26 September 2008)

and now i am getting pumped.. 

going to get some lunch hopefully things will look brighter on my return ! wont look again till 3.45


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## peter g (26 September 2008)

Ive got in today.....it looks like it broke through a ceiling today.  Hopefulley it gets back to $6 as quickley as it fell from 6 to 2.


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## peter g (26 September 2008)

I worked out to attach a chart properly 

 ..............................................................................................         ............................. .......min word count


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## white_goodman (26 September 2008)

this puppy is back down, so much for $6... may give the rest of us a buy opportunity next week........................


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## prana (26 September 2008)

Got out today early today, awesome trade.

I'll get back in again when Julia, Dhukka and Mr_T start singing the "doom & death by next week and suckers rally" mantra's. 



> But based on the overall almost overwhelming negative sentiment, I'll be taking action on this one too.   love net forums ....


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## posh (26 September 2008)

peter g said:


> Ive got in today.....it looks like it broke through a ceiling today.  Hopefulley it gets back to $6 as quickley as it fell from 6 to 2.





I'm new to trading and just happen to have bought this stock today without reading any of the news items 

Peter, how do you know that it broke a ceiling which is set at 2.86 going by your charts?


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## peter g (26 September 2008)

Hi Posh,

Im new as well but i have been recently reading some books and infomation on the internet about stocks and charts.  So if anyone thinks i am giving Posh a bum steer please speak up to help both Posh and myself.  

Anyway basically from August 21 to Sept 10 the price would appraoch the line i added to the chart most days and then retreat. I calld it a ceiling but i think it is more comonaly called resistance. However today it broke through that resistance.

The 2.86 nominated on the chart is just the open price for today it is not necessaryily where my line is.  The thing to notice about my chart is that today was teh fist time the stock traded above that line in a month after the stock tested that resistance/price for some time .

The thing about supports and resistance is the longer they last the harder it is for the SP to break though/fall through. so this particular resistance would be considered pretty weak for a long term trader.

Like Adobe said next week will depend on what happens over the weekend and tonight in the US.


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## posh (26 September 2008)

Yep, I see what you mean. It did however go down some 30c after I bought it today, lol, I might have been a bit too optimistic.


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## posh (26 September 2008)

By the way, is support and resistance generally functional for all stocks? What kind of stocks would you not try it on? The volatile or the less volatile?


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## peter g (29 September 2008)

Thats up to you mate, its all about risk v reward Posh.

Hey Adobee what do you think will happen today?

That announcement from Paulson in the US sounds like an agreement will be met today.  

Im thinking today is going to be good for BNB.  We will see.


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## adobee (30 September 2008)

i cant believe i went to bed having seen the announcement on the news an agreement had been reached and Obama saying he had pushed the critical parts and then bang i am worken up to "no deal"..

considering how much bnb got smashed this morning and the fact that there are still buyers now down 9-15% i am optimistic..

i am holding.. why i am not sure.. but hoping something good will come out of it.. at this stage to me it doesnt look like its all over yet.. compared to the american banks which have just been knocked out in a night bnb seems to have some resilliance..


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## abc (2 October 2008)

BNB share price went down again today. where is the price going to move tomorrow? 
I bought some more Today .  I am trapped deeply in BNB now.


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## posh (3 October 2008)

Our darling has made it into the top 5 most popular buys YESTERDAY (2nd Oct) according to Commsec Most Popular Stocks, with a turnover volume of 11,993,936.


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## abc (3 October 2008)

posh said:


> Our darling has made it into the top 5 most popular buys YESTERDAY (2nd Oct) according to Commsec Most Popular Stocks, with a turnover volume of 11,993,936.




Does that mean the price will go up? what is the probability of the firm going into liquidation?


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## oldblue (3 October 2008)

abc said:


> Does that mean the price will go up? what is the probability of the firm going into liquidation?





All it means is that there were a lot of holders selling and a lot of buyers ( or a few big ones? ) prepared to buy.
Note that the SP is still in a downtrend. Anything else would be a guess on my part.


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## Sarahbne (3 October 2008)

posh said:


> Our darling has made it into the top 5 most popular buys YESTERDAY (2nd Oct) according to Commsec Most Popular Stocks, with a turnover volume of 11,993,936.




It may have been in the most popular buys, however there were still more sellers than buyers. When most investors are holding off buying until there is a definitive verdict on the bailout package, it doens't take a large volume of buys to make it in commsec's top 5


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## sammy84 (10 October 2008)

Hi all

Could anyone explain to me the price movement of BNB in the last week? It seems as though the stock has been pretty resilient by staying around the $1 mark, when considering some of the large drops the market has taken in general. Could this mean that more investors are becoming optimistic about the firms prospect of survival?


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## jetblack (10 October 2008)

Yes, BNB was resilent to the market today. I guess in times like these you could assume a number of things.

Could it be accumulation because it is under valued or possiblly a take over target.??
Or 
Could it be a carefully orchestrated move to relieve large holdings from the company without spooking the share price?

In the end you make the decision if you perceive it to be good value in light of the current economic conditions or an old debt ridden dog that has had its day in the sun.

I have no idea, I only wrote this because I felt like it.

I have no postion in this stock


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## sammy84 (11 October 2008)

Thanks Jet Black, good to get another opinion on what is happening here. The price rebounded strongly on take over whispers only a few weeks ago, and considering the current movements in the price I am starting to believe that obviously some still believe this might happen. Or maybe this is what I am hoping


----------



## cridstar (11 October 2008)

Definitely just a hope, no rebound in sight on this junk stock unfortunately.  Got out at $2.50.


----------



## sammy84 (14 October 2008)

One of the largest gainers on the share market in the last 2 days and not a word. Doesn't look like ending either, there was alot if support even as the asx was losing ground in the later stages of the day.


----------



## Logique (17 October 2008)

BNB is one of the most intriguing stocks on the market. It trades big volumes and has been bouncing back up off recent lows. The share price is so far off it's recent highs it's not funny. That rumour of a 2.50 buyout is obviously still in peoples minds. Watching BNB very closely.


----------



## hardcoremike (19 October 2008)

I've come across Babcock and Browns hybrid notes. The code is : BNBG and is currently trading for $20~. From what I gather the interest rate is roughly around $8 per annum with a face value of $100 and there is a reset day of nov 15 2010.


not sure if i'm understanding the concept of hybrids correctly, at the moment it will pay $8 per annum and until 2010 comes in which it will exchange $100 worth of BNB shares for each note .

is that correct?

Cheers


----------



## Mr_T (19 October 2008)

I'm considering starting a web page devoted to the Great Phil Green. Basically, it will consist of taking quotes of his when he was CEO of BNB and comparing them with reality. Letting viewers judge the integrity and competence of this man.

Any thoughts? Would it also be useful to cite some studies showing personality differences between siblings? I raise this point in light of the fact that Phil's brother, Max Green was a embezzler (I mention his story in previous points of mine).


----------



## lcl999 (19 October 2008)

hardcoremike said:


> I've come across Babcock and Browns hybrid notes. The code is : BNBG and is currently trading for $20~. From what I gather the interest rate is roughly around $8 per annum with a face value of $100 and there is a reset day of nov 15 2010.
> 
> 
> not sure if i'm understanding the concept of hybrids correctly, at the moment it will pay $8 per annum and until 2010 comes in which it will exchange $100 worth of BNB shares for each note .
> ...




Yep, $20 buys you $116 over the next two years. Provided BNB doesn't find some way to reneg. Buy, and you may end up like the holders of AHUGA.
Take care.


----------



## forfunsake (20 October 2008)

With the BNBG, I understand that if there is a takeover bid that these must be paid out. That would mean that you wont have to wait until Nov 2010 to benefit the $100 return.


----------



## lcl999 (21 October 2008)

Re BNBG I haven't read the prospectus (not sure where to find it) but "reset date" usually means the date at which the interest rate is reset. Usually according to some formula such as inter-bank plus x percent. It may, or may not, be convertible at the holders option on that date. Perhaps just the issuers option.


----------



## YELNATS (21 October 2008)

lcl999 said:


> Re BNBG I haven't read the prospectus (not sure where to find it) but "reset date" usually means the date at which the interest rate is reset. Usually according to some formula such as inter-bank plus x percent. It may, or may not, be convertible at the holders option on that date. Perhaps just the issuers option.




Try this link:

http://www.babcockbrown.com/bnb-investor-information/bbsn-subordinated-notes.aspx

According to the prospectus,

Quote

Reset Date
The first Reset Date is 15 November 2010.
Reset of terms On each Reset Date:
Babcock & Brown may change certain terms of BBSN (BNBG) including:
• the next Reset Date, provided that each Reset Date will be no less than 12 months after the immediately preceding Reset Date and will also be an Interest Payment Date;
• the Exchange Discount;
• the Market Rate (including from a floating rate to a fixed rate);
• the Margin; and
• the Interest Payment Dates

Unquote

Note as per BNB's last announcement
Quote
The interest rate for subsequent periods until the first reset date (15
November 2010) will be based on the Australian six month bank bill swap
rate plus a margin of 2.20% per annum.
Unquote


----------



## YELNATS (21 October 2008)

Further, as per BNB's 27/09/06 ASX release:

Quote

Under the BBSN terms of issue, investors have the right to request an
exchange of BBSN into ordinary shares in Babcock & Brown in a number of
circumstances, including at reset dates and at maturity. On receipt of a request to exchange, Babcock & Brown may choose whether to exchange, repay or resell the relevant BBSN.
Babcock & Brown’s decision on whether to exchange, repay or resell the
relevant BBSN will depend on a range of factors including Babcock & Brown’s
equity and debt position at the time, the opportunities for expansion of our
business and our assessment of the optimal financing sources available to
Babcock & Brown at that time. In the event of exchange, Babcock & Brown
ordinary shares will be issued to investors at a discount of 2.5% to the average market price on the terms set out in this Prospectus.

Unquote


----------



## abc (22 October 2008)

will the company pay the interest to BNBG holders next month? I just bought some BNBG. 

any ideas? 
thanks


----------



## YELNATS (22 October 2008)

abc said:


> will the company pay the interest to BNBG holders next month? I just bought some BNBG.
> 
> any ideas?
> thanks




Yes, as per BNB's May 15 ann,

Quote
Babcock & Brown (ASX: BNB), today announced that the record
date for the next Babcock & Brown Subordinated Note (ASX: BNBG)
interest payment, to be made on 17 November 2008, is 10 November
2008 and the interest rate will be 10.1400%.
This equates to $5.1672 per subordinated note.
Unquote

I understand the "ex-div" date is Nov 3.


----------



## gimmster (22 October 2008)

hardcoremike said:


> I've come across Babcock and Browns hybrid notes. The code is : BNBG and is currently trading for $20~. From what I gather the interest rate is roughly around $8 per annum with a face value of $100 and there is a reset day of nov 15 2010.
> 
> 
> not sure if i'm understanding the concept of hybrids correctly, at the moment it will pay $8 per annum and until 2010 comes in which it will exchange $100 worth of BNB shares for each note .
> ...






lcl999 said:


> Yep, $20 buys you $116 over the next two years. Provided BNB doesn't find some way to reneg. Buy, and you may end up like the holders of AHUGA.
> Take care.




As yelnats noted


> The interest rate for subsequent periods until the first reset date (15
> November 2010) will be based on the Australian six month bank bill swap
> rate plus a margin of 2.20% per annum.



which means the interest rate (and thus income) will fall if/as the swap rates fall.

AFAICT - It won't exchange the notes for shares until expiry which is 15/11/2015

General info on this type of note is at http://www.asx.com.au/asx/markets/displayInterestRateSecurities.do#convertnotes

I'm hopeful, I have a *very* small number of these notes, but it's still a risk in the present environment.


----------



## YELNATS (22 October 2008)

gimmster said:


> which means the interest rate (and thus income) will fall if/as the swap rates fall.




That's correct, in fact the 6 months bank bill swap rate has fallen to about 5.39% as of today (from about 6.8% at the beginning of October).

see http://www.nabcapital.com/bondcreditmarkets/bankbills/BankBills.aspx

This means based on today's rate, the annual return is around 7.6% (5.4% + 2.2% margin) or 3.8% half-yearly.


----------



## lcl999 (23 October 2008)

YELNATS said:


> Further, as per BNB's 27/09/06 ASX release:
> 
> Quote
> 
> ...




I draw your attention to "Babcock & Brown may choose whether to exchange, repay or resell the relevant BBSN." especially to the option to *resell* the notes. 
Does this mean that B&B can resell the notes at way below par and pay the old holder the proceeds as full settlement? If so, you might still only get $20 each for them.


----------



## posh (10 November 2008)

surprised nobody has said a word here about this stock. the commentary in the other forum has gone up to sky height following today's news release and here, silence... does nobody hold this stock anymore?


----------



## sjx (10 November 2008)

posh said:


> surprised nobody has said a word here about this stock. the commentary in the other forum has gone up to sky height following today's news release and here, silence... does nobody hold this stock anymore?




I would have thought that most may did in fact sell back when disaster struck BNB.. I certainly did

Bought back in today



It did indeed gain much attention on other forums and I am also surprised it hasn't received much attention on ASF today.


----------



## bluey (11 November 2008)

Got burnt pretty badly on BNB's monumental fall..

Right now 55c.. seems very tempting.. but don't want to play with fire again!

Is anyone buying into the stock today?


----------



## sammy84 (11 November 2008)

bluey said:


> Got burnt pretty badly on BNB's monumental fall..
> 
> Right now 55c.. seems very tempting.. but don't want to play with fire again!
> 
> Is anyone buying into the stock today?




I played a few weeks ago with bnb when they were around the 80c mark and was rewarded very nicely. I'm not sure if I am as gutsy this time. The support doesn't seem to be there. BNB used to correlate nicely with the market movements, only at a larger BETA, this is no longer happening. It is hard to support a stock when now all the other debt ridden stocks are finally succumbing and going into receivership.

Its sad as BNB has served me well in the past.


----------



## dhukka (11 November 2008)

posh said:


> surprised nobody has said a word here about this stock. the commentary in the other forum has gone up to sky height following today's news release and here, silence... does nobody hold this stock anymore?




You only need look back a few pages to understand why, the opinion was overwhelmingly bullish on this stock, I'd say the lack of commentary has to do with shock by those that hold. No doubt they'll be back when the stock starts to rally telling everyone what a wonderful blue chip company this is. 

I'll reiterate my comments again on this smallcap specy:



> The problem is that BNB was only ever a blue chip in drag. They got on board the cheap credit, leverage to the hilt model and it worked wonderfully whilst asset prices were going one way. However that evironment has effectively come to an end for the short to medium term. GS and MS represent the most successful at this game and but as of today they have essentially admitted that they cannot continue in their current form and are converting to bank status.
> 
> BNB dooes not have the same level of leverage but they suffer similar problems. Reducing leverage and significant asset sales are the only way they can survive. Nothing has fundamentally changed in the last few days to change that.


----------



## M34N (11 November 2008)

dhukka said:


> You only need look back a few pages to understand why, the opinion was overwhelmingly bullish on this stock, I'd say the lack of commentary has to do with shock by those that hold. No doubt they'll be back when the stock starts to rally telling everyone what a wonderful blue chip company this is.




I agree dhukka, after seeing the collapse of Allco and ABC, both which relied so much on credit, why anyone would hold BNB still is beyond me. What positive is there for this company that anyone can state at the moment? I wonder how long before Ms. Nosworthy makes them file for bankruptcy, she has a good history in that field.

What's it going to take for people to finally get off this sinking ship?


----------



## johenmo (13 November 2008)

I interpret this to say that unless they manage to sell a few things then they are in a really tight spot.  Am I reading this right?

DISC: i have a few which are beig treated as a case study.  I will laugh in a few years, whilst I cry now.....................  (takes shares form bottom drawer and puts them under the house, as he figures that's lower than bottom drawer. LOL)


----------



## Struzball (13 November 2008)

How could they not be bankrupt already?

They've lost 98% from of their highs and they were leveraged to the eyeballs.  

If it were me and I lost 98% of my asset value and had loans to pay I think I'd find the nearest window.  How can they continue to trade?


----------



## Mr_T (14 November 2008)

Struzball said:


> How could they not be bankrupt already?
> 
> They've lost 98% from of their highs and they were leveraged to the eyeballs.
> 
> If it were me and I lost 98% of my asset value and had loans to pay I think I'd find the nearest window.  How can they continue to trade?




More to the point, how does society allow a man like Phil Green to continue to live a life of luxury whilst the company he was CEO of has lost 98% of its value? 

Uncle Phil has very much contributed to debunking the myth that if you pay high amounts for a CEO you get quality talent. He is a narcissistic tosspot, Australia should be ashamed of itself for allowing him to keep his riches.


----------



## YELNATS (14 November 2008)

M34N said:


> I agree dhukka, after seeing the collapse of Allco and ABC, both which relied so much on credit, why anyone would hold BNB still is beyond me. What positive is there for this company that anyone can state at the moment? I wonder how long before Ms. Nosworthy makes them file for bankruptcy, she has a good history in that field.
> 
> What's it going to take for people to finally get off this sinking ship?




The thing is, holders have lost so much already, there's not much more to lose.

So you might as well hang on to what little you've got left and pray for some sort of recovery.


----------



## johenmo (15 November 2008)

YELNATS said:


> The thing is, holders have lost so much already, there's not much more to lose.
> 
> So you might as well hang on to what little you've got left and pray for some sort of recovery.




So true.  Sad, but so true.  And I'm one.

*New definition of a masochist:  A long term BNB shareholder............*

I'm just thankful I'm just starting out and I only got my toes in the water before getting bittten.  Could have have been the whole leg!!! LOL


----------



## skyQuake (16 November 2008)

Assuming G10 doesn't screw things up (and the gap is not too big), we could see a decent long daytrade on monday morning...


----------



## dhukka (19 November 2008)

For those paying attention it was obvious that BNB was a piece of junk before S&P decided to downgrade it to a BB- credit rating. However after today S&P has drvien BNB further into junk status by giving BNB the highest risk rating they can possibly get without being in default. Only a matter of time before they go under IMO. 



> *B&B International Ratings Lowered To 'CCC+/C' On Restructure Plans; Stay
> On CreditWatch Negative*
> 
> Melbourne, Nov. 19, 2008””Standard & Poor's Ratings Services said today that it had lowered its long-term issuer credit rating on Australia-based Babcock & Brown International Pty Ltd. (BBIPL) to 'CCC+' from 'BB-', reflecting the financial challenges faced by the company, which were highlighted in the restructure announcement today. At the same time, the short-term rating was lowered to ‘C’ from ‘B’. The ratings remain on CreditWatch with negative implications, where they were initially placed on Nov. 10, 2008.
> ...


----------



## Mr_T (20 November 2008)

Is this the end for BNB?

Maybe yes, maybe no.

One thing for sure. Whether it is or isn't, that arrogant, lying tosspot Phil Green will continue to live a life of luxury in his Sydney mansion.

There is zero justice in this world.


----------



## johenmo (20 November 2008)

Business Spectator - 20 Nob 08
Babcock's best offer

The choice facing the 25 banks owed $3.1 billion by Babcock & Brown is either to accept the restructuring proposal put forward by the company or wait for the facility to default and opt for accelerated repayment.

This choice was made clear on Tuesday night when the company held a conference call with its bankers and told them because of deteriorating asset values it would find it difficult to meet the interest coverage ratio under its facility. 

Declining asset values affect interest cover because impairment charges go through the profit and loss account and reduce the amount of income to cover interest payments.

The banking syndicate, which is led by Bank of Scotland and includes the big four Australian banks, were not asked to take a haircut on their loan. 

However, it was made clear to them that unless they agreed to revisit the various default and review covenants in the loan to Babcock & Brown International Pty Ltd, there would likely be a default. 

A default would provide the trigger for the banks to demand accelerated repayment. It would also have dire implications for the holders of $600 million in subordinated notes, staff, other creditors and shareholders. 

A demand for accelerated repayment of the debt would almost certainly mean Babcock & Brown would not be able to meet its debts as they fell due. Directors would have to call in administrators. That would be followed by the appointment of a receiver by the banks.

The collapse of Babcock & Brown, which had total liabilities at June 30 of $11.5 billion, would be extremely messy and stretch out for years. It is a far more complicated and much larger business than Allco, which is causing nightmares for its receivers and administrators.

The insolvency of Babcock & Brown would immediately terminate the management agreements with various listed and unlisted funds thus destroying hundreds of millions of dollars in value.

Putting the company under would not speed up the sale of various real estate and leasing assets that have been frozen by the dislocation in the global financial markets and the likely vulture like behaviour of the potential buyers. 

The collapse of Babcock & Brown would not facilitate the early repayment of $400 million owed to the company by Babcock & Brown Power, which is currently up for sale. 

Pulling the plug on Babcock & Brown would be unlikely to generate renewed interest in the hidden assets locked up in the listed funds which are all trading at large discounts to net tangible assets. And it would not do much for the value of Babcock & Brown's investments in the listed funds. 

The alternative to these unpalatable outcomes is for the bankers to put their trust in the new chief executive Michael Larkin and his ability to deliver on a pretty radical restructuring plan. 

Larkin has done a backflip since August and now says Babcock & Brown should get out of real estate and operating leasing. The core business will be infrastructure financing. 

The payoff for the banks is that Babcock & Brown will repay $1.2 billion of the $3.1 billion corporate facility by April 2011 when it was due to be rolled over. 

Larkin argues there is no point trying to sell assets when no one is buying just to meet loan covenants that have no bearing on the company's ability to meet its interest payments. 

The share market reaction to the Larkin proposal was logical. Babcock & Brown shares fell to reflect the fact the company is anticipating severe impairment charges in the six months to December. 

Larkin and his team can see from announcements made by others and by looking at their own valuations that asset values have to come down. 

For example, anyone wanting a realistic assessment of the deterioration in the aircraft leasing market need only look at the two recent announcements to the New York and Singapore stock exchanges by Babcock & Brown Air and Babcock & Brown Global Investments. 

The coming balance date will not only be a trigger for big write-downs at the Babcock mothership. Virtually all the Babcock listed funds are headed the same way judging from the huge differences between their share prices and net tangible assets. 

Larkin wants to ring fence Babcock & Brown's investments in the satellite funds from the banks as part of his plan to shrink the company down to an infrastructure financier and manager. The banks may have other ideas. The stakes held in nine different listed funds are worth about $140 million at current prices.

If Babcock & Brown's bankers agree to restructure the $3.1 billion facility in way that involves accelerated repayment, capitalised interest or a forced reduction in the principal, then ratings agency Standard & Poor's will regard this as a payment default. 

At this stage S&P has cut the rating on Babcock & Brown International Pty Ltd from BB minus to CCC plus with credit watch negative. This means the debt is “vulnerable to non-payment, and is dependent upon favourable business, financial, and economic conditions for the obligor to meet its financial commitment on the obligation.” 

One factor that has shaped S&P's negative view of Babcock & Brown is that the company broke one of the golden rules of the externally managed funds business model when it extended $400 million in loans to Babcock & Brown Power. That loan is repayable early next year.

External managers of infrastructure assets were never supposed to provide financial support for a fund in distress. It was a stated policy of Babcock & Brown that it would not step in to provide financial support to satellite funds. 

The bankers to Babcock & Brown will be conscious of the financial pressures created by the rescue of Babcock & Brown Power. 

As David Bowie sang in "Young American"..it makes you want to "...break down and cry..." if you hold BNB.


----------



## tigerboi (21 November 2008)

tigerboi said:


> very true on this mob,once the dust settles which will be?? there will be opportunities, yep your a lot gamer than me,too risky for my liking as i still think they may be rearranging the deck chairs on the BNB titanic, however they did react swiftly to a possible attack from the long short-short long gang,i would think the sentiment to these types of set ups will see the price head much lower,i reckon they where very lucky they werent among the hit squads early victims, as it gave them much needed time to re-borrow & spread it,interesting to see how they go in the next 3 months...tb






tigerboi said:


> I said last week this was the next house of cards to go & i see they are furiously covering their vunerable arses from the shorters hit squad,they all got the same problem,debt to expand & with the banks wanting the bat & ball back its only a matter of time before they cant take from here to prop up this staple..always very dodgy using debt...




looks like the time is near for this criminal ponzi to go ar5e over as predicted some time ago,next month cnp's turn...still cant fathom why anyone would touch this...tb


----------



## outback (21 November 2008)

1. Ignorance.
2. Following professional advice.
3. Ignorance.
4. Not understanding the company, sector, market.
5. Ignorance.


Well that's my excuse anyway. Fortunately the pride has taken a much bigger dent than the wallet.


----------



## tigerboi (24 November 2008)

*Re: BNB-I HEAR THE FAT LADY NOW*

Gloating over the demise of this mongrel criminal ponzi scheme?you bet i am in the sincere hope all the punters fully understand what these set ups do...FLEECE SHAREHOLDERS nothing less,all you unfortunate people who lost coin on this rubbish should take it as a solid lesson,dont get bitter get better...

stay away from these debt ridden companies...the last time im going give this mob a bagging,asic should put a microscope right up their sphincters  screw them real good like they did to unsuspecting good hard working folk who put money into them...tb




tigerboi said:


> looks like the time is near for this criminal ponzi to go ar5e over as predicted some time ago,next month cnp's turn...still cant fathom why anyone would touch this...tb






tigerboi said:


> very true on this mob,once the dust settles which will be?? there will be opportunities, yep your a lot gamer than me,too risky for my liking as i still think they may be rearranging the deck chairs on the BNB titanic, however they did react swiftly to a possible attack from the long short-short long gang,i would think the sentiment to these types of set ups will see the price head much lower,i reckon they where very lucky they werent among the hit squads early victims, as it gave them much needed time to re-borrow & spread it,interesting to see how they go in the next 3 months...tb






tigerboi said:


> I said last week this was the next house of cards to go & i see they are furiously covering their vunerable arses from the shorters hit squad,they all got the same problem,debt to expand & with the banks wanting the bat & ball back its only a matter of time before they cant take from here to prop up this staple..always very dodgy using debt...


----------



## waz (24 November 2008)

I was doing some quick calculations in my head.

BNB has approx 2500 employess, lets say that each employee earns an average of $1,000 per week. It will actually be more for BNB, im just using 1,000 for ease of calculation.

I also know that BNB pays its employess monthy.
So 2,500 x 1,000 x 4 weeks = $10mil

BNB needs at least 10mil a month to pay its employees. If it does not have this by pay day, then I guess the employees arnt gonna bother to turn up for work.

Once you add in all the other day to day costs of runing a business, office rental, electricity, etc. BNB needs at least $20mil in cash every month to stay alive.

You can see why companies like to pay monthly instead of weekly or fortnightly. Unpredictable CASHFLOW.


----------



## prawn_86 (24 November 2008)

Waz,

BNB recently said they are cutting half their staff. Not sure if it is effective immediately, or if some have already left.


----------



## waz (24 November 2008)

Getting rid of 60% of your staff will have an even greater impact to your short term cashflows.
60% x 2500 = 1500

1500 x redundancy package = A huge amount of money that its lenders also want a piece of.

Even if you take out the contractors, BNB needs at least 30mil to pay its staff out. Thats being conservative.


----------



## webclever (24 November 2008)

BNB ask to withdraw SP&P rating.
Is SP&P rating withdrawal is a good sign that BNB might not survive this year?

In general how important is SP&P rating to the movement of SP?


----------



## drsmith (24 November 2008)

Standard & Poor's has cut BNB's credit rating to CC which is either one or two notches above D. 

I won't say what D stands for but a word containing four letters comes to mind.


----------



## M34N (24 November 2008)

drsmith said:


> Standard & Poor's has cut BNB's credit rating to CC which is either one or two notches above D.
> 
> I won't say what D stands for but a word containing four letters comes to mind.




Dead? : 

It's a bad rating to have irrespective of your business, but to be an investment firm and have that rating is probably the worst combination I can imagine.

I wonder where BNB will go to from here now, is there any hope what-so-ever left? They have to resume trading eventually...


----------



## waz (24 November 2008)

Taken from wikipedia:

The Standard & Poor's rating scale is as follows: AAA, AA, A, BBB, BB, B, CCC, CC, C, D. Anything lower than a BBB rating is considered a speculative or junk.


----------



## johenmo (24 November 2008)

If I could get my hands on my shares in the old fashioned paper format I'd shred them and sell them as kitty litter.  Then they'd be of use. LOL.

wait and see, wait and see....


----------



## Mr_T (26 November 2008)

A valuable lesson from BNB: That the apple doesn't fall far from the tree.

Phil Green's brother, Max Green was a thief who was murdered for his actions.

Phil Green is clearly smarter than his brother. He has managed to run a company in an incompetent, dishonest manner yet he was very generously remunerated.

Moral of the story: if someone in a position of power has a very dishonest relative/s, be very very very careful.


----------



## banska bystrica (26 November 2008)

A scandalous post. Disgraceful. Guilt by blood relations? You need to wake up to yourself and have a think about what you posted.


----------



## Mr_T (26 November 2008)

banska bystrica said:


> A scandalous post. Disgraceful. Guilt by blood relations? You need to wake up to yourself and have a think about what you posted.




I make zero apology for what I have posted.

Phil Green had no involvement in his brother's actions. I do not wish to give the impression he did.

Point is that people in the same family do tend to share similar personality traits. It's not an absolute, it's a tendency. Whether we like it or not that is reality.

Clearly, a lack of integrity is a trait that is common amongst the Green brothers.


----------



## chops_a_must (26 November 2008)

WTF?

That's right up there with the dumbest thing I've read on ASF today. And going through the property thread, that is quite an achievement.

But seriously... my brother has done some seriously dumb things I am appalled about, and I'm sure it's the same in reverse. How the hell can you be responsible for other people's actions, and judged like you have?

Why not lock up the family members of murderers because they all must be murderers?

Absolutely moronic post.


----------



## Mr_T (27 November 2008)

chops_a_must said:


> WTF?
> 
> That's right up there with the dumbest thing I've read on ASF today. And going through the property thread, that is quite an achievement.
> 
> ...



Clearly you are one of those people who can only feel better about themselves by putting others down. 

So let me explain something to you. In simple terms, since that is clearly what you need.

I said there was a tendency for people in the same family to have similar personality traits. I didn't say it was a certainty. I didn't say people should be punished for what others in the family did.

There is a difference between saying

a) A relative of a criminal should be punished for what their relative did (this is NOT what I am saying, as it is clearly morally wrong to do so). 

b) If someone is related to a criminal, some caution is required when dealing with that person as statistically they are more likely to be a criminal than the ordinary Joe (statistically correct).


Understand yet? I don't think you care, you seem to be getting your rocks off abusing me.

If you bother to read some of my past posts, I spent a large amount of time on this forum trying to show people what a dishonestly run company BNB was. I did this when its share price was still $15 or so. If i persuaded even one person on this forum to sell then it was worth the effort.

Now please rack off and take your low self esteem elsewhere, I am not interested in you or your opinion.


----------



## adluroil (27 November 2008)

Mr_T said:


> Clearly you are one of those people who can only feel better about themselves by putting others down.
> 
> So let me explain something to you. In simple terms, since that is clearly what you need.
> 
> ...




Mr T has a good point and also just as a confirmation in some 
 European countries citizens who applied for  jobs in public sevice could only get them if there was no criminal in their family as far back as 4 or 5 generations . This has been long held and proven belief.


----------



## basilio (27 November 2008)

Mr T's kicking of Phil Green because his brother was a crook seems a bit harsh.

But the real point was that BNB was always dodgy as Mr T consistently said. Phil Green as head honcho was responsible for the creative accounting that made BNB look good but then caused its collapse. Perhaps the important point was that Phil was just a little more "legal" than Max. There are many legal crooks around.

The sticking point is suggesting that just because ones relative is crook the rest of the family should be viewed with suspicion. It seems unfair simply because it is. Each person should be seen as a separate, responsible person. In particular if anyone has a close relative who has done the wrong thing "being tarred with the same brush" seems/is ugly. There is no logic- just prejudice. Very hard to  fight against pre-judging or prejudice... 

This becomes particularly poignant when one has a close relation who has fallen foul.

In the end the idea that your life could be constrained or  ruined because some distant relative was crook is just not reasonable. It simply suits a society with strong  lines of people who are "born to rule" and have the capacity to ensure that any black sheep in the family are hidden or denied.


----------



## Mr_T (27 November 2008)

Looks like the BNB boys are using their influence over BBW to make BBW act in BNB's interests rather than BBW's interest.

What a bunch of crooks. Especially frightening is BBW's buying BNB's management rights when they will get them for free if they just wait a few days.

http://business.theage.com.au/business/more-babcock-wind-hot-air-20081127-6jc0.html?page=1

More Babcock Wind hot air


Surprise, surprise, Babcock & Brown Wind shareholders weren't told the truth about why their main European wind farms were put up for sale. Or they weren't told the truth at BBW's AGM yesterday - this is a Babcock and Brown company, so it's hard to be sure where the truth is.

Press coverage of BBW's AGM seems to have been largely written out of BBW media releases and thus doesn't quite tell the full story of this bemusing exercise in backtracking and backside covering, never mind the sudden discovery of very basic corporate governance.

For a start, there was the proposal to increase the share buyback to a massive 30% of the company. Last week I thought I was being a little facetious in suggesting BBW's strategy taken to its logical conclusion would see it disappear up its own fundament in a puff of its own wind (here). Maybe not.

The proposal was passed but some shareholders at the meeting seemed to smell a rat, or at least Babcock and Brown, when they wondered if such a large buyback would mainly be used by substantial shareholders to clear the decks. BNB has 11% of BBW. BNB is desperate for cash. Join the dots.

The current 10% buyback has been spectacularly unsuccessful in supporting the share price, but it did allow Deutsche to unload 17 million BBW securities earlier this week.

Then there was the hilarious haste professed by the board and management to enter into negotiations with BNB to buy BBW's management rights.

Damned if I know why BBW would be in a hurry unless they are so hooked on paying BNB vast amounts of cash, they're desperate for another fix. They only have to wait a day or two for the receivers to arrive at the mothership and BBW should be able to internalise its management much more cheaply. Indeed, some genuinely innovative footwork by BBW's newly-aligned managers could make it free: they could resign en masse from the management company and seek direct employment at BBW.

(One shareholder noted BBW paid BNB $180 million in fees last year - about a third of BBW's current market capitalisation. BBW's independent directors have all the credibility of Babcock satellite company independent directors.).

The wind in Spain

But the bit I would have found particularly galling if I had been a shareholder was the new reasons given for flogging off BBW's Portuguese and Spanish wind farms.
From the announcement in February (in unison with BNB) until yesterday, BBW's board and management have strenuously maintained its policy of "selling the farm to prove the farm was worth owning'' was all about "demonstrating and capturing'' the unrecognised value of BBW's assets.

But when quizzed by a shareholder about why they were selling off such good assets - selling the things investors had bought into BBW to own - BBW came up with entirely new reasons.

Now BBW says the Spanish wind farm operation is a dog - a low-yielding asset that didn't produce and economic return. That's a little at odds with the glowing picture painted in previous reports. I'm not sure it was the smartest thing to say when the sale hasn't settled yet.

And there was an entirely new story on the Enersis Portuguese operation owned 50/50 with the collapsing BNB.

As I've suspected from the outset, rather than being about "demonstrating and capturing value'', there was a hidden agenda that involved BNB.

CEO Miles George (an employee of BNB, at least for the time being) admitted Enersis was a "good asset'' but it "had some other difficulties for us''.

Three options

Turns out what really drove BBW's decision to sell was BNB's need to sell its half. George told the meeting that BNB's move meant BBW had three options: sell out as well, remain at 50%, or move to 100%.  

The 50 and 100% options would have meant "we were taking on future obligations that in the current environment we didn't think were prudent''.

So that's why BBW sold the best performing asset in its portfolio - because BNB was selling. The "future obligations'' weren't spelt out, but this is a Babcock satellite.

What also wasn't spelt out was what "certain assets'' BBW is currently negotiating in great haste to buy from BNB. My general observation is that you can generally pick up assets from receivers more cheaply but, hey, these are Babcock people.
The meeting's final joke was the enthusiasm of the board and management to be rid of the Babcock and Brown name and for management to be paid by BBW and have their interests "aligned'' with BBW shareholders.  

Well, there's not much point in being paid in BNB shares any more.

As of yesterday BBW has a new independent chairman. Aside from restraining his management from paying BNB any more money, his first duty should be to rid the company of the directors who have been happy to take fees under the Babcock regime and then get BBW to do what it was supposed to do: own and operate a diversified portfolio of wind farms instead of being a reactive and subservient cash cow for a dubious bunch of financial engineers.


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## Mr_T (27 November 2008)

basilio said:


> Mr T's kicking of Phil Green because his brother was a crook seems a bit harsh.
> 
> But the real point was that BNB was always dodgy as Mr T consistently said. Phil Green as head honcho was responsible for the creative accounting that made BNB look good but then caused its collapse. Perhaps the important point was that Phil was just a little more "legal" than Max. There are many legal crooks around.
> 
> ...




I can see both perspectives.

On the one hand, you are right. Everyone is an individual, they should be judged on the merits of their actions, not the actions of others.

On the other hand, reality is reality. And the reality is that relatives do tend to share personality traits. Who would you rather  trust with your money? Take 2 otherwise identical people, with one difference. The first one comes from a family with no history of dishonesty, the second one comes from a family of crooks. I know which one I'd rather trust with my money.

These are complex issues with no simple answers.


----------



## arlee123 (27 November 2008)

Lessons learnt from BNB, cut your loss!!!! I should have cut my loss when BNB is down 10, 20,30% instead of now.....99%......


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## blinkau (27 November 2008)

I luckily cut my losses at $17 when I was down from $23. Not because of my own luck but I purchased more and the lender would offer no further gearing. I looked at the annual report and I couldn't understand it and figured if the lenders wouldn't lend against it then it must be in further trouble then I could see. Lucky otherwise I would have been down from $6k to roughly a few $hundred.


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## basilio (27 November 2008)

> I can see both perspectives.
> 
> On the one hand, you are right. Everyone is an individual, they should be judged on the merits of their actions, not the actions of others.
> 
> ...




Interesting question about comparing people with one coming from a  family of crooks and another a family of cleanskins.

I don't imagine that the Green family situation is as cut and dried as that. Certainly one brother was shown to be crooked and we are suggesting the other is less than squeaky clean. Doesn't really add up to a whole tribe of shonks though which lets down your argument.

Another perception is that perhaps to be brilliantly successful in business you need to be a charming, ruthless, sociopath. Sort of Gordon Gecko character.

In fact we may recognise such characteristics in successful entrepreneurs  and  decide that while they are  potentially ruthless crooks, they are *our* ruthless crooks and that if we go along for the ride we could make a pot of money. Lets think about. Can we easily identify highly successful businessmen who do not have ruthless and perhaps amoral characteristics? Do we have a business culture that would publicly rebuke such a person before the whole ship collapsed? Has it happened yet?

We certainly haven't seen such a culture with the  explosion of  executive salaries in the past 10 years. Maybe its time  to bring up the issue of just what is acceptable in the name of making a profit.


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## drsmith (27 November 2008)

Interesting read regarding how BNB might be able to extract some capital from one of it's children, BBW.

http://business.theage.com.au/business/more-babcock-wind-hot-air-20081127-6jc0.html


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## Mr_T (28 November 2008)

basilio said:


> Interesting question about comparing people with one coming from a  family of crooks and another a family of cleanskins.
> 
> I don't imagine that the Green family situation is as cut and dried as that. Certainly one brother was shown to be crooked and we are suggesting the other is less than squeaky clean. Doesn't really add up to a whole tribe of shonks though which lets down your argument.
> 
> ...





a) I never said the Green family was a "tribe of shonks". I merely said that if one brother is a crook, the chances of Phil being one are materially higher than they otherwise would be. I stand by my comment.

b) i don't agree that we want business leaders to be "our ruthless crooks" They will only be "ours" for as long as it suits them. As soon as their self interest in no longer aligned with shareholders, the shareholders will suffer. Furthermore, there would be a material chance that the amoral character you describe will make decisions that will come back to bite us all, history is full of such examples

We want leaders to have true entrepreneurship, ie actually create something that is useful. Whether that be digging minerals out of the ground, finding new and more efficient appliances/vehicles, etc. A far cry from the financial engineering tosspots who never created a true dollar of wealth in their lives.

Bottom line: Phil Green is a lying, narcissistic, incompetent tosspot. Who has gotten away with it. Some might admire him for this, hopefully most won't.


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## posh (28 November 2008)

People don't seriously think Phil Green is going to get away with making up false company records?
Shareholders or ASIC will bring a suit against him for breach of director's duty and he can be made personally liable in spite of his resignation.
I do, however think that a quick fix would be to do what some US guys did to a Lehman director - use him as a punching bag at the gym.


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## Mr_T (28 November 2008)

posh said:


> People don't seriously think Phil Green is going to get away with making up false company records?
> Shareholders or ASIC will bring a suit against him for breach of director's duty and he can be made personally liable in spite of his resignation.
> I do, however think that a quick fix would be to do what some US guys did to a Lehman director - use him as a punching bag at the gym.



I wish I shared your optimism. But I think that he'll get away with it. He'll hide behind some obscure accounting standard/s, and have enough falsified documents, etc. And frankly, I don't think ASIC will care. They are a government organisation after all.


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## basilio (29 November 2008)

> On the other hand, reality is reality. And the reality is that relatives do tend to share personality traits. Who would you rather trust with your money? Take 2 otherwise identical people, with one difference. The first one comes from a family with no history of dishonesty, the second one comes from a family of crooks. I know which one I'd rather trust with my money




Actually Mr T I was focusing on your suggestion that one would be less likely to trust a person who comes from a  family of crooks rather than one who comes from a seemingly honest background.  Appeared to link with your comments on Phil and Max Green.

Totally agree with the *theory* that we don't want our business leaders to be amoral and/or ruthless crooks. Yes, shareholders and the broader society will get bitten as result of their actions. As the fallout from the current financial crisis unfolds there are more and more examples of the completely shonky practices which fueled the  process. This has particularly been the case with lending practices in America (and probably elsewhere). One of the features has been the intimidation of whistle blowers and refusal by market regulators or the mainstream press to expose the problems  until its all too late. _see below_

I put up the theory of some people attempting to "go along for the ride" with a sharp entrepreneur because in my experience it does happen all too easily. A few years ago for example friends of mine tried to introduce me to PIPS - People in Profit system. It took a millisecond to work out that this was ponzi scheme which promised 2% a day returns, was totally crooked and would collapse.

BUT....but... it worked for a while. Tens probably hundreds of thousands of people put their money in and watched as their online accounts swelled. But what I found interesting was that PIPS continued far longer and with far more success than many similar scams. I suggest it did this because its pitch was so good and the promoters so visible that a number of people joined  thinking they could get in and out  before the inevitable bust.

In a similar vein in a bull market stocks are manipulated and  ramped shamelessly and much of the profit made by individuals and companies has nothing to do with a product but simply the buying and selling of bits of paper.

We do need quality business leaders and excellent products. My question is whether the current structure of our economic system rewards such efforts *by making sure that financial paper shufflers don't end up with the lions share of our money.
*



Sex, Lies, and Subprime Mortgages
The sexual favors, whistleblower intimidation, and routine fraud behind the fiasco that has triggered the global financial crisis 
http://www.businessweek.com/magazine/content/08_47/b4109070638235.htm

PIPS
http://www.quatloos.com/people_in_profit_system_pips.htm

Excellent discussion on PIPS and in particular the psychology of sucking people in to Ponzi schemes
http://www.sitnews.us/0305Viewpoints/032505_david_hanger.html


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## webclever (3 December 2008)

Babcock & Brown secures $200m temporary lifeline
http://www.theaustralian.news.com.au/story/0,24897,24745531-643,00.html

Would this push the SP upward tomorrow?


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## drsmith (3 December 2008)

One thing to consider in trying to answer that question is that the stock has not traded since the current problems with the banking syndicate emerged.


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## fEkuaR (4 December 2008)

Reasonable jump today with the end of the trading halt, what are your thoughts on this company with the announcement of lifeline funding?


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## drsmith (4 December 2008)

I actually thought the share price would go down today as sellers ran for the exit while they had a chance.


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## Logique (6 January 2009)

Does anyone know why BNB this has jumped from .15 two days ago to .38 today, on increased volume. Can't see any announcement there.


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## outback (6 January 2009)

The final twitch of life berfore rigour mortis sets in?

Dunno actually, I'd noticed it, but couldn't see anything either.

At this stage I'd be better off if they did go belly up, then I could claim a loss.


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## deano9801 (6 January 2009)

Found this article? Do you think this could be the reason?

" Babcock Shares Jump on Speculation Banks Agree to Survival Plan "

http://www.bloomberg.com/apps/news?pid=20601080&sid=aAiU.8wHh_cA&refer=asia


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## webclever (6 January 2009)

Another news that might be influencing the stock price. (Long term)
http://www.caller.com/news/2009/jan/05/wind_farms/


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## YELNATS (6 January 2009)

outback said:


> At this stage I'd be better off if they did go belly up, then I could claim a loss.




G'day, I think you'd be better off selling them now, unless you expect the sp to keep improving.

If you sold them on-market at least you could claim the capital loss as CGT relief against some other capital gains, if you have any.

If they go into receivership or administration, it may take years before the company is formally wound up and only then could you claim any CGT relief.

This is problem current holders of AFG Allco like me, have.

This is just my understanding based on a recent conversation with my tax accountant.


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## STYLSH (6 January 2009)

I watched it go up to like 49c and i was like wow whats happening... Then it came tumbling back down very quickly to 36c -ie 2 mins if that.

This does remind me of how it when up from 70c to $2.xx a little while ago.  So hopefully it'll keep this trend so i can make a smaller loss lol.


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## roofa (6 January 2009)

I'd be happy if they got to 70 cents, small gain and out.
I would think the day traders are having a ball with this one at the minute.


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## Family_Guy (6 January 2009)

I had a look at the SP on friday and thought to myself "throw $1k on and sell at a small profit". Missed it yesterday, didnt even look at it and then a mate rang me this morning and told me it was up 50% and there was a possible financing announcement due on Monday or something, so i PLUNGED another $500 on it. Can't wait to it tops a dollar by Monday (wishing). Still......i could have just done dinner for a couple of months too.

Go you good thing.


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## roofa (6 January 2009)

Reply (just released) from BNB to a speeding ticket lets us know that around the 12th of Jan we should have a better idea of the future of this company.


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## Logique (7 January 2009)

http://business.smh.com.au/business/bank-talks-delay-bampb-rescue-plan-20090106-7b57.html

Media report this morning that the rescue plan requires that the banking syndicate accept a debt-for-equity swap.  BNB saying that if this eventuates, general shareholders equity would be significantly reduced.


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## joeyjoejoe (7 January 2009)

Logique said:


> http://business.smh.com.au/business/bank-talks-delay-bampb-rescue-plan-20090106-7b57.html
> 
> Media report this morning that the rescue plan requires that the banking syndicate accept a debt-for-equity swap.  BNB saying that if this eventuates, general shareholders equity would be significantly reduced.





does any1 else think this share will tank 2mrow on the open?

http://business.theage.com.au/busin...cts-substantial-writedowns-20090107-7bw5.html


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## dhukka (7 January 2009)

Given this after hours announcement you would have to think the shares would  come under considerable pressure tomorrow:



> *UPDATE ON FORECAST 2008 FINAL RESULT*
> Babcock & Brown (ASX: BNB) today advises that further to the announcement
> to the market on 19 November 2008, following progress on the asset
> impairment review process for its 2008 full year accounts, it now believes that
> ...


----------



## Aussiejeff (8 January 2009)

dhukka said:


> Given this after hours announcement you would have to think the shares would  come under considerable pressure tomorrow:




LOL.

Nice "trading halt" tactic by BNB to halt the expected run on its SP. With an indicative open price of 20c in Commsec (down about 40%) no surprise really?



aj
(non-holder)


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## Bushman (8 January 2009)

dhukka said:


> Given this after hours announcement you would have to think the shares would  come under considerable pressure tomorrow:




They would've apart from the trading halt called pre-trade. 

BNB have stated that they are 'technically insolvent'. Technically insolvent, huh? That is pure accounting spin. Either the Directors believe they can pay their future financial obligations as and when they fall due or they do not. It is fairly straight forward. 

Banks are being weak as p*ss on BNB and that is because they cannot afford a write-down on BNB loan book at the moment. That is the only reason, IMO, that they have not called the administrators in and flogged off what they can.


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## Aussiejeff (8 January 2009)

Bushman said:


> They would've apart from the trading halt called pre-trade.
> 
> BNB have stated that they are 'technically insolvent'. Technically insolvent, huh? That is pure accounting spin. Either the Directors believe they can pay their future financial obligations as and when they fall due or they do not. It is fairly straight forward.
> 
> *Banks are being weak as p*ss on BNB and that is because they cannot afford a write-down on BNB loan book at the moment. That is the only reason, IMO, that they have not called the administrators in and flogged off what they can.*




Well, I'm a little surprised they haven't figured they can afford to risk any write down of any magnitude, because as we well know, KRudd & Co. will guarantee the banks for as much as they want to risk?

Meh.


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## jackson8 (8 January 2009)

what i find completely illogical with a stock like this is the fact that over a seven day period the sp has rallied 200 percent only then to have said ann made which obviously will have a negative impact on sp
my question is or observations are

why did the share price rally so much

who were buying.. surely retail investors could not account for the large volumes traded

why would institutions be buying into this . surely they would have more insight into the deeper financial woes of this company

begs for understanding and gives me little confidence in how our free market operates

note .. i do not hold ...just concerned


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## gfresh (8 January 2009)

Bushman said:


> Banks are being weak as p*ss on BNB and that is because they cannot afford a write-down on BNB loan book at the moment. That is the only reason, IMO, that they have not called the administrators in and flogged off what they can.




Seems to be the heading towards the same state as the others that have ended up in zombie mode... 

Does anybody know which Aussie lending institutions have exposure to BNB ? edit: below (from a business spectator article from Nov).. 



> The Australian reported that Westpac Banking Group is believed to be owed $240 million, half of which is secured, the Commonwealth Bank of Australia (CBA) and National Australia Bank (NAB) are owed $150 million each, and ANZ Banking Group (ANZ) $120 million. Those three loans are secured.
> 
> The AFR however reported it was estimated that Westpac was owed up to $250 million, CBA $200 million, ANZ and Suncorp $125 million, and NAB $100 million.


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## noirua (8 January 2009)

Babcock & Brown Ltd., needs to be partly nationalised.  It's a major Aussie company that needs to survive. Probably would be bad luck for investors, still,  Australia comes first.


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## benwex (8 January 2009)

jackson8 said:


> what i find completely illogical with a stock like this is the fact that over a seven day period the sp has rallied 200 percent only then to have said ann made which obviously will have a negative impact on sp
> my question is or observations are
> 
> why did the share price rally so much
> ...




I think the sp run is due to shorts exiting theie positions and closing out...

any other suggestions??

benwex


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## dhukka (9 January 2009)

noirua said:


> Babcock & Brown Ltd., needs to be partly nationalised.  It's a major Aussie company that needs to survive. Probably would be bad luck for investors, still,  Australia comes first.




If this is not a joke it would have to be one of the most ridiculous statements I've seen in the last 18 months, and that's saying something.


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## It's Snake Pliskin (9 January 2009)

noirua said:


> Babcock & Brown Ltd., needs to be partly nationalised.  It's a major Aussie company that needs to survive. Probably would be bad luck for investors, still,  Australia comes first.



What a ridiculous statement. Are we going communist now? Let the market sort it out.


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## nomore4s (9 January 2009)

jackson8 said:


> what i find completely illogical with a stock like this is the fact that over a seven day period the sp has rallied 200 percent only then to have said ann made which obviously will have a negative impact on sp
> my question is or observations are
> 
> why did the share price rally so much
> ...




Pretty good sell off the day before the trading halt, maybe it was just a good old pump and dump.



noirua said:


> Babcock & Brown Ltd., needs to be partly nationalised.  It's a major Aussie company that needs to survive. Probably would be bad luck for investors, still,  Australia comes first.




How would nationalising BNB help Aust? 
I'm not really sure it needs to survive, only people it helped were the greedy management and directors imo.
Better off trying to sort out the ABC mess (keep more centres open) as at least that would have a some sort of effect on peoples everyday lives.


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## totoro_chan (9 January 2009)

jackson8 said:


> what i find completely illogical with a stock like this is the fact that over a seven day period the sp has rallied 200 percent only then to have said ann made which obviously will have a negative impact on sp
> my question is or observations are
> 
> why did the share price rally so much
> ...





isnt it because there was some hedge fund was buying in BNB to close their short position (from a year ago)? other probably in same situation.

otherwise, i also cant explain y ppl still stick to this stock.

Moreover i dont really understand their situation atm. They said BNB is "technically insolvent" so wat difference will the banks' acceptance make?


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## Julia (9 January 2009)

noirua said:


> Babcock & Brown Ltd., needs to be partly nationalised.  It's a major Aussie company that needs to survive. Probably would be bad luck for investors, still,  Australia comes first.




So should every other company in trouble similarly be nationalised?
I don't see that BNB has any particular claim to having the taxpayer support the incompetence of its management.

You might be happy for your taxes to rise to fund all the government's spending, Noirua, but I'm not.  We will already be getting the bill for the 'spend, spend, spend' handout as the deficit deepens.  Do you think Rudd & Co are going to feel just okey dokey about going to the next election with a massive deficit?  What great ammunition for the opposition who will have no qualms in pointing out that at some stage it has to be paid for.

But, I've just remembered:  aren't you living in the UK at present?
Not paying tax in Oz?
No worries, then.


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## gfresh (23 January 2009)

Well, b&b puts the final screw into shareholders .. What a collapse, from $35, to $0 in 18 months. That's right up there with the best of them. 



> Embattled investment firm, Babcock and Brown Ltd, says there will be *no value for equity holders* under its revised business plan and little, or no, value for holders of its subordinated notes.
> 
> "The board believes that in the current market environment and based on continuing discussions with the banking syndicate there will be no value for equity holders under the revised business plan and balance sheet restructure of Babcock & Brown International Pty Ltd and negligible or no value for holders of the company’s subordinated notes," Babcock and Brown said in a statement to the Australian Securities Exchange (ASX).


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## Dezza (23 January 2009)

Can't believe Centro outlasted them...disappointing for shareholders. When are they coming off suspension (if at all)?


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## investorpaul (23 January 2009)

noirua said:


> Babcock & Brown Ltd., needs to be partly nationalised.  It's a major Aussie company that needs to survive. Probably would be bad luck for investors, still,  Australia comes first.




Nationalised..... Major Company???? I would hardly class them as a company of national significance. 

They bought a hole heap of assets that they paid to much for and when the market corrected they found themselves up a creek without a paddle. 

The step they have taken is probably the best outcome for the company althrough creating zero value for the shareholders the company continues to operate and some assets are retained avoiding a further fire sale, the other alternative would have included a sale of all assets and winding up the business which would result in a short fall against the debt. 

There would be no point in nationalising B&B. If B&B was to fail the assets would just be sold off to another company and the world would continue to go round.


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## noirua (23 January 2009)

Julia said:


> So should every other company in trouble similarly be nationalised?
> I don't see that BNB has any particular claim to having the taxpayer support the incompetence of its management.
> 
> You might be happy for your taxes to rise to fund all the government's spending, Noirua, but I'm not.  We will already be getting the bill for the 'spend, spend, spend' handout as the deficit deepens.  Do you think Rudd & Co are going to feel just okey dokey about going to the next election with a massive deficit?  What great ammunition for the opposition who will have no qualms in pointing out that at some stage it has to be paid for.
> ...



I do pay some tax in Aus though not as much as I once did. There are tax agreements in place these days.
If a lot of Aussies found jobs abroad and sent some money back home, the unemployment figure might stay near 4.3% - I should get an award.

If Rudd & Co succeed in making a majority think that they're the only ones competent enough to save the country, then they'll get back in deficit or not.
Come to think of it, most other countries will have a deficit as well. 

Anyway, if the Aussie$ stays low, perhaps 59c to US$1, the export industry will be helped.

Growing more food on your own plot would help, and of course, guarding passion fruit etc.,


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## sails (23 January 2009)

noirua said:


> I...Growing more food on your own plot would help, and of course, guarding passion fruit etc.,




Noirua, what do you mean about guarding passion fruit?  Do you mean they are good for export?  Sorry if I've missed something...


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## drsmith (23 January 2009)

Dezza said:


> Can't believe Centro outlasted them...disappointing for shareholders. When are they coming off suspension (if at all)?



The banks in general are perhaps now too frightened to turn off the drip to these large comatosed entities for fear that the fire sale of assets by administrator will yield less than asset sales by current management.


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## kingbrown (23 January 2009)

*Re: BNB DEAD !!!*

*BNB... DEAD *

Babcock and Brown warns battered shares worthless Print UPDATE: Cynthia Koons | January 23, 2009 


Article from:  Dow Jones Newswires 
BABCOCK & Brown warned today that, given discussions with its lenders, current market conditions and the fact that it expected to report a negative net asset position, shareholders would be left with nothing under the company's restructuring.

Babcock shares, which have been suspended since January 12, last traded at 32.5 cents, the day after the company, once valued above $8.4 billion, said it had a negative asset position.

"The board believes that in the current market environment and based on continuing discussions with the banking syndicate there will be no value for equity holders under the revised business plan balance sheet restructure,'' the Sydney-based company said today.

http://www.theaustralian.news.com.au/business/story/0,28124,24952440-20501,00.html


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## drsmith (23 January 2009)

*Re: BNB DEAD !!!*

If the restructure with the banks goes ahead the shares will trade again as insolvency will have technically been avoided. They will trade at a very low level however.


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## fyusy (23 January 2009)

Would it be a good idea to buy these penny stocks? Hoping one day the share price will trade higher?


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## tigerboi (23 January 2009)

*Re: BNB DEAD !!!*



tigerboi said:


> Gloating over the demise of this mongrel criminal ponzi scheme?you bet i am in the sincere hope all the punters fully understand what these set ups do...FLEECE SHAREHOLDERS nothing less,all you unfortunate people who lost coin on this rubbish should take it as a solid lesson,dont get bitter get better...
> 
> stay away from these debt ridden companies...the last time im going give this mob a bagging,asic should put a microscope right up their sphincters screw them real good like they did to unsuspecting good hard working folk who put money into them...tb






kingbrown said:


> *BNB... DEAD *
> 
> Babcock and Brown warns battered shares worthless




ha ha lol!got news for ya...i put this mutt down ages ago,bunch of thieves.

$8.4b to zero just shows you what a scam this has been.asic what a joke to allow this type of set ups.

directors should be charged with gross incompetence...sentence:bend over to pick up the soap at long bay for 20 years...find out what its like to get screwed...


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## gfresh (23 January 2009)

... but they won't  

ASIC should be hung at the same time. 

The "Corporate Watchdog" is full of dirty fleas


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## noirua (23 January 2009)

sails said:


> Noirua, what do you mean about guarding passion fruit?  Do you mean they are good for export?  Sorry if I've missed something...



Hi sails, If you go to this link at ASF all will be revealed about passion fruit problems:  https://www.aussiestockforums.com/forums/showpost.php?p=375119&postcount=221


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## joeyjoejoe (28 January 2009)

what is every1s expected SP for babcock if it reopens on market

are we talking between 5-10c

or under 5c or 1c....



im guessing around 0.06 - 0.09 range??

cant belive the shares were so heavily  traded at 40c so close before the suspesnsion

didnt take long to lose the majority


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## drsmith (28 January 2009)

joeyjoejoe said:


> what is every1s expected SP for babcock if it reopens on market



Similar to Centro assuming a similar recapitalisation of some of BNB's debt (90% equity for banks, 10% equity for existing shareholders).

This is perhaps the best that can be hoped for given Babcock's recent statements on the current shareholder equity position.


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## Family_Guy (28 January 2009)

http://www.news.com.au/business/story/0,27753,24973886-462,00.html

Lucky for some??????

PHIL Green and Rob Topfer -- the top Babcock & Brown executives who left last year as the investment bank careered towards its current crisis -- stand to pocket more than $3 million in cash after the company's private equity offshoot promised to return $100.7 million to shareholders.


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## prawn_86 (29 January 2009)

Family_Guy said:


> http://www.news.com.au/business/story/0,27753,24973886-462,00.html
> 
> Lucky for some??????
> 
> PHIL Green and Rob Topfer -- the top Babcock & Brown executives who left last year as the investment bank careered towards its current crisis -- stand to pocket more than $3 million in cash after the company's private equity offshoot promised to return $100.7 million to shareholders.




I dont see a problem with this. If they, as directors, didnt own shares they would be accused of not being aligned with shareholder interests (which they clearly weren't anyway), and now they do own them they get **** dished out when they recieve the same as every other shareholder.

What are they supposed to do? Dump their shares when they resign, which would flood the market. Then there would be a big story about that...


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## skc (29 January 2009)

prawn_86 said:


> I dont see a problem with this. If they, as directors, didnt own shares they would be accused of not being aligned with shareholder interests (which they clearly weren't anyway), and now they do own them they get **** dished out when they recieve the same as every other shareholder.
> 
> What are they supposed to do? Dump their shares when they resign, which would flood the market. Then there would be a big story about that...




So long as the decision to pay out the capital was not made because of the fact that they were major shareholders. We have all seen how BNB funds serve its masters (be it the headstock or the key personnel) better than its investors.


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## pilbara (29 January 2009)

joeyjoejoe said:


> what is every1s expected SP for babcock if it reopens on market
> 
> are we talking between 5-10c
> 
> ...



before suspension the floor price seemed around 15 cents, which is market cap of around $50 million.  Sure it rose to 40 cents but that was just speculators playing around.  15 cents to 40 cents is a very good dead cat bounce!

if the banks hadn't put the $150 million emergency finance in December the shares would have been worthless.  

So prior to suspension at 15 cents, we could say shareholders have $50 million, with the expectation the banks would get back $150 million, a total of $200 million.  This is a split of 25 percent shareholders to 75 percent banks.  If this changes to a definite 10 percent shareholders to 90 percent banks, then we get 10/25 * 15 cents = 6 cents per share.


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## banska bystrica (29 January 2009)

No it was not speculators playing around at all. The stock price rose from 15c to 40c prior to the suspension because a US hedge fund was buying the stock back that they sold at $24. It's called "short covering". If people mistakenly thought someone was buying the stock because they thought it had a future, then that was a very costly mistake.
BNB has no equity left, whether it be for BNB holders or BNBG holders. The banks will be lucky to get back 50c in the dollar themselves even after an orderly sale of assets according to today's Financial Review.


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## pilbara (29 January 2009)

by "speculators" I meant people like me who would be willing to hold the stock for about half an hour maximum during the rare times there was genuine liquidity in the order book.

the 15 cent valuation in the share price is due to the good will value of the intangible assets, like the quality of the BNB staff, who were given a stay of execution to realise greater value from deals still in the pipeline.  The company was insolvent if you look at the liquidators valuation of the assets.


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## drsmith (29 January 2009)

The market valuation of the shares prior to suspension perhaps only represented the most intangable of intangables, hope.


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## joeyjoejoe (30 January 2009)

i bought it on the day for 40c.. almost sold it for 44c.

then some how i got tangled in the web and before i could blink it was suspended........ kicking myself. although i only invested a measly 1k


truth be known. i put the order in .. 5 minutes late said that i must be losing my mind.. tried to cancel it .. went through all the cancel screens came back and the trade had allready executed....

you live and learn.........

ive written the 1k off in my head .....so to get back $150. ill be happy

i was hoping to sell for say 60c and walk away with $500


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## Mumbank (30 January 2009)

At least if they trade again at any price, with any luck those who hold (including my very small parcel) can dump them and at least have a tax loss to claim.  If they never come out of the trading halt, we can't even claim the loss. So if they trade its just a small mercy


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## prawn_86 (30 January 2009)

Mumbank said:


> At least if they trade again at any price, with any luck those who hold (including my very small parcel) can dump them and at least have a tax loss to claim.  If they never come out of the trading halt, we can't even claim the loss. So if they trade its just a small mercy




Check out www.delisted.com.au. You can pay them to buy your suspended shares so then you can claim a tax loss.


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## webclever (6 February 2009)

http://www.bloomberg.com/apps/news?pid=20601087&sid=aKZ6HpRiioSw&refer=home

Babcock Shareholders Wiped Out as Banks Force Sales.


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## drsmith (6 February 2009)

You have to give the directors 10/10 for determination.

Having reached agreement with the banks they now have to navigate the minefield of getting the noteholders to agree on a restructure of the subordinated notes.


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## banska bystrica (6 February 2009)

Unfortunately for BNB and BNBG holders, the "new" notes issued to the banks will have priority and whilst they are undergoing an asset sale over a period of years, the equity for existing BNB holders and BNBG holders is NIL.
BNB's model relied on doing deals and ripping fees from those deals. That scenario is dead and will be for perhaps another generation.
It is highly unlikely BNB or BNBG will ever re-list on the ASX.


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## M34N (6 February 2009)

banska bystrica said:


> It is highly unlikely BNB or BNBG will ever re-list on the ASX.




Good, the less rubbish listed on the ASX, the better.

Many people here over the past year have posted about BNB being worthless, and that day is now here. Hopefully people can learn from this example and it never happens again. I only feel for those who held on believing it was worth something and have lost money on something that was obviously very troubled and risky.


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## joeyjoejoe (7 February 2009)

i was 2 seconds away from getting my entire investment back

my order was on the buy side.......i was going through the cancel screens quickly.......but a gap down of like 5 cents wiped me out and my order executed.....2 days later it was suspended for life

worst $1000 i ever spent...... would of been better of putting it on a race horse at least i would of got 1 minute of excitment


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## Mr_T (7 February 2009)

Phil Green is still enjoying his riches. And after a small period of guilt, is resilient enough to want to get into something else.

Question: What does it say about Australian society that it allows arrogant, deluded, lying narcissistic twats like him to get away with it all?

Here's the source:

From  http://www.theaustralian.news.com.au/business/story/0,28124,25009131-30538,00.html 

THE long-awaited Babcock & Brown bank deal, which will see $2 billion of its $3.5 billion in debt converted into perpetual notes, should, all going well, be finalised today.

That of course simply marks a new stage in the bank-led workout, which is already being led by McGrathNicol.

At least one of its fallen angels, Phil Green, is out and about ready to get back into anything but public company management.

Green was among the crowd in Melbourne watching the Serena Williams tennis show at the Australian Open last Saturday.


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## abc (8 February 2009)

"If you are interested in the BBSN's, as a holder, and want to participate in the BBSN Action Group:

1) Register a (free) gmail address at www.gmail.com; and

2) Send an introductory eMail to ActionBBSN@gmail.com

We are underway and can use any ideas or offers of help through connections.

Anonymity will be preserved.

Key tasks for the moment are contacting as many BBSN holders as possible and producing a coherent plan and approach in advance of the Noteholder meeting."


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## StatsMan (12 February 2009)

Thats right folks.  If you hold any of the BBSN such as BNBG is Australia, then you should definitely joint the BBSN Action Group.  There are a lot of very smart people amongst the holders of these notes and we have a better chance of claiming back our money if we unite than if we do not.  I highly recommend that you contact "Enumerate" by emailing ActionBBSN@gmail.com


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## Cialis (13 February 2009)

can someone please explain to me what a subordinated note is? This 100 character limit is also quite annoying...


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## drsmith (13 February 2009)

Cialis said:


> can someone please explain to me what a subordinated note is? This 100 character limit is also quite annoying...



This will do. 50 better than 100 but that's a discussion for elsewhere.

http://answers.yahoo.com/question/index?qid=20061120222532AArrzQV

While most likely an academic question, would noteholders who tick the repayment box on the exit notice and send it back be bound by any subsequent restructure of the notes ?


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## lcl999 (14 February 2009)

Will the registrar accept off market transfers? If so, I can sell what I have to my dog for a dollar and crystalise the loss.


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## banska bystrica (14 February 2009)

Some of the garbage being mentioned on another site:

_"Oh well, they can kiss their mgmt rights goodbye then as well.

These are worth hundreds of millions to BNB, but in administration they are rendered worthless."_

Hundreds of millions? Who is this person kidding? I guess BNBG holders are hoping for a miracle. The fact is there is no equity left. The banks will not get all their money back so why would unsecured lenders get a cent?


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## drsmith (14 February 2009)

banska bystrica said:


> The fact is there is no equity left. The banks will not get all their money back so why would unsecured lenders get a cent?



I would go further and suggest that the more capital BNB can bleed out of it's satellites before/in return for their independence, the happier the banks will be.


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## Cialis (19 February 2009)

what does everyone thing of the revised note holder terms and conditions? it will be interesting to see how people vote on this one


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## Judd (19 February 2009)

From what I understand the notes, revised or not, are essentially worthless.  BNB doesn't have the cash to pay them out and B&B International, the guarantor under the deed, doesn't have any money either.

Use 'em to wallpaper the smallest room in the house.  Alternatively, just use them in the smallest room in the house.


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## Mr_T (20 February 2009)

Looks like Uncle Phil & Co have well and truly financially raped not only equity holders, but bond holders as well.


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## MACCA350 (26 February 2009)

Hey DrSmith, didn't realise you were on here 

Well I got stuck holding a plate of 100k BNB shares
I picked them up when they hit 16c and was going to sell them off the morning after they jumped for a tidy 100% profit...........imagine my pain when I awoke to them in a trading halt 

Now I'm stuck with my hand in the cookie jar 

cheers


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## MACCA350 (27 February 2009)

Anyone notice that 1 trade of 20,000 BNB shares(valued at 8,000, so 40c each) were traded today?

What's up with that  they show up on both the ASX website and through my broking software even though they are still in suspension.

cheers


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## sails (27 February 2009)

MACCA350 said:


> Anyone notice that 1 trade of 20,000 BNB shares(valued at 8,000, so 40c each) were traded today?
> 
> What's up with that  they show up on both the ASX website and through my broking software even though they are still in suspension.
> 
> cheers




Course of sales in Iress shows that 20 x 40c puts were exercised.  This means someone exercised 20 of their long puts and sold 20000 BNB shares at 40c to the  put seller.  Really bad news for the seller if they didn't have an offsetting option and means they are obligated to buy the shares.

Option exercises/assignments usually show up just after 7am the next morning even though the trade technically goes through the day before.

Even though BNB isn't trading, the ASX have rules allowing limited trading for options.  Here is the ASX notices link for BNB Feb. expiry which explains it:  http://asx.com.au/products/pdf/notices/2009/Clm02109.pdf

Hope that helps


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## MACCA350 (27 February 2009)

That explains it then, thanks ..........thought I'd missed an opportunity to offload  

cheers


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## drsmith (3 March 2009)

MACCA350 said:


> Hey DrSmith, didn't realise you were on here
> 
> Well I got stuck holding a plate of 100k BNB shares
> I picked them up when they hit 16c and was going to sell them off the morning after they jumped for a tidy 100% profit...........imagine my pain when I awoke to them in a trading halt
> ...



That's why I'm a little quiet over at the other place.

BNB's short term fate now lies in the hands of the subordinated noteholders. If there is 75%+ acceptance of the $0.10 offer for each $100 note (as opposed to administration) then there is a slight possibility the shares could trade again.


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## drsmith (13 March 2009)

Babcock and Brown's directors are clearly not a superstitious lot but in the end that did not help..


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## Mr_T (13 March 2009)

http://www.crikey.com.au/Business/20090313-Babcock-and-Brown-slips-quietly-into-administration.html


Babcock and Brown slips quietly into administration


Friday, 13 March 2009

Adam Schwab writes:



Like a dying man whose life support was quietly turned off without a great deal of commotion, Babcock & Brown’s New Zealand subordinated note holders voted today against a restructuring plan, forcing the company to appoint voluntary administrators . 

In an announcement to the ASX, Babcock stated that “while the Babcock & Brown Board believes that there will be value for BBIPL’s Corporate Facility lenders, it does not believe that there will be any value for equity holders, and holders of the Company’s subordinated notes following the completion of the BBIPL asset sale program.” Babcock shares had been suspended from trading on the ASX since 12 January 2009. 


Administration marks the end for the Babcock mothership, once dubbed Macquarie Bank’s ‘Mini-me’. In its prime, Babcock was a voracious fee-generating machine, which, in 2007, had $72 billion worth of assets under management as well as 33 offices across the globe. In 2007, Babcock collected more than $700 million in performance, base and advisory fees from satellites including Babcock & Brown Infrastructure, Babcock & Brown Wind Partners and Babcock & Brown Power. BNB’s 2007 Annual Report claimed net assets of $2.5 billion. 


Like other highly levered, boom-time companies (including MFS and Allco), the Babcock downfall has been swift. In July 2007, the company was valued by the market at $10 billion. Throughout its rapid rise, Babcock executives, including former CEO, Phil Green, were paid During its four years as a listed entity, Green collected more than $30 million in cash payments. Other Babcock executives also received generous total remuneration, including Eric Lucas ($45 million), Peter Hofbauer ($47 million) and Rob Topfer ($36 million). 



Babcock’s collapse bears stark contrast to the confidence of its executives, who continued to exude confidence even as world economies started to crumble and the sub-prime crisis caused the cost of debt to rapidly and substantially increase. In March 2008, almost a year after the collapse of two Bear Sterns hedge funds, Green told Business Spectator that:

We’ve seen no evidence of any deterioration in valuation of those sort of infrastructure assets in the wholesale space. We accept that in the listed environment in Australia, really the only place those vehicles exist, there’s been deterioration in valuations, but we think that’s short term and we certainly don’t think it reflects the value that the global investor market place on the underlying assets. 


In June 2008, as BNB shares slipped from $34 to less than $20, Babcock’s Kelly Hibbins accused Stephen Mayne of providing “inaccurate and unduly alarming for investors who look to commentators such as you for informed insight and guidance.” Mayne had previously suggested that Babcock was facing “imminent collapse”, a comment which appears to have been eminently prescient. 


Earlier that month, Babcock reassured investors as to the stability of Babcock’s businesses, with Green noting that: 

Babcock & Brown will continue the asset recycling and freeing up of capital that has previously been outlined to the market; de-leveraging our balance sheet and, further, will move to narrow our investment focus to core activities including development and co-investment. 

Babcock & Brown has a significant pipeline of assets in greenfield development including wind (16,000 MW), solar (1,400 MW) and gas fired power generation (3,360 MW) assets, and power transmission assets; and PPP projects in countries around the world including selected countries in Europe, North America and Australia. Babcock & Brown’s development and acquisition pipeline is one of the key attractions for investors in both our wholesale and listed funds. 


Babcock & Brown remains committed to investment in this pipeline to deliver a source of competitively priced, attractive assets for its managed funds platform. 


Our employees remain strongly aligned and committed to the ongoing success of Babcock & Brown and its listed and unlisted funds. We have received significant levels of support from our partners globally who recognise the depth and expertise of Babcock & Brown’s people and business as evidenced by the announcement of the Angel Trains transaction in the UK last week. 


Babcock’s administration does not immediately affect Babcock & Brown International Pty Ltd (BBIPL). Babcock’s announcement noted that, “BBIPL is the main operating and asset owning entity of the Babcock & Brown Group. BBIPL will continue to operate and will proceed with the orderly realisation of assets over an approximate 2-3 year time horizon to reduce debt.” 


Babcock satellites, BBP, BBI, Babcock Japan Trust and Babcock & Brown Residential Land Partners released similar announcements noting that BNB’s administration does not of itself prevent BBIPL “from continuing


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## Cialis (23 April 2009)

http://www.nbr.co.nz/article/babcock-investors-guard-after-reports-bank-offer-101339

*Babcock investors on guard after reports of bank offer*

Fiona Robertson | Monday April 20 2009 - 03:53pm 

Babcock & Brown investor activists will not be easily won over if the company’s bankers are planning to make them an offer, the coordinator of investor group ActionBBSN says.

David Gibson says the investors have no basis for trusting the banks.

“Even if an offer was forthcoming we would still view it with some scepticism.”

Mr Gibson says the group will place their trust in independent administrator Deloitte’s report, which is due out before a second creditors’ meeting in August.

Deloitte has four months to investigate the state of affairs at Babcock & Brown and report to the company’s creditors – mainly subordinated noteholders who are owed nearly $A600 million – on the potential for returns from a continued administration or liquidation.

But news reports from the Australian this morning suggested that a banking syndicate was considering putting a buyout offer to the 8000 Babcock noteholders as a pre-emptive move.

Analysts tipped that any offer would have to be much higher than the previous 0.1% payout offered to noteholders by Babcock directors to succeed, the Australian reported.

Babcock directors previously put up almost $A600,000 in a bid to keep the company out of administration. The company's bankers - who kept the operating subsidiary of Babcock & Brown alive via a restructure of its $3.3 billion debts - were not involved in that bid.

Noteholders rejected the offer, which equated to a tiny 10c return on every $100 invested.

Investors on both sides of the Tasman have $225 million in NZDX-listed notes and in Babcock subordinated notes.


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## rajeev (23 April 2009)

Cialis said:


> http://www.nbr.co.nz/article/babcock-investors-guard-after-reports-bank-offer-101339
> 
> *Babcock investors on guard after reports of bank offer*
> 
> ...




does this mean will share holders get something? i did not get rid of them when had a chance now suffering..........


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## MACCA350 (23 April 2009)

rajeev said:


> does this mean will share holders get something? i did not get rid of them when had a chance now suffering..........



Your not the only one, I believe there are a few of us on the forum who have been stuck with BNB............would be nice if we could get something half decent back.

cheers


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## qldfrog (14 June 2009)

is it my wrong understanding or can we now realise the capital loss?
I am not authorised to send url on the site but go to the 
asx web site and do a BNB search
11/06/2009  	    	Anticipated Removal from Official List of ASX  	
11/06/2009 	  	Declaration re Shareholder ongoing economic interest in BNB 	

at least no need to throw any further money down the drain on this looser.
Sad bit is a lot of people are making money on the carcass


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## MACCA350 (14 June 2009)

I've been hoping to have this one finalised this financial year. 

From the announcement:


> All future announcements by the voluntary administrators will be lodged publicly on the Deloitte website (www.deloitte.com.au). *Direct mail notification will occur when formal notices are legally required for noteholders and creditors.*



I'd assume we can only claim the loss once we receive the formal notices by mail. I assume this will be sent out when they are ready, although 'when formal notices are legally required for noteholders' sounds like we may need to contact them and tell them we require the notice...........maybe I'm just reading too much into it.

I'm assuming we just wait for the notice..........I'd really like it so I can reduce my CGT this financial year.

cheers


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## prawn_86 (14 June 2009)

You can sell unmarketable parcels of shares on www.delisted.com.au. This will enable you to realise a CGT loss


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## mastatrada (14 June 2009)

http://www.deloitte.com/dtt/cda/doc/content/ASX Announcement 11 June 2009 Declaration(1).pdf

this is an announcement by deloitte released on the ASX 11 june. As far as I know this is all we need to write off the scumbags as a capital loss


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## MACCA350 (14 June 2009)

Thanks for the link, I couldn't find that one on their site before.

I'm guessing that notice will be snail mailed to all shareholders over the next week or so........at least now we can crystallise our loss for this financial year.

cheers


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## Garpal Gumnut (25 August 2009)

For any muppets out there wanting to know what not to invest in, and why,  this thread is 23 pages of pure gold.

Vale BNB.

gg


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## surf73 (6 September 2009)

BNB Taught me to think for myself.

I bought a Commsec trading pack last year.

Of the 5 shares included in the pack - 4 of them are currently the bottom 4 in my total portfolio, (I picked the other 9 companies with no knowledge of the share market) and the other one was BNB.

Makes me realise that this is a game for people with common sense......not a sheep with an economics degree.


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