BNB - Babcock & Brown

[Mr_T]

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.

 

[nick2fish]

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

 

[mrgroundwork]

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

 

[hangseng]

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.

 

[nick2fish]

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

 

[Mr_T]

What I find interesting is that Comsec are still lending for BNB's major satellite at 70%, specifically:
BBP
BBI
BBW

 

[reece55]

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

 

[Mr_T]

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.

 

[stoxclimber]

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.

 

[Mr_T]

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?

 

[VViCKiD]

Anyone know why this one got hammered today ? there were no announcements at all and it still lost ~7%!

 

[dj_420]

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]

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.

 

[Mr_T]

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]

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.

 

[Garpal Gumnut]

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]

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

 

[Garpal Gumnut]

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

 

[vishalt]

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.

 

[Garpal Gumnut]

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