BNB - Babcock & Brown

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

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

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

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.

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.

Click to expand...

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.

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..

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.

Click to expand...

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

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.

Click to expand...

Uh huh. What's that saying about when the tide goes out you can see who is swimming naked...or something along those lines.

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

Click to expand...

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.

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.

Click to expand...

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

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.

Click to expand...

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

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.

Click to expand...

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

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.

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.

Click to expand...

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.

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....

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

Click to expand...

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.

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.

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.

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.

Click to expand...

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.

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.

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