MQG - Macquarie Group

[Mofra]

Re: MBL - Macquarie Bank

Hrmm.... the parent Company would be safe from harm if the asset bubble affected their sattelite funds..... Lets have a think about that....

Not safe from harm... safe from an Enron type meltdown, as implied by posts above.

1. Revenue impact - Revenue from fee and consulting commissions to associates and JV's for 2007 was over 1 Billion. Lets say that costs associated with such advisory was half (500 Mil). If their fee income was gone from associates, that would be 1/3 of net profit - sounds fairly material to me.....

I doubt losing 1/3 of net profit would be enough to cause a financial meltdown in the majority of listed companies - MBL have one of the highest contract to fulltime ratios in the country, so have a higher degree of flexibility on overheads than many of their contempories.

2. Asset impariment - Net assets are 7.5 Bil, investments in associates 4 Bil - I think an impairment here would greatly affect their collateral.

So their recent raising of capital just prior to a global tightening of credit is another tick in the box of intelligent timing.

Everyone needs to have a good look at what MBL actually is - the biggest deck of cards on the ASX. The Company restructure is not about asset protection, it's about getting around the Capital requirements of having banking licence for the investment banks head Company. It will actually increase risk, because the prudential requirements won't hold them back ....

It is about both - less regulation and an increase in asset protection. Lumping MBL with the profiles of largely unregulated hedge funds & private equity firms seems a little unfair (and over the top) when you consider the difference in approach both to raising capital, internal risk policies & history of reporting.

In saying all this however, MBL have lasted this long ripping everyone off with their spin outs, so perhaps if the bank roll continues, everything will be ok..... I've heard this story before......

Reece, you've made some good points throughout this thread but the last paragraph sounds a little bitter. I wont speculate upon the resoans for this, although I am a little curious - are you hoping for an Enron style meltdown?

I can certainly see an impact on figures due to global credit tightening but a collapse is (pardon the pun) not on the cards.

 

[reece55]

Re: MBL - Macquarie Bank

Mofra,
Firstly, thanks for the intelligent debate here, sometimes opinions can become heated and people on boards can get a little abusive - you seem to be putting forward a logical and from what I can see objective opinion so I do appreciate that.

Let me say firstly, that I would be extremely disappointed if MBL went down in an Enron style collapse. Clearly, it would adversely affect Australia in ways that are too numerous to mention on one post. I sincerely hope that this is just a stage in the asset cycle that MBL go through and emerge safely so that investors funds are safe from harm.

However, to state that an Enron collapse couldn't happen to MBL is not true. They are the most aggressive M&A firm around internationally, they have been paying top $$ for all the assets they have acquired of late and pay the largest pay packets to maintain there staff. Like it or not, the similarities between MBL and Enron are numerous - only MBL is selling financial instruments and services, Enron was selling Gas distribution.

In reference to the their latest capital raising, I would say it was more opportunistic than intelligent - I mean, every man and his dog raised money before this latest correction/cash (the verdicts still out), why because scrip prices were high and cash was about, simple as that. Sure, it gives them a buffer, but how much considering their gearing levels, which are out of this world? But they raised less than 1 Bil - a material write down in their investments in associates could cause them to default on many of their loan covenants etc.

OK, happy to concede they have a good consultant to FTE ratio. This obviously decreases the profit downside risk.

I'm not bitter about MBL, I just think they are terrible at disclosing the risks associated with their and their satellite businesses. And for the average investor who doesn't understand financials, they are fooled about what is going on. They see a nice profit in MIG and think things are great - it's all just paper make believe money....

As I always say, one needs to draw their own conclusions in life, but MBL is a very interesting little debacle in corporate Australia and it will be interesting to see what arises out of them in the next 6 - 12 months...

Cheers

 

[Mofra]

Re: MBL - Macquarie Bank

Firstly, thanks for the intelligent debate here, sometimes opinions can become heated and people on boards can get a little abusive - you seem to be putting forward a logical and from what I can see objective opinion so I do appreciate that.

Likewise, we all learn from hearing someone else's viewpoint

Let me say firstly, that I would be extremely disappointed if MBL went down in an Enron style collapse. Clearly, it would adversely affect Australia in ways that are too numerous to mention on one post. I sincerely hope that this is just a stage in the asset cycle that MBL go through and emerge safely so that investors funds are safe from harm.

However, to state that an Enron collapse couldn't happen to MBL is not true. They are the most aggressive M&A firm around internationally, they have been paying top $$ for all the assets they have acquired of late and pay the largest pay packets to maintain there staff. Like it or not, the similarities between MBL and Enron are numerous - only MBL is selling financial instruments and services, Enron was selling Gas distribution.

I still see a major difference between Enron & Macquarie.
Macquarie are very quick to transfer assets off to subsidieries or (more commonly) package off assets under managements to "sophisticated investors" (yes the term makes me chuckles as well). Enron were less diversified, and the infrastructure assets were vital to the daily running of their core business, not just to one of the 6 major businesses they operate in like MBL.

MBL are deriving asset management fees from annually revaluing infrastructure assets held in subsidieries - not a very clean practice, but one that is fully disclosed, and is not directly comparable to including forward earnings as trade debtors on a balance sheet.

M&A activity will dry up moving forward, however staff & intellectual property overheads are easier to dispose of than forward order gas supply agreements & the associated infrastructure arrangements.

In reference to the their latest capital raising, I would say it was more opportunistic than intelligent - I mean, every man and his dog raised money before this latest correction/cash (the verdicts still out), why because scrip prices were high and cash was about, simple as that. Sure, it gives them a buffer, but how much considering their gearing levels, which are out of this world? But they raised less than 1 Bil - a material write down in their investments in associates could cause them to default on many of their loan covenants etc.

Agree that it was opportunistic, however I still see it as showing a reasonable measure of market conditions in the near future. Majority of their loans are held off balance sheet or against assets already majority held (although not managed) by the same "sophisticated investors", againt consisitent with a practice of sheilding the parent company from as much exposure as possible.

OK, happy to concede they have a good consultant to FTE ratio. This obviously decreases the profit downside risk.

I'm not bitter about MBL, I just think they are terrible at disclosing the risks associated with their and their satellite businesses.

1 point each I would think here - yes, happy to agree that MBL exist in an evironment where selling yourself is rewarded, disclosing the risks is done only "in accordance with Macquarie's standard practice of complying with all relevent regulations under (insert act here)"

As I always say, one needs to draw their own conclusions in life, but MBL is a very interesting little debacle in corporate Australia and it will be interesting to see what arises out of them in the next 6 - 12 months...

I think MBL are fairly unique in the Australian corporate landscape, so even those with no direct interest in Macquarie would keep an eye on them to see what they are doing.

Taxis, Credit Cards, London Water supply (London market blindsided by a ridiculously low bid for the FTSE, brilliant stuff)... nothing like a diversified industrial for a bit of economic soap opera in the past few months

 

[Gundini]

Re: MBL - Macquarie Bank

Who would have ever dreamed you would see MBL in the $69's...

Has lost 30% in 3 months... OMG, a serious pullback...

 

[barnz2k]

Re: MBL - Macquarie Bank

Ouch. This is really painful now.
I knew today would hear after fridays efforts.
How the going to recover from this one? and how long will it take!?

 

[Gundini]

Re: MBL - Macquarie Bank

How longs a piece of string?

It seems like a bottomless pit...

And to think I thought it was a bargain buy at around $90

 

[GreatPig]

Re: MBL - Macquarie Bank

May find support at the 38.2% Fib level ($68), which roughly matches with earlier resistance between $68 and $70.

Next support after that is the 50% Fib level at $58.60, which matches the previous support level at $59-$60.

So could be support around the current price, or on down to $60!

Cheers,
GP

 

[CanOz]

Re: MBL - Macquarie Bank

I had a sell stop CFD order on this today but it didn't get activated, thankfully. It looks like buyers are coming back in at this level, still may be a shorting opp, thoughts anyone? GP?

Cheers,

 

[mime]

Re: MBL - Macquarie Bank

The question is when/if to buy back in. I've got a feeling that in 6 months time the stock price will be back around the $90 mark again. Of course for legal reasons the stock could also go down even more .

 

[GreatPig]

Re: MBL - Macquarie Bank

Personally I wouldn't consider shorting at a significant support level.

But then, what do I know...

GP

 

[Awesomandy]

Re: MBL - Macquarie Bank

This is seriously looking like a ship sink. An ex-college who has just left us last Fri to start work at MBL received a floatie for his farewell gift. We never thought he would really have to use it!

 

[explod]

Re: MBL - Macquarie Bank

The question is when/if to buy back in. I've got a feeling that in 6 months time the stock price will be back around the $90 mark again. Of course for legal reasons the stock could also go down even more .

Would be pleased if you would be so kind as to elaborate on your feeling that the SP will move back up to $90 in six months. I am hesitant to take note of posts without qualification

 

[CanOz]

Re: MBL - Macquarie Bank

Personally I wouldn't consider shorting at a significant support level.

But then, what do I know...

GP

No thats good advice GP! I guess i was a bit peaved for it going through my sell stop this morning, would have paid off handsomely too. I guess i better wait for another go at it later.

Cheers,

 

[mime]

Re: MBL - Macquarie Bank

Would be pleased if you would be so kind as to elaborate on your feeling that the SP will move back up to $90 in six months. I am hesitant to take note of posts without qualification

Then you shouldn't take any notice of what I say. I came to that conclusion because I seen it time and time again that after a stock drops significantly it has recovered to it's same levels later down the track. Just look at the NAB.

 

[vishalt]

Re: MBL - Macquarie Bank

lol this is a buying opportunity.

the selling is based on fear & over-reaction rather than fundamentals, seriously macquarie banks makes billions a year - whats $300m (from hedge funds) that its not even directly responsible for gonna do?

and that counts for most other Australian financial demons as well, BNB & Allco barely have any exposure

im accumulating this baby before it shoots past $100 in the medium term

 

[Buffettology]

Re: MBL - Macquarie Bank

One off losses like this have always prooven incredible buying opportunities!

Coke, American Express anyone?

 

[Mofra]

Re: MBL - Macquarie Bank

One off losses like this have always prooven incredible buying opportunities!

Coke, American Express anyone?

That is assuming it is a one off loss. Part of the pullback seems to be based on the fear that the tightening of world credit will also lead to a reduction in M&A activity, which is a major source of MBL cashflow.

Happy to let this one form some new sort of support base prior to considering a long position.

 

[aussienorm]

Re: MBL - Macquarie Bank

lol this is a buying opportunity.

the selling is based on fear & over-reaction rather than fundamentals, seriously macquarie banks makes billions a year - whats $300m (from hedge funds) that its not even directly responsible for gonna do?

and that counts for most other Australian financial demons as well, BNB & Allco barely have any exposure

im accumulating this baby before it shoots past $100 in the medium term

Only the little wheels are falling off...............wait for the big ones to fall off!!!!!!!!!!!!!!!!!!!!!!!!!!!

 

[explod]

Re: MBL - Macquarie Bank

Then you shouldn't take any notice of what I say. I came to that conclusion because I seen it time and time again that after a stock drops significantly it has recovered to it's same levels later down the track. Just look at the NAB.

And look at Telstra two, it didnt'. Many thought that HIH would bounce back and lost over 95%. In fact NAB you mention is also in a down trend and looks like it could continue lower. As a fundamentalist and trend follower for many years I have learned never to assume on any experience of the past. You can only act on the direction of the action. ........the future we do not know yet. Fundamantals tell us what should happen but never tells us when. On fundamentals the US Stock Market price earnings ratio is way too high, so a crash has to happen, it has started to happen but we dont' know when it will all pan out, but as just mentioned by another above it is going to go a long waaaaay doooown before it is over.

My purpose in pursuing your post is that I see the situation on all markets at the moment as dangerous and that many on the forums with not a lot of experience may get hurt from statements that are not backed up by a full consideration of the facts. The forums are no place for games.

In my humble opinion of course

 

[Awesomandy]

Re: MBL - Macquarie Bank

I agree with most that this is now a good buying opportunity. However, since we can never tell where the bottom is, it is probably much better to take a wait and see approach. It's still not too late to buy in after getting confirmation for a new trend.