Blue Sky Alternative Investments shares slide another 21 per cent on profit warning

SHARES in Blue Sky lost another 21 per cent on Tuesday, diving to a four-year low after the Brisbane fund manager scrapped projects and forecast a $59.4 million hit to this year’s net profit.

Blue Sky managing director Kim Morison. Picture: Liam Kidston.

SHARES in Blue Sky Alternative Investments lost another 21 per cent on Tuesday, diving to a four-year low after the Brisbane fund manager scrapped projects and forecast a $59.4 million hit to this year’s net profit.

The stock price closed at $1.765, down 47.5¢, after the embattled firm completed the second of three independent reviews of its asset valuations.

Blue Sky has now shed about $1 billion in market value since its shares peaked at $14.70 in December.

About $750 million of that has gone up in smoke since late March, when US short seller Glaucus alleged that Blue Sky inflated asset values, misrepresented its performance and charged exorbitant fees.

Blue Sky, which had previously forecast a net profit of between $34 million and $36 million this year, will now fall into the red as a result of the predicted $59.4 million loss.

Managing director Kim Morison described the development as “disappointing”.

“The review has resulted in a restructure to allow the company to focus on managing alternative asset classes that are scalable, profitable, institutional grade and demonstrate competitive advantage,” Mr Morison said.

Blue Sky plans to terminate three retirement living projects and one student accommodation project. Another student development has also been deferred and another is under strategic review.

That follows the closure of a domestic hedge fund business, as previously announced, and the staged exit from property management rights and regional real estate development.

The launch of new investment funds have also been delayed even as three new private equity funds kicked off.

Fee-earning assets under management stood at $3.4 billion at the end of last month, the company said yesterday. That stands in contrast to Blue Sky’s announcement in March, when it said assets under management had exceeded $4 billion and were tipped to reach between $5.5 billion and $6 billion by June next year.

The company’s expected net cash position of $32.3 million by the end of the current financial year is down significantly from the $44.6 million reported for the December half and follows a $100 million capital raising. It has slashed $3.8 million in costs, including laying off staff, in a process that Mr Morison said had involved “some very tough decisions”.

Blue Sky also announced the appointment yesterday of Andrew McNeil of Yarmouth Group as the non-executive chairman of its trustee entity.