B and B...
And I am not talking about Bed and Breakfast.
Babcock and Brown have been in the spotlight for all the wrong reasons.
Rewind the clock 12 months and Australia's 2nd largest Investment Bank was trading at close to $35 a share, had a share price which had increased by 75% in the previous 12 months and looked unstoppable. The CEO was being hailed as a genius and the markets looked at the company with Envy.
They were classified as "Financial Engineering Specialists."
The strategy of securing debt to fund boring infrastructure projects throughout the world, then packaging it and listing it... seemed to be winning formula. One that was pushing the companies success to greater heights.
Now, June 2008 the Directors are bunkered down in discussions on how to bring the company back above market capitalisation of over $2.5 billion, so it wont be handed over to it's 25 financiers from around the world.
The share price hit a low of $4.70. The $46 Billion of debt throughout it's funds has had investors fleeing the stock and hedge funds driving it sharply lower.
Babcock and Brown have all eyes on them and it will be interesting to see how the company will get itself back on track. More importantly... what will happen to big brother Macquarie Bank.
What are your thoughts??
Babcock and Brown have been in the spotlight for all the wrong reasons.
Rewind the clock 12 months and Australia's 2nd largest Investment Bank was trading at close to $35 a share, had a share price which had increased by 75% in the previous 12 months and looked unstoppable. The CEO was being hailed as a genius and the markets looked at the company with Envy.
They were classified as "Financial Engineering Specialists."
The strategy of securing debt to fund boring infrastructure projects throughout the world, then packaging it and listing it... seemed to be winning formula. One that was pushing the companies success to greater heights.
Now, June 2008 the Directors are bunkered down in discussions on how to bring the company back above market capitalisation of over $2.5 billion, so it wont be handed over to it's 25 financiers from around the world.
The share price hit a low of $4.70. The $46 Billion of debt throughout it's funds has had investors fleeing the stock and hedge funds driving it sharply lower.
Babcock and Brown have all eyes on them and it will be interesting to see how the company will get itself back on track. More importantly... what will happen to big brother Macquarie Bank.
What are your thoughts??
posted by SMC Trader at
6/18/2008
3 Comments:
It really is amazing the change in the share price. I believe it is healthy that their funders have got behind them, so they can continue business as usual.
Just goes to prove that as a trader or an investor that once the long term trend of a stock has change you should jump out and take your profits or a where a small loss.
BNB had the same "template" as MQG - just Macquarie may have not levered as aggressively. Just shows everyone needs to hedge when it is getting unstable.
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