EARNINGS WIPE-OUT FOR FUND MANAGER BLUE SKY
BLUE Sky has wiped out its profit guidance, just three weeks after telling investors that the Brisbane-based fund manager should be earning up to $25 million.
The company, which manages 80 funds investing in everything from apartments to a burrito chain, also has dumped the amount of assets it estimates to be overseeing.
That asset number has been a flagship figure used to woo investors; the company earlier this year had predicted it would oversee up to $6 billion in fee-earning assets under management by 2019’s end.
The cuts were unveiled to the sharemarket yesterday in a presentation marked “Project Rainbow”. The latest hit to earnings estimates carved another 7 per cent off Blue Sky’s stock in early morning trade, down 20¢ to $2.52.
The complete axing on earnings forecasts were blamed on several factors: uncertainty about timing of three development projects in Australia, uncertainty about some US deals and costs of “restructuring the business”.
The company, which employs almost 100 staff, has so far not cut any employees.
The former market darling’s share price has been chainsawed from $11.43 in March, when short-seller Glaucus, which makes money from stocks falling, accused Blue Sky of manipulating investment performance.
Blue Sky rejected the concerns then but has since acknowledged market concerns about transparency. “Blue Sky was of the belief that shareholders understood the nature of its private market investment management business including our governance and valuation policies,” the company said.
“(We) underestimated the impact that shareholder activism could have on the business as a whole, inclusive of its shareholders, fund investors and staff.”
Blue Sky also addressed concerns about independence of the board.
Chairman John Kain is stepping down from the role at this year’s annual general meeting, with him no longer deemed an independent board member as he was a director of Blue Sky companies since 2007. Executive director Tim Wilson and chief investment officer Alexander McNab are also leaving their board roles.
The announcement said Mr Wilson would remain with Blue Sky’s private equity business while Mr McNab was ceasing his role as chief investment officer.