Blue Sky Alternative Investments Ltd shares are getting crushed again

Unfortunately for its shareholders, the Blue Sky Alternative Investments Ltd (ASX: BLA) share price has been crushed for a second day in a row.

At the time of writing the investment company’s shares are down almost 24% to $6.45.

The Blue Sky Alternatives Access Fund Ltd (ASX: BAF) share price has also sunk lower.

What happened?

Around lunch time on Thursday Glaucus Research provided a comprehensive 14-page response to Blue Sky’s rebuttal of its short seller report released last week.

According to today’s release, Glaucus has accused Blue Sky of falling back on threats and recriminations, suggesting that investors should not have any confidence in the Blue Sky management team if it cannot answer basic questions about its fee structure, AUM, and historic performance.

One key paragraph of note states that:

“Time and again, Blue Sky insists that we are incorrect, without providing any substantive rebuttal, analysis or calculations showing why we are wrong. Rather, Blue Sky claims what we consider to be a fabricated obligation to maintain secrecy on all of its investments, its portfolio and its performance. We call on Blue Sky to point to the statute or requirement which prevents them from even high-level disclosures regarding their portfolio. The market should not hold its breath, because we suspect that no such requirement exists. Blue Sky’s claimed confidentiality requirement is entirely self-serving and only selectively applied: when it suits the Company, it discloses details; when it wants to hide, it insists that its hands are tied. But in our opinion, this is smokescreen, designed to conceal details which we believe will show the truth.”

Blue Sky was quick to respond to this latest piece out of Glaucus, noting that it raises no new allegations, doesn’t identify any information which previously has not been disclosed, and does not identify any errors in the information that has been previously disclosed by the company.

What now?

Whether Glaucus is proven right or not, I suspect that Blue Sky’s shares could still come down sharply from here in the short-term. After all, no shareholder wants to get caught up in another Quintis FPO (ASX: QIN) situation.

Therefore, if I were still a shareholder I would consider heading to the exits. Whereas I think non-shareholders should stay clear of Blue Sky’s shares and resist the temptation to buy the dip.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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