The Blue Sky Alternative Investments Ltd (ASX:BLA) share price is now down 80%

There seems to be no relief for Blue Sky Alternative Investments Ltd (ASX: BLA) shareholders.

The stock is down 80% since the end of March, when short seller Glaucus started questioning the way the fund manager valued its assets. Blue Sky replied to the allegations of overvaluation and scarce transparency, but couldn’t prevent the tumble.

In an attempt to contain the meltdown, Blue Sky announced on May 7 a review of all its business units to ensure each had scale, was institutional grade, and had a competitive advantage.

Following the review, Blue Sky updated the market on Tuesday, declaring it will wind up the Alliance Fund – its domestic hedge fund vehicle targeting retail Australian clients – and return proceeds to investors. The hedge fund business will now focus solely on institutional investors.

The company – which operates three other divisions in addition to hedge funds: private equity and venture capital, private real estate, and real assets – specifies that the Alliance Fund comprised $49 million of fee-earning assets under management (FEAUM) at March 31, representing less than 1.5% of Blue Sky’s total FEAUM.

However, the news put off investors, and the share price fell 5.5% to $2.34.

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Motley Fool contributor Tommaso Autorino 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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