Monday, August 27, 2007

Its Not All Bad News...

Its nice to see a little good news:

Hedge fund manager HFA Holdings has booked a surge in annual profit, in line with its most recent guidance, and says its outlook is very positive. Annual profit was $20.3 million, up 288 per cent, while normalised profit, excluding one-offs, was up 157 per cent.

HFA, which listed on the Australian stock exchange in April 2006, said the result beat its prospectus forecast guidance of a $13.9 million profit, by 46 per cent. The strong result reflected continued inflows into its hedge fund products, plus two capital raisings during the year.

Chief executive Paul Jensen said the outlook for the company remained very positive despite recent equity market volatility, which caused a sharp fall in HFA's share price. The declining share price forced HFA to postpone an estimated $700 million cash-and-scrip takeover of US counterpart and long-time investment partner Lighthouse Investment Partners.

HFA previously told the market that it had taken short positions on the US sub-prime mortgage market and was therefore benefiting from the crisis, but that hasn't stopped its shares falling from $3.00 on July 25 to a low of $1.65 on August 15. By 1500 AEST, HFA was up seven cents, or 3.4 per cent, at $2.15.

Mr Jensen said global share market upheaval presented HFA with an opportunity to promote the value of absolute return funds. "The complacency toward risk that has been present in investment markets for some time has been removed and we are looking forward to maximising this change in investor sentiment to promote absolute return fund investing and its unique qualities."

Absolute return funds attempt to provide more consistent annual returns, so might underperform the rest of the market in good times but outperform in bad times.

HFA will reopen two of its funds for investment in the first half of fiscal 2008.

The company declared a fully franked final dividend of four cents a share, bringing the total dividend to 8.1 cents for 2006/07, up 80 per cent on the previous financial year.

For those who are not doing so well, we can always rely on country music!

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