The casualties in the 'Great Gearing Correction' of 2007/2008 are starting too mount. A list of those who have not made it home reads as follows:
All have had a few things in common - former 'market darlings', opaque structures and afflicted by the dreaded 'HIGH GEARING RATIO'. The shorters, and their followers the *shock horror lets jump off a cliff* brigade, have sold these puppies into oblivion. In all cases (except for ABS - yet), the shorters have got it right as if there wasn't a struggling beast behind the vulture pack, a white knight would have seen value and bought up the oversold shares, causing the shorters to scramble back into their inner city dens.
So who is next?
This article in today's Age has a list of the shares that might not be prudent to be 'long' in in today's market. To paraphrase, these are the companies the nefarious hedgys are stalking today:
1. Transpacific Industries - net debt to equity 160%.
2. Iluka - 'gearing too high'. What 'too high' means, I do not know but 'too high' the 2008 is what 'too low' was to the bull pack of, er, 6 months ago.
3. Challenger - 'opaque structure'. What has happened to 'trust us'?
4. Crown - 'load of debt'. Repeat after me - debt is bad, debt is bad.
5. Asciano - not showing it's internal pain.
6. Mac Communications - 350% gearing. Fruit cake!
There is also some umming and ahhing about the King & Queen of financial engineering, fat fees and asset revaluations, MQC & BNB.
Any others that the shorters see as fair game? Given it is a bit an episode of Underbelly out there at the moment, we can be rest assured that some other former high flyer will be on the verge of coping it very soon.