Fund managers embroiled in the collapse of Centro Property Group (Centro) should have noticed the signs months ahead of time, ShareFinder managing director said.
"I don't know why it still amazes me that fund managers get caught in stocks such as Centro Properties Group. I shouldn't be amazed after so many occurrences", ShareFinder managing director Gary Stone said.
"The technical signals have been there for months to get all your investing capital out of Centro Properties. Both of our mechanical systems would have had you right out of Centro months ago. Customers using our medium-term system, SPA3, would have been out at $9.18 on 19 March 2007 and users of our long-term system, AUREUS, at $8.13 on 12 July 2007," Stone said.
Shares in Centro collapsed on Monday after the management slashed its profit forecasts and admitted the firm was struggling to refinance its debt.
Its shares fell a whopping 76 per cent on Monday to $1.36 after the firm issued a statement saying it had failed to renegotiate $1.3 billion worth of debt.
Dividend forecast was downgraded from 47 cents a share, to 40.6 cents.
Stone said the sad reality is that the majority of current shareholders would have bought into Centro when the share price was above $4.00.
University of Technology Sydney professor Spike Boydell said as a result of Centro's collapse there will be a lot of very nervous players in the property market in 2008.
"It remains to be seen if Centro is the tip of the iceberg. What is certain is that there will be a lot more focus on what lies underneath property trusts, and that can only be a good thing," Boydell said.
"The retail sector is already under scrutiny with last weeks Productivity Commission Draft Report: The Market for Retail Tenancy Leases in Australia. History suggests that the long-term nature of property investments should ensure those who can ride the storm will come out smiling. In the meantime, there are going to be a lot of nervous valuers and fund managers over the next few months."
Centro Property Group shares closed up 49.69 per cent to $1.205.
