Eight Fund Manager stocks to watch out for

 
Contango Microcap Ltd


CTN Details

Improving performance: Contango Microcap Ltd (ASX: CTN) stock surged over 23% (as on August 26, 2016) in the last three months driven by the group’s improving assets performance. Net Assets after Tax rose to $190.13m as of July 31^st, 2016 as compared to $179.84m in June 2016. CTN has also realised the equity holding in its subsidiary Contango Asset Management Limited (CAML) sold effective June 30, 2016. The purchase price for CAML has been $13m and this represents profits of $2m to CTN. CAML delivered 15.7% rate of return over last 12 years since beginning. In the above regard, Tyrian diagnostics has signed an implementation agreement to support the management buyout of Contango Asset Management.
 

Net Tangible Assets, Asset Composition & Investment Portfolio of CTN (Source: Company Reports)
 
On the other side, the company has strong future position as CTN had earlier mentioned that it has sufficient reserves of $13.9m for the dividends of next two years. Despite the recent stock rally, the group is trading at a reasonable P/E. We give a “Hold” on this dividend yield stock at the current price of $1.16
 

CTN Daily Chart (Source: Thomson Reuters)
 
WAM Capital Limited


WAM Details

Boosting capital position: WAM Capital Limited (ASX: WAM) recently raised a capital of $247.2m through SPP and the placement was considerably oversubscribed (as on August 22, 2016). WAM raised more than $128.1m through SSP at the fixed price of $2.14 per share and also raised $119.1m through placement with the same terms as SPP. The group also reported a fully franked final dividend of 7.25 cents per share which will be paid in October, 2016.
 

Investment Update & Net Tangible assets of WAM (Source: Company Reports) 
 
The group’s NTA also increased from July’s number with the pretax NTA rising by $20.0 million or 3.41 cents per share from 196.68 cents per share to a theoretical pre-tax NTA of 200.09 cents per share. Accordingly, WAM stock rose over 4.2% (as on August 26, 2016) in last three months and still trading at a very cheap P/E. We maintain our “Hold” recommendation on this dividend yield stock at the current price of $2.24


WAM Daily Chart (Source: Thomson Reuters)
 
Perpetual Limited


PPT Details

Mixed performance: Perpetual Limited (ASX: PPT) reported a decent FY16 NPAT growth of 8% year on year (yoy) to $132 million in FY16 as compared to the same period of last year while fully franked full year dividend reached 255 cents per share, which rose 6% against FY15. This is the sixth consecutive half wherein the group generated positive net flows driven by net new clients and decent investment performance. On the other hand, the group’s operating revenue fell 1% to $494.2 million in FY16 as compared to $501.5 million in FY15.
 

Overview of results of FY16 (Source: Company Reports)
 
The group’s overall expenses also fell, while the cost to income ratio rose to 64% in FY16 against 62% in FY15. The stock has risen over 14.9% in the last three months (as on August 26, 2016) and is trading close to the 52-week high price. We believe that the stock is “Expensive” at the current price of $48.96
 

PPT Daily Chart (Source: Thomson Reuters)
 
Magellan Financial Group Ltd


MFG Details

Solid Average Funds under Management performance: Magellan Financial Group Ltd.’s (ASX: MFG) average funds under management rose over 27% to $39.4 billion for fiscal year of 2016 while reported profit after tax was of the order of $198.4m with an increase of 14% on a yoy basis. Whereas, fully diluted EPS of the group was up by 13% to 115.5 cents per share (cps). MFG also declared fully franked (interim & final) dividend of 89.3 cps which grew by 19% on a yoy basis.
 

MFG Final Results (Source: Company Reports)
 
The group manages $12b on behalf of their retail investors in Australia & New Zealand and also attracted $2.3b of net inflows during FY16. MFG launched a Colonial First State in May 2016 which is replica version of their infrastructure strategy and helps to boost penetration in Infrastructure. Magellan also has strong support for ASX quoted funds and replica funds on the AMP and BT/Westpac platforms. We put a “Hold” recommendation on the stock at the current price of $24.18
 

MFG Daily Chart (Source: Thomson Reuters)
 
Hunter Hall International Ltd


HHL Details

Meek growth for Funds under Management: Hunter Hall International Ltd (ASX: HHL) stated a PAT of $7.8m which is up by 86.8% on a yoy basis. The group got $1.782m in net performance fees from HCT & AVT. HHL also declared dividend of 28.7 cents per share for FY16.
 
  
FUM chart (Source: Company Reports)
 
Operating profit from investment management enhanced 10% on a yoy basis. On the other hand, the company’s funds under management rose only 1.9% to $1.139b from $1.118b in FY15. We believe that stock is “Expensive” at the current stock price of $4.23
 

HHL Daily Chart (Source: Thomson Reuters)
 
Henderson Group PLC


HGG Details

Market uncertainty impacted the performance: Henderson Group PLC (ASX: HGG) asset under management rose just 3% to £95 from £92 in FY15 while the underlying profit before tax fell to £100.5 million as of June 2016 as compared to £117.4 million as of June 2015, as Brexit uncertainty and outcome had impacted the performance.
 

Performance Fees (Source: Company Reports)
 
We believe the pressure on the stock would continue in the coming months given the economic conditions at the macro level. Considering all factors, we recommend “Expensive” at the current stock price of $4.20
 

HGG Daily Chart (Source: Thomson Reuters)
 
BT Investment Management Ltd


BTT Details

Expanding geographic diversity: BT Investment Management Ltd (ASX: BTT) reported an NPAT growth of 26% to $78.3m in first half of FY16. The group managed to increase the Funds under management of BTT to $79.7b as of June 30, 2016 as compared to $77.2 billion as of March 2016, which is $2.5 billion rise in FUM. Meanwhile, BTT is growing their products including Absolute return, and diversified income and demographic changes motivating rising demand of Income products. BTT also declared interim dividend of 18 cents per share in FY16 up by 6%. On the other hand, we believe that the company would continue to face performance pressure in the coming months given the ongoing currency fluctuations coupled with other market challenges. We give an “Expensive” recommendation on the stock at the price of $9.07

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BTT Daily Chart (Source: Thomson Reuters)
 
Platinum Asset (Investment) Management Limited


PTM Details

Softness in Performance: Platinum Asset Management Limited (ASX: PTM) reported a weak performance with the fee revenue falling 0.9% to $337.9 million (2015: $340.9 million) on account of average Funds Under Management declining by 1.2% to $25.8 billion (2015: $26.1 billion).  As a result, the stock fell over 4.11% in the last five days (as on August 26, 2016). We believe that the group has the ability to recover in the coming months given the expertise of the management.  We maintain our “Hold” recommendation on the stock at the current price of –
 

PTM Daily Chart (Source: Thomson Reuters)

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