Platinum Asset Management Limited

PTM Details

Launching exchange traded versions of actively managed funds: During April 2017, Funds under Management grew by 3.4% month on month to $23.9 billion, while it grew by same percentage from December 2016. Recently, the company announced new Exchange Traded Managed Funds (“ETMFs”) and changes to product fees. The group will launch two Exchange Traded Managed Funds (ETMFs) in August 2017 as part of the strategy to help investors to access Platinum’s International and Asian equity strategies via the ASX. These new products will be structured as feeder funds into the existing unlisted Platinum International Fund and Platinum Asia Fund respectively, therefore they will have the same portfolio composition, portfolio managers and investment strategy as the underlying funds.

 
The group has lowered the standard management costs on the Platinum Trust Funds and Platinum Global Fund from 1.5% to 1.35% pa to benefit clients with regards to channel choice and price options. However, the current fee and cost reductions will not have impact on 2017 revenues or profit as will not come into effect until on or about 3 July 2017, but are expected to lower PTM’s 2018 revenue. The stock has fallen by 21% and 33% over the past six months and twelve months respectively owing to subdued growth in revenue in line with the FUM. However, we expect that the company to regain the steam driven by long-term efforts, and maintain a “Buy” recommendation at the current price of $ 4.48.

Magellan Financial Group Ltd

MFG Details

Well balanced and positioned to grow:For April 2017, Magellan Financial Group Ltd (ASX: MFG) reported about 5.4% Month on Month growth in total Funds under Management (FUM) at $50.4 billion against $47.8 billion as at March 2017. Total net inflows stood at $109 million against an outflow of $27 million during March. However, net retail inflows into Global Equities strategiesdeclined to $38 million against $69 million in March, while net retail inflows into Infrastructure Equities and net institutional inflows for April were reported to be $26 million ($19 million in March) and $45 million (outflows of $115 million in March), respectively. Although fund inflows have been growing, earnings have been impacting by revenue from performance fee due to constant fluctuations in global equities. We believe that catalysts such as attractive inflows coupled with historical investment performance track record and continuous focus to outperform global benchmark indices can drive momentum going forward from a long-term perspective. We give a “Buy” recommendation on the stock at the current price of $ 25.81.

WAM Capital Limited

WAM Details

Recently, WAM Microcap completed its $154 million capital raising on 15 May 2017, and it will provide shareholders with risk-adjusted returns derived from a portfolio of undervalued growth companies listed on the ASX with a market capitalization of less than $300 million by using Wilson Asset Management’s research-driven and market-driven investment processes. The company’s investment objectives are to deliver a stream of fully franked dividends and capital growth over the medium-to-long term by preserve capital. Further, WAM Capital acquired an unlisted investment company with net assets of approximately $25.5 million by issuing 13,246,376 new WAM Capital shares. The acquisition is expected to benefit existing WAM Capital shareholders by increasing the size of the investment portfolio in a cost-effective manner.


Assets under management; (Source: company reports)
 
For H1FY17, WAM Capital reported an operating profit before tax of $79.7 million against $103.0 million in H1FY16, and operating profit after tax decline to $59.1 million from $74.6 million during the same period in 2015, due to the change in value of the investment portfolio between the periods. We give a “Hold” recommendation on the stock at the current price of $ 2.28

Contango Microcap Ltd

CTN Details

Back to a single manager structure: On 31 May2017, the company announced its on-market buy-back program for ordinary shares up to the maximum aggregate amount of $5 million. The buyback program is expected to commence from 19 June 2017 and to remain in place for a period of up to 12 months or until all funds have been utilized. Based on the company’s closing share price of $0.885 on 30 May 2017, this would equate to approximately 3.35% of the company’s issued capital. Further, the company has completed its review of the dual investment manager structure and has been in constructive engagement with both appointed managers to ensure the best interests of CTN’s shareholders are met. In practice, the dual manager structure has resulted in managing two portfolios which has resulted in a material overlapping of positions between the managers, increased concentration risk and confusion for brokers and market participants. In addition, CTN's current dual manager structure has increased the cost and complexity of reporting and overseeing its investments. Contango Funds Management Limited (subsidiary of Contango Asset Management) and OC Funds Management Pty Ltd (OCFM) reached a resolution to return to a single manager structure as OCFM ceased providing investment management services to the company from 25 May 2015.  We give a “Buy” recommendation on the stock at the current price of $ 0.895

Perpetual Limited

PPT Details

Growth in FUM driven by market appreciation: During Q3FY17, Perpetual Limited’s (ASX:PPT) funds under management (FUM) grew by $1.0 billion to $32.9 billion over the prior quarter. Net inflows for the quarter stood at $0.1 billion, while the average FUM for the three months to 31 March 2017 were $31.9 billion. Further, change in FUM over the quarter was primarily led by market appreciation with the All Ordinaries Index up 3.2%, increasing FUM by $0.9 billion, while it also experienced $0.8 billion of net inflows into cash and fixed Income, $0.6 billion of net outflows from Australian Equities primarily from the Institutional and Intermediary channels, and $0.1 billion of net outflows from other asset classes from the retail channel. For H1FY17, the company reported 5% yoy growth in revenue at $252.4, while posting 2% yoy growth in statutory net profit after tax (NPAT) at $66 million. Over the past twelve months, the stock has moved up by 23.5% owing to modest financial performance, and currently the stock is trading at its 52 week high levels. We give an “Expensive” recommendation on the stock at the current price of $ 53.2

BT Investment

BTT Details

Recently, Westpac Group sold its partial stake of 60 million shares at $10.75 per share in BT Investment Management Limited. However, it will retain a 9.8% holding in BTIM and retained shares will be subject to a voluntary escrow until after the release of BTIM’s FY2018 interim results announcement in May 2018.

The company’s FUM grew by 9% to $91.2 billion in H1FY17 against $84.0 billion at 30 September 2016, driven by strong net inflows of $4.6 billion and $3.9 billion on positive markets and investment performance, offset by unfavorable foreign exchange movements of $1.3 billion due to the stronger Australian Dollar. The stock has moved up by 15% during the last three months, while it was down by 9.5% during last one month as on 02 June 2017.We give an “Expensive” recommendation on the stock at the current market price of $ 11.5

Henderson Group plc

HGG Details

Merger to create a Global active manager with diverse footprint: Henderson Group completed its all-stock merger with Janus Henderson Group plc.  Janus Henderson is a leading global active asset manager with assets under management (AUM) of approximately U.S.$331 billion (as at 31 March 2017) with a market capitalization of approximately U.S.$6 billion. Notably, the merger is expected to create a global active asset manager with a diverse geographic footprint with Janus’s strength in the U.S. markets and Henderson’s strength in the U.K. and European markets. Simultaneously with Henderson Group plc's delisting from the London Stock Exchange, Janus Henderson lists its shares on the New York Stock Exchange (NYSE) under the ticker symbol “JHG” (NYSE: JHG). From 13 June 2017, Janus Henderson securities will trade on the ASX under the ticker symbol “JHG” (ASX: JHG) and the merged entity will market its products and services as Janus Henderson Investors.
 
For Q1FY17, HGGs assets under management (AUM) increased to £103.1bn against 101.0bn at 31 December 2016, largely driven by positive investment performance and FX gains as it witnessed net outflow of £1.4bn from retail and £0.4bn from institutional clients. However, the long-term investment performance remained strong with 73% of funds outperforming over the past three years. While retail client outflows continued during the quarter, there was an improvement in client sentiment and flows during the end of the quarter. Excluding the one-off outflows that resulted from the merger related restructuring of global equities team, institutional business continues to witness see stable growth with a healthy number of mandates funding since the quarter ending.
 

AUM flows
 
Over the past three months, the stock has moved up 20.4%, while it was down by 18.3% in the last twelve months as on 02 June 2017.We give an “Expensive” recommendation on the stock at the current price of $ 44.78.

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