Funds Management Companies

[mark100]

FPS had a very strong quarterly - they had no requirement to release a 4c, but thought that the cash flow information was such that it was market sensitive

A bit of a break-out happening, as the big sellers seem to be taking a break for the time being.

I have been whinging to FPS about their poor disclosure. The cash flow statement is handy but surely it would not be too hard for them to disclose their FUMA at quarterly intervals. It's pretty much standard practice in the industry.

Still holding decent amount of FPS and AEF, been buying more over the past month or so

[steve fleming]

http://www.fool.com.au/2013/11/07/wh...hould-you-own/

Which fund management company should you own?

t’s well known that fund management companies record much higher profits when the market is buoyant. This is because fund managers usually charge a management fee that is a percentage of their funds under management (FUM). When the market is up, fund managers invariably have more FUM, because the funds they are managing have grown through increasing investment returns.
A secondary effect of a rising market is that investors (for all the wrong reasons) are generally less likely to withdraw funds during a period of strong returns. Once the music stops, FUM can take a dive as investment returns turn negative and investors withdraw money. It’s fair to say that fund management is a cyclical business.
As Motley Fool contributor Peter Andersen writes, Macquarie Group (ASX: MQG) has improved earnings consistency with its shift towards funds management. Not only that, the profligacy of IPOs and positive sentiment is a positive for Macquarie’s investment banking business. Should the current optimism continue, Macquarie is very likely to grow profits.


Macquarie is worthy of consideration because the company was able to withstand the GFC while one of its major competitors went out of business. However, some commentators have suggested that the “millionaire factory” has overpaid executives in the past. The same cannot be said for boutique funds management company Fiducian Portfolio Services (ASX: FPS).


Fiducian has a network of in-house financial advisors and franchisee advisors. However, about 70% of its revenue comes from its boutique funds management business. Fiducian may not be the brightest star in the funds management universe, but the company has recorded reasonable results over the long term. Its most successful fund, which invests in smaller companies, has returned an average of 10.9% p.a. over the last 10 years. The Fiducian Australian Shares Fund has returned 9% p.a. over the same timeframe.
Fiducian’s cash flow statement for the quarter to September 2013, released today, reports net operating cash flow of over $1.8 million. That’s not bad for a company with a market capitalisation of under $40 million. Fortunately for shareholders such as myself, the company has a good history of paying dividends, and trades on a trailing yield of 5.9% fully franked. I consider Fiducian Portfolio Services to be attractive at current prices.


Another fund manager trading on an impressive (trailing) dividend yield is Hunter Hall(ASX: HHL). Hunter Hall manages the listed fund Hunter Hall Global Value (ASX: HHV), which is up about 17% in FY 2014. Hunter Hall’s unlisted Value Growth Trust has returned 7.4% p.a. in the last 10 years and its Australian Value Trust has returned 5.5% in the same timeframe.
Hunter Hall (the management company) has a market capitalisation of about $60 million and trades on a trailing yield of about 8.2%, partially franked. In 2012, the company hired David Deverall as the new managing director. Deverall previously led blue chip fund manager Perpetual (ASX: PPT). While Perpetual does have a very strong brand, the company yields less than the other fund managers mentioned in this article. Perpetual currently has a trailing dividend yield of about 3.6%, fully franked.

[steve fleming]

http://www.fool.com.au/2013/11/07/wh...hould-you-own/



Macquarie is worthy of consideration because the company was able to withstand the GFC while one of its major competitors went out of business. However, some commentators have suggested that the “millionaire factory” has overpaid executives in the past. The same cannot be said for boutique funds management company Fiducian Portfolio Services (ASX: FPS).


Fiducian has a network of in-house financial advisors and franchisee advisors. However, about 70% of its revenue comes from its boutique funds management business. Fiducian may not be the brightest star in the funds management universe, but the company has recorded reasonable results over the long term. Its most successful fund, which invests in smaller companies, has returned an average of 10.9% p.a. over the last 10 years. The Fiducian Australian Shares Fund has returned 9% p.a. over the same timeframe.
Fiducian’s cash flow statement for the quarter to September 2013, released today, reports net operating cash flow of over $1.8 million. That’s not bad for a company with a market capitalisation of under $40 million. Fortunately for shareholders such as myself, the company has a good history of paying dividends, and trades on a trailing yield of 5.9% fully franked. I consider Fiducian Portfolio Services to be attractive at current prices.

just on this, Claude Walker who contributes to Motley Fool, has his own website

He has a few more comments about FPS here: http://ethicalequities.com.au/fiduci...hflow-asx-fps/

He has a lot more detail on FPS if you subscribe to his hidden report

[blackcap]

Thanks for the info on FPS and links. It is a company I have had a small holding in for a while now and have been happy with. But with their latest quarterly being out I can see a substantial re-rating happening pretty quickly. If you annualise the quarterly result the FY cash flow is looking pretty impressive for a company with a market cap of $40m. Am thinking of adding to my holding for both great divs and potential upwards re-rating.

[steve fleming]

PFG closing today at what appears to be a multi year high

not sure how their FUM growth is going though; as reading their investment commentary, they have been bearish equities for many months

they always provide a market sensitive AGM update, so hopefully some good news in a couple of weeks

[Stranger_Danger]

Even WIG is making a few bucks again. Clearly a better environment for these companies at present.

[mark100]

Bullish AGM release from AEF. FUM continue to grow, now up 15% for the financial year to date. And that's not just from market movement, inflows are very solid

[soulman]

EQT released an update yesterday. NPAT from operating business projected to be up 10 to 15% from PCP.

[mark100]

Big profit jump forecast for HFA has prompted me to take a position. However it may not be as cheap as it first appears as there is a convertible note conversion in FY15 that will result in a lot of extra shares being issued, along with some offsetting interest costs.

Cash generation is very high however due to the high amortisation charge that reduces reported profit but still ends up in the bank account

[soulman]

Mark, what is your takes on the market in the next upcoming reporting season. Bullish or bearish? Also, are you cashed up or mostly invested?

Keen to know your view.