Funds Management Companies

[mark100]

I'm taking up my 1 for 3 CAF @ 32c and applying for more. Mkt likes the news and I'm believing in the turn around story and low entry looks good but DYOR. hows all the other FMA's performing for you all?

I grabbed a few pre the ex date and then sold out. I'll be applying for my entitlement plus extra. The 2.2c div target is a promising sign that the turnaround is going to happen

[Joshuatree]

Smart move mark, sharpest tool in the shed . I'm more of a crayon attempting to join up dots.

[Huang Chung]

News today that K2 will be involved in managing a new international LIC to be listed in the next FY.

After selling out a few months ago, I picked up a small stake today on the presumption that K2 shareholders MIGHT get a look in on the float of the new LIC. The standard fare with these things seems to be subscribers get a free option for each share subscribed for. Have absolutely no idea if this will be the case with this new listing (or that K2 shareholders will even get a look in) but, for a small outlay, it seems worthwhile to get a foot in the door just in case K2 shareholders are offered a piece of the pie.

http://stocknessmonster.com/news-ite...E=ASX&N=405941

[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.

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.

One of FPS' flagship funds, the Fiducian India Fund is up 33% in the last 6 months

the Fund is available on a number of wrap platforms and is being widely marketed (ie not just to the FPS client base)

With the new favourable political environment in India, and the Indian stock market breaking all records (and now surpassing ASX in terms of market capitalisation) this is likely to continue to attract fund inflow from Australian planners/investors looking for exposure to India.

the 33% return over the past 6 months will have significantly increased the size of the fund and thus the fees drawn by FPS

May not be a huge driver of earnings, but certainly helps momentum

[mark100]

One of FPS' flagship funds, the Fiducian India Fund is up 33% in the last 6 months

the Fund is available on a number of wrap platforms and is being widely marketed (ie not just to the FPS client base)

With the new favourable political environment in India, and the Indian stock market breaking all records (and now surpassing ASX in terms of market capitalisation) this is likely to continue to attract fund inflow from Australian planners/investors looking for exposure to India.

the 33% return over the past 6 months will have significantly increased the size of the fund and thus the fees drawn by FPS

May not be a huge driver of earnings, but certainly helps momentum

Good point stevefleming. I continue to hold FPS

[soulman]

Good point stevefleming. I continue to hold FPS

Is PPT 11.89% holdings of TRG purely a fundies investment or a future takeover?

[mark100]

Posted this on hc. Careful though there appears to be a big seller lurking

The more research I do on HFA the more I think it's a bargain at current prices.

Obviously profit can swing around a bit due to performance fees. Looking back to pre GFC times the performance fees were much higher than they are today which shows the potential that is there for much higher profits.

In 2006 $13.5m of performance fees with year end AUM of $2.6b.
In 2007 $39m of performance fees with year end AUM of $3.9b. What a year!
In 2008 $9.4m of performance fees with year end AUM of $9.4b.

Since 2008 performance fees have been miserable at less that US$5m pa however H1 2014 was the first half since 2008 that showed some promise in this area.

I'm sure the future share dilution due to the conversion of the convertible notes is hindering the share price but in terms of reported profit, in around 2 years it will be boosted in the order of $9.2m pa when the management rights are fully amortised. They have been amortising at a rate of $9.2m pa and as at Dec 2013 have been amortised down to $22.9m.

Looking at a pro-forma FY14 estimate that includes full amortisation of the management rights and full conversion of the convertible notes:

H1 2014 NPAT - US$6.9m
H2 2014 NPAT estimate - US$5m (allowed for reduced performance fee)
Total reported FY14 NPAT - US$12m
Add Management rights amortisation - US$9.2m
Add interest saved on conversion of convertible notes - US$2.5m
Total Pro-forma 2014 NPAT - US$23.7m
Fully diluted shares on issue following C.N. conversion - 208m
EPS - US$0.114
EPS - A$0.124

So at $1.00 the proforma PE is in the order of 8x. In addition the fully diluted market cap is $208m with net cash in the order of A$25m.

What PE should a debt free global hedge fund manager with in excess of $8b AUM trade at? I would argue 15x is not hard to justify, giving a price target around $1.85. This target should rise as AUM grow and HFA's cash pile builds.

Obviously I hold...

Looks like the market is catching on here. And the buyback of the CNs improves the EPS well above what I estimated in my previous post

[Joshuatree]

Of many of the Funds management stocks CAF is holding up well above 60 and180 DMA
BLA above 180 just below 60
HFA dropping to 60 DMA
AEF just above 60
PPS below 60 above 180
MFG,TRG hitting 180
FPS,EQT,KAM,AFV,PFG,RFL,BTT,PTM,PPT,CGF all below 180 DMA


Holding CAF (just)

[mark100]

Of many of the Funds management stocks CAF is holding up well above 60 and180 DMA
BLA above 180 just below 60
HFA dropping to 60 DMA
AEF just above 60
PPS below 60 above 180
MFG,TRG hitting 180
FPS,EQT,KAM,AFV,PFG,RFL,BTT,PTM,PPT,CGF all below 180 DMA


Holding CAF (just)

I'm all out of CAF and AEF, mainly on valuation grounds for the time being. 75% of FPS were sold in the week after going ex div although I still have most of my HFA which has only been trimmed slightly. Should have sold them all when the facebook hype was on!

All up I'm about 70% cash at the moment even though I hate holding cash

[Joshuatree]

CAF still holding up there haven't checked others. You back in buying a few FPS Mark?