Tatton Asset Management Share Price (TAM)

AUM jumped £3.8bn or +30% in FY24, reaching £16.6bn on 31 Mar 24, 12% above our previous forecast of £14.7bn. Including 50%-owned 8AM Global, Assets Under Influence hit £17.6bn. Investment performance provided a tailwind, adding £1.5bn to AUM. But our key takeaway from Tatton’s hugely impressive last few years, is that it has designed and implemented a superior offering in platform-MPS with net flows consistently far higher than peers. That leadership looks even more pronounced in H2-24 with net flows of £1.4bn v £0.9bn in H1.

Forecasts increase on the jump in AUM, although Tatton has flagged that flows were elevated in H2 and unlikely to continue at quite the same level. Our fundamental value rises to 620p per share (prev. 580p). We will re-visit forecasts in June with final results and when Tatton presents an updated strategic growth target. We also flag growing trading volumes/interest in TAM shares.

New research report: https://www.equitydevelopment.co.uk/research/aum-up-30-in-fy24-record-flows-forecasts-raised

Tatton Asset Management (AIM: TAM) ran viewers through highlights of the period to 30th September which included strong net inflows and growth in revenues & profits, with adjusted operating margin hitting 50.7% - far above any comparables.

Management provided a financial review and outlined the significant growth potential going forward. With strong tailwinds they detailed the opportunities and challenges around M&A with price expectations remaining high, while highlighting their organic growth in market share. An in-depth summary of investment performance was followed by questions from viewers.

Paul Hogarth (Chief Executive Officer), Paul Edwards (Chief Financial Officer), and Lothar Mentel (Chief Investment Officer) presented from the company.

The presentation has been divided into chapters for ease of viewing:

0:00:03 Overview of Tatton AM

0:02:01 Key Highlights

0:05:20 Financial Performance

0:13:15 Strategic Update

0:27:46 Investment Management Update

0:37:45 Summary

0:37:53 Questions & Answers

Link to video: https://www.equitydevelopment.co.uk/research/tatton-asset-management-interim-results-investor-presentation-22-november-2023

And in the Tatton analyst presentation this morning, company confirms it has hit its £15bn assets under management/influence target early- in March 2021 (when AUM was £9bn) it set out to reach a £15bn target by March 2024

AUM grew 8% over H1-24 (to 30 Sep 23) from £12.7bn to £13.7bn. Net inflows totalled +£910m (7% of opening AUM), an inflow rate far above most peers, with some experiencing substantial outflows (see page 2). Investment performance contributed +£100m to AUM. Encouragingly, Tatton reports that the level of net inflows of H1 has continued into H2.

Revenue was up 10% y-o-y from £15.9m in H1-23 to £17.5m; adjusted operating profit (AOP) increased 11% from £8.0m to £8.9m; and AOP margin hit 50.7%, from an already-impressive 50.1% in H1-23. These margins are far above any comparable business (see page 7).

We highlight the significant growth potential going forward (detailed on pages 9-12): Tatton is in a growing market with significant tailwinds; it has a market-leading proposition and is gaining market share; it has a huge opportunity to grow AUM even without winning new clients (by increasing average AUM per client); and it can accelerate growth through strategic partnerships and acquisitions.

Our fundamental valuation is 580p per share, 18% above the current share price. We also flag that since the end of the bull market (end of 2021), investment/wealth managers and platforms have ‘de-rated’ significantly, with the median PER of a tracked peer group declining 47% from 27.6 to 14.6. We believe there is potential for a significant sector re-rating (see page 16).

Link to report: https://www.equitydevelopment.co.uk/research/sector-leading-net-flows-double-digit-profit-growth

Tatton Asset Management (AIM: TAM), the investment management and IFA support services Group, will be conducting a presentation covering its Interim Results for the six months ended 30 September 2023.

The event will be hosted by Paul Hogarth (Chief Executive Officer), Paul Edwards (Chief Financial Officer), and Lothar Mentel (Chief Investment Officer).

The online presentation will take place at 2.00pm on Wednesday 22nd November, and is open to all existing and potential shareholders.

The webinar is open to all existing and potential shareholders. Questions can be submitted during the presentation to be addressed at the end.

Link to register: https://www.equitydevelopment.co.uk/news-and-events/tattonam-investor-presentation-22november2023