The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
It's only RNS'd because Eastgate has crossed the 5% line by a marginal amount. When any insto or holder dips above or below certain %'s , in this case 5%, it triggers an auto RNS. These share adjustments are par for the course across the LSE listings. Nothing sinister or unusual.
Time to play 'Guess the Predator' at this level!
There's a lot of asset managers looking to consolidate premium quality teams and AuM out there......take your pick at this derisory sub £150m MCap.
The US banking wobble certainly sent ripples to this side of the pond and added to investor uncertainties linked to the 10% inflation rate. This resulted in fund outflows across the board as investors chased higher returns hence the current depth plumbing here. Quality will prevail as it always does and as interest rates fall many will realise that self investment is not as easy as they thought. The rebalance will happen in the near future and inflows to PMI and other asset managers will rise accordingly. Premier Miton has an excellent track record as a prudent, trusted and competent team witha vast range of products not solely equities. Yes it is in the doldrums at present but the tide may turn very quickly indeed, and given the current MCap and limited shares when that happens the rise could indeed surprise. Any purchases at this level, given the quality here, should see a probable 100% gain in a 12-24 month time frame. A bid situation although speculative could most definitely be on the cards at this level.
A decent divi is also available here so well worth the patience.
The fun bit comes when the supremely confident hedge fund manager who may gaining by this actually stimulates the process of his demise. Sector consolidation certainly means that predatory eyes will also be watching PMI which is now trading at less than half it's sensible value of just over £2 a share. I'd delight in seeing PMI capitulate to a £1.80 surprise approach and the hedge to spontaneously combust.
Just a matter of time/patience. At this level the upside as either a stand alone or, as is looking increasingly likely, the target of a takeover bid, is significant. It could very easily double from this sub £1 level. Solid management, good team and prudent decision making look pretty good credentials for PMI to be a very juicy addition for an existing predatory asset manager.
Significant discount to peers leaves Premier highly vulnerable to predation at present for the reasons listed below plus it's seasoned and prudent management team. Sector consolidation is moving rapidly this year and PMI is a peach.
Calculating the logical share price for a listed UK asset manager with 158 million shares in issue and managing assets of £11 billion requires several assumptions, as the valuation of an asset management company depends on a variety of factors such as investment performance, fee structure, client retention, and market conditions. Therefore, any estimate should be taken as indicative and subject to significant uncertainty.
One approach to estimating the logical share price is to use a multiple of the company's assets under management (AUM) or its earnings. The most common multiples used in the asset management industry are price-to-earnings (P/E) and price-to-book (P/B) ratios.
Assuming the company has a P/E ratio of 15 and an AUM-to-revenue ratio of 1.5%, the calculation for the logical share price would be:
Calculate the total revenue generated by the AUM: AUM x AUM-to-revenue ratio = £11bn x 1.5% = £165m
Calculate the earnings based on the P/E ratio: Earnings = Total revenue / P/E ratio = £165m / 15 = £11m
Calculate the book value of the company based on the AUM: Book value = AUM x P/B ratio = £11bn x 1.5 = £165m
Calculate the logical share price based on the book value and earnings: Logical share price = (Book value + (Earnings x P/E ratio)) / Total number of shares = (£165m + (£11m x 15)) / 158m = £2.11
Therefore, based on these assumptions, the logical share price for a listed UK asset manager with 158 million shares in issue and managing assets of £11 billion would be approximately £2.11.
With AuM of £11bn and an MCap of just £156m this management team would fit perfectly into a bigger underperformed to boost prospects... Interesting as both a pure play on solid fundamentals and team with the added spice that it's a peach of an opportunity for a bigger player to acquire PMI and liven up it's quality. As a decent dividend payer, even a reduction would still place it in the top echelon of divi returns.
Good to see AuM improved despite expected outflows due to financial sector blip. Premier is well positioned to benefit as sentiments shift and rebalance. Diverse exposure and a good team philosophy should see it be amongst the leaders going forward. Bit harsh to see it marked down aft market open but that should reverse as analysts look at improving sector prospects. Solid, but vulnerable to predation at this low price.
Agreed, the market is marking asset managers as a generic group with the same brush. PMI managed to steer itself well through the last decade as quality prevailed within a talented team. Last year was a tough one but Q4 22 seemed to indicate that the tide was turning post Covid. It's a difficult call given the current rise in inflation and cost of living constraints but PMI has a strong reputation and prudent management so should be one of the leaders as conditions improve. A firm hand on the tiller and a straight course are the key drivers. Hopefully there won't have been a dash for cash last quarter and AuM should be on the climb again.
It has been impossible to sell larger small quantities for several weeks. Today the situation has reversed with Mms happy to take on book. Is this an indication from the floor-whisperers that the furnaces are firing on all fours??? Possibly...
Let's hope Richard Sneller will be equally as scathing ..... and R Gledhill as they are in similar positions having followed progress and the current hurdle. To be quite honest, any news would be reassuring if put into the context of a hiccough being addressed with an accompanying timeframe. These challenges are common with scaleups, the demise in share price however lies fair and square on management shoulders for lack of updates.
Kevin Johnson really needs a shake. It is no good engaging with supportive investors highlighting a 'temporary problem' and then completely ignoring the update process. Zeus and Finncap are both negligent in failing to press management after such a sustained decline in share price which is not directly related to the bigger market. Seasoned holders are used to technical setbacks and swings having an eye on the bigger picture but a competent and proactive CEO should be actively engaged in reassurance rather than hiding in the shed. Can't see this lack of communication inspiring prospective customers despite the multiple OEM contracts. Poor management communications. Holding on but kicking myself for not selling out on anticipation earlier.
As a shareholder here it really cheeses me off when companies pander and promise great strides forward prior to wanting funds yet clam up tight when they highlight problems. It's fair enough stating there will be quarterly updates, but when you interrupt them to mention problems and then hide back behind the quarterly screen it sucks. It would be magnanimous to relay progress on a monthly basis. Pretty shoddy BoD performance given the overall underlying strengths and progress.
Yep. I have written to management but they say that they are adhering to their promise of quarterly updates ie April for quarterly and t/u. It is irritating that the furnace info was RNS'd 2 months after November update not 3 so an impromptu RNS would be appropriate to reassure investors. Those invested here are well aware of hiccoughs that are bound to happen during ramp up but it's good practice to keep newsflow active at this pivotal/transitional stage.
Having risen and consolidated at this level it's time for a new push to break the previous £1.30 up to the £1.38/40 level for the next consolidation phase. Prospects look good for first quarter AuM given previous outlook.