This ship is ready to sail, jump on board
Platinum Asset Management is an Australian based fund manager specialising in International Equities with a leaning towards Asian markets. The company manages $23 billion and should generate a net profit next year of around $180 million. The highly regarded fund managers at Platinum have had a rough couple of years in the markets. But let’s face it; who hasn’t?
Looking a little longer term I am sure those that have been invested for the last 5 years in the Platinum International Fund wouldn’t be disappointed with a return of 14.5% per annum.
Source: Platinum Asset Management
Due to the under performance versus their relative benchmarks in the last few years, investors have been redeeming their money and the share price has been punished in tandem. The stock is actually down a whopping 39% since December last year. This is what made me take a closer look to find out if the situation is a bad as what the market thinks?
Well, last week the company posted some very positive news of outperformance from their flagship Platinum International Fund. The International fund outperformed the index by around 4% over the past quarter. In my view this is very bullish for the stock as it should drive more investment dollars back under Platinum’s management. In the funds management game it is all about performance and inflows as their revenue comes from a percentage of how much money they are managing. So they make more money not just on new people investing their money in Platinum’s funds but also when markets rise. In my view I feel this is a serious inflection point and provides the platinum sales force with a nice tailwind to generate business.
The other reason I like this stock is the fact that it has very good exposure to the wealthy retired baby boomers who manage their own Self Managed Super Funds (One of my pet themes). Currently overseas share investments account for approximately 0.5% of investments in Self Managed Super Funds so there is plenty of growth for Platinum to aggressively pursue this market.
Investors buying the stock in their Super Funds will also enjoy a 5.8% fully franked yield which will gross up to 8.2%. Not bad when you compare it to the 1.5% cash rate. These are some pretty handsome numbers for a company that has hit a rough patch so imagine what those figures could look like in good times…