ASX Shares Magellan Financial Group (MFG): meteoric rise in 2019

Magellan Financial Group share price has climbed 50% from its 52-week low: Is it a buy? | Motley Fool Australia

Any comments? Fully franked dividend yield of 4.1%. International proxy.

 

Only that I shouldn't have been so timid and let this one slip by a couple of years ago.

I've a fondness for "ticket clippers" but this and Platinum somehow couldn't get pass my mental blocker at the time.

Now, it'll be a pass for me but not because I don't think they are no good. Just the number of different holdings to which I limit myself. Have rule, stick to it - unless I change my mind

 

BKI has it in its top 25 recently so that’s good enough

 

Magellan Financial Group (ASX:MFG) CIO Hamish Douglass takes a leave of absence

CEO Brett Cairns departed late last year also

 

Marital strife I heard on a podcast.

 

We lost 60%

 

Bullet well and truly dodged on both counts!

 

Oh crap.

 

I put it down to the wisdom of pure, dumb luck.

 

Just saw this. It has been really hammered.

As an aside, I assume the funds hanging off MFG are also down as well.

 

I used to also subscribe to the ticket clipper concept….alas it was a simple heuristic that was missing the forest for the trees. Industry headwinds + SPIVA + key man risk.

 

I am reading a book called 'Rationality" by Steven Pinker (its not a finance book).
In one of the chapters, there is an anecdote about one Bill Miller, anointed by CNN Money in 2006 as "The Greatest Money Manager of Our Time" for beating the S&P stock market index fifteen years in a row.

Pinker points out that the chance that some manager had a 15-year winning streak sometime over a period of 40 years is not at all unlikely (it's 3 in 4). He says:
The CNN Money headline could have read "Expected 15-year Run Finally Occurs: Bill Miller is the Lucky One". Sure enough, Miller's luck ran out, and in the following two years the market "handily pulverised him"

Some similarity to the Magellan manager maybe?

 

I'm currently accumulating a position in PTM. The risk is their fees are high and without out-performance they shed further FUM. The attraction is the natural leverage to a favourable market for their investment style and that they haven't wavered or fallen apart when markets were against them for an extended period.

Magellen share price shows the leverage in-bedded in a funds manager business. the magnitude of the rise and fall are not un-expected given the leverage. Unfortunately Magellan seems to be losing discipline and falling apart soon after the market no longer favors their style.

PTM funds have been outperforming strongly just recently. Out-performance typically leads fund flows. A sustained period of outperfrormance is also needed to get PTM funds back to high water marks so performance fees can be generated. But if the recent performance persists the punters will return and pay the fees. Whether this ends up as a cyclical investment or a long term hold depends on how sustainable the fee level is, I'm on the side of fees for active being unjustified and under pressure long term, but are their enough people that disagree? I'm sure if PTM outperforms and I expect the market to continue to favour them, then there will be heaps that disagree with me. Despite losing FUM for a long time in a market not suited to them they are still alive and faithful to their beliefs - That is what really attracts me but I don't expect a smooth ride.

I don't expect most will agree with me - at least I hope the won't otherwise I likely have my timing wrong.

 

Agree PTM has stuck to their guns. The main strategy (intl fund) has underperformed for 1-3-5-10 years now. It would take both performance and time for adviser groups and retail to come back imho as this is the first thing these punters look to. There are plenty of other international strategies now with supportive performance records if one wants active management. Back in the day PTM totally owned the space.

MGF also in the same position. I’m curious if there are examples of listed managers coming out the other side of very long periods of underperformance and fund flows returning. PTM at least has the Asia strategy which has performed well relative to benchmark

Of course even with some outflows if performance is good enough they can grow FUM and pick up the performance fees. The 1.3%++ large cap fund model is dying, the youf have no interest in boomer value investing etc but if the valuation is undemanding and capex negligible, variable overhead there is not a lot of downside. I looked at it when Judith Nielson was selling but in the end was too hard for me.

 

PTM had outflows of approximately $168 million in December 2021, and $134 million in January 2022

Here's hoping it gets back to its highs

ASX has the annual yield at 9.37%

 

I still hold MFF, but didn't bite the bullet on MFG. Sorry to those that did.

Still holding PMC, whose NTA has way outperformed, and PTM, whose P/E makes it very cheap and probably a lower risk option given their yield and potential inflows (eg from MFG). Forgot to mention that Judith's rushed exit may not have helped sellers, but it sure helped buyers.

That being said, my strategic asset allocation no longer includes any of these and can hopefully exit in rosier times.

 

The approach of PMC seems to be one of selling picks and shovels to the miners. I've sold it but I recall Samsung was in its Top 10 holdings. All those big, flashy products need grunt to work.

 

I own a very small amount of PMC and I see from their latest nta report that Samsung is their 5th largest holding, but makes up only 2.7% of the portfolio. Their largest holding makes up only 3%. They must have a lot of holdings!

 

Got to love thread drift. IT is 15.9% including Iris Energy a bitcoin miner.

 

Sentiments are not good atm. We lost a fair bit with shares (recent entry at peak) on paper. We will likely hold for now. Make a bit with property. Win some lose some I guess.