ASX Shares PTM: kerr Neilson hands over reigns

Kerr Neilson to leave Platinum top job, Andrew Clifford to succeed as CEO

Kerr hands over to Andrew Clifford. This was obviously coming one day, no-one lives forever, but what about the reaction:

PTM drops 13% today. Yield now around 4.4%. Proxy for international although not in a diversified sense.

Any thoughts?

 

PMC indirectly effected?

 

Reins?

 

Great buying opportunity fundamentally imho. The fog of war. Volatility today and over the subsequent weeks will likely be noise. I could be wrong though but definitely still of interest re: medium to long-term:

• Succession Plan whereby Kerr Neilson (MD since 1993) moves into the role of Executive Director (1-July-2018), moving away from day-to-day operations to now providing strategic mentorship and soundboard to up and coming Platinum stars
• Commitment to stay highly involved (e.g., continuing with company research and investment ideas/innovations)
• Kerr Neilson + ex-wife own a combined 53.2% of Platinum
• Over the past 5yrs (2013), Kerr Neilson had already handed over Chief Investment Officer role to co-founder of Platinum, Andrew Clifford.
• Flagship fund to be led by Andrew Clifford and Clay Smolinksi

Platinum's Kerr Neilson shows how to handle key man risk

Disclosure: I just bought in today @ $6.70
6.2% yield with Franking

 

I was surprised by the reaction too. Not sure why it was sold off that heavily. Didn't have any PTM until today

 

Changing guard at Platinum Asset Management | Sky News Australia

 

Between CBA and PTM which company is at higher risk? 6.2% is better than before but CBA div at today’s price is 8.1% grossed up. Maybe PTM has better growth prospect?

 

I estimate the likelihood of CBA going bust to be less than PTM. The competitive advantage / economic moat / start-up costs of a funds management company would be much smaller than a bank. Consider for example Vertium Ex-IML portfolio manager launches new boutique started by ex-IML analyst Jason Teh.

In addition, business models are evolving rapidly with technology and the advent of ETFs that can track anything (two flies walking up a wall - ETF FLY), will erode the business of fund managers (Subscribe to read).

Although this applies to banks too, who have to compete with peer to peer loans and other online lenders (How Banks Can Compete Against an Army of Fintech Startups) for example I can't see a monolith like CBA missing the boat on the disruptive tech.

Regardless, I'm not buying CBA at the moment with an over-allocation to the big 4 banks in my Australian LIC/ETF portfolio. I considered PTM yesterday but I was too slow (busy) to make up my mind - just shows how formulaic my buying decision is....it's very much based on gut feeling at the moment - checked yield (4.4% without including franking), the charts (big drop recently), EPS vs DPS (earns more than it pays) and still believe in PTM the company. IMHO PTM is one of the leading managers in Australia with a proven track record, who have made some positive decisions of late like reducing fees (Platinum cuts fees, readies to launch ETMFs) that show to me they understand the competitive landscape in which they sit; and Kerr Neilson has obviously supposedly set up a succession plan within a process-driven organisation that can continue without him. Active management has its place and PTM's stable (PMC et al) have had a good run in the recent past without taking advantage of the US bubble; whether that's a good or bad thing I will leave that to the reader to decide.

Not advice...just rambling.

 

I am conservative so when i buy direct shares i try to build in some margin of safety that the dividend yield is 8% or above so if they cut dividend by say 30% then yield woyld still be above mortgage rate.

Although this strategy does not seem to work with Telstra div cut hence share price hammered

 

If I was to buy bank shares now it would be NAB.

 

I think bank shares are not going anywhere any time soon, with the royal commission still ongoing and CBA facing a few investigations. PTM on the other hand appealed to me as the drop on Friday seems excessive for what I thought is a rather good CEO transition. Perhaps market knows something I don't, but happy to pick up PTM on Friday and take my time to buy more bank shares (I've quite a bit of it already).

Just curious, why NAB and not others? I can understand avoiding CBA but thought the others look comparable.

 

Not buying bank shares as per previous post, but I think NAB has more upside and yield is higher.

 

PTM down to 6.20. Is this drop justified or fickle investor sentiment?

 

Perhaps general negative market sentiment plus CEO retirement a few days apart just add to the investors' anxiety? Waiting for further drop to see if I want to add more to the portfolio.

 

$5.99 today. Definitely sentiment: Kerr's imminent departure must have already been priced in. Algo shorting opportunity.

 

An interesting article from him:

https://www.asx.com.au/education/investor-update-newsletter/201803-kerr-neilson-capitalising-on-technology-driven-megatrends.htm?