Dividend Portfolio: Platinum Asset Management (ASX: PTM)
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Overview: Platinum Asset Management Ltd ("Platinum Asset", "PTM", "the Company") is an Australian financial services firm focused on funds management. Platinum Asset is the holding company of Platinum Investment Management Ltd, which manages 14 funds and two listed investment companies ("LICs"). As of June 2017, Platinum had funds under management ("FUM") totalling $22.7 billion.
Catalysts: Platinum Asset has gone through a period of underperformance due to fund outflows and being the underweight U.S., but management has taken actions to respond to structural industry changes. Historically Platinum Asset has outperformed in challenging conditions and bear markets, providing investors the opportunity to hedge against the market whilst maintaining long exposure to equities. PTM is on track to distribute a fully franked dividend-yielding approximately 6% p.a.
Hurdles: The funds management industry experiences structural changes as investors shift towards Exchange Traded Funds ("ETFs") and indices and ongoing indexation could further erode funds under management, which have declined over the past two years. There is no guarantee that new pricing structures will retain clients and attract fund inflows. The performance of the Company’s funds is subject to general market volatility.
Investment View: Platinum Asset offers profitable exposure to asset management trends and global equity markets. We are attracted to management’s track record, recent product changes, and Platinum’s hedge fund nature. Ongoing fund outflows and market volatility are principal risks. Following two years of stock price depreciation and fund outflows, Platinum Asset may be at an inflection point following recent management actions. The Company has a strong long-term track record of value creation and we are attracted to the fully franked 6% dividend. We initiate coverage with a ‘buy’ recommendation.
General Information Only
This material has been prepared by Jason Price. Jason Price is an authorised representative (AR 000296877) of 62 Consulting Pty Limited (ABN 88 664 809 303) (AFSL 548573) (62C), and a Director of S3 Consortium Pty Ltd (trading as StocksDigital).
This material is general advice only and is not an offer for the purchase or sale of any financial product or service. The material is not intended to provide you with personal financial or tax advice and does not take into account your personal objectives, financial situation or needs. Although we believe that the material is correct, no warranty of accuracy, reliability or completeness is given, except for liability under statute which cannot be excluded. Please note that past performance may not be indicative of future performance and that no guarantee of performance, the return of capital or a particular rate of return is given by 62C, Jason Price, StocksDigital, any of their related body corporates or any other person. To the maximum extent possible, 62C, Jason Price, StocksDigital, their related body corporates or any other person do not accept any liability for any statement in this material.
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The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.
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