Financial Grime - 6 November 2018

Nov 06, 2018 / Financial Grime

News

  • Provident Financial (Share Price 537p Mkt Cap £1.36bn)

Gets a new CFO and Andrew Fisher steps down on 3 December.

  • ASA International (Share Price 442p Mkt Cap £442m)

The provider of international microfinance reports underlying loan book growth in line with expectations showing 34.2% growth in the loan portfolio but Asian currency weakness results in a downgrade.

Fund Managers 

  • Survey from Procensus, an opinion sharing platform for institutional shareholders yesterday showed that of 21 respondents two thirds wanted to see an external candidate taking over the CEO role at Aberdeen Standard Life in the next 12 months.
  • The performance of the smaller fund managers against the larger fund managers has been hugely diverse this year:

Miton                            +70%

Liontrust                       +24%

Polar                               -4%

Standard Life Aberdeen  - 37%

Jupiter                             -47%

  • Conclusion Increasing Pressures in the fund management market are ensuring that niche fund managers are continuing to prosper while the larger player with less differentiation are struggling.  I expect the same will start to happen in the wealth management market, albeit at a slower pace, due to the power of relationships and the same has been happening in the lenders for a number of years as the larger banks suffer creating opportunities for specialist lenders to prosper.  Perhaps that’s why AIM is up 24% over the last 2 years while the FTSE is up 4%

Specialists

  • Good evidence of specialism is what Mr Buffet has described as a Moat.  This will show itself through a high ROE.  Typically investors get sold the story that growth will ultimately result in high ROE while the many threats mean the high ROE doesn’t ultimately get delivered.  The high ROE stocks in my unioverse are:

Wealth Management                  ROE

  1. Hargreaves Lansdown  66%
  2. Jarvis Securities            58%
  3. SimplyBiz                      72%
  4. Integrafin                       32%
  5. Nucleus                         26%

Lenders

  1. Amigo Holdings               107%
  2. Morses Club                     25%

Fund Managers

  1. City Of London IG           51%
  2. Jupiter                             27%
  3. Polar                               42%
  4. Premier                           26%

Others

  1. Park Group                     91%
  2. K3 Capital                       87%
  3. Alpha FX                         26%
  4. Plus 500                         152%
  5. IG Group                          29%
  6. Personal Group               27%