-Full year results ahead of expectations.
-Diversification strategy continues
-New smart energy and smart mobility funds to drive growth
Shares in specialist asset management firm Polar Capital (POLR:AIM), moved 2.1% to higher to 532.7p following the announcement of full year results that were ahead of expectations.
The positive share price reaction suggests investors’ view the 32% fall in the share price over the last six months as an overreaction to fears over difficult market conditions.
Instead the market is focusing on the group’s ability to grow assets in the new Smart mobility and energy funds, and the 8.8% dividend yield.
Assets under management increased by 6% from £20.9 billion to £22.1 billion. Core operating profits increased by 35% to £69.4 million, whilst performance fees of £4.1 million were in-line with expectations.
Pre-tax profit fell 18% to £62.1 million given a lower contribution from performance fee profits. Basic earnings per share fell by 10% to 50.8p. The total dividend for the year rose by 15% to 46p per share.
DIVERSIFICATION AND GROWTH
Under the auspices of chief executive officer Gavin Rochussen Polar continues to simultaneously grow its product offering whilst diversifying its exposure away from US growth stocks, with the addition of more value orientated funds.
Polar has a proven ability to attract experienced teams with proven track records.
Polar offers investment teams they recruit a unique combination of investment autonomy, coupled with transparency regarding remuneration and a stoic approach to capacity management.
The Emerging Markets Stars Fund launched in June 2018 now has £930 million in assets under management.
It is headed up by fund manager Jerry Noddekaer who joined Polar from Nordea Asset Management.
More recently Polar launched two new equity funds: Smart energy and Smart mobility, both run by Thiemo Lang who Polar recruited from Robeco.
The institutional demand for both these offerings is encouraging.
EXPERT VIEW
Peel Hunt analyst Stuart Duncan believes ‘The business remains robustly profitable and the benefits of diversification are reducing the headwinds from the Technology franchise. We believe the challenges are reflected in a 2022 valuation of enterprise value/ earnings before interest and taxation of 8.5x on our updated forecasts’.
David McCann Numis analyst suggests ‘On 10x March 2023 marked to market core profits?.and a safe yield of 8.8%, we think it is inexpensive, but arguably lacking short term positive catalysts.’
