Hamish Douglass and the Magellan team have been copping plenty of criticism in recent times about underperformance over the past 12 months or so. Their flagship fund is up +7.57% for the year and is up 13.80% on a 5 year basis. That performance is weak (MM Flagship Growth is +30%) however, we believe the Magellan team are good managers, Hamish is a smart operator and one of the best pieces of advice I was ever given early on was to back intelligence. MFG now trades on a forecast P/E of 14.5x which is a ~30% discount to its 5 year average and now more aligned with the broader sector. In other words, the premium multiple that MFG attracted given their superior performance & consistent inflows of funds has been ripped away by the market, and rightly so in the short term, however taking a more medium term view and given valuation and expected yield over the coming 12 months of ~6.3% fully franked, we view this as an opportunity to buy Magellan (MFG) – we simply need to make room for it in a fully invested portfolio.
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Performance update for March, stocks that drove returns & our current positioning
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Friday 26th April – ASX200 -101pts, Newmont (NEM), Resmed (RMD) & Super Retail (SUL)
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Market Matters Research Lead Shawn Hickman with David Koch
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MM is now bullish MFG for a mix of income & growth
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