Is Magellan (MFG) good buying?
Is it a "good " buy following the big sell dow
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Answer
Hi Philip,
We discussed MFG in detail in late May with the following salient point still valid with analysts remaining unconvinced the fund manager is yet a turnaround story with 5 SELLS, 4 HOLDS and one lonesome BUY.
- We believe the recent ~20% sell-off is overdone but they do need to improve the FUM flow.
- MFG is trading on a valuation of ~9x, a warranted discount to standout sector player GQG which is trading closer to 14x, but a safety buffer nonetheless.
- One major reason we own MFG is its balance sheet, an area we think the market continues to overlook in the midst of the negative sentiment towards the business.
If we had no position in MFG, we would buy it.
