GQG Partners (GQG) and Pinnacle Investment Mgt (PNI)
Hi guys, would love your updated views on GQG and PNI. I think you've mentioned in the past reconsidering the position in PNI and is the GQG thesis still intact? Thanks, Josh
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Answer
Hi Josh,
GQG is a global active equities fund manager best known for its flagship global and emerging markets strategies, led by CIO Rajiv Jain. It’s a high-margin, highly scalable earnings model driven by FUM levels and net $$ flows, but it also carries performance risk which has been tracking the wrong way of late leading to outflows.
The fund manager has “bet” against AI, believing valuations of AI-related companies that had soared over the last year would slump and the cost of selling too late would be significant. However, for now their value play is weighing on performance causing outflows which is depressing the share price – in December investors pulled another $US2.1bn from GQG.
We understand how they feel, we went overweight the resources sector too early in 2025 causing some chagrin from investors but 6-months later and MM’s portfolios are outperforming nicely, perfect timing rarely exists outside of hindsight!
We think GQG is a good hedge against AI not living up to expectations. We remain long and bullish towards GQG around $1.62, believing patience will be rewarded.
Pinnacle (PNI) is a multi-boutique funds management platform, owning stakes in a stable of specialist investment managers and providing them with distribution and business support. It’s a more diversified and “lower single-manager risk” way to own the funds management theme, with exposure across most asset classes.
We believe PNI is an excellent business model (that Regal (RPL) & Magellan (MFG) are now copying to a certain degree), with a strong track record, and we hold the stock in our Emerging Companies Portfolio. Despite this, the share price has underperformed recently, even after a standout FY25 result, with profit up 49% year-on-year to $134.4m and FUM rising to $179.4bn. Growth was driven in part by a very strong contribution from its newest affiliate, Life Cycle, which joined the group in May 2025.
Our one major caveat is the group’s strong reliance on private credit flows, principally via Metrics Credit Partners, which manages over $30bn, representing around 17% of total affiliate FUM introducing concentration and liquidity risk into the group’s earnings base, but the recent weakness in the share price, which is trading ~20% cheap, compensates for this.
- We remain long and bullish towards PNI ~$17 for the medium term, but the share price looks “heavy” short term.
