Magellan (MFG) shares fall as outflows continue
MFG -13.93%: The pain/frustration in MFG continues with further outflows prompting another decent sell-off in the stock today pushing it to the lowest close since 2014. They said that Funds Under Management (FUM) at the end of May was $65.0bn down from $68.6bn in April. To give some context on this number, FUM peaked at around ~$110bn and while lower performance fees have an impact on earnings now and in the future given high water marks, it has been an extreme share price reaction with the stock down more than ~70%. Was MM surprised by today’ slide? Partially, however recent FUM updates had given some indication that outflows had slowed, and a new status quo may have been established, however, that view took a hit today with announced flows. There is no doubt MFG is cheap on ~7x earnings with a market cap of $2.4b relative to $65bn in FUM which is why we are not selling our small position in the Income Portfolio, however until we see confirmation (multiple months) where FUM flows are stable or positive, we will not average our position which marked to market sits at less than 1.5% of the portfolio.
