At the end of January, Insignia reported a better than feared quarterly trading update which showed early positive signs that their turnaround is working. While outflows continued and there are some swings and roundabouts in terms of adviser numbers declining again, the rate of outflows slowed markedly and there are positive signs emerging in the platforms and asset management side of the business. Based on consensus forecasts, IFL is trading on just ~9x FY23 earnings, with those earnings expected to be growing at mid to high single digits, with a dividend yield of 6.85% in FY22 jumping to 7.69% fully franked based on FY23 expectations. In short, our investment thesis has always been around a turnaround in the business that will improve earnings and when evidence of that emerges, the market will start to re-rate the multiple it is prepared to pay for those earnings. In the meantime, the dividend yield we believed was sustainable.
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Performance update for March, stocks that drove returns & our current positioning
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Wednesday 24th April – ASX200 +17pts, Silver Lake (SLR), Kogan (KGN) & CPI
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Market Matters Research Lead Shawn Hickman with David Koch
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Wednesday 24th April – DOW +263pts, SPI +27pts
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MM has decided to hold IFL given a better quarterly update
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