MFG is back on our radar, having plunged over 20% following Gerald Stack, Head of Investments and infrastructure team leader since 2007, announcing his departure effective July 2025. His exit has raised concerns about potential fund outflows, especially given that approximately 75% of Magellan’s infrastructure funds under management (FUM) are held by institutional investors, who may be more prone to redeeming funds following such changes. However, they have had plenty of reasons to pull money in recent years but have remained supportive.
This is a relatively binary play with MFG now priced for redemptions. If none are forthcoming, the stock is cheap, and its consensus of almost 8% fully franked yield is attractive in today’s easing environment. However, if we do hear of redemptions, the stock could quickly be trading 10% lower, making this a “high risk” yield play but one with foundation.
- We like the risk/reward towards MFG, but it comes with more risk than more traditional “yield plays”.
MM is cautiously bullish MFG ~$10
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