Our Q&As are emailed in our Saturday Morning Report, find the answer to this question below.
Hi James and Team, Watching the recent performance from some of the fund managers it led me to thinking about a few related questions. Has market sentiment started to shift towards the fund managers (eg PNI, MFG, PDL, etc.)? If my observations are correct, does MM think there is more to this shift? Please can MM comment on PNI's recent 20% gain (in a week)? Is there more in the tank or is this about as good as it gets? Thanks and regards Jan P
Hi Jan,
The fund managers are bouncing in an amplified manner to the ASX200 i.e. they’ve proven to be high beta plays on both the way down since late 2021 and now on the recovery journey since we saw panic lows in mid-June.
MM has been bullish over recent weeks targeting a test of 6900 hence after we reached 6890 on Thursday morning we have to adopt a more neutral stance to PNI after it’s tested $10 i.e. over 50% above its June low. However, we like the structure of PNI’s business as we’ve written a number of times before, being an investor and distributor to varied fund managers and asset classes. At the heights of optimism towards PNI, it traded on 40x earnings, at the depths of pessimism it traded on 15x. It’s now back to 24x which we think is about fair value for this type of business and where the market now sits.
However if we do see equities test their 2022 lows over the coming months we believe PNI has shown its hand as a great recovery play when the risk/ reward looks appealing to the bulls.
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