Our Q&As are emailed in our Saturday Morning Report, find the answer to this question below.
Hello James,
Some time ago I spoke with you and your advice was most helpful. Can you please advise me as to why the MFG share price has been on the slide down for many months. Even today, when the market was well up, MFG was down!! Their funds under management are holding up….has Mr. Douglas lost his magic touch ?? Your comments would be very much appreciated.
Sincerely, David R.
Hi David,
A few reasons that have compounded to push Magellan’s share price lower. Ultimately, I think your assessment is spot on, the market used to apply a ‘guru premium’ to Hamish and therefore MFG due to his strong performance i.e. a higher multiple, well above its peers due to a superior track record. That performance has changed dramatically, they have underperformed significantly in recent times and that has led to fund outflows and importantly, the stocks P/E has also lost its premium rating. There is also concern that they are spending a lot on peripheral investments like Barrenjoey, however in my view that’s not the real driver here, performance & fund flow’s are. I doubt MFG will ever trade on such a lofty premium to its peers again. They have their portfolio’s defensively positioned, and really need some prolonged weakness in the market to start outperforming again.
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