Hits: 3

25 October 2019


  • Premier/Miton merger gets regulatory approval last night
  • IPF clarifies the Polish tax authorities investigation which results in a £3.8m payment. The shares were up 20%. Trading at a 30% discount to NAV and producing a 16% ROE this is one to take a closer look at.  6 years ago the shares were 650p and today they are 132p. It is one to buy once every few years and remember to sell when it is loved. There are other regulatory issues yet to be clarified but when they are the shares appear unlikely to go down.

Nucleus – AUA update

Share Price – 144p

Mkt cap £110m

Conflict Disclosure: No Holding

  • Update Net inflows were 0.7% in Q3 but market help lifted AUA 2.3% to £15.55bn. Average AUA is up 6.6% for the 9 months of 2019 year on year. The statement says they are hopeful of negotiating a partnership with an IFA consolidator but IFA consolidation remains a headwind accounting for the higher than normal outflows.
  • Estimates In H1 the company reported 6.9% AUA growth and 4% revenue growth. Fy estimates are predicated on 6.9% revenue growth which looks reasonable.
  • Valuation PER 19.8X Yield 3.5%. Integrafin trades on 35X and yields 2%.
  • Conclusion Flows are likely to be inferior to those of Integrafin over the long term as this company is more exposed to IFA consolidation.  Integrafin AUA was up 14% over the year at 30 September. The difference in rating’s would be caught up after 8 years of AUA growth differential, but the operational gearing means it would be considerably shorter in profit terms.  Struggling to understand why to own this one.

Begbies Traynor – Acquisition

Share Price 85p

Mkt cap £107m

Conflict Disclosure: No Holding

  • Update Acquisition of a London based insolvency practitioner for £2.35m initial and up to £4m deferred consideration over 5 years. That is up to 2X historic turnover and 6.7X profits although the earn out targets aren’t disclosed so in reality the final multiple is likely to be less than this.  
  • Estimates On the last acquisition, 4 days ago analysts didn’t adjust forecasts arguing that the earnings enhancement cancelled out the dilution from the July placing. This could add 10% to PBT which with few new shares issued may be close to the earnings enhancement figure.
  • Valuation PER 18X yield 3.3%. 
  • Conclusion In my experience it is rare to feel excited about an acquisition spree but in this case I do. Because the company can acquire at better ROI than it achieves on its existing business.  As long as the businesses can thrive rather than the staff take the money and run.