Randall & Quilter announces another legacy portfolio transfer. No numbers disclosed.

St James Place– Q4 Update

Share Price 1141p

Mkt Cap £6,104m

Conflict Disclosure: No Holding

  • Update 2.1% net inflows in the quarter brings AUM to £117bn. Over 12 moths the net inflows are 9.4% against the number of qualified advisers up 8%. AUM is up 22% over the year.
  • Estimates In December 2020 23% PBT growth is anticipated on the back of 17.5% revenue growth which looks reasonable in the light of 22% AUM growth
  • Valuation PER 21.1X Yield 4.5%
  • Culture While the press tells us the company is toxic the staff reviews are largely positive on Glassdoor. The incentivisation of the self-employed staff is strikingly different from say Brewin Dolphin who reported net inflows of 1% annualised yesterday.  
  • Conclusion The unstoppable marketing machine continues apace. While their charges seem high the model looks likely to continue to deliver.

Intermediate Capital Group – Q3 Trading Update

Share Price 1720p

Mkt Cap £4,995m

Conflict Disclosure: No Holding

  • Update AUM is up 4% in the 3 months to September while third party AUM is up 5% over the quarter. Performance fees, which are weighted to the end of a fund’s life are expected to grow over time and are expected to add 10-15% to management fees currently. The balance sheet portfolio was £2.3bn.
  • Estimates A significant increase (47%) in PBT is expected in the current year on the back of last year’s 29% increase in AUM. This is forecast to reduce to 9% growth to March 2021 which looks highly likely to be too low given AUM are up 15% over the first 9 months of this year.
  • Valuation PER 18.6X yield 3%. The NAV is £1.4bn delivering an 18% ROE so the shares trade at 3.5X book value.
  • Culture Highly paid and highly incentivised. It gets highly reviewed on glassdoor at 4.4 with 100% approval of CEO.
  • Conclusion I have always been nervous of the highly paid culture but the company is delivering and looks set to continue to deliver while it is inexpensive.  Looks like an effective compounder.

Paragon Banking Group – Trading Update

Share Price 527p

Mkt cap £1,351m

Conflict Disclosure: No Holding

  • Update Net loan book up 1.6% over the quarter to £12.4bn. CET 1 ratio was 14.2%.  Buy to let lending was 1.1% higher while overall mortgage lending was down 4$. The pipeline of buy to let lending is accelerating.  Commercial lending was up 19.9%.
  • Estimates 2.3% EPS growth is expected to September 2020 followed by 9% in 2021.
  • Valuation The ROE is 11.9% and it trades at 1.2X book value. PER 10.1X Yield 4.2%
  • Culture The glassdoor rating is 3.6 with 82% approval of the CEO
  • Conclusion This is looking a little dull, which is perhaps why the shares have gone up 27% over the last 12 months.  It is perhaps a safe place to hide but I am struggling to see the USP.

jeremy@charltonillingworth.co.uk