Hits: 15

29 July 2020

Jupiter – H1 Results

Share Price 232p

Mkt Cap £1,280m

Conflict Disclosure: No Holding 

  • Results AUM down 8% over H1 to £39.2bn. Net outflows of £2bn in H1 implies net inflows in Q2 given a £2.318bn outflow in Q1 which breaks the 9 quarter run of net outflows. Management fees were down 12% to £161m and underlying PBT down 36% to £56.6m. Underlying EPS 7.9p. Margin 36%. DPS unchanged at 7.9p for H1. Merian completed on 1 July and the outlook is confident referring to strong investment performance. 
  • Estimates Given Merian is only in the numbers for H1 perhaps 2021 is a better estimate for valuation purposes, where £148m PBT is expected from £417m revenue. EPS 22.3p 
  • Valuation PE 10.4X, Yield 7%. Merian AUm was £16.7% at 30 June so adding this in we get an EV/AUM of c2%.
  • Conclusion Every contrarian bone in my body feels excited about the turnaround potential here. Perhaps the analyst call will temper it.

15 April 2020

Jupiter– Trading Update

Share Price 215p

Mkt Cap £958m

Conflict Disclosure: No Holding

 

  • Update –. Net outflows of 5.4% (£2.32bn) compound a 12.9% market decline to reduce AUM from £42.8bn to £35bn. The fixed income strategy accounted for £1bn of the net outflows. Merian, not yet acquired, experienced net outflows of 11.6% and market decline of 18.5% reducing AUM from £22.4bn to £15.6bn. Run rate revenues from Merian have declined from £140m at Dec 19 to £98m at March 20. Based on AUM for Jupiter and Merian at March 20 the original EPS accretion of low to mid teens would now be improved.

 

  • Estimates – Jupiter AUM is down 18% and Merian down 30% over 3 months. Merian’s revenue run rate has dropped 30% while with Jupiter outflows being fixed income weighted perhaps the revenue fall will be less than 18%. Currently PBT is expected to fall 18% in 2020 which looks too high given today’s market.

 

  • Valuation Jupiter EV/AUM is  2.3% while the acquisition price of Merian values it at 2.4% of AUM. PE 10.6X on existing forecasts with an 8% yield.

 

  • Conclusion This looks a bit like a falling knife. Important not to underestimate the power of momentum for fund managers.

28 February 2020

A picture containing clipart

Description automatically generated

Jupiter – FY Results 

Share Price 326p

Mkt Cap £1,493m

Conflict Disclosure: No Holding

  • Results  Flat AUM over the year produces a 6% decline in management fees to £370m. Underlying PBT down 11% to £163m. EPS down 11% to 28.8p. DPS 17.1p, down 40%. The performance is described as resilient. Formica’s ex-boss Roger Yates is to become chairman of the remuneration committee. Exceptional items of £11.7m largely related to deferred employee awards (£9.3m) and redundancy costs (£2.4m). deferred employee awards were £3.8m in the prior year but were not deemed exceptional due to their size. Cash bonuses were down 8% but deferred bonuses led to a 3% rise in variable compensation. The outllok refers to the Merian acquisition and sustainable long term returns.
  • Estimates Results are in line. The dividend however is lower than the 23p estimate.Estimates look for an 8% PBT reduction going forward.
  • Valuation PER 11.5, Yield 5.2%. EV/AUM 3.8%
  • Culture Staff reviews are the grumpiest of the fund managers perhaps for understandable reasons, but the brand remains strong as does the customer focus.
  • Conclusion The shares are cheap for a good brand but investors can usually wait until momentum returns with fund managers. The power of momentum is strong with fund managers so value investors can lose money. Too early.

17 February 2020

A picture containing clipart

Description automatically generated

Jupiter Fund Management – Acquisition 

Share Price 397p

Mkt Cap £1,815m

Conflict Disclosure: No Holding

  • Statement Over the week end it emerged that Jupiter is in advanced talks to but Merian Global Investors, confirmed this morning.  Price is £370m up front with £20m deferred and Merian bring net debt of £29m equating to EV/AUM of 1.9%. TA Associates acquired Merian a little over 2 years ago, paying £600m for a majority stake. Back then the AUM was £30bn. Jupiter’s AUM back then was £50.2bn and Jupiter hasn’t yet disclosed its Dec 19 AUM but last September it stood at £45.1bn.   
  • Cost savings The underlying EPS accretion is said to be low to mid-teen accretion. Based of Jupiter reveues of £377m and Merian’s management fees of £140m that suggests c£60m cost savings from 2021 and increasing from 2022. The one off cost is expected to be £40-£45m.
  • Valuation Forecasts for Dec 2021 are for 27.7p EPS. If we accrete this by 12% for the cost savings that puts the shares on 12.8X. Premier Miton trades at 11.6X ahead of achieving their 27% accretion from the costs savings on their merger.
  • Strategic Henderson/Janus, Aberdeen/Standard Life, Liontrust/Neptune, Premier/Miton,  the list of squeezed fund managers combining is growing. While a new breed of specialists is emerging. Gresham House, Intermediate Capital, Impax, Arrow Global, and First Property seem to be the emerging highly specialist fund managers.
  • Conclusion This may improve fund diversification and achieve cost savings but is unlikely to improve flows in the short term. There has been no disclosure by Jupiter of flows in the quarter to December, but that maths tells us that AUM declines by c £2.5bn in Q4 (5.5%) in a quarter when markets where strong.  There are cheaper, more transparent, and recovering fund managers to own. Underwhelming.

11 October 2019

Jupiter – AUM Update 

Share Price 318p

Mkt Cap £1,455m

Conflict Disclosure: No Holding

  • Update Net outflows of 2.8% of AUM (£1.3bn) led to a decline of 1.8% in AUM to £45.9bn. £1bn of this was from the European strategy where Alex Darwall is leaving in mid November to set up a boutique.  
  • Estimates PBT fell 16% in H1. Full year forecasts anticipate a 14% reduction in profits for the year to £163m.
  • Valuation PER 10.9X and yield 7.5%. EV/AUM 2.5%
  • Conclusion While these numbers don’t read well there is valuation support. The shares recovered from the low of 290p at the beginning of the year.  We can’t be far from the darkest day for this share.

30 July 2019

A picture containing clipart

Description automatically generated

Jupiter – H1 Results  

Share Price 380p

Mkt Cap £1,742m

Conflict Disclosure: No Holding

  • Results Q2 net outflows were 1.4%, an increase from the 1.1% in Q1..AUM however was up from £44.1bn to £45.9bn over the quarter on the back of buoyant markets. Net management fees were £182.9m (2018 199.2m) and PBT was £81.4m (2018 £96.5m). EPS 15.1p (2018 17.3p). and DPS 7.9p (2017 7.9p). Outflows have ceased in the dynamic bond fund. Net management charge remains at 84 bps and operating margin was 47%.
  • Estimates H1 has delivered 49% of the full year revenue number so while revenue forecasts look aggressive the operating margin uplift to 47% may make estimates of PBT conservative.
  • Valuation PER 13.8X Yield 6.4%. EV/AUM 3.4%
  • Conclusion  Performance looks respectable but Darwall’s exit won’t help flows over the coming 6 months despite being a Woodford beneficiary. I have pencilled in the Q3 update as likely to show further net outflows and the shares won’t recover until flows do.  

30 April 2019

Jupiter – Trading Update 

Share Price 384p

Mkt cap £1.76bn

Disclosure: No holding

  • Update – The last of the fund managers to report gives net outflows of 1.1% over the 3 months to March. Total AUM were up 3.2% to £44.06bn
  • Estimates Revenue is expected to decline 20% to £367m in the year to Dec 19 which looks conservative with AUM only 6% below March 18.
  • Valuation PER 14 Yield 6.1%. EV/AUM 3.2%
  • Conclusion While still experiencing net outflows the data is beginning to suggest momentum is changing. One for the increasingly rare breed of value investors. Flow chart for the quarter below with Ashmore storming into the lead for the “Flow Trophy”

10 January 2019

Image result for crying smiley face

Jupiter Fund Management – Trading Update 

Share Price 304p

Mkt cap £1.39bn

  • Update Net outflows in the quarter £1.5bn of which £1.3bn were from fixed income taking AUM to £42.7bn
  • Estimates Estimates for 2018 assume £410m revenue, a 10% decline from 2017. For 2019 estimates assume a further 5% revenue decline. AUM is now 16% below where it was a year ago so there is a risk of further downgrades
  • Valuation EV/AUM is 2.6%. PER 10.6 and yield 8.3%
  • Conclusion Share Price has now halved over the last 12 months and it is now in value territory. If it wasn’t structurally in a difficult place it would be the time to buy it but with fund managers momentum can kill so it is dangerous to buy a company in a structural bind. I suspect things get a bit worse yet

11 October 2018

Jupiter – Trading Update 

Share Price 377p

Mkt Cap £1.73bn

·         Update  Net outflows of 1.7% for the quarter mitigated by market tailwinds left AUM down 1.1%.

·         Estimates  The PBT decline of 3.3% to Dec 18 looks reasonable to £187.4m.

·         Valuation EV/AUM 3.2%. PER 11.5X Yield 3.2%

·         Conclusion Cheapest I recall seeing this stock.  But in a market rout it may be too early to bottom fish.

27 July 2018

Jupiter Fund Management – H1 results 

Share Price 443p

Mkt Cap £2.03bn

·         Results Despite AUM down 4% to £48.2m PBT grew 3% to £96.5m. EPS up 3% to 17.3p and dividend increased 16% to 7.9p while the variable staff costs increased 10% to £42.1m. The operating margin was stable at a lofty 54%.  The capital surplus is £87m with £80m deployed in seeding funds. Performance fees were £14.1m against £0.8m in the prior period accounting for 6.5% of the £214m turnover while box profits reduced from £7.2m to £0.7m.

·         Estimates Full year estimates look for £417m revenue and 51% of this has been delivered in H1 so that looks reasonable. Going forward consensus assumes 3% revenue growth.

·         Valuation EV/AUM is 4%. PER is 13 and yield 6.8%

·         Conclusion This is a mature cash cow. Which is useful for dividends. Growth can be found in fund managers at an earlier stage of development. Ask Miton and Liontrust for further details.