Hits: 31

8 July 2020

Liontrust – FY Results

Share Price 1410p

Mkt Cap £855m

Conflict Disclosure: No Holding 

  • Results Its unusual to have 2 RNS’ on results. We also have a separate one for the Q1 update. The Q1 update notes AUM up 20% since March with net inflows of 6%. Results show revenue up 26% last year to £107m from AUM up 27%. Reported PBT was down 26% while adjusted PBT was up 26% to £38m. Adjusting items are around amortisation, re-organisation, acquisition costs and share based payments. Adjusted EPS up 21% to 56.8p and dividend 33p, a 22% increase.
  • Estimates Results are in line with estimates at the PBT level while next year’s anticipated 9% revenue growth is a long way south of the likely outcome.
  • Valuation PE 25X on numbers just reported. The valuation is perhaps anticipating 18 months ahead.
  • Conclusion The power of momentum with fund managers is huge and it is in full flow here while all looks set fair. When we start to think nothing could possibly go wrong it can sometimes be a good time to take some profit.

1 July 2020

Liontrust – Acquisition

Share Price 1305p

Mkt Cap £724m

Conflict Disclosure: No Holding 

  • Acquisition The company is acquiring Architas Multi Manager and Architas Advisory for up to £75m. Architas has £5.6bn of AUM and the multi manager offering will merge with Liontrust’s existing multi manager business which has £919m AUM. Price is 1.3% of AUM and is expected to be earnings neutral to March 2021 and enhancing thereafter. The company is raising £66m in a placing at £13/share through Panmure Gordon.
  • Estimates Architas made £4.8m PBT last year from £22m revenue. Post reorganisation the company is expected to make comparable margins to Liontrust  (36%) which would imply c £8m so the implied multiple is 9.4X. Transaction costs will be £5m and re organisation costs £9m.
  • Valuation EV/AUM 3.1%. PE 23.1X Yield 2.5%
  • Conclusion The shares are expensive so the company is using its currency effectively rather like Aberdeen did in the 00’s. With 25 new funds coming into the stable today the offering is becoming broad as is the distribution capability. With capacity now growing faster than AUM the momentum can continue for some time.

15 April 2020

Liontrust – Trading Update

Share Price 1000p

Mkt Cap £555m

Conflict Disclosure: No Holding

 

  • Update Net inflows of 2.6% over the 3 month period combine with 18.4% market falls taking AUM from £19.2bn to £16.1bn over the 3 months to March.  The company adds that in the first 9 days of April further net inflows of £136m have come in. 40% of AUM are in the economic advantage process and 31% with the sustainable team.

 

  • Estimates AUM are up 27% over 12 months while forecasts anticipate a 9% revenue increase in the year to March 20. Too low.  

 

  • Valuation EV/AUM 3.2%. PE 17.4X Yield 3.3%.  

 

  • Conclusion Momentum continues. With such a long track record for the economic advantage process and few credible competitors for the sustainable team it may continue. Despite the shares being expensive the compounding effect of the earnings may make this continue to be a good investment. too high, while if its wrong they are too low.

9 January 2020

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Liontrust  – Trading Update 

Share Price 1115p

Mkt Cap £610m

Conflict Disclosure: No Holding

  • Update: Net inflows were a storming 4.8% in the 3 months to Dec 19. Market appreciation added c 5% and then the Neptune acquisition added £2.73bn bringing AUM to £19. 1bn. Performance is generally strong. The statement talks of 4 investment teams having AUM above £1bn as the company is keen to play down any suggestion of concentration risk.  Economic Advantage is now 40% of AUM and the sustainable team is 28% at £5.3bn.  This is close to double the AUM at the time the sustainable team was acquired from Alliance Trust underlining what can be termed “revenue synergies”. The outlook refers to optimism about further sustainable inflows from non UK investors.
  • Estimates To add 10% organic in 3 months is quite a performance.  With a March year end we may get some modest upgrades today. March 2021 revenue is expected to increase 24% while AUM is up 70% on where it was 12 months ago. 
  • Culture The vibrant culture and transparent remuneration policy encourages me to relax about any concentration risk. This feels like Jupiter at the time of its IPO.
  • Valuation PE 19.6X for March 2020, falling to 16X March 2021. Yield 2.9%. EV/AUM 3%
  • Conclusion This sector is one to be a momentum investor in.  The momentum feeds on itself and lasts a long time. There are a few years to go yet, evidenced by the confident statement. No longer cheap but further to go.

20 November 2019

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Liontrust  –H1 Results

Share Price 896p

Mkt Cap £491m

Conflict Disclosure: No Holding

  • Results  Adjusted PBT up 17% to £17m. AUM at 18 November has increased a further 3% from 30 September to £17.9bn.  With performance consistently strong across the funds and net inflows top of the charts there is little to see here. Except for the stripping out of the £4.5n share incebtivisation expense of £4.5m and the costs relating to consolidating the fund services provider to BONY of £1.4m. It could be argued they are ordinary costs of running the business. Outlook is confident of continued momentum.
  • Estimates PBT of £38.3m is expected for the full year. This looks in line with the £17m delivered in H1 and the acquisition of Neptune at the end of H1 adding 18% to AUM.
  • Valuation PER 15.8X Yield 3.6%. EV/AUM 2.5%
  • Conclusion. The valuations of the fund managers vary modestly, generally trading at 14-17X earnings, while the prospects vary hugely. The prospects for Liontrust are outstanding and it is therefore the one to own. Annoyingly I don’t

9 October 2019

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Liontrust – AUM Update 

Share Price 748p

Mkt Cap £410m

Conflict Disclosure: No Holding

  • Update Net Inflows of 4.6% and a negative market contribution gave a 4% increase in AUM over the 3 months to September to £14.6bn. That is an increase of 22% over 12 months, beating Impax.  Neptune acquisition was completed on 1 October adding £2.7bn AUM bring pro forma AUM to £17.4bn. This will dilute the economic advantage process from 48% AUM to 40% AUM and sustainable process from 32% AUM to 26% AUM.
  • Estimates 20% EPS growth is anticipated for the year to March 2020 to 55.9p, which is modest bearing in mind the accretion from the Neptune acquisition and the 20% underlying AUM growth. Currently Neptune is loss making but post £16m of reorganisation costs it is expected to be earnings enhancing from March 2020.
  • Valuation PER 13.4X and yield 4.3%. EV/AUM 2.8%.
  • Conclusion The shares are good value. Performance of the funds remains largely strong and with the new distribution for the Neptune funds and modest forecasts this feels a little like Jupiter IPO’s in 2010. Investors should not under estimate the influence of momentum in this business.

31 July 2019

Liontrust – Acquisition 

Share Price 802p

Mkt Cap £407m

Conflict Disclosure : No Holding

  • Acquisition £2.8bn of Neptune AUM being acquired for up to £40m which is a lofty 7% of AUM which is all payable in shares.  Neptune is loss making at the run rate level and there will be £18m of exceptional costs. Post re organization Neptune is expected to make margins in line with Liontrusts and so be earnings enhancing from March 2020.
  • Estimates Earnings enhancement is likely to be minimal but strategically this adds some useful processes to diversify Liontrust as well as distribution. March 2021 revenue estimate is currentl;y expected to be £107m. This may add £25m revenue so if we impute a 35% margin we get £46m PBT.
  • Valuation  If we use £46m PBT and allow for £40m share issuance we get a PER of 12.1X.
  • Conclusion The acquisition looks expensive but it also looks like it works for Liontrust.  The company is re fueling on product to put down its distribution pipe and now has the potential to become significantly larger. I find myself want to own this.

29 July 2019

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Liontrust – Potential Acquisition  

Share Price 814p

Mkt Cap £412m

Conflict Disclosure: No Holding

  • Acquisition The Sunday Times reported Liontrust is close to acquiring Neptune with 19 funds and £3.6bn AUM. Liontrust has £14.1bn AUM of which 48% is held within the economic advantage process and 30% in the sustainable process. 
  • Estimates Revenue for the year to March 2020 is forecast to be £98.6bn with a 36% operating margin delivering £35.3m PBT.  Neptune would add 25% to AUM and 20% to net revenues.   The price is alleged to be £25m which would be a lowly 0.7% of AUM.  The accounts for Neptune show a modest profit but net revenue yields are 61bps. If the margins became anything close to Liontrust’s 36% there could be some material earnings enhancement
  • Valuation PER is 14.6X for Liontrust. Cash is £36m.
  • Conclusion  This would diversify further Liontrusts concentration risk. Although it is concentrated in attractive funds.  Its all about earnings enhancement but looks like a nice idea. If it happens.

11 July 2019

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Liontrust  – Trading Statement  

Share Price 772p

Mkt Cap £392m

Conflict Disclosure: No Holding

  • Statement AUM up 11% over the 3 months period to £14.1bn consisting of net inflows of 5.7% and 5.3% performance. 49% AUM is now economic advantage and 30% sustainable investment process. One year fund performance is generally strong too. Outlook is “well positioned”
  • Estimates Forecasts look for 10% PBT growth to March 2019 which looks rather too easy to achieve when you do 11% AUM growth in Q1.  
  • Valuation PER of 13.9X and yield of 4%. EV/AUM 2.5%.  
  • Conclusion The shares are cheap because of concentration risk. Opportunity.

27 June 2019

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Liontrust – FY Results 

Share Price 718p

Mkt Cap £364m

Conflict Disclosure : No holding

  • Results Adj. PBT up 10% to £30.1m and EPS up 10% to 46.9p from revenue also up 10% to £85m. AUM of £12.7bn at end March has since increased to £14.06bn (10.6%) by 25 June. The Chairman’s statement makes invigorating reading about the perils of markets in his “47th year in the industry”. Despite efforts to diversify the growth of the economic advantage process ensures it remains at 49% of AUM while Sustainable team accounts for 29.5%. The fixed income team looks to have strong prospects growing AUM from £186m to £419m over the period. Outlooks looks forward with great confidence.
  • Estimates  Results are politely ahead of estimates. Going forward estimates look for 9% PBT growth. Given the 11% rise in AUM since the year end this looks a very comfortable place to be.
  • Valuation Per 14X yield 3.7%. EV/AUM 2.3%
  • Conclusion Subject to market risk this remains a good value stock compounding very effectively.  I sense a strong culture will ensure the strong share price performance will continue.

10 April 2019

Liontrust – Trading Update 

Share Price 607p

Mkt Cap £308m

Disclosure No holding

  • Update. 5.2% net inflows in the quarter resulting in a 13% increase in AUM to £12.7bn. Economic advantage team gets a mention (49% AUM) but the fixed income team have brought in £419m in the first year and the increasingly fashionable sustainability team (29% AUM) gets a mention. Fund performance remains generally strong
  • Estimates The 5% revenue increase anticipated should be a walk in the park for the year to March 2020 in the context of a 21% increase in AUM over the last 12 months.
  • Valuation PER 12.3. Yield 4.4%. EV/AUM 2.2%
  • Conclusion  If we assume EPS should be 55p rather than the 49p forecast for the current year and put it on 15X that would be 800p per share against the current 607p. 

9 January 2019

Liontrust Asset Management – Trading Update  

Share Price 580p

Mkt Cap £293m

  • Update AUM was down over the 3months to December from £12bn to £11.2bn. However this was entirely market driven with net inflows amounting to some 4.2% of AUM.  Inflows were entirely retail with a small outflow from institutional clients. Performance remains strong.  The Kames bond team who joined last year now have £328m AUM and this is a very scalable process.
  • Estimates The full year estimate for revenue to March 19 is for £86m revenue while in the first 6 months to September 18 the company delivered 54% of this. It would seem estimates that were previously conservative look reasonable in poor markets
  • Valuation PER 11.9X and yield 4.45%. EV/AUM is 2.4%
  • Conclusion Shares are off 13% from their high. Cheap relative to others on account of concentration risk which the bond team have the potential to diversify as the sustainable team has.  One to own.

11 October 2018

Liontrust – Trading Update  

Share Price 642p

Mkt Cap £325m

·         Update Net inflows of 3.5% took AUM to £12.05bn over the quarter. Economic advantage is now 49% of AUM while sustainable is 28%.

·         Estimates 12% PBT growth over the year to March 19 looks conservative given 15% AUM growth over the first 6 months

·         Valuation EV/AUM 2.4%. PER 13.8X and yield 3.8%

·         Conclusion Cheap stock with strong growth coupled with an element of concentration risk

12 July 2018

Liontrust – Trading Statement 

Share Price 684p

Mkt Cap £346m

·         Statement  Net inflows over the 3 months to June were 3% taking AUM to £11.424bn. The economic advantage process is now 48% of total AUM and continues to grow while the Sustainable team runs 28% of the AUM

·         Estimates AUM are up 9% year on year while consensus looks for 10.5% revenue growth to Mar 19 and 7% PBT growth to EPS of 46p and a 24p dividend

·         Valuation EV/AUM is 2.7%. PER 15 and yield 3.5%

·         Conclusion  Remains cheap due to concentration risk.  There are 4 fund managers running the economic advantage process and 14 in the sustainable funds team. Perhaps the real key person risk is exaggerated in the valuation.