MFG in the BUY zone, page-247

I'm a big fan of Magellan, and in fact I bought 3 parcels in the last week, but please lets just be realistic about a few things:
- most investment banks don't have a proprietary trading desk that can just take random bets...and especially one labelled something along the lines of 'spite your house'
- there has been a fundamental change at magellan......their performance fees are down, they incurred 40m loss mainly on barrenjoey and arguably what was a very very capital light and highly profitable model of clipping the ticket is now slightly different with a slightly bigger balance sheet with investments in GYG and Barrenjoey (I can't figure out GYG because it certainly is not capital light and RoE I would imagine is much lower than the asset mgmt business, but it's Hamish so I'm willing to give him some leeway given his track record)
- magellan missed out on a significant part of the market upturn since Mar last year, so there is a noticeable negative sentiment attached to that miss when you look at some of what the analysts/brokers are saying

The last 2 factors is why its trading at where it is....perhaps it's overshot as markets tend to do on both the upside as well as downside (although I would hazzard a guess that no one knows where this downtrend will stop). Also note that if your argument that it is cheap relative to 3-4 mths ago, you could also use the other argument that 3-4 mths ago it was over priced and this is closer to a more reasonable valuation.

Ultimately irrespective of what shorters do, what investment banks do etc etc, as night follows day, price will follow earnings, so if you are a long term investor, all you need to care about is whether those earnings growth will come and if so, the price will follow

As I said, I bought 3 parcels on faith in that asset mgmt business and Hamish & his teams abilities......I'm happy for this to fall to $30 and top up again at that point.....I expect that in 2-3 yrs time, the price will be a decent % higher than $35 so I'm less concerned about where this goes in the interim (unless it offers me a better point to top up)