MFG in the BUY zone, page-1155

Hi @Mostly_Dreaming

Do your own research before considering buying based on the below.

Magellan as a business is a value trap with declining earnings over the next few years. Magellan is a fund manager and relies on Funds Under Management (FUM) to generate earnings. They have lost almost $40 Billion in FUM over the last 5 months by now (waiting for the latest FUM release) and continue to lose more as each month goes by - due to fund performance and investors taking out Funds due to high cost. $40 Billion in FUM loss will cost Magellan $200M in annualised revenue (assuming the average fee charged is 0.5%).

Magellan will grow earnings when FUM starts to stabilise on a quarterly basis and it is clear what Magellan will be earning, they could easily lose another $20B in FUM over the next 6 months, costing another $100M in revenue. The bottom of FUM losses may still be another 12 months away (similar to Platinum (PTM) business).

While Magellan pay out 90% of EPS, the trend for EPS is down, see below table of different scenarios over five years based on FUM loss:


Best of Luck
Lost