Ann: Funds Under Management - August 2022, page-86

While global equity markets remain under pressure, the price of all fund management businesses will continue to fall.

IMO, that is a certainty.

It may seem anomolous that l would hold and accumulate a range of these businesses if, as l do l expect markets to fall significantly over the medium term.

My expectation is that M & A or MBO activity will come into play, on any day, to re-rate and re-price essentially debt free, positive cash flow businesses at cyclical lows. A simple premium of 25% would see most retail holders sell in heart beat.

Alternatively, the short term impulse of a resolution to Ukraine or a slow down in inflation prints could easily drive a 5-10% upward market correction. These are known unknowns.

l don't really need any external events to drive my valuations, though of course they affect them. I simply am happy to hold assets that will pay me 5% to 8% while l wait for markets to do what markets always do, over the medium term of 3 to 5 years.

l just took a look at my portfolio from 3 years ago and l gently made a note to self, "back you judgement". I hesitated on a bigger buy of a lithium PRODUCER that was bashed down 60%, when l should have quadrupled down. That's life and l am still extremely happy with the now result of what l own.

Fund managers are fundamentally different from green metals miners, but when they are flogged, they are flogged. On market share buy backs everywhere of unloved stocks, are an indication of management views of current market valuations. I just happen to agree with them as l want to own a bigger piece of the same pie without putting any of my own money down.

l reiterate a comment l have repeated many times, if MFG dips to $10 l will back up the truck, them wait and watch the scramble to buy a sound funds management business at a counter cyclical price.

lf the price does not fall, either cap growth or dividends keep me satisfied with my thesis.

Each to their own.

GLTASH