If it breaks $26.75, you're looking at $22.50 as the next line of resistance. Fair value of $13.60 seems on the lower side when you factor in their balance sheet investments (Investment bank and Mexican takeaway).
Although its a large chunk of FUM, it's important to remember that the institutional side has a materially lower fee than retail and although its ~14% of FUM its probably 8-10% of revenue.
I'm more interested in the commentary around the loss of this material mandate or will they keep things vague and investors in the dark. Will other institutions and financial advisors follow and how quickly can magellan liquidate their funds to keep up with outflows to avoid having to freeze redemptions.
Another consideration is if Hamish has the mental capacity to continue to manage the funds? Considering he's lost a few hundred million this past quarter, his wife's leaving him, two of his closest friends have very recently left magellan, a very long supporter (SJP has supported them since 2013) is leaving and now his shareholders. I can't imagine he's in the best mental space to make decisions.
Cheers, Plague.
MFG Price at posting:
$29.36 Sentiment: Sell Disclosure: Held
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