Be ready for $4, page-46

Good point - they don't manage the funds in house. But to the customer, they're investing their funds and they choose the fund managers to whom they allocate money.


On FID itself - I've owned this in the past, and now own again (why did I ever sell it?). It's too cheap to ignore right now.

The consistency of FID never ceases to amaze me. From 2015 to 2019, earnings increased by 106% on a per share basis [*]. That's 15.5% compounded, whilst maintaining a payout ratio of over 60%. Very few companies can grow at that rate whilst spitting out so much cash.

If 5 years of history aren't enough and you're worried about what a large market drop will do, FPS (previous stock code) still managed $3.2m of profits in 2009, down roughly half of the 2008 result. That's in line with the market drop, which is not what you'd expect, at performance fees basically head to zero. All the while, Fiducian were paying dividends.

The balance sheet is rock solid too. Roughly $10m net cash accounts for 27% of net assets on the book. If you remove the lazy cash on the balance sheet, the ROE is extremely impressive. Not that I'm suggesting they kill their balance sheet, just that the business has a clear and sustainable competitive advantage.

There is potentially big upside in their software platform too. Wrap platforms are notoriously expensive, but once they reach scale they have a very sticky customer base. Having worked for a Wrap platform provider for 2 years, I'm amazed at how cheaply FID can create their software. Most would need at least $20-30bn FUA to make them even palatable, but FID can do it with < $3bn...

As @pseudonym1 correctly states, Fiducian will be around for some time yet. If a company of this quality, carrying net cash goes under, we'd be nearing something like the Great Depression. I don't see anything of the sort.




* Using UNPAT measures, which I believe are a more accurate measure of cash flows.