Fund managers, page-215

Obviously, some people are now trying to estimate a conservative valuation on some listed fund managers, like Platinum and Magellan which are regularly facing net outflows.
The example above of Paradice (considered as one of the best fund managers of Australian small caps) shows that the valuation of most fund managers may now be quite low. Perhaps, one reason for Paradice may be its investment style (more value) which may have impacted their performance during the last couple of years.

I find it very difficult to calculate a conservative (=minimum) valuation for both MFG and PTM for 2 main reasons :
- difficult to reverse the trend once companies face regular net outflows,
- significant pressure on existing fees, which are still really high for both Platinum and Magellan, in particular with their retail customers.

So, in such cases, low PE, based on the most recent results, does not mean much, as long as we do not have a lot of visibility on where their AUM are going to stabilise (mainly a function of their fund performance and market growth).
It seems to me that rather than the PE, it is the dynamic which matters the most for fund managers : as long as fund managers are facing net outflows, it is difficult to expect anything else than a regular de-rating.