I was thinking about how this one is still down 20% from the IPO, especially considering the business fundamentals have actually strengthened since listing. Fund management companies have limited potential to re-invest in the business (Outside of higher employee expenses which is above the line) and is actually one of the attractions as an investment due to scalability. Therefore the after tax cashflows are significant and how they choose to allocate such will influence investor returns materially.
GQG had cash of $56.8 million USD and zero debt as of Dec.31 2021, this would be nearing $70m USD+ by now given they retain 10% of distributable earnings which I assume just sits in short term liquid securities and pay the other 90% as a dividend.
Surely it is a matter of when not if they will announce a stock buyback? A conservative DCF puts this business above $2.50 per share with a margin of safety, current free cash flow yield is 9%.
Am I missing something? Surely the best use of surplus capital rather than sitting on the balance sheet?
Cheers, Plague.
GQG Price at posting:
$1.61 Sentiment: Buy Disclosure: Held
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