Guesstimates for AMP 2020-21, page-234

Poor old Franchesco having a whinge at the senate committee yesterday. He was moaning about class actions and how they are damaging his business. Poor old Franchesco, boo hoo! If the company he runs didn't do the wrong thing there wouldn't be 5 class actions against them.

Meanwhile, the turnaround strategy for AMP seems to be non-existent and we still have no idea as to their updated forecasting. As usual, AMP are making everyone wait until the absolute last minute before the tell us the bad news.

AMP has a big bag of cash from the sale of their life insurance division. I expect that they will be flat out trying to spend it on a bolt-on acquisition so that the company can be less attractive for a takeover. Avoiding a takeover for as long as possible would allow the management team to keep getting their above-market salaries. Of course, there is the possibility of a second strike at the next AGM so fingers crossed on that one. I have no doubt that shareholders will barely see a cent of any excess cash and instead AMP will go about blowing this capital up in the same way they did with AXA and their UK business.

Given the state of the economy and AMP generally, I cannot see this business at over $2.00 ever again. The market reacted to the completion of the life business sale with a whimper. I suspect that there are a few fund managers trying to work out how they can quietly get rid of AMP quietly. Analysts are hoping for a takeover offer but that seems unlikely. Even if a takeover was to proceed it would be lucky to make $2.20 let alone $2.50. This leaves everyone who has held the shares for more than a couple of years sitting on a pretty massive loss.

Advisers are now flying out the door. AMP would like to convince the market that they are getting rid of low performing advisers and whilst this might be true in some cases there are some pretty big advice businesses leaving AMP as well. Along with the departing advisers are the departing clients. Remember them? These are the people whos AUM gets clipped by the advisers, the licensee the fund manager and the trustees, and all along AMP's vertically integrated supply chain to create above-market revenue streams for AMP (these above-market revenue streams also create below-market returns for clients and these very clients are now leaving!).

So what is next? Well, COVID19 as provided the perfect cover to justify the contraction in this business. AMP will announce declining profits and AUM etc. but they will blame this on "challenging economic conditions" and continue paying themselves above market remuneration to manage this. There will be mass layoffs and rationalization within the business and in a few year's time this once giant wealth company will emerge as a shadow of its former self. There will be books written and retrospective analysis as to what went wrong but none of this will help. The poor old long term shareholders will have lost most of their capital. The business will be broken up and the pieces will be rebranded and merged into competitors. All of which will happen and knockdown prices of course because the management team will hang on to their sinecures for grim death until the very end.

Of course, I could be wrong and the above is only my opinion. Whatever you do don't take my word for it. DYO research and let me know what you think.