MFG in the BUY zone, page-130

Happy to respond to your questions (but I should point out they are only based on my personal views - I get it wrong sometimes!)

Your assumptions 1. through 5. are broadly correct.

I think the best way of explaining what’s going on with MFG is to look at the two ‘camps’ as far as views on MFG is concerned.

The ‘Anti’ MFG camp valuing the stock at mid $30’s

- believe recent (relative to benchmarks) poor returns across its various funds will slow the rate of investor inflows ...or worse ....see investors pull their funds out in search of better returns

- believe Hamish has lost his ‘magic’ so relatively high management fees are hard to justify and there may be pressure to reduce them to help stem the outflows.

- don’t have any belief in Hamish’s ‘side bets’ (ie Barranjoey, Guzman & Gomez, FinClear) generating any meaningful returns

The ‘Pro’ MFG camp valuing MFG at $50 plus

- believe relative investment returns will bounce back (particularly in tougher market conditions) and FUM growth will, in time, resume its upward trajectory

- believe Hamish has only temporarily lost his magic and Magellan investors will largely leave their investments as they are (having faith in the long term track record) and there is therefore no real pressure to reduce fees.

- believe Hamish knows a winner when he sees one and, in time, the side bets will contribute significantly to the bottom line.

As you would’ve gathered I’m in the pro camp. In early July at mid $50’s I wasn’t particularly attracted to MFG but at mid $40’s I started seeing real value. At $40 and below I’ve been a buyer (for the ‘pro’ reasons above) because I think the sell off has been overdone and now believe it’s at least 20% undervalued. I’m not a ‘quick buck’ investor mind you - this is a medium to long term bet for me.

Good Luck assessing which camp you’re in.