MFG in the BUY zone, page-387

The market is discounting the fact that Magellan is extremely profitable and scalable business. It’s expense ratio was 17 per cent in FY21 (average FUM -103b) reducing from 25 per cent in 2018 (aver FUM - 59B). That translates in FM EBIT of 82 per cent ( excluding performance fee). GQG promises 75 per cent EBIT ( FUM US85b) and Pinnacle associates deliver 42 per cent EBIT (FUM 89b at 100 per cent) if you exclude performance fees.
Pinnacle”s net profit was 20basis points of closing FUM including 20 per cent of profit derived from performance fees, while Magellan FM net profit ( grossed up dividends to 100 per cent) was 38 basis points including 5.5per cent of profit from performance.it would be more correct to do against average but could not find Pinnacle data.
To achieve the same FM net profit Pinnacle associates need to have FUM twice the size of Magellan and keep performance fees high at 20;per cent of the profit. Noting that Pinnacle only owns around 38 per cent of its associates. For Pinnacle to report the same profit as Magellan , the associates FUM should increase 5 times and retain performance fees level. HGGC already underperforms index on 12 months basis by 1.2 per cent and 1.8 per cent on 3 months basis. If you remove Tesla (12 per cent of the portfolio) underperformance is 11per cent and 4 per cent. New Magellan’s sustainable fund outperformed 3 month index,It pays 4 per cent distributions tax deferred.

Cash is a king, and always will be. 9 per cent MFG unfranked dividend is a bargain, banks are trading now at lower yield without massive growth outlook.

GQG who measures its profitability while management fees are waived needs to prove it is able to generate free cash flow

BABA story is already forgotten , Charleigh Manger taught the market a lesson by doubling his share recently.