I have wondered for years about when investors will work out the economics of the business and that in the end it is about profit. Both hub and netwealth have looked overvalued for years. They have looked a little like tech bubble stocks.
My last detailed analysis of these businesses suggested that they are still valued at close to twice what makes any type of sense if you factor in margin squeeze in the industry, margin squeeze as you try to buy distribution, capital cost as you buy for growth.
Time will tell, but with both businesses having retraced their SP back 2 or 3 years, even they have kept achieving huge fund growth, I am pretty sure my logic is sound. What happens as outflows gain momentum simply based on size and age of fua? This will start to offset the inflows increasingly. It is the problem BT faces and North would, if it was not getting billions transferred from old amp products.
NWL Price at posting:
$12.26 Sentiment: Sell Disclosure: Not Held
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