News: PTM Platinum Asset Management Posts FY Net Profit Attributable Of $157.7 Million, page-10

@Just_a_guy

@madamswer

@MarsC

(and all other valuable contributors to the PTM threads)

I, too, have been a buyer of PTM shares today; my first purchase ever, in fact.

At a dividend yield of ~6.5%, which at current FUM is generated by the fixed 1.1% pa management fee alone, I see the market as essentially pricing in a combination of a) sub-par (or negative) FUM growth for the foreseeable future, and b) a very low probability of any performance fees being earned again any soon.

But, as you guys have already observed, FUM does appear to be reasonably sticky (given the circumstances), Management have demonstrated a willingness/capability to align employee expenses with revenues to a meaningful degree, and the FUM trend from active value managers toward passive index funds (whilst entrenched) simply cannot continue forever.

So, at a current yield premium of over 550bp to the 10-year bond yield, and with the real possibility of significant earnings accretion in the event of performance fees being generated again in the not-too-far future, I now see enough margin of safety to start dipping my toes in, as well as an attractively asymmetric risk/reward profile.

Worst case is of course a dramatic acceleration in outflows, which is why I don’t think I will go over a 3%-4% portfolio allocation with this holding, but the current yield premium over the risk-free rate does seem to provide decent compensation for that tail risk.

Cheers