MFG

3.12%

$9.94 magellan financial group limited

Stokes, Grounds liken returning co-founder Chris Mackay to Warren Buffett.” AFR, page-35

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kennethgalbraith

14,068 Posts.

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12/02/22

11:50

Post #: 59527279
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Originally posted by Jean Luc Bergman: ↑

There are often companies where you have a gamble such that they're priced to fail and if they don't maybe you have 10x upside and your downside is obviously capped at initial invested, such that you can only lose 1x. Often these short term bets such that you'll know quickly if it will pay off or fail. If you have a 50/50 bet with 10x upside and 1x downside, you'd take these every single time at least as partial aggressive allocations in a broader portfolio. A large portion of cryptocurrencies fall in this boat, Bitcoin I think is a fantastic investment because its proven over time to have sustained growth over a decade and provides the same functions of gold, for which if it attains the market cap is a full 10x and I'd put the chance closer to 80% over a five year period than a coinflip 50%. Occasionally for smaller projects this can be an upside of 100x vs downside of 1x initial investment, these investments can be justifiable even at relatively low confidence.

The problem I have with MFG is that short term upside is capped at best maybe a 100% increase over a few years, even if the company returns to some marginal outperformance over the next year or so. If it retains current FUM and achieves this at current payout ratio on the dividend it would look like a $40 stock to me. There's no universe in which a company that has had confidence in it shaken so hard can sustain the higher P/Es it used to without extended, 5 year+ periods of outperformance however.

Issue is that with CURRENT performance (marginal underperformance) its plausible that the company loses more mandates and substantial amounts of FUM, such that the company could plausibly hit $5 in a few years if the majority of holders jump ship. There's a huge issue of confidence and a few more major holders leaving could cause an avalanche.

So as an investment, I say best case scenario is maybe the company doubles in 18 months, but even at par current performance in their funds its possible the company slowly halves again over that period as more mandates get scrapped.

This is not investment grade in my opinion. I do think its plausible that the company returns to former outperformance and retains its current FUM, but most sensible people aren't interested in coinflips. Its possible to argue that over the past few years MFG has shown no evidence of ability to outperform, so perhaps its actually even more likely that the company simply drops further.

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where is salty investor when you need him??

MFG Price at posting: $18.11 Sentiment: Hold Disclosure: Held
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(20min delay)
Last $9.94		Change -0.320(3.12%)		Mkt cap ! $1.796B

Open	High	Low	Value	Volume
$10.07	$10.20	$9.94	$8.519M	847.6K

Buyers (Bids)

No.	Vol.	Price($)
3	4149	$9.93

Sellers (Offers)

Price($)	Vol.	No.
$9.99	1848	1

View Market Depth

No.	Vol.	Price($)
1	504	9.920
2	1819	9.800
2	1350	9.750
2	2626	9.700
1	104	9.620

Price($)	Vol.	No.
10.000	3940	1
10.030	1000	1
10.100	1000	1
10.200	500	2
10.230	1500	1

Last trade - 16.10pm 02/08/2024 (20 minute delay)

MFG (ASX) Chart

Stokes, Grounds liken returning co-founder Chris Mackay to Warren Buffett.” AFR, page-35

Westgold sets its sights on top five producer status through merger with Karora

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Week 31 Wrap: JORC rules to get tougher; RBA rate hike chance 50/50; US Fed Sept cut still the quo

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Commodity house Trafigura funds Develop Global's copper-zinc Woodlawn play with offtake deal in place

GreenX picks up prospective copper project in Germany

Collaboration in a green (steel) future the focus for Magnum and Saudi partners

Vmoto sales plummet -50% YoY as weak demand in Europe & China stifles EV scooter sales growth

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Stokes, Grounds liken returning co-founder Chris Mackay to Warren Buffett.” AFR, page-35

Top Stories

Westgold sets its sights on top five producer status through merger with Karora

Is oil undervalued?

Week 31 Wrap: JORC rules to get tougher; RBA rate hike chance 50/50; US Fed Sept cut still the quo

Uranium prices on the NYMEX are stable, but ASX uranium stocks are sinking on Friday. The answer lies in Kazakhstan

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Venture to sniff out high-grade REE targets at Jupiter project, WA

Featured News

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Sellers (Offers)

Featured News