The Horse has Bolted, page-6

How will employees feel coming to work everyday where the top management is leaving (Paul lewis, Brett Carins), your stock price is in the sink and continues to fall, with institutions/advisors calling up in higher and higher numbers to redeem units? Can't imagine the feeling is very positive around the place.

Looking at the Platinum board (PTM) it looked cheap at $5, the horse bolted at $4 then again at $3, now its $2.70.
You never want to overstay your welcome in a business that is no longer getting better, because whatever valuation work you do, it always ends up being too expensive. Platinum had a great track record of performance, then it started to lag the benchmark and outflows began, once they start pulling money out, its hard to reverse without either a massive fee cut or a significant uplift in relative performance.

Could investors stomach another year of poor performance whilst being charged 1.35%?

I'm also selling due to management, I feel they've been unfaithful to shareholders. Hamish's still saying he's found no institutional clients questioning performance, yet the numbers don't lie. The handling of the CEO exit was also very poor, no transition period, no CEO lined up and a vague excuse of 'personal reasons' for a man that has been there since day one... something seems off about it all. Magellan call inflows, inflows and outflows are termed 'rebalancing', like c'mon, who are you fooling?


From the AFR article @SP007 brought up..

Multiple financial advisers told AFR Weekend they had advised clients to pull funds out of Magellan products, while others were still considering doing so. All asked to remain anonymous to avoid lengthy phone calls or visits from Magellan’s business development managers.“We recommend you sell down your entire holdings of the Magellan Global Fund” one firm, which had been a supporter of Magellan’s for more than a decade, wrote to clients in October.“This is due to significant underperformance with the benchmark over the past year, and a reduced conviction in their team.” Another said the duty to act in the best interests of clients made it difficult, if not impossible, to continue backing an underperforming manager indefinitely, even if you thought their explanations had some merit.

The reduced confidence in the team is the kicker. How can Hamish effectively manage the fund if he's going through divorce and the courts?
Will he also step away like Kerr Neilson?

At the AGM, Hamish was asked about flows and conversations with clients. To which he brushed off, said that flows were insignificant and a similar to a rounding error at the end of the day on 115 billion. If clients take 2.5 billion out, is that a rounding error too? What about 15 billion?

Quarterly flows
March FUM flows +1,120 m
June FUM flows -351m
Sept. FUM flows -1,527m

I don't like this trend. I wouldn't want to be holding when the December FUM update is announced, which will reveal all flows for the quarter to be released early January.

Too many question marks. I really do want to seem them turn it around, however to quote a man Douglass is fond of "Turnarounds seldom turn" (W.B.).

For me theres better opportunity elsewhere, you don't have to make your money back the same way you lost it.
Has the hose bolted? or has it just began to trot?

I hope I am wrong,

Plague.