Hunter Hall vs Platinum Asset Management Redux
Eleven months ago I compared Hunter Hall Limited (HHL.AX) with Platinum Asset Management (PTM.AX) and found that HHL was a third of the relative price of PTM. Here’s my graph from then. Rechecking their statistics now, sees HHL at half the cost of the PTM, so the gap has closed, but HHL is still relatively attractive.
At the time I decided to buy HHL. Looking at the chart below may lead some people to assume that it didn’t really matter which company I bought as their share prices have tracked reasonably closely. Hunter Hall is now trading at $5.50, PTM is $4.68.
However, those able to look past share charts and see income and dividends will note HHL has returned 47 cents to investors while PTM has returned a miserly 20 cents. Those dividends translate into 9.2% and 4.7% returns respectively.
The following chart shows where Hunter Hall make their money. It is no surprise that the lions share is management fees and those fees have a strong correlation to funds under management (FUM or AUM as you please).
Disclosure: Long HHL.AX and looking at buying more.
Further disclosure.
If Hunter Hall offered me a Melbourne based job I’d leap at the opportunity. Hey, I may as well put that out there.
While I’m at it, if Goldman Sachs or Maquarie Bank want a quality, passionate individual, with ten years business consulting experience and six years portfolio management experience I’m the guy. I’d certainly love to work with people as smart as reputed to work at those two firms.
If M2 Telecommunications want someone to manage their integration and assist on deals them who better than the guy who introduced the concept of integration management to SAP installations.
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You could always try this approach
http://alecbrownstein.com/project.php?cat=3&subcat=&pid=23
Great stuff Justin. Now where did I put that $50 Adsense voucher.
I’m a year away from going back to work, but have started to think about who I would like to work for.
It’s a somewhat uninformed view, but I think my dream employer/job would be at Platinum. Perhaps Kerr will let me carry his briefcase around for a year or two (we even have the same alma mater! I’m a shoo-in!)
the real big money will be if hhl can can ever get back to earning performance fees.
I’m closely watching both and hope to buy both. At the moment I think global stock markets are due for a big fall so I think I’ll wait a while, even though I think you will make money buying at these levels. Both stocks were gifts at the lows, mid $2 each I think.
HHL is indeed cheaper, but PTM is more steady.
Also if you’re investing in managed funds now I think Platinum has the better strategy, high quality large caps (jeremy grantham at gmo thinks this will offer the best return) and they can go short.
Performance fees are certainly the cream. Not only do they fall straight to the bottom line, but the outperformance attracts more funds and hence more management fees, 2007 and 2008 at HH are a great example of that.
As for whether we’re in for a big fall, that is a possibility, but not inevitable. I give it less than 50% chance in the near term. Here is what I said on Thursday on a discussion forum.
Take a deep breath, maybe do some yoga and then think about what is going. Are companies earnings improving? Are consumers feeling better? Are economies outside of the basket cases improving?
This is a bull market correction, driven by fear not by fundamentals. US markets will be higher over the next year, though will be lower at some point in the next five years. I can’t speak for what a short term trader may do, but as a long term investor now is the time to start averaging back in.
The Platinum strategy appears to be the best is these volatile overpriced market times and I agree with his thoughts that high quality large caps should outperform. However, considering the last fifteen years I’d expect Platinum’s strategy to have outperformed and it hasn’t. http://www.hunterhall.com.au/content/upload/temp/dnc-xs5c0o2c.png?634102128784211675 vs http://www.platinum.com.au/images/chart_pif.pdf
Also what happens is the market seems to price in the performance fees as normal earnings. So you can see the stock at a normal multiple of earnings that includes non-normal earnings.
Dave, isn’t that what happens in every industry? For example retail gets priced at normal or higher multiples when experiencing peak earnings. Investors seem to have short memories and extrapolate things too far out into the future. – Thanks for your comments.
Too true.
Good luck with the investment and the gob search.
Do you know much about the HHL european business? The FUM is very small at the moment but there is no reason why they can not grow that as performance has been good.
I just recalled a quote from Security Analysis which captures this brilliantly.
guard “against overemphasis upon the superficial and the temporary” … “this overemphasis is at once the delusion and the nemesis of the world of finance”
What a coincidence as i recently brought into both PTM in May @ 4.72 and HHL in early August @ 5.29…i figure both will benefit from the recovery via FUM growth as all that side line money gets back into the market, and i do like fund managers that have a proven track record and that think outside the square.
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