Platinum Asset Management Limited (ASX: PTM) just warned investors its profit may suffer in its December 2018 half year result.

Platinum Asset Management was founded in 1994, one of the co-founders was leading investor Kerr Neilson. Platinum is a fund manager that aims to provide investors exposure to international shares using a contrarian, long-term and bottom-up investment process. Platinum’s International Fund has delivered a 12.1% per year compound return since 30 April 1995.

Platinum’s Profit Points Lower

In an ASX update, Platinum warned investors that recent falls in the share market mean the company will record an unrealised loss on its seed investments. Moreover, given the lower returns, its performance fee income in the December 2018 result will fall.

This was first warned at the annual general meeting (AGM).

Platinum Chairman Michael Cole said at the time: “Whilst Platinum’s assessment is that the funds’ portfolios represent significantly better value than the broad market, this does not make them immune to sell-offs in times of uncertainty.”

Platinum December Funds Under Management (FUM)

One of the key drivers of profit for Platinum is its total funds under management or FUM. That is, the money it manages for clients/investors. Platinum earns management fees on its FUM. In December 2018 Platinum’s ‘FUM’ fell by 0.5% to $24.09 billion.

The falling share market has also hurt the Magellan Financial Group Ltd (ASX: FUM), as we reported yesterday.

Is the Platinum share price a buy?

The Platinum share price has fallen along with the Asian & global share markets. If the share market recovers then Platinum’s share price and dividend could grow quickly because its business is highly scalable.

However, I’d prefer to go for shares that are more consistent with their profit growth, such as the reliable businesses outlined in the free report below.


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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).