Is the Platinum Asset Management Ltd (ASX: PTM) share price a buy after the release of its FY19 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 FY19 Result
The fund manager reported that its total revenue decreased by 15.3% to $299 million after a 3.6% decrease of funds under management (FUM) to $24.8 billion from $25.7 billion a year before.
The average FUM for the year decreased by 4.1% to $25.3 billion. Platinum said that the reduction in FUM was driven by net fund outflows of $246 million.
Platinum disclosed that most of its managed funds and portfolios lagged the broader market returns during FY19, which translated into lower fund flows, lower investment performance fees and therefore lower profit.
Platinum’s shareholders suffered a 16.7% decline of net profit to $157.65 million as a result of the lower net profit.
The fund manager blamed the ongoing uncertainty of the US – China trade war and lower growth expectations, which hurt the share prices of ‘value’ stocks and those with cyclical earnings.
Interestingly, no member of the investment team received any variable awards under the profit share plan and the CEO/Chief Investment Officer (being Andrew Clifford) decided not to receive any bonuses.
Platinum Dividend
The Platinum Board decided to declare a final fully franked dividend of 14 cents per share, bringing the total year dividend to 27 cents per share, a decrease of around 16%.
Is The Platinum Share Price A Buy?
Platinum said it’s more important for them to minimise the risk of loss to clients than to achieve the maximum return possible, even if it means at times it underperforms the competition.
It sees an opportunity to grow overseas, with expansion in the UK and the US. This could be promising, but it will have to do well to make investors believe that it can provide better returns after fees that the passive ETFs with low fees.
It’s hard to know if Platinum is worth buying or not. It partly, perhaps largely, depends on the investment returns generated which can’t be known. So for me personally I’d rather invest in the growth shares in the free report below instead.
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