The Magellan Financial Group Ltd
(ASX: MFG) share price is in focus again today as it was announced that Hamish Douglass was resigning. It’s up 1%.
Hamish Douglass resigns as a director
In a short statement to the Australian Stock Exchange, Magellan advised that Hamish Douglass had resigned from the Magellan board with effect from 19 March 2022.
Mr Douglass said his resignation as a director of the Magellan board is due “solely to his medical leave of absence.”
The Magellan board is continuing its search process to appoint an additional independent director.
Why is Hamish Douglass on a medical leave of absence?
In February, Mr Douglass decided to go on a leave of absence “after a period of intense pressure and focus on both his professional and personal life.” Mr Douglass requested a period of medical leave to prioritise his health.
The investment performance that Mr Douglass was a leading contributor towards has been disappointing over the last couple of years. Magellan remained too defensive after the COVID-19 crash, it timed some Chinese stock purchases poorly and a couple of sizeable tech investments sank recently.
The poor fund returns and Mr Douglass’ absence caused the Magellan share price to drop.
FUM flies out the door
Magellan’s funds under management (FUM) has been decimated over the past three or four months.
On 30 November 2021, the FUM was $116.4 billion, with $86.27 billion at 30 November 2021. On 11 March 2022, this FUM had fallen to $69.1 billion with $39.2 billion of global equities. However, the Australian shares and infrastructure shares have been stable.
Magellan said that it had experienced net outflows of approximately $5 billion since the most recent FUM update on 25 February 2022, which comprised net institutional outflows of $4.7 billion and net retail outflows of $0.3 billion. It has also received notifications of intention to redeem $1 billion, which has been reflected in the above FUM figures.
What next for the Magellan share price?
Magellan shares have dropped 57% in the last six months. Could it fall even lower? Possibly, if the FUM were to fall a lot more. But there is a lot of negativity priced in now. While the global strategy is leaking FUM, the other two segments are seeing good stability.
It could be a higher-risk income option, with its high dividend payout ratio. A return to good investment performance would also be handy, but who knows when that will happen?
Magellan may be a turnaround idea, though I’m not looking to add more to my portfolio.
