The GQG Partners Inc (ASX: GQG) share price climbed 4% after its November update was released to the ASX.
GQG is a fund manager based in the US. It has been under pressure following revelations that one of its substantial investments, Adani, was accused by the US of bribery. The November update showed investors the impact of those developments.
November update
Due to recent events, GQG thought investors would want to see details about what had happened with its funds under management (FUM) flows.
GQG reported that its FUM at November 2024 was US$159.5 billion, up from US$159.4 billion in October 2024. Total net flows for the month of November were US$0.1 billion.
The business reported that in November it experienced gross flows (which excludes withdrawals) of US$4.2 billion, of which US$744 million occurred in the last week of November. In November 2023 it experienced US$2.6 billion of gross flows, in November 2022 it was US$4 billion and in November 2021 it was US$2.3 billion.
GQG noted that the “positive flow profile continued into December” with an estimated US$1.1 billion of gross inflows occurring between 1 December to 6 December 2024.
The funds management business noted that as of 6 December 2024, its estimated FUM was US$161.5 billion.
However, GQG cautioned against extrapolation of the data as seasonality and other factors “can have meaningful impact on flows and there may not be a strong signal in such short-term data”.
GQG share buyback cancelled
The fund manager also announced that it was cancelling its CHESS Depositary Interests (CDI) / share buyback.
It’s cancelling the buyback because there is a “lack of certainty” about the US tax treatment of the proposed on-market buyback and GQG may be required to withhold up to 30% of the proceeds from shareholders selling into the buyback because of US withholding tax requirements.
GQG said it doesn’t think it’s appropriate to pursue the buyback because it doesn’t expect to be able to resolve this uncertainty before entering the year-end ‘blackout’ period.
The fund manager may revisit the idea of this buyback if it gains enough comfort about the US tax treatment.
Chair and chief investment officer Rajiv Jain has indicated he intends to buy more GQG shares, subject to the blackout, valuation and other considerations.
Final thoughts on the GQG share price
I’m not surprised GQG shares are up today, considering the FUM actually rose in November despite all of the difficulties the company faced about its portfolio performance and the withdrawals.
With the GQG share price down more than 22% in the last month, this could be a good time to buy if most of the client withdrawals have already occurred. It can get back to growing FUM through its funds’ returns and the ongoing inflows it’s still seeing, as seen with the US$1.1 billion inflows in the first week of December.
I think it’s a higher-risk, higher potential return sort of buy idea at this lower price.
