The Financial Grimes: Chance to own two cheap shares
This top City analyst reviews the financial sector stocks making headlines today.
11th July 2019 08:34
by Jeremy Grime from ii contributor
Share on
This top City analyst reviews the financial sector stocks making headlines today.
- Morses Club (LSE:MCL)20 million shares printed in home-collected credit business Morses Club last night at 138p. On a single figure PER and a yield of 6.3% I suspect the buyer will find a very satisfactory outcome.
- Gresham House (LSE:GHE) The Energy Storage fund announces a placing to raise £49.7 million. Note that forecasts for the fund management group assume no increase in AUM this year.
Liontrust  – Trading Statement  
Share Price 772p
Mkt Cap £392 million
Conflict Disclosure: No Holding
Liontrust Asset Management (LSE:LIO)Â is a fund manager.
- Statement AUM up 11% over the three months period to £14.1 billion consisting of net inflows of 5.7% and 5.3% performance. 49% AUM is now economic advantage and 30% sustainable investment process. One-year fund performance is generally strong too. Outlook is "well positioned".
- Estimates Forecasts look for 10% PBT growth to March 2019 which looks rather too easy to achieve when you do 11% AUM growth in Q1. Â
- Valuation PER of 13.9X and yield of 4%. EV/AUM 2.5%. Â
- Conclusion The shares are cheap because of concentration risk. Opportunity.
Polar Capital – Trading Statement 
Share price 580p
Mkt Cap £559 million
Conflict Disclosure: No holding
Polar Capital (LSE:POLR) is a fund manager.
- Statement AUM up 6.4% over the three months comprising net inflows of 1.1% and 5.3% performance.
- Estimates AUM is now back to where it was in September 2018 at £14.7 billion. Pre performance fees to March 19 the company made £42.2 million PBT, which is forecast to be £53 million for the year to March 20.
- Valuation PER 13.6, yield 5.8%. EV/AUM 2.8%
- Conclusion The shares are cheap on earnings forecasts that are about right. Liontrust has £14,097 million AUM and can be bought for £392 million, while Polar has £14,712 million and can be bought for £559 million .
| Glossary | |
|---|---|
| PBT | profit before tax |
| EPS | earnings per share |
| DPS | dividend per share |
| ROE | return on equity |
| EBITDA | earnings before interest, tax, depreciation and amortisation |
| PER | price earnings, or PE ratio |
| Yield | dividend yield |
| FCF | free cash flow |
| NAV | net asset value |
| Price/Book (PB) | a company's share price versus what it owns |
| Book Value | a company's worth after subtracting debts and liabilities from assets |
| AUM | assets under management |
| FUM | funds under management |
| OTC | over-the-counter |
| FCA | Financial Conduct Authority |
| ESMA | European Securities and Markets Authority |
For information about Jeremy's 'deep dive' company analysis, you can email him at jeremy@charltonillingworth.co.uk
Jeremy Grime is an independent equity markets analyst and freelance contributor, not a direct employee of interactive investor.
These articles are provided for information purposes only. Â Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. Â The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.