The Financial Grimes: Time to take interest in this share

This top City analyst reviews the financial sector stocks making headlines today.

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Just as the gold price reaches $1,448 overninght, this chart catches my eye from the BAML fund manager survey. After 9 years of value stocks underperforming growth, consensus has now moved to value being likely to underperform.

• Impax Asset Management (LSE:IPX) announces a new introduction agreement with BNP Paribas Asset Management in Australia and US which are subsidiaries of their 32% shareholder.

Close Brothers – Trading Update

Share Price 1,451p

Mkt Cap £2.196 billion

Conflict Disclosure: No Holding

Close Brothers (LSE:CBG) is a merchant bank that owns the Winterflood equities market making operation.

• News Banking division grew its loan book 5.1% to £7.6 billion, driven by commercial, premium lending and retail, while property lending was flat.  Impairments remained low, while net interest margin (NIM) was down slightly from 8% to 7.8%. In Asset Management, AUM was up 9% to £11.3 billion and total client assets were up 6% to £12.9 billion. Winterfloods was in line with H1.

• Numbers A 3% PBT increase is anticipated for the year to £273 million. With the bank contributing 95% of the profits that looks conservative

• Valuation PER 10X Yield 4.7%. ROE 15% and P/Book 1.64

• Conclusion The profits from Winterfloods are less than the central costs, which is why this business would be better off broken up.  In the meantime, the yield may be enough to keep shareholders happy. Perhaps shareholders should give Edward Bramson a call. I can get to a SOTP valuation above £20.

Record Plc  – Q1 Update

Share Price 32.5p

Mkt Cap £65 million

Conflict Disclosure: No Holding

Record (LSE:REC) is a currency manager for institutional clients, offering services such as currency hedging.

• Update AUME was up 1.7% to $58.3 billion but, due to sterling weakness, was up 4% in sterling terms. Net inflows were 0.5% at $0.3 billion. Clients numbers grew from 65 to 68 over the period.

• Estimates.  Full-year forecasts anticipate £5.6 million PBT, down from £8 million last year following investment in New York last year and £2.3 million of performance fees last year not anticipated to repeat.  

• Valuation  PER 14, Yield 7.2%. The dividend is just covered on this year's forecast and there is £21 million net debt.

• Conclusion Other than the yield, it has been hard to see the attractions of this resilient but low growth company over recent years. As the cycle changes I suspect the attractions of a currency manager, which has invested in its distribution, may become more obvious over coming years. This could be a time to take more interest in this one.  

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.