Assetco Share Discussion Threads

[ohisay] 29/3/2024 05:54

Recommended again couple of weeks ago .

Moreover, following press speculation that Parmenion’s majority shareholder, Preservation Capital, is looking to sell, AssetCo’s 30 per cent stake has been independently valued at £75mn-£90mn (52.6p to 63.2p per share). This implies a conservative-looking cash profit to enterprise valuation multiple of 12 to 13 times. The investment is held in the group’s accounts at £24.6mn.

True, AssetCo’s share price has drifted since I analysed the investment case (Alpha Research: 'Target recovery upside from a deep value asset manager’, 30 November 2023), but the stake in Parmenion and its cash pile are easily worth more than double the group’s market capitalisation, and potentially far more. It leaves a fund management business that is operationally geared to any improvement in market sentiment in the price for free. Buy.

[strollingmolby] 30/11/2023 13:15

Thanks, eeza. I assume it is this article? below is what can be seen before the paywall kicks-in:

Target recovery upside from a deep value asset manager
This heavily punished stock has the hallmarks of a Ben Graham value play.

November 30, 2023
by Simon Thompson

- Business has a top asset management team.
- Net cash backs up a third of market capitalisation.
- Discount to sum-of-the-parts valuation.

It’s sensible to build a ‘margin of safety’ into the price you are willing to pay for any investment. Risk can be mitigated further when the company is sitting on a cash pile to cushion potential downside. In the case of one asset manager, balance sheet cash backs up a third of its market capitalisation. Moreover, the group’s 30 per cent stake in a profitable investment platform is worth 50 per cent more than its own market capitalisation.

Investors also get a free ride on an asset management business with around £3bn of client mandates which is being right sized and could hit run rate profitability in 2024.

[eeza] 30/11/2023 12:36

Tipped by Simon Thompson (IC)

[jurgenklopp] 30/11/2023 11:20

A very pleasant surprise.

There is, of course, a very valid case that the sum of the parts is at least 80p so it might be reality creeping in.

[strollingmolby] 30/11/2023 11:04

Sudden flurry of trades since 10:30... are there any new broker notes out on ASTO?

[tommygriff] 11/11/2023 16:38

AssetCoThis is a real oddball. In 2020, the UK AIM listed company AssetCo had ~£30 million in cash but no underlying business (after the loss of a contract providing fire fighting services to the UAE). Fast forward a few years and AssetCo has transformed. It's now an Asset Management business with ~£2.5 Billion in Assets Under Management (AuM).AssetCo also has one of the most experienced micro-cap management teams I've come across. Martin Gilbert is Chairman. The same Martin Gilbert who founded Aberdeen Asset Management in the early 1980s and grew it into the largest Asset Manager based in the UK. When he left Abrdn (as it's now called) in 2020, he convinced his Global head of Investments (Alex Hoctor-Duncan), Head of Private Markets (Peter McKellar), and Head of EMEA/UK (Gary Marshall) to join him at AssetCo.The general strategy has been to acquire small (sub £1Bn AuM) active equity managers with good track records. Many are family owned and lack the scale to complete with their much larger peers. In theory, AssetCo pays ~2-3 x Sales, then reduces compliance costs, integrates back and middle office functions, and cross sells the funds under a single brand. Ultimately, targeting an Operating Margin of ~20-30%.The team has made 7 acquisitions over two years, spending over £100 million using not only the cash on hand, but both debt and equity financing. You only need to look at the historic share price to see it's been a bumpy ride. Mistakes have been made. The most obvious being the purchase of Rize ETF, a racy thematic manager, for 17 x sales in 2021. Growth remained low and it was recently sold to Cathie Wood's ARK at a cut down price.Away from this 'moon-shot' investment, the other acquisitions averaged ~3 x Sales and focused more on traditional active 'Value' strategies (here's a link to AssetCo's current funds).Thinking about valuation. As a rule of thumb, Asset Managers are rarely sold for less than 1% of AuM. This conservative approach would value AssetCo at around the current Market Capitalisation of ~£50 million. Consisting of ~£25 million for the AuM and ~£20 million of Net Cash (as of the last reporting date, the 31st March 2023).The kicker, and most of the upside, comes from AssetCo's 30% ownership of Parmenion. A platform for Independent Financial Advisors that is majority owned by the Private Equity firm Preservation Capital Partners and was bought from Abrdn in 2021 (yes, the same Abrdn that Martin Gilbert had left a year earlier!).Parmenion's results continue to impress. AuM has grown from ~£5Bn in 2018 to over £10Bn today, and Net Income has gone from around breakeven to £12 million in 2022. In a recent interview, Martin Gilbert gave the current run-rate EBITDA as between £20 million and £25 million. A figure that would support an 'independent' valuation of AssetCo's stake at between £75 million and £90 million (Yes, you read that correctly - considerably higher than AssetCo's entire Market Capitalisation!).The catch here is timing. Firstly, there's cash burn. Full year results (ending 30 October 2023) will be released in early 2024 and I expect the overall Net Cash position will have fallen to ~£10-15 million. If you believe management, the business is nearly cash flow positive, but if you conservatively use the historic cash burn, AssetCo will require financing in less than 2 years. Secondly, the Parmenion sale rumours have been circling for some time. If true, the sale would provide a catalyst for a sizeable re-rating of the stock. If not, the stock could well continue to tread water for years.Overall, investing in AssetCo feels uncomfortable due to the rapid changes and the ongoing uncertainty. However, it's difficult to come up with a feasible scenario where you might lose money over the long-term. For those with the stomach, and the patience, I think it'll work out pretty well.

[brummy_git] 30/10/2023 14:04

In this fascinating interview, Exec Chairman Martin Gilbert of AssetCo plc takes me through:

00:00 The key secular trends driving the asset management industry
02:10 How AssetCo plc is ideally placed to continue growing in this environment
16:45 Path to profitability
19:15 Upside potential including 30% equity interest in Parmenion

[brummy_git] 16/10/2023 06:55

I was having a rummage through Christopher Mills’ latest holdings at Harwood Capital - & specialist fund manager AssetCo came up as an interesting GARP stock for long term, risk tolerant investors.

All the details here

[tommygriff] 20/9/2023 14:36

Plus river and mercantile

[tommygriff] 20/9/2023 14:31

Plus the cash, the Scottish hub and the Indian fund, must be worth 75p or so this?

[privileged] 20/9/2023 12:59

As long as they can sell parmenion for 55p and call it a day that works

[topvest] 20/9/2023 10:09

Fairly impressive to sell Rize ETF to Cathy Wood's ARK at a c60% loss - that must be a first!

[tommygriff] 31/7/2023 16:33

Hopefully it will be sold in the future for even bigger bucks

[arthur_lame_stocks] 28/7/2023 16:17

Whatever happened to the mooted sale of Parmenion for big bucks.

[tommygriff] 28/7/2023 15:48

Bottoms in hopefully

[dartron] 30/6/2023 18:30

More today at 32p, nearly 1M shares.

[slatto1971] 23/6/2023 00:11

This thing won’t go anywhere. Costs are a massive drag, minimal synergies, no business momentum. In a business that requires critical mass, a sub-scale firm buying minnows at premium prices is simply setting fire to cash.

[tommygriff] 22/6/2023 20:03

In that size as well - nice work

[privileged] 21/6/2023 19:47

How did that director buy at 35p? Did we ever get to that level?

[giardap] 19/6/2023 21:05

What price snapping up some Odey business?

[volsung] 16/6/2023 08:28

Tabhair do lamb

[tabhair] 14/6/2023 13:02

For the last six months they generated £8.3m of revenue but had £15.6m of administrative expenses (this was after exceptional items!).

The company had £15.2m in staff costs for 2022 alone with management and directors getting huge salaries and fees.

As pointed out above, pretty clear that this business is just too sub-scale to provide a return to shareholders.

I had a quick look at Premier Miton as a peer comparison. It's twice as expensive as Assetco on enterprise value but has 5x the revenue and is hugely cash flow generative.

[fastbuck] 14/6/2023 12:56

I'm waiting for the broker note from Zeus, hopefully it will give us more insight into FY next years forecast