It hasn't been a great start to the day for BT Investment Management Ltd (ASX: BTT) shareholders. In morning trade BTIM's share price fell as much as 8.9% to $10.10 despite there being no news out of the fund manager.
Today's decline is likely to be the result of a research note out of investment bank Credit Suisse which revealed that its analysts have downgraded BTIM to an underperform rating.
According to the note Credit Suisse's analysts are concerned that the company's UK-based JO Hambro business will disappoint when BTIM releases its next quarterly update in mid-January.
They estimate that accrued performance fees at the end of November were approximately half the level they were at the end of the September quarter.
If this proves to be the case then I'm not surprised to see the share price plunge. The JO Hambro business is the company's key business, providing 77% of BTIM's cash profit in FY 2016. If it misfires then BTIM's performance as a whole will be dragged down with it.
Whilst at this stage these are just estimates from Credit Suisse, there have been numerous reports recently about how the United Kingdom is losing out on billions of pounds worth of investment post-Brexit. So it isn't hard to imagine the JO Hambro business suffering as a result.
Regardless of these concerns I felt BTIM was a little on the expensive side already. Today's drop has brought its shares down to a more reasonable level, but I would still hold off an investment at least until it releases its quarterly update in January.
Until then investors might be better served with an investment in either WAM Capital Limited (ASX: WAM) or FORAGER AU FPO (ASX: FOR) instead.
