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Is Platinum Asset Management Limited a buy at this share price?


Platinum Asset Management Limited (ASX: PTM) has seen its share price sink 5.3% today, and has lost a quarter of its value since the start of this year.

That’s surprising for a company that makes its profits from investing in the market, and the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) is virtually flat since January 2016, and the S&P 500 is up 2%.

Platinum isn’t alone though – Magellan Financial Group Ltd (ASX: MFG) has seen its share price sink 10.7% year-to-date, Perpetual Ltd (ASX: PPT) has seen its share price sink 8.4% and IOOF Holdings Limited (ASX: IFL) has seen its share price sink 14% in the past five-six months.

Platinum Capital Limited (ASX: PMC) – the listed investment company managed by Platinum AM – has seen its share price fall 14.5% year-to-date. And while the fund has underperformed its benchmark index since January 2016, over the long term, it has returned close to double the MSCI All Country World Net Index.

Interestingly, Platinum’s funds under management has declined since January but did rebound in May, compared to April – as the chart below shows.

Platinum FUM 2016

Source: Company reports

However, Platinum’s share price is virtually the same it was in early May.

One factor that may have contributed to Platinum’s fall is the company’s much higher exposure to Asian stocks and just 10% exposure to the US market. The company highlighted this differentiation in February this year. The market may have taken a dim view of this, with fears over growth in countries like China slowing – and the impact it would have on Platinum’s performance.

However, that’s to cast doubt on Platinum’s historical performance and suggest that the manager can no longer outperform. That could be a major mistake, and at the current share price, Platinum looks compelling value.

Foolish takeaway

Trading on a P/E ratio of 15.2x and paying a fully franked dividend of 6%, now could be the perfect time to add this renowned fund manager to your portfolio.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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