Platinum Asset Management Limited (ASX: PTM) shares appear well priced and its huge fully franked dividend is a bonus.
PTM share price
The chart above compares the Platinum share price (blue) to the market, or S&P/ASX 200 (Index: ^AXJO) (ASX: XJO), and it peers. As can be seen, shares of Magellan Financial Group Ltd (ASX: MFG) and BT Investment Management Ltd (ASX: BTT) have comprehensively outperformed Platinum over the past year.
Are Platinum shares cheap?
With a near 20% fall in its share price, Platinum shares appear to be trading quite cheap using historical financial results. However, the share market is forward-looking — you do not invest by looking through the rear-view mirror.
Currently, the outlook for the active funds management industry is anything but clear cut. With the fees which Platinum collects being reduced, together with a recent fall in its funds under management, it's easy to see why some investors are negative on Platinum shares.
However, it is debatable that the negative sentiment and selloff has been overdone. With a fully franked dividend yield of over 6% and the inevitable ebb-and-flow of financial markets and fees – I think Platinum shares are worthy of closer inspection.
Foolish Takeaway
Contrarian investing is uncomfortable. However, if you can identify quality businesses that have been unreasonably sold-off it can be extremely rewarding.
I recently bought shares in Platinum because although I think Platinum is a higher-risk investment, I think the potential rewards outweigh the potential risks at today's prices.
