The Platinum Asset Management Limited (ASX: PTM) share price is up 13% in a month, but I'm banking on it going higher in time.
PTM share price
As can be seen above, over the past month the Platinum share price has trounced the market or S&P/ASX 200 (Index: ^AXJO) (ASX: XJO), which is down 0.6%. It has also thumped the short-term return of rivals Magellan Financial Group Ltd (ASX: MFG) and BT Investment Management Ltd (ASX: BTT).
Of course, they are only (very) short-term returns.
But it is encouraging since it has been the polar opposite for Platinum shareholders over the past three years.
Why I'm banking on Platinum
I own Platinum shares. In May, right here in this column, I said the odds of success were in investors' favour.
I'm sitting on a tidy gain of 17%.
It's a nice start.
While the margin of safety — the difference between price and value (wider = better) — has narrowed, I think Platinum could be a worthwhile long-term investment.
As a rough rule of thumb I would say that, based on my current expectations, I would be willing to pay up to $5.50.
However, there are some risks, including:
- It could continue losing precious funds under management (FUM)
- The bottom could fall out of financial markets (perhaps counterintuitively, this might be a good thing for its long-term returns)
- Its investment performance could take a bath, leading to less FUM
Nonetheless, under $5.50, I think the potential long-term rewards outweigh the risk. The forecast 5.3% fully franked dividend is icing on the cake.
Foolish Takeaway
At today's prices, I think Platinum is still worthy of long-term investors' consideration, or at least a spot on watchlists.
While the recent price action has made resulted in its shares being a less compelling opportunity, I'm a happy holder of Platinum shares at today's prices.
