Here's why I have National Australia Bank Ltd. (ASX: NAB), Praemium Ltd (ASX: PPS) and Magellan Financial Group Ltd (ASX: MFG) shares on my watchlist.
NAB
National Australia Bank is Australia's third-largest bank, behind Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC). Although I believe Commbank is an impressive bank, I like NAB because it has a lesser reliance on Australia's property market and its shares are cheaper. NAB would still be hurt by a fall in property markets but its exposure to business banking is a nice alternative.
Also, NAB recently cleared the deck of its international businesses. It got rid of a portfolio of bad loans in the UK, sold Clydesdale and Yorkshire Banking Group (ASX: CYB) and Greater Western Bancorp, and divested most of its insurance business.
NAB shares are currently a little expensive for my liking but I would consider buying them closer to $20.
Magellan
Magellan is the Sydney-based funds management business. Run by of one of its shareholders and chief investment officer, Hamish Douglass. The company makes money by investing people's money in international markets for a fee.
The company's track record is impeccable. As a result, it has gained popularity with direct investors and financial advisers alike. However, the problem with all large investors is that as they gain more money to invest they lose their potency. After all, it is much more difficult to invest $40 billion than $4,000.
Although Magellan will still earn hefty fees for managing the large pool of money it may not collect the same amount of performance fees that it has in the past. Given its current valuation, I am keeping Magellan shares on my watchlist, for now.
Praemium
Praemium is a small, Melbourne-based financial technology company. The $160 million company has developed a platform for financial advisers and other investors to design and implement investment portfolios for their clients. Praemium clips the ticket for those using its platform.
Foolish Takeaway
There's an old saying in finance: 'Where are the clients' yachts?' It implies that those working in finance get rich at the expense of their customers. If you believe that to be true, you could always consider owning shares in the finance companies themselves!
As for me, I've got these three companies on my watchlist as I wait for lower prices.
