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Here are 3 reasons I bought Platinum shares

I bought Platinum Asset Management Limited (ASX: PTM) shares for the dividend, among other things.

Just take a look at this graph…

Platinum Shares

PTM share price

Source: Google Finance

….that’s right, folks. I’m probably the greatest momentum trader in history…

Just kidding.

I was lucky (for once) with the timing of my investment.

Its shares were cheap, so I bought some. And the price jumped.  But I didn’t buy Platinum shares for a short-term hit. I think it holds longer-term potential.

As I wrote the week before I invested, here’s why I bought — and still hold — Platinum in my portfolio.

  1. Management.

Platinum is run by Kerr Neilson, its billionaire founder and chief investor. Nothing keeps a public company’s management team aligned with ordinary shareholders as much as a manager who is a founder and investing alongside you.

  1. Markets are cyclical.

Over the past five years, some international fund managers — such as some Sydney-based companies that are in competition with Platinum (not naming names) — have looked like geniuses because they bought American tech stocks. That’s okay. But with markets being cyclical and the US markets looking a little expensive, it may be time to transition.

Among other things, Platinum lost some investors because it didn’t have the US exposure, so its performance was strong but not as good.

But markets are cyclical, so now I think Platinum will gain ground on its peers.  

  1. Dividends!

Even after rallying 25%, Platinum shares are forecast to pay a fully franked dividend over 5%. That is very compelling.

Buy, Hold or Sell

At today’s prices, Platinum’s shares are closer to their fair value than they were before. So unless they fall below $5 again I won’t be in any rush to buy more shares for my portfolio.

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Motley Fool Contributor Owen Raszkiewicz owns shares of Platinum. You can follow him on Twitter @OwenRask.

The Motley Fool Australia owns shares of Platinum Investment Management Limited. 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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