If you like Westpac Banking Corp (ASX: WBC) shares, why not try shares of finance companies like Platinum Asset Management Limited (ASX: PTM) or Pinnacle Investment Management Group Ltd (ASX: PNI)?
Why I'm avoiding Westpac shares
Westpac is Australia's second-largest bank having performed exceptionally well for a long period of time. However, I'm reluctant to buy shares in Westpac because I believe it is higher-risk than many investors think it is, and that complacency has driven its share price above its fair value.
I'm not predicting it will crash or fall anytime soon. However, if I were looking to buy shares in an Australian finance company Westpac would not be at the top of my list.
Indeed, when prices fall I would prefer to own shares of nimbler, faster-growing companies like these two:
Platinum Asset Management.
Platinum is one of Australia's most successful investment management companies, with its investment track record stretching back many years.
A recent turn of events saw the Platinum share price sliced in half from over $9 to less than $4.50. However, the company appears to be on the mend, with money flowing back to the coffers of the Sydney-based company.
Pinnacle Investment Management is also in the financial space, but it is much smaller than Westpac and even Platinum. Pinnacle is a $500 million company which supports other investment companies by doing their marketing, administration and support services.
Pinnacle shares have rallied strongly in recent years but it is a cyclical business, which means it may be time to second-guess buying shares.
However, if the Pinnacle share price does suffer a setback in the near future I will be ready to scoop some up for my portfolio because it is growing at a healthy rate and the business has attractive economics. That makes it an ideal long-term investment in my view.
