I wrote about Platinum Asset Management Limited (ASX: PTM) in May this year. At that time, the share price was $6.29 and whilst I thought the price tag was too high, I was a big fan of the company’s historical performance and financial strength.
With a 52-week high of $8.72 and a 52-week low of $4.61, today’s 9% fall is the latest instalment in a roller coaster narrative experienced by shareholders. Consequently, the consistency of volatility affirms the need to focus solely on the company’s intrinsic value.
Platinum Asset Management has been a strong investment for the past decade. From 2008 to 2017, it has returned $2.79 in earnings per share whilst paying $2.77 in fully franked dividends.
In that same time period, Platinum Asset Management grew book value per share by $0.25. This means that for every $1 retained in earnings, Platinum Asset Management has grown book value by $12.50.
On the back of its funds management revenue stream, Platinum Asset Management is also tipped to grow earnings for the 2018 financial year. Since April 2017, Platinum Asset Management has increased funds under management from $23.96 billion to $27.75 billion.
Funds under management growth has been largely attributed to the returns provided by its two largest products. In the last year, Platinum International Fund and Platinum Asia Fund have returned 14.2% and 19.5% respectively.
Whilst both outperforming the All Ordinaries (INDEXASX: XAO), perhaps Platinum Asset Management’s exposure to international markets and reliance on management and performance fees is causing investors to feel uneasy.
International markets are on edge as the “trade war of words” between the U.S. and China continues. Additionally, Australia’s debt situation is becoming more prevalent with ASIC recently slamming the $45 billion credit card industry, adding to fears of a potential debt bubble.
Downturns aside, if you were to buy Platinum Asset Management on today’s prices, you would be securing an investment with no debt, a P/E ratio of 17 and a dividend yield of approximately 5.5% on 2017’s figures.
Personally, there aren’t many shares I’d buy given my thoughts on short-term threats to market sentiment. However, if you disagree with my opinions, I believe Platinum Asset Management is a proven investment at an enticing price.
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Motley Fool contributor Matt Breen has no position in any of the stocks mentioned. 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 Scott Phillips.
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