Shares in asset manager Macquarie Group Ltd (ASX: MQG) dropped around 2.2% in trade this morning on the back of news at its AGM that its CEO Nicholas Moore is set to retire on November 30 2018. Taking his place will be the long-serving head of Macquarie’s core Macquarie Asset Management (MAM) group Shemera Wikramanayake, with the two Macquarie stalwarts having worked together for more than 30 years. This fact speaks for the strong culture at Macquarie that sees it attract and retain the best staff, while aligning staff’s interests with those of shareholders via a long-term approach and its remuneration…
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Shares in asset manager Macquarie Group Ltd (ASX: MQG) dropped around 2.2% in trade this morning on the back of news at its AGM that its CEO Nicholas Moore is set to retire on November 30 2018.
Taking his place will be the long-serving head of Macquarie’s core Macquarie Asset Management (MAM) group Shemera Wikramanayake, with the two Macquarie stalwarts having worked together for more than 30 years.
This fact speaks for the strong culture at Macquarie that sees it attract and retain the best staff, while aligning staff’s interests with those of shareholders via a long-term approach and its remuneration structure.
Macquarie is also famous as a no passengers, rapid fire culture, with long working hours similar to a magic-circle law firm where partners are remunerated on a profit share basis.
One big difference being that Macquarie is listed and offers Australian investors exposure to its global investing and capital markets advisory expertise alongside the opportunity to share in profits.
Under departing CEO Nicholas Moore the group moved deeper into what it describes as the ‘annuity earnings’ space as by definition this area offers more reliable revenues and profits than businesses relying on confidence or activity in capital markets for fees.
After the GFC-induced transformation in focus Macquarie can now be viewed as an asset manager that also does some investment banking work.
The next medium-term growth leg will be a deeper push into the technology, infrastructure, and green investing space that is seeing an exponentially-growing flood of global capital looking for a home.
On an operational basis the group reported that all its operating groups are “performing well”, with Q1 FY 2019 profit expected to be up on the prior corresponding quarter, but down on what was a strong final quarter of FY 2018. The group also reaffirmed guidance that full year profit is likely to be broadly in line with the last financial year.
Is it a buy?
The market is expecting some mid-single-digit full year growth and Macquarie tends to provide conservative guidance. It should be noted that with nine months ahead until the end of the financial year buyers of shares today take on the primary risk around the short-term health of capital markets.
While the price could be volatile over the short term, over the long term Macquarie looks to tick the boxes as a sound investment prospect for ASX investors.
It is especially worth considering for any local investors who have too much exposure to the residential-property-leveraged big 4 Australian banks like Commonwealth Bank of Australia (ASX: CBA) or Westpac Banking Corp (ASX: WBC).
One of Macquarie’s key strengths is its adaptability and innovation in pursuit of profit growth, which is not something possessed by the old school Australian banks.
As such I’d be a happy buyer of Macquarie shares today, if I didn’t already have some exposure.
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You can find Tom on Twitter @tommyr345
The Motley Fool Australia has no position in any of the stocks mentioned. 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.