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HUB24, Netwealth share prices climb higher as Praemium crashes

The HUB24 Ltd (ASX: HUB) and Netwealth Group Ltd (ASX: NWL) share prices have climbed 2.50% in early trade after key competitor Praemium Ltd (ASX: PPS) announced the withdrawal of a key client and saw its share price plummet 20% lower.

What did Praemium announce?

Praemium made two announcements to the ASX this morning and as always, led with the good news.

The wealth management platform announced the signing of a major contract extension with Shaw and Partners to provide an integrated suite of portfolio administration and investment platform services.

However, the bigger announcement (and the one that saw its share price plummet) was that ANZ Private has selected an “alternative supplier”. The company did not announce who that alternative supplier was.

ANZ Private currently generates 8% of Praemium’s revenue, which for the 2018 calendar year was $4 million, and it is expected that the business transition will commence from the new financial year.

Praemium also pointed out the Shaw and Partners extension, the recent Morgan Stanley Wealth Management Australia expansion and renewal of its Asgard Capital Management contract but that wasn’t enough to prevent investors from heading out the door.

Why is the HUB24 share price trading higher?

HUB24 is a leader in the wealth management platform space and the weakening of a key competitor is good news for the HUB24 as an incumbent.

With no news on who the alternative supplier chosen by ANZ Private is, it’s possible that the market is trading on speculation that HUB24 and Netwealth could be snapping up future business from the likes of Praemium.

HUB24 and Netwealth have seen their share prices climb higher in 2019 while Praemium has struggled even before today’s announcement as it now trades at $0.45 per share, a long way shy of its $1.18 peak in September 2019.

For those who want a more high-risk, high-return play in their portfolio, this buy-rated stock in a booming industry could be in the buy basket.

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Lachlan Hall has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Praemium Limited. The Motley Fool Australia owns shares of Netwealth. The Motley Fool Australia has recommended Hub24 Ltd and Praemium 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.