Shareholders of Aussie wealth manager AMP Limited (ASX: AMP) have endured a difficult 18 months as they’ve watched the AMP share price plummet 67%.
The AMP share price was trading at $5.27 as recently as February 2018 but is now valued at just $1.72 per share amid the fallout from the 2018 Financial Services Royal Commission fallout.
But, could AMP finally be righting the ship and actually be considered a buy in 2019?
How is management turning around the business?
According to an article in the Australian Financial Review (AFR), the Aussie wealth manager is ramping up its adviser network review and accelerating remediation for its customers.
In December 2018, AMP confirmed it had set aside $700 million for customer remediation following the uncovering of its “fee for no service” scandal during last year’s Royal Commission.
The embattled wealth manager increased this by a further $200 million in January 2019 and is reportedly now making automatic refunds to all advice customers who paid an average of $400 or less, according to the AFR.
While sources cited in the article suggest the company’s recent remediation ramp-up is true, the company remains committed to its 3-year timetable for the total payouts to be made to affected customers.
Is there hope for the AMP share price?
While this morning’s announcement shows positive intent from AMP management, it’s a different question as to whether the AMP share price is a buy at its current valuation.
While some may think the 67% share price drop in 18 months is the result of overselling, the reality is that AMP’s business model and operating environment have fundamentally changed in the post-Royal Commission world.
I think management’s ability to revitalise its AMP Life deal is a potential game-changer for AMP’s fortunes, and one which could provide a fresh injection of cash and change to refresh its strategic focus.
While I’m not personally looking to buy at this point in the cycle, I wouldn’t be surprised to look back at August 2019 in a year’s time and see the AMP share price as a bargain buy at just $1.72 per share.
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Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. 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.