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Why the IOOF share price just hit a new 52-week high

The IOOF Holdings Ltd (ASX: IOOF) share price has had a surprisingly good year on the ASX.

The Aussie wealth manager looked set for a tough year ahead of the 2018 Royal Commission final report release in February. However, Commissioner Kenneth Hayne’s report didn’t appear to spell too much trouble for IOOF shares.

The IOOF share price is up 56.29% since the start of January to be well ahead of the S&P/ASX 200 Index (INDEXASX: XJO) this year. The Aussie index has returned just 21.03% while AMP Ltd (ASX: AMP) shares are down 20.49%.

So, what’s driving IOOF shares to their new 52-week high of $7.94 per share in November?

Why the IOOF share price is climbing higher

October was a good month for IOOF shares following a broker upgrade and an acquisition update from the company.

Credit Suisse and Citigroup both demonstrated increasing confidence in the Aussie wealth manager. Credit Suisse moved IOOF to “outperform” from “neutral” while Citigroup upgraded it from “Hold/High Risk” from “Sell/High Risk”.

Also boosting the IOOF share price in October was the company’s update on its acquisition from Australia and New Zealand Banking Group Ltd (ASX: ANZ).

IOOF is set to buy the bank’s wealth division, OnePath Pensions & Investments (P&I), for $850 million. The latest update in October saw IOOF negotiate a $125 million discount on the original price agreed to one year ago.

A strong second half of the year has seen IOOF outperform not just the ASX 200 but also fellow ASX-listed wealth manager, AMP.

AMP shares have been under pressure as customer remediation and an attempted rebuild have slowed growth.

Should you buy in November?

While the IOOF share price has been on the run in 2019, I’m not sure now is an ideal time to buy.

IOOF is yielding a tidy 4.73% in dividends but could be a little overvalued at its 52-week high.

I’d be waiting until the company’s February results release before making a buy, hold or sell decision on the stock.

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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.

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