The start of February 2021 is another opportunity to look into some ASX shares.
It has already been an interesting year in the global stock market with everything that’s going on relating to Gamestop.
These ASX shares could be ones to think about:
Pacific Current Group Ltd (ASX: PAC)
Pacific Current is a business that invests in leading global investment managers around the world.
If the investment managers manage to grow their funds under management (FUM), then Pacific Current benefits as well.
On Friday, the ASX share announced its FUM update for the three months to 31 December 2020. Pacific Current said that its FUM rose by a further 8.3% to $112.8 billion.
The company said that GQG’s assets once again posted significant increases. GQG saw its FUM rise by more than US$35 billion over the 12 months to December 2020.
In native currencies US dollar orientated fund managers saw FUM increase by 16.9%. When converting to Australian dollar, the increase was partly offset by the appreciation of the Australian dollar against the US dollar.
Pacific Current management said that in local dollars, all nine of the portfolio companies with FUM grew during the quarter, but when translated into Australian dollars only four of the nine did. Pacific’s FUM and revenue is heavily skewed towards the US dollar.
Dean Fremder of Perpetual Limited (ASX: PPT) said when Pacific Current shares were a bit lower: “The stock’s really cheap. It is on nine times earnings. It’s growing earnings at double digits, so more than 10% a year. It’s paying a 6.5% fully franked yield. And most excitingly, we think they can pay out a much larger portion of their earnings as dividends. We see no reason, given the surplus franking credits they have on the balance sheet, they can’t be paying a 10 or 11% fully franked yield in the next 12 months. So, really excited about that one.”
According to Commsec, the Pacific Current share price is valued at 10x FY22’s estimated earnings.
Magellan Financial Group Ltd (ASX: MFG)
Magellan is another ASX share that’s involved with the funds management business.
Dr Peter Gardner from Plato Investment Management said about the ASX share and its FY20 result: “Magellan had a really good result. Their profit was up 20%. That final dividend was 10% higher than last year. What bodes well for future earnings for Magellan is that their average funds under management was up by 26% over the year. They’re actually doing really well in the current market environment. The growth stocks in the US, which they’re exposed to are doing really well.”
Not only does the fund manager have over $100 billion of FUM, which generates high levels of management fees, but it is also seeking growth in other areas.
Magellan’s own investment called Barrenjoey, a new investment bank, has just hired its latest members of the team according to reporting by the Australian Financial Review. Barrenjoey has hired two of JPMorgan’s top Australian investment bankers to run its equity capital markets unit.
Magellan has been making investments in operating businesses to make returns and provide greater levels of information to the funds management business. Barrenjoey is one investment and Guzman y Gomez is another, which is a fast food Mexican chain.
According to Commsec, the Magellan share price is valued at 16x FY23’s estimated earnings. It also has a projected partially franked dividend yield of 4.6% for FY21.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.