Over the last 12 months the Pinnacle Investment Management Group Ltd (ASX: PNI) share price has gone up by around 170%.
If readers haven't heard of Pinnacle before, it's a business that is a multi-affiliate investment management outfit. It aims to establish, grow and support a diverse stable of "world-class" investment management firms. It provides distribution and other support services to those affiliates.
There are a number of different fund managers in the portfolio such as Plato, Coolabah, Firetrail, Solaris, Spheria, Antipodes and Metrics.
Growth in FY21
The business has experienced significant funds under management (FUM) growth during FY21 in the financial year to 30 April 2021, according to the last update.
Total affiliate FUM at 30 April 2021 was $84.9 billion. That was an increase of 20.4% from 31 December 2020, where it had $70.5 billion. It was also an increase of 44.6% from $58.7 billion at 30 June 2020. The April 2021 FUM number included $19.3 billion of retail FUM, up from $16.7 million at 31 December 2020.
Pinnacle has seen FUM grow from a combination of both investment performance and net inflows. In the four months to 30 April 2021, net inflows were $9.9 billion. That included $1.8 billion of retail inflows.
The ASX share commented about affiliate investment performance, saying that it's seeing the managers and strategies continuing to deliver performance to expectations (or better), though there are short-term challenges at a couple of affiliates.
Performance fees
In some years, performance fees can play a sizeable part in the overall profit in a given financial year.
Earlier this month, Pinnacle advised that seven affiliates have crystallised performance fees for FY21, totalling around $86 million, of which $40.7 million was crystallised in the second half of FY21.
Pinnacle's net share of these performance fees, after tax payable by the affiliates on that revenue, was around $19.5 million, of which $8.4 million was earned in the second half of FY21.
It also told investors that it expects the net return on its principal investments for FY21 to be in the order of $2.2 million. That includes $2.3 million of dividends and distributions received.
Pinnacle expects to release information about its funds under management (FUM) and inflows for the year to 30 June 2021 are scheduled to be released on 5 August 2021.
What could happen next to the Pinnacle share price?
Pinnacle is currently rated as a buy, by a few different brokers including Macquarie Group Ltd (ASX: MQG). However, the price target is $12.28, which is roughly where it is now. Macquarie's latest rating means it doesn't expect much price growth over the next 12 months.
Even so, the broker believes Pinnacle has good growth possibilities with its rising FUM and the potential to add more affiliates to the portfolio.
