The S&P/ASX 200 Index (ASX: XJO) share HMC Capital Ltd (ASX: HMC) could still be an opportunity according to a fund manager despite strengthening this year.
Since the start of 2023, the HMC share price has risen by around 20%, which we can see on the chart below. It has been a strong return considering the sector (real estate) that the business operates in and despite higher interest rates.
It describes itself as an alternative asset manager specialising in "real assets and private equity". The business aims to invest in quality real estate in areas like healthcare, life sciences and last-mile retail logistics that are benefiting from "powerful megatrends".
It's aiming to reach funds under management (FUM) of over $20 billion in the medium term by scaling its existing platform and expanding into new sectors such as the energy transition, infrastructure, and private credit.
Wilson Asset Management believes that the ASX 200 share was an opportunity as of 21 June 2023.
Bullish opinion
WAM thinks HMC is a buy for a few different reasons. First, senior equity analyst Shaun Weick said that he likes the management team, stating that under the CEO's leadership, the business has done "a wonderful job in the context of tough market conditions".
Another positive is that the business has pulled off the Healthscope deal which "underpins the unlisted healthcare fund."
Healthscope is one of the largest private hospital operators in Australia. HMC's unlisted fund will initially own $1 billion of Healthscope hospitals.
Weick suggested that investors are increasingly going to want exposure to 'alternative assets', and get diversification away from traditional asset classes. The analyst suggested that HMC Capital is "strongly positioned to benefit from that".
He noted that the ASX 200 share's pathway to $20 billion of FUM "has been set".
He finished his bullish comments by saying that if the business can execute its strategy then the "stock can double from here".
Any risks for the ASX 200 share?
The analyst didn't note any negatives, so I'll try to name a couple of things to keep in mind.
As a major investor in real estate, the business may not be immune to the effects of higher interest rates, which could hurt valuations and shareholder value if commercial property suffers. However, ongoing rental growth may protect against some of this pain.
We've already seen a lot of strength in the HMC Capital share price, so it's worth questioning how much further the ASX 200 share can rise in the shorter term. The $20 billion goal is achievable, but it will take some time to reach.
