Platinum Asset Management Ltd (ASX: PTM) shares are having a difficult start to the week.
In morning trade, the fund manager's shares are down 13% to 90.5 cents.
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Why are Platinum shares sinking?
There are a couple reasons why the company's shares are in the spotlight this morning.
The first is the release of an abject funds under management (FUM) update which was released after the market close on Friday.
Platinum revealed that in November the company experienced net outflows of approximately $841 million. This figure includes the loss of an institutional mandate of $537 million and net outflows from the Platinum Trust Funds of approximately $239 million.
Funds under management were $10,957 million at the end of the month, down from $12,178 million.
What else?
The big news impacting Platinum shares today is that Regal Partners Ltd (ASX: RPL) has pulled the plug on its proposed takeover.
The two parties have been conducting an initial period of mutual due diligence which has now concluded.
According to the release, Platinum advises that discussions with Regal have ceased without a firm offer being table.
Platinum is trying to spin this as good news, stating that the takeover collapse is "removing the uncertainty that has persisted since Platinum rejected Regal's initial proposal."
Special dividend
One positive that is attempting to offset the bad news is that the company's board has determined to pay a fully franked special dividend of 20 cents per share. This is the equivalent of a 19% dividend yield based on its last close price.
Management believes that after the payment of this special dividend it will still have sufficient working capital to pursue its growth initiatives.
It also notes that the company remains fully focused on executing its restructure and turnaround strategy. Despite its FUM update covered above, it believes it has so far illustrated momentum in the areas of cost control, remuneration re-design, product rationalisation and a review of the investment process, all initiatives designed to stabilise and reset the business in order to return to a growth footing.
New partnership
Platinum also revealed that it has signed a new partnership as part of its new Platinum Partner Series. It advised:
As we move forward with the next phase of the turnaround, the investment area is a key priority. We are also focussed on managing costs in line with our funds under management, as well as product diversification and the build out of our sub advisory partnerships under our new Platinum Partner Series.
To this end, we are pleased to announce that we have secured our first partnership with GW&K, a leading US based small cap specialist with $86 billion AUD in funds under management and over 50 years of market experience. Under this arrangement, we have been appointed to exclusively distribute GW&K's global small cap strategy to the Australian retail market.
