Pinnacle Investment Management Group Ltd (ASX: PNI) shares are jumping on Wednesday.
In morning trade, the ASX 200 stock is up 8% to $18.58.
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Why is this ASX 200 stock jumping?
Investors have been buying the investment company's shares despite it releasing its half-year results and reporting a sizeable profit decline.
According to the release, net profit after tax was $67.3 million during the half. This is down 11% from $75.7 million in the prior corresponding period.
This was driven by weaker performance fees. The ASX 200 stock advised that performance fees earned by eight Pinnacle affiliates, post-tax, contributed $13.4 million of Pinnacle's net profit after tax in the first half. This is down from $36.4 million from nine affiliates during the same period last year.
Importantly, net profit after tax before performance fees was 37% higher than the prior corresponding period and 11% higher than the second half of FY 2025.
In light of its profit decline, the ASX 200 stock's board was forced to cut its interim dividend by 12% to 29 cents per share. This dividend will be 80% franked.
What happened during the half?
Other than its weak performance fees, the first half was strong for Pinnacle.
It revealed record net inflows of $17.2 billion. This comprises domestic retail net inflows of $6.8 billion, domestic institutional net inflows of $7.0 billion, and international net inflows of $3.4 billion.
Aggregate affiliates funds under management (FUM) was $202.5 billion at the end of December.
Commenting on its performance, the ASX 200 stock's managing director, Ian Macoun, said:
We have made deliberate efforts over several years to diversify and expand our platform, both organically and through careful inorganic growth, believing that doing so provides us with greater robustness, wider relevance to our clients and more avenues to continue growing our earnings. We recall the very large performance fee contribution from Hyperion in the first half of FY25, which was an exceptional outcome.
We also note the ongoing growth in net flows and core earnings within Affiliates, across multiple channels, which this diversification has enabled. Within the record flow outcome for this half, of particular note was the outcome in Australian wholesale and retail, demonstrating our strong position in that market, and in Life Cycle, who have had the fastest start of any Pinnacle Affiliate to date. We continue to invest in our people and platform, across multiple channels and markets, to support and drive further growth.
