Monash expectant of significant AUM losses at Magellan
Monash Investors has initiated a short position on Magellan as it is concerned the firm will get significantly smaller in light of its underperformance.
On a webinar, directors Simon Shields and Shane Fitzgerald, said the firm had first initiated the position last September and reviewed it again recently given the change of management.
The share price of Magellan had fallen 66.4% since the start of September, although it rose 13% following its half-year results.
Assets under management at the fund had fallen in recent weeks following the exit of chair Hamish Douglass as well as underperformance by its flagship Global strategy.
Shields said: “I can’t see how it won’t get a lot smaller. There’s a cycle with research ratings and it’s already gone from strongly recommended to recommended by the researchers. I’m not confident in the earnings outlook for Magellan at all.
“Magellan had better results than expected but the stock did nothing for the month and has been going down. We’ve made a lot of money from it going down and are happy to continue with our short position.”
Fitzgerald added that while the firm had seen the withdrawal of an institutional mandate from St James’s Place, it was yet to see wholesale redemptions and assets under management would be affected “significantly” if they took place.
“We have seen a chunky outflow from St James’ Place in the UK but we are yet to see the retail mum and dad investors redeem. We think that’s likely and we would expect to see AUM decline significantly as a result of that and that’s not in market expectations or forecasts at present. There’s a lot of downside still in Magellan.”
AUTHOR
Laura Dew
Recommended for you
Australian fund managers are actively seeking to launch Cayman versions of their funds to attract offshore flows, with Regal Partners set to launch its latest offering this month.
As private markets gain traction in Australia but only a limited pool of talent is available, three recruiters explore whether fund managers should consider looking overseas to find top talent.
With an explosion of private credit managers appearing in the market, two alternatives experts believe a consolidation is needed to maintain the quality of the sector.
Bentham Asset Management has become the latest fund manager to expand its distribution team as it reports increased interest in its credit strategies.
