Best-in-class growth in very difficult markets
In our 18 October note, we stated how impressed we were with Tatton’s strong net inflows during H1-23 (to 30 Sep 22), an extremely testing economic period. These totalled +£907m (H1-22: £652m), an annualised rate of 16% of opening AUM, just offsetting a negative investment performance of -£905m (-8.0% of opening AUM compared to the MSCI PIMFA Private Investor Balanced Index fall of -9.6%), leaving AUM at £11.3bn (£12.3 bn including c£1.0bn of ‘assets under influence’ from the acquisition of 50% of 8AM Global, growing to £12.9bn in the post-results period).With more peers releasing trading updates since that note, Tatton’s performance now looks even more impressive than first thought. It was the ONLY company in our peer group that grew AUM, with all comparable peers recording AUM declines (between 5% and 11%).
We highlight the significant growth potential beyond their three-year plan: Tatton is in a growing market with significant tailwinds; it has a market-leading proposition and is gaining market share; it has a huge opportunity to grow AUM even without winning new clients (by increasing average AUM per client); and it can accelerate growth through strategic partnerships and acquisitions.
Our core value is 500p per share, 14% above the current share price. This increases from 460p on better-than-expected interims and a fall in the 10-year Gilt rate, the risk-free rate in our DCF valuation.
Tatton Asset Management is engaged in providing a range of services to the Financial Conduct Authority ("FCA") directly authorized financial adviser ("DA IFA") marketplace encompassing discretionary fund management, regulatory and compliance services and mortgage services. Co.'s discretionary portfolio management ("DFM") service operates on ten United Kingdom adviser WRAP platforms and can be integrated into the growing number of adviser WRAP platforms in the market. Co. provides support services to independent financial advisors ("IFA"s), enabling DA IFA firms to provide compliant and effective investment portfolio management for their platform based clients.
Equity Development enables companies to become better understood and supported by investors. Since our launch in 1996 we have consistently focused on helping our clients improve their communication and relationships with both existing and potential shareholders. Our clients have come from a wide variety of sectors and domiciles, are both private and quoted and range in size from micro-cap to $multi-billions. We offer free access to company research notes written by experienced analysts. These notes include detailed forecasts, financial models and a fair value. We host regular Private Investor Forums at which investors have the opportunity to hear company directors present, and to ask questions. These are free to attend. We broadcast live Webinars with company management that include active Q&A. We also make the recordings available online. We arrange face to face meetings between private investors and company management. We are active users of Twitter, commenting daily on company news, share price moves, Directors’ Dealings, Equity Development Research Notes & Events.
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