UK Asset Managers & Argo Group

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% of AUM, Andreas Rialas, ARGO, Argo Group, asset managers, Charlemagne Capital, Dolphin Capital Investors, Ex-Cash Ratios, F&C Asset Management, Impax Asset Management Group, Investor Relations, Kyriakos Rialas, Miton Group, NAV discount, The Argo Fund, Third Point, UK

In April, I took a closer look at the universe of UK-listed asset managers. A key piece of research was a (relatively) simple analysis which focused on financial stability & market valuation – this study also offered a useful peer comparison with Argo Group Ltd. (ARGO:LN) (& see this recent post).

Frankly, the numbers (plus the rest of this post) speak for themselves, but let’s have a taste of the main highlights:

Name	Ticker		Net Cash/Inv as % of Mkt Cap
F&C Asset Management	FCAM		(23)%
Liontrust Asset Management	LIO		3.9%
Henderson Group	HGG		6.2%
Aberdeen Asset Management	ADN		7.9%
Jupiter Fund Management	JUP		8.4%
Polar Capital Holdings	POLR		16%
Ashmore Group	ASHM		18%
Miton Group	MGR		26%
Schroders	SDR		34%
Man Group	EMG		55%
Impax Asset Management Group	IPX		59%
Charlemagne Capital	CCAP		64%
Median			17%
Argo Group	ARGO		175%

It’s encouraging to see the entire sector now enjoys robust financial health. Only F&C Asset Management (FCAM:LN) is in a net debt position – all other companies sport net cash & investments on their balance sheets. But it’s also clear this healthy financial position is not the key driver of market valuations – for Argo’s peer group, net cash/investments only represents a median 17% of market cap. On the other hand, Argo’s $23.6 mio of net cash/investments amounts to a whopping 175% of its market cap.

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Asset Managers – Cash Hogs & What’s Hot, What’s Not

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% of AUM, 3i Group, Affiliated Managers, AHL, alternative assets, Altira, Argo Group, Artio Global, Ashmore Group, asset managers, carry trade, Charlemagne Capital, CIFC, Cowen Group, David Harding, FRM Holdings, GLG Partners, IFMI, Integrated Asset Management, Janus Capital, Man Group, MPC Capital, Polar Capital, Price/Cash, Ramius, Record plc, Volcker rule, Winton Capital

Continued from here. And plse ref. my (alternative) asset manager table here. Taking a look, I marvel again how conservative most managers are in terms of net cash/investments. Less than 1 in 10 has net debt, while the average manager’s on a 4.6 Price/Cash multiple – 22% of the average market cap. consists of net cash/investments! This has always puzzled me. In general, particularly now, I don’t believe shareholders are being properly rewarded for this asset/financial strength. You’d think managers would be a little savvier about shareholder value..?! And reasons for this surplus cash? I can think of three:

i) Management Nap Policy:  Ah diddums, management finds it hard to sleep, or even nap, unless they’ve a large chunk of cash lying ’round so they feel warm & cozy… Maybe they’re even hoping a lap dancer will be impressed at the size of their…balance sheet? A touch sarcastic? Don’t forget a company’s really just a collection of people – which can sometimes be wonderful…or terrible! [btw Here’s another collection of people]