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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Another Assault on Fortress

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% of AUM, alternative assets, asset managers, dry powder, Ex-Cash Ratios, FIG, Fortress Investment Group, high dividend yield, incentive fees, Logan Circle Partners, Price/Cash, RailAmerica, share buyback

In May, I published a series on alternative asset managers, which culminated in a write-up of my latest purchase (at the time), Fortress Investment Group (FIG:US). Based on its net cash/investments per share, plus a fund management valuation of 6.3% * $46.4 bio of Assets under Management (AUM), I pegged FIG at a Fair Value of $7.80 per share. Based on FIG’s $3.11 share price at that point, this offered substantial Upside Potential of 151%. This turned out to be v fortunate timing, as I caught the 2012 bottom (in fact, pretty much the 3 yr low) for FIG:

Hitting The Century (III)

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Argo Group, Avangardco, dividend coverage, dividend yield, EIIB, Ex-Cash Ratios, FBD Holdings, Net LTV, P/E ratio, Petroneft Resources, portfolio allocation, portfolio performance, Price/Book, Price/Sales, TGISVP, Total Produce, Trinity Biotech, Wordpress

Damn WordPress! If you viewed/received a similar Century (Part III) post (since deleted), please ignore it – it was just a draft & I’ve updated/revised figures across the board since. Not quite sure how WordPress managed to publish it for me..!

Right, continued from here. In my last post I promised: ‘OK, next I’ll take you through each of my investment allocations – and try to give a flavour of my thinking, and some underlying stocks/funds, in each instance‘. However, I’ve just completed a detailed quarter-end portfolio update/review, so let’s flip things ’round – perhaps you’d be interested in a timely look at some portfolio metrics¹, and we’ll return to investment allocations in my next post?

Yes, really? So you like the pretty panties, but you still want to know the damn cost..?! Sigh, value investors..! OK:

A Brief Diagnostic on Trinity Biotech

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Ex-Cash Ratios, intrinsic value, Medical Devices/Diagnostics, share repurchase, technical analysis, Trinity Biotech

I last wrote about Trinity Biotech (TRIB:US) here.

Since then, we’ve been rewarded with another good set of (Q1 2012) results – more good news-flow, plus steady progress on the sales & earnings front. The Boys from Bray really do continue to deliver! The shares have just gone xd, and an annual dividend of $0.15 per ADR will be paid on June 22nd. This is small (a 1.3% dividend yield) vs. the share price & their current cash pile (about $3.60 per ADR), but the 50% yoy increase is a confident signal. TRIB also confirmed their intention to continue with open market share repurchases up to a max. of about $25 mio, around 10% of their current market cap. Here’s their latest investor relations presentation.

Sailing on the Good Ship Argo

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% of AUM, Argo Group, Ashmore Group, distressed assets, Ex-Cash Ratios, hedge funds, Margin of Safety, Price/Cash, private equity funds, Rialas brothers, The Argo Fund

Argo Group Ltd. (ARGO:LN)

• Mkt Price:  GBP 13.375p
• Mkt Cap:  GBP 9.0 mio
• % of AUM:  4.5%  (of $325.4 mio)
• P/C:  0.6
• P/S:  1.3
• P/E:  10.0  (Pre-Amortisation/One-off Fee)
• Div Yield:  9.7%      

Please read my previous investment write-up here & here. Wow, it was December when I last wrote about Argo! But not so surprising – the pace of news from the company is astonishingly low… In fact, we’ve only had one news item since, their Final Results. Shouldn’t complain though, I guess this contributes to the market’s neglect of the stock. Anyway, it’s a pleasure to write about Argo again…and marvel at just how bloody cheap this stock is!? If you haven’t read my prior posts (which provide plenty of useful background, some of which has contributed to ARGO’s cheapness), I think you’re in for a treat!

Trinity Biotech, Be My Valentine… <3

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Adriana Lima, Clearstream Technologies, Ex-Cash Ratios, FBD Holdings, intrinsic value, Owner-Operator, Price/Sales, relative value, Richland Resources, Trinity Biotech, Valentine's Day, value investing

To celebrate Valentine’s Day, I thought it was only fitting that I write about my favourite stock… For some of us, Valentine’s is still about love and constancy. (Not that the Valentine’s ‘industry’ agrees – much as I enjoyed this ad, among others, the increasingly strident commercial ‘come-on’ that a gift guarantees sex seems far too crass for all concerned). So, I’m not going to fall for some hot young tramp like Richland Resources (RLD:LN)…

Instead, I wanted to revisit my fondest love, Trinity Biotech (TRIB:US). How did she win my heart? Well, she’s never let me down, about 40% of her market cap consists of cash, I currently have a 265% gain on my average entry price, I see 30% upside from the current price (with a secondary price target that offers 68% upside), and it’s my largest portfolio position at 7.6%!

Asta Funding – Buying Debt for Cents on the Dollar

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Asset Acceptance Capital, Asta Funding, distressed assets, Encore Capital, Ex-Cash Ratios, Margin of Safety, Owner-Operator, Portfolio Recovery Associates, value investing

Asta Funding, Inc. (ASFI:US)

• Mkt Price:  $7.65
• Mkt Cap:  $112.0 mio
• P/E:  10.8
• P/C:  1.02
• P/B:   0.65   

Asta Funding’s a NJ based company which purchases, services and collects on charged-off, semi-performing and performing consumer receivables. This strategy offers attractive growth prospects, driven by increasing levels of consumer debt, defaults and use of third party collection agencies. As they say: ‘Never count out the American consumer’. Of course, one can also count on the US consumer to rack up and default on ever increasing amounts of debt! I was shocked to see, especially in the current environment, that Black Friday was the largest ever. But then again, the US savings rate is collapsing again, after a brief recession-induced spike to 8% in 2008. Longer term, this puny savings rate doesn’t bode well for the US. Globally, most countries have a savings rate that’s a multiple of the US rate…

Argo II – Time to Claim the Golden Fleece

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% of AUM, Argo Group, Ex-Cash Ratios, Margin of Safety, Mulberry, Price/Cash, special situations, Theo Fennell

Argo Group Ltd. (ARGO:LN)

• Mkt Price:  GBP 14.5p
• Mkt Cap:  GBP 9.78 mio
• % of AUM:  4.0%  (of $379.7 mio)
• P/C:  0.6
• P/S:  1.3
• P/E:  5.8  (pre-Amortisation)
• Div Yield:  8.3%      

Continued from here…     However, Argo is a relatively small fund management business, so I still worry that a loss of funds or personnel could have a disproportionate financial impact. It’s also not clear when performance fees will be a significant contributor again for Argo. This will depend on future market performance, and how its funds stand in relation to their high-water marks. On the other hand: Argo obviously has a well respected investment record and reputation. I’m actually impressed that their AUM has only declined 6% in the past year, and 20% in the past 2 years, despite the difficult market. And, of course, the litigation issue…don’t underestimate this! I’ve dealt with this type of problem personally, and it’s nearly impossible to raise funds from (institutional) investors when there is such a due diligence stumbling block. Now this is out of the way, I think Argo finally has to chance to do some significant fundraising.

Trinity Biotech – Cheap Diagnostics

Tags

Clearstream Technologies, ELG Scheme, Ex-Cash Ratios, FBD Holdings, intrinsic value, Owner-Operator, Price/Sales, relative value, Trinity Biotech, value investing

Trinity Biotech (TRIB:US)

• Mkt Price:  $9.57
• Mkt Cap:  $203.1 mio
• P/E Ratio:  13.5
• Ex-Cash P/E:  9.1
• P/S Ratio:  2.6
• Ex-Cash P/S:  1.5

Trinity Biotech specializes in the development, manufacture and marketing of diagnostic test kits. These kits are used in the clinical laboratory and point-of-care segments of the diagnostic market to detect infectious diseases, sexually transmitted diseases, autoimmune and hemoglobin disorders, and to detect, monitor and control diabetes. It’s also a significant provider of raw materials to the life sciences industry. TRIB is headquartered in Ireland, with Irish and US manufacturing facilities, and quoted on NASDAQ. Through R&D and acquisitions, the company’s assembled a portfolio of over 400 products to date. It has a direct sales force in the US and UK, and sells in 75 other countries via a network of distributors.