Asset Managers – Another Look at Valuation

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% of AUM, activist investors, alternative assets, asset managers, catalyst, earnings growth, Goldman Sachs, hedge funds, P/B Ratio, P/E ratio, P/S Ratio, Price/Sales, REIT/MLP sector, short sellers, takeover offers

Continued from here. I was glad to see some comments/debate come back to me re my previous asset manager valuation statement:

‘Obviously each manager has their own unique story/valuation, but big picture these metrics really work: 2.25%-3.25% of AUM for traditional managers and 7.5%+ of AUM for alternative managers.‘

‘Big picture‘, of course, just means on average & over time, there will be plenty of exceptions to the rule..! Actually, readers were really just (smartly) anticipating something I wanted to highlight in my Part 2: I’ve highlighted the benefits/logic of using a % of AUM valuation approach, but how about related risks & questions? Like:

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Learn to Love the Distress

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Apollo Commercial, Colony Financial, Goldman Sachs, Kinder Morgan Energy, Leverage, PennyMac, REIT, Starwood Property

I’m no big fan of US REITs (or MLPs). I can’t count the number of excitable headlines/articles I’ve read about REIT/MLP yields…but still wonder if there’s a decent investment amongst the entire bunch?

You’re certainly not going to find one in the non-traded REIT sector. You may have never heard of these, but you can bet they know all about them down at the senior centre. What’s the sales pitch for this garbage? Hey, we’ll take 10% up-front in commissions, we’ll charge you again to redeem (if we even let you redeem), you’ll have no idea what your shares are really worth…but, gee heck, look at the yield!! Oh, and we’ll never point out that much of your yield is simply a return of capital. Perfect for the old dears… Read this v entertaining REIT forum. But this isn’t just a US phenomenon, there’s plenty of similar horror stories in Europe too.

EIIB (EIIB:LN) – The Strongest Bank in the World?

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DiamondCorp, EIIB, Equity/Total Assets, Goldman Sachs, Margin of Safety, Price/Book, Price/Cash, Sharia'a, sukuk, Tier 1 Capital, value investing

European Islamic Investment Bank (EIIB:LN)

Mkt Price:  GBP 3.75p

Mkt Cap:  GBP 66.2 mio

Equity/Total Assets Ratio:  69.2%

P/B Ratio:  0.46  (adjusted)

Price/Cash Ratio:  0.61  (adjusted) 

Congrats if you guessed I was referring to the European Islamic Investment Bank in my last post! EIIB’s the first independent Sharia’a compliant  Islamic bank authorized by the FSA. Headquartered in London, EIIB offers Sharia’a compliant treasury, investment, private equity and investment banking services. Established in early 2005, their FSA authorization process took a little over a year to complete. The bank then immediately opened up for business, following up with an IPO a month later. Fortunately, these were the boom times (aah, remember those days..?!) and they raised an impressive  GBP 183 mio of Equity from a private placing and their IPO.