Fund manager Miton Group has been bucking the trend in the asset management sector, with some solid growth in recent years. Mark Watson-Mitchell thinks it could very well continue.
At a time when so many of the asset management groups are facing slow or even negative demand, it is very pleasing to see that Miton Group (LON:MGR) has recently announced good news. For the tenth quarter running it has reported that its assets under management figures are showing positive net inflows.
To the end of 2017 it boasted £3.8bn worth of AUM (assets under management), then for the year to end 2018 it closed with £4.4bn AUM. So, at a time of higher markets but lower sentiment, it must have encouraged its Board when it declared a further advance for the first quarter period to the end of March this year, with an AUM figure of £4.6bn.
| Master Investor Magazine
Never miss an issue of Master Investor Magazine – sign-up now for free! |
The group is an equity and multi-asset fund management specialist. Its managed assets are handled across 11 Open Ended Investment Companies, 2 Unit Trusts, 3 Investment Trusts and through 1 Segregated Mandate.
It has not been plain sailing since the group was set up way back in 2001. Its early years were somewhat shaky. However, in the last few years the management, new and old, have shown some real grit and determination to win through.
The growth in Assets Under Management shows that they are now getting it right. Furthermore, the company’s future looks very positive, such that when normal market conditions return, their spread of funds and their effective distribution will really spur both AUM and profits growth. In fact, a number of their funds are ‘top performers’ and their investment managers have some pretty strong City backgrounds.
The company’s Chief Executive, appointed a couple of years ago, is chartered accountant David Barron, who has nearly 40 years’ experience in fund management with top investment companies like Flemings, Merrill Lynch, JP Morgan and Hambros Bank.
Probably the best-known investment name in the group is Gervais Williams, who has over 30 years fund experience. He joined Miton in 2011 as new blood was jetted in to the company after the hassles of the financial sector collapse in 2008.
Gervais was formerly with Gartmore Group, for 17 years, where he was the head of the UK Small Companies fund. He is on the AIM Advisory Council, is the Chairman of the Quoted Companies Alliance and is a Board Member of the Investment Association. He manages around £2bn of Miton’s £4.6bn AUM figure, leading the Miton UK Multi Cap Income fund. On that fund he is partnered by Martin Turner, a chartered accountant with 24 years in the City. He is ex Rothschild, Merrill Lynch, and then Teathers/Landsbanki, before heading Collins Stewart Small/Mid Cap Equities team.
Both Gervais Williams (with 9% of the company’s equity) and Martin Turner (with 7%) are sizeable shareholders in the £97m valued manager. Other shareholders of note include Artemis Investments (with 9.9%), AXA Investment Managers (with 8.11%), Hargreaves Lansdown (4.35%), BlackRock Inc (4.17%), FIL Investment International (2.67%), River & Mercantile Asset Management (2.32%) and Janus Henderson Investors (2.14%). Other directors, employees and related parties hold another 17% of the equity.
In two weeks, we should get a more up to date comment, at the AGM, from Chairman Jim Pettigrew, on just how well the group is trading in this current year. Estimates for the year to end-December 2019 suggest a slight fall back in revenue from 2018’s £36.17m down to £29.12m – reflecting the subdued market.
Last year’s £8.88m pre-tax profit could see a gentle lowering to around £8.25m for this year. Even so, that should produce earnings of some 4.10p per share, amply covering a 2.17p dividend for the year – giving a nearly 4.0% yield at the current 57p share price.
Looking into the future it is good to see that broker estimates for the coming year are for £33m revenue and £10.25m pre-tax profits, worth some 5.16p in earnings and 2.42p per share in dividends, worth 4.5% in yield.
The shares in the last year have been up to 76.5p and as low as 41p. Now at just 57p, trading on 13.9 times current year earnings and yielding 4%, I think that the shares of Miton Group appear to be a comfortable investment, with some very good upside. And that takes no account of the possibility of another management group making an early takeover approach for this tiny £97m valued company, which controls £4.6bn of funds.