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magazineMiton looks cheap with plenty of room to grow
While the heavyweights of asset management such as Standard Life Aberdeen (SLA) seem to be haemorrhaging money through multi-billion pound outflows from their products, a much smaller peer is pulling in the punters.
We give you Miton (MGR:AIM), a self-proclaimed ‘specialist’ asset manager whose 2017 results showed £494m of inflows into its products during the year.
The funds that Miton offer can be broadly described as single strategy and multi-asset, with a penchant for seeking out value plays. The latter style is illustrated explicitly with its UK Value Opportunities Fund (GB00B8KV0M06) and both the US Smaller Companies Fund (GB00BF54H991) and UK Smaller Companies Fund (GB00B818N094).
CEO David Barron tells Shares that one reason his firm has done well is due to a desire for ‘genuine active management’. ‘It’s harder to buy the market and make money’ he says, in reference to investors relying on index trackers to make returns.
He adds that this has been heightened by central banks across the world moving to normalise monetary policy, i.e. rein in quantitative easing programmes and raise interest rates.
Miton’s funds have around 90% active share meaning they are very far from tracker funds (0% active share would be a tracker).
THE NUMBERS
For 2017, Miton increase its pre-tax profit by 33% to £6.8m and upped its dividend by 40% to 1.4p per share.
The company is debt free with a £24m net cash position and no pension deficit.
Stuart Duncan, analyst at broker Peel Hunt, says ‘there is a clear value opportunity now with Miton’.
Using his forecasts this seems evident. Miton is trading on a bargain 9.5 times 2019’s forecast earnings while paying a prospective dividend yield of 4.8%.
THE RISKS
2018 has not been a great year for the markets, with a global sell-off occurring in February. While active management should mitigate some of the market downturns through savvy stock selection, investing is always a risk.
Miton also invests primarily in equities; while it will allocate money to bonds and other assets within its multi-asset range it does not have any pure bond funds which arguably heightens the risk.
It may also lose star fund managers, which happened when Georgina Hamilton and George Godber left in 2016. The departure of the overseers of the UK Value Opportunities Fund resulted in a 30% share price fall at the time for the parent group. (DS)
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