Opinions
Paul Gardner, CFA
Sceptre Investment Council Ltd
SZ-T
PAST TOP PICK
May 28, 2008
(A Top Pick May 17/07. Down 23%.) Sold about half his position at around $13. Still likes the company.
$9.320
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TOP PICK
Great dividend yield. Dropped recently because one of the top small-cap managers left. Has not seen any redemptions from their fund and the performance has actually gotten better. Trades at a 12 X multiple. They're an institution money manager and their performances all through their offering are very good.
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COMMENT
In the small cap asset management space. Small caps are being hit hard because of the liquidity issue. Also got hurt when one of their managers left to go to another firm although his fund has continued doing well if not better. No dent on the balance sheet. Have improved their costs. Thinks it will do well longer term and looking for it to recover in the next year or so.
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HOLD
In the institutional and no-load investment fund space. Suffered a drop last year because their small-cap manager left but that didn’t really affect them. Have great managers. Because of market volatility it is hard for them to grow in this market. Will do better over a long-term. Pays a good dividend.
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TOP PICK
Has a positive view on asset/investment managers. A very highly leveraged business in that most firms have enough people to allow them to significantly increase assets over the next 5 years. Looking for 10%-11% annual growth. Expecting a dividend increase next year. Look to hold for 3-5 years and take your time buying.
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BUY
He did like it and he did get out previously. There is great cash on the books. Generally descent performance. The one negative is that it has a lot of institutional and pension business. The best part of the business is the private client business because of better fees. It’s relatively cheap and a chance there could be a takeover, although he is not sure they are set up for it. He is not interested in this point in time but it probably could go up from here.
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