Question: What are your thoughts on Platinum Asset Management (PTM)?
Answer (by Paul Rickard): Platinum Asset Management has struggled over the last couple of years due to investment performance, and as a result, funds outflow. The last few months have been a little better.
As a result, it is now trading on lower multiples than either Magellan (MFG) or BT Investment Management (BTT). That said, the major brokers are still a little negative on the stock. According to FN Arena, sentiment is negative at -0.5 (range of -1.0 is most negative to +1.0 is most positive), with a consensus target price of $5.01 (last traded price is $5.14).
I guess I am not a seller at these levels – but whether I would buy just yet, I’m not sure.
Question: What is going on with Westpac shares? They seem to be underperforming compared to NAB and ANZ.
Answer (by Paul Rickard): I don’t think there is anything particular happening to Westpac shares, except that the market has been narrowing the differentials between the “expensive” banks (CBA and Westpac) compared to the “cheap banks” (ANZ and NAB). Arguably, the strategies of the banks are almost now identical, earnings outlooks about the same, and capital strength about the same.
As a result, the multiples have come right in. Westpac is trading at a multiple of 12.3 times forecast FY17 earnings, compared to ANZ at 11.2 times, and NAB at 11.3 times. CBA, which has a different financial year, is trading at a multiple of 12.9 times forecast FY 18 earnings. These differences are, compared to where they were 18 months ago, very small.
So, just rotation. If anything, it looks like over the last few days the market has started to say that Westpac and CBA, on relative terms, are starting to look like better value.
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