Pinnacle Investment Management Group Ltd (ASX: PNI) released a strong FY19 result to ASX investors showing a big increase in funds under management (FUM).
Pinnacle is a “multi-affiliate investment management firm” that operates slightly differently to your typical fund manager. Basically, Pinnacle has ownership interests in specialist fund managers and partners with them to provide governance, working capital, seed funding and marketing/distribution and support services.
Right now, Pinnacle has 13 investment affiliates/managers that manage $54.3 billion in assets.
Here Are The Key Takeaways
- Net profit after tax (NPAT) from continuing operations increased 32% to $30.5 million
- Basic earnings per share (EPS) from continuing operations was up 28% to 18.3 cents per share
- Fully franked dividend of 9.3 cents per share, up 32.8%
- FUM increased by 42.9% to $54.3 billion
FUM was one of Pinnacle’s best results, increasing by $16.3 billion in FY19. This figure is broken down into $6.8 billion of acquired FUM, $6.5 billion in net fund inflows and $3 billion from investment performance.
Over the last 10 years, FUM has grown at a compounded annual growth rate (CAGR) of 28.5% per year.
Management Commentary
“In FY19 shareholders will benefit from 15.4c of fully franked ordinary dividends per share, compared to 3.3c of fully franked ordinary dividends per share in FY16,” Pinnacle Chair Alan Watson said.
Managing Director, Ian Macoun, said the company’s focus is still on assisting affiliates to grow their businesses.
“Pinnacle’s focus remained on continuing to support each of our Affiliates and assisting them to grow their business and profitability, as well as expanding our distribution and infrastructure capabilities to support future growth,” he said.
Time To Buy Pinnacle Shares?
Looking at the results, it’s clear that Pinnacle has benefited from a large increase in FUM and profits/fees have been increasing along with the strong share market.
Personally, though, I tend to avoid this type of business because in a downturn it can suffer a sharp reduction in FUM, which can very quickly hurt the company’s profit. Usually, it’s a situation that is out of the company’s control.
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Disclosure: At the time of writing, Max does not own shares in any of the companies mentioned.
