PPT - Perpetual Limited

[Brengun]

Is there any problem with PPT atm? Most of the market is going up great at present yet this usual highflyer is showing lame duck prices? Surely it's not still because of ex-div?

 

[Brengun]

A week of terrific shareprice increases esp for mining and banks but PPT shareprice did nothing, nada, zip. What exactly have they invested in?

 

[reece55]

Nice strong move from Perpetual yesterday.... seems to have broken free from it's deep downtrend of late.......

Next move - looking for a lower low. I have been waiting for years to get a cheaper entry into Perpetual, it's been a great Company for many years and with super fund flows continuing in Australia, I suspect it will continue to generate good profits...

Haven't done a F/A check yet...

Cheers

 

[Sean K]

Nice strong move from Perpetual yesterday.... seems to have broken free from it's deep downtrend of late.......

Next move - looking for a lower low. I have been waiting for years to get a cheaper entry into Perpetual, it's been a great Company for many years and with super fund flows continuing in Australia, I suspect it will continue to generate good profits...

Haven't done a F/A check yet...

Cheers

Yep, looks great reece!

Have to put it next to AMP and QBE along with some banks as candidates for the recovery....

 

[Tyler Durden]

This used to be worth +$70?!?!

 

[skc]

This used to be worth +$70?!?!

High of $84.58 to be precise.

PPT, MQG (high of $98.64) and COH were racing to become the first $100 stock on the ASX back in the days...

But if you take recapitalisation/dilution into account, you will see that there are shares with hisotrical highs that looked absolutely incredible.

e.g. ELD trading at 24c used to worth $28 a share. PGA @ 6c used to worth $6.15. VPG was takenover at $1.75 having traded at $42. HST used to be worth $40+. But the best I can think of is PIH (the old Babcock & Brown infrastructure) was takenover at $4.90 but had a pre-recapitalisation high of $243.

 

[Huskar]

High of $84.58 to be precise.

PPT, MQG (high of $98.64) and COH were racing to become the first $100 stock on the ASX back in the days...

But if you take recapitalisation/dilution into account, you will see that there are shares with hisotrical highs that looked absolutely incredible.

e.g. ELD trading at 24c used to worth $28 a share. PGA @ 6c used to worth $6.15. VPG was takenover at $1.75 having traded at $42. HST used to be worth $40+. But the best I can think of is PIH (the old Babcock & Brown infrastructure) was takenover at $4.90 but had a pre-recapitalisation high of $243.

Reminds me of my schoolboy Milton:

"Into what pit thou seest from what height fallen..."

Could be the motto for my portfolio as well..

 

[Tyler Durden]

So what happened to PPT? I have never heard of it before, only caught my attention yesterday when I was looking at other companies, and noticed this currently has about a 9% dividend yield - but me thinks there must be a catch?

 

[notting]

It's basically a wealth manager and the wealthy that were managed by it have become somewhat poorer as have it's share holders, hence it's funds under management have shrunk somewhat as has it's valuation.
It did get a take over bid offer about a year ago which, in line with its broader wisdom, it chose to reject.
It should do well if the worst is behind us for, as you know, even morons can make money in a raging a bull market..

 

[Tyler Durden]

It's basically a wealth manager and the wealthy that were managed by it have become somewhat poorer as have it's share holders, hence it's funds under management have shrunk somewhat as has it's valuation.
It did get a take over bid offer about a year ago which, in line with its broader wisdom, it chose to reject.
It should do well if the worst is behind us for, as you know, even morons can make money in a raging a bull market..

Hmmm thanks for the info, sounds like one to keep an eye on!

 

[prawn_86]

AFR rumouring at possible PE takeover in the wings. Stock currently up about 8% at the moment.

Anyone got these in their portfolio?

 

[McLovin]

Anyone got these in their portfolio?

I do. These big deals take time to get worked through. If KKR was prepared to pay $40/share last year then someone is still prepared to pay that today because very little has changed. PPT is a good business (with a pretty open share registry), but it's expensive to run, largely because of its trustee business. I imagine they want to strip out the trustee business and keep the FM business.

I can't see the article on the AFR site, do you have a link?

 

[prawn_86]

I can't see the article on the AFR site, do you have a link?

I just heard it over the wires so haven't actually read the article myself.

What sort of leverage does PPT currently operate under? If PE were to buy them wouldn't they want to gear it up even higher?

 

[McLovin]

I just heard it over the wires so haven't actually read the article myself.

What sort of leverage does PPT currently operate under? If PE were to buy them wouldn't they want to gear it up even higher?

There's not much debt (interest cover is out over 25x) and these businesses can be scaled with very little extra cash. The angle that PE would be going for is that PPT employs a lot of people many of them in the trust side of the business. By way of example PTM employs 50-60 people and has FuM of ~$16b, PPT employs 2,200 and has FuM of ~$22b. Strip out even half of those employee expenses (~$200m/year) and you'll increase profit by over ~150%. You could definately load it up with debt, these sort of businesses are great for PE, no CAPEX. I could be wrong, but I highly doubt PE is looking to get involved because of the sleepy trustee business.

 

[aussiepat]

I just heard it over the wires so haven't actually read the article myself.

I haven't seen it on AFR but there is an article on Business Spectator: http://www.businessspectator.com.au...-pd20120614-V8SHF?OpenDocument&src=edbyo&ir=3

 

[McLovin]

There's not much debt (interest cover is out over 25x) and these businesses can be scaled with very little extra cash. The angle that PE would be going for is that PPT employs a lot of people many of them in the trust side of the business. By way of example PTM employs 50-60 people and has FuM of ~$16b, PPT employs 2,200 and has FuM of ~$22b. Strip out even half of those employee expenses (~$200m/year) and you'll increase profit by over ~150%. You could definately load it up with debt, these sort of businesses are great for PE, no CAPEX. I could be wrong, but I highly doubt PE is looking to get involved because of the sleepy trustee business.

Looks as though PPT has decided to stop being an easy target and taken some of McLovin's medicine!

Investment group Perpetual will cut 300 jobs over the next two years and exit the mortgage lending business as it tightens its belt amid a downturn in the financial services sector.

But the job losses may not be be confined to Perpetual. The company will also sell its lenders mortgage services business, which could see another 280 people jobs lost, taking the total job cuts to about 580 in a company that employed nearly 1500 people in 2011.

Read more: http://www.smh.com.au/business/perp...re-could-go-20120625-20x69.html#ixzz1yl6uovOZ

I thought they employed over 2,000 people. Oh well.

 

[McLovin]

Good result. Cost cutting starting to work. A rising market helps this business too.

 

[SeekingYields]

Positive outcomes after 1 full year of CEO's Geoff Lloyd's "Transformation 2015" strategy. Cost reductions are all on track, positive NPAT news.

But my main concern is the continue FUM drain - whilst net outflows since 2011 has reduced, still in a net outflow position and all this when they have one of the best and experienced investment teams in the Australian marketplace.

 

[tinhat]

But my main concern is the continue FUM drain

Three large challenges for fund managers like PPT:

1. Industry reform - MySuper - margin squeeze.
2. Huge stampede to SMSF especially by retirees entering or about to enter pension phase.
3. Super FUM pool about to be drawn down by retiring baby-boomers.

A 2011 report into super fund managers by KPMG raises some interesting points. It suggests that fund managers like PPT just might be too small to compete given the flight to SMSF, the squeeze on margins and that funds that are seeing FUM decline might end up in a vicious circle of increasing costs per member.

The report points out that the top 10 fund managers in Australia (a club which PPT does not belong to) have 50% of the funds under management and that consolidation amongst fund managers is likely to continue.

http://www.kpmg.com/AU/en/IssuesAnd...ph-superannuation-trends-and-implications.pdf

 

[piggybank]