Pinned valuation:
April 2024
Started a deep dive on Fiducian Group but valuation is now getting close enough to where I think is on the higher end of fair value so will put Fiducian on the watchlist. Overall, looks like a well run financial services business, returns from funds management over the longer term are very good (relatively). Business has grown revenues and profits steadily over time.
Valuation:
Target PE = 18
NPAT estimate = $15mil
Target MC = $270mil
Valuation = $8.58 per share
shearman
@Dominator Id be interested in any deep dive you do or collaborating with you on one if you are interested
Ive owned FID since 2015 - and it has been very consistent in both strategy and growth over this period
I have it tagged as a very consistent performer I need to buy more of when Mr Market is feeling generous
However that doesnt happen that often - so you need to understand the business and value it so you can take advantage when it does under value
Some key points from my understanding
- Consistent ROE > 20
- High Insider ownership > 40% (CEO ~ 34%)
- Management and Board buying shares
What is really interesting is their model/strategy - which Id like to understand better
From what I can see it has 3 key pillars:
- Where the banks are shedding advisors - they are focused on advisors (internal + independent external)
- They develop their platform to support advisors (and generate growing revenue from it) - and FUA is growing consistently
- They provide various high performing (and ranked) funds which are consistently growing FUM
Dominator
@shearman I should have said "researching" rather than "deep dive" as it makes it sound like I put a lot of effort in, I didn't go that deep. I use the term "deep dive" loosely, its just how I define a stage in my investment process...
Anyways, given your points maybe I'm being a bit harsh on Fiducian in terms of valuation (see TIKR LTM PE over time), from all measures it looks like a well-run company, that could easily beat the market over time. Like you state high ROE, high insider ownership and management buying shares. I am a bit concerned about key person risk with CEO, from what I can see he has been CEO for almost 30 years, he would be in or approaching a retirement age range shortly if he wanted to retire. What really interested me was the funds consistently high returns relative to peers (see second image), this would compound earnings over time as it can't be hard for investment advisors to allocate to a fund that performs so well consistently.
I'll put it back on my research ("deep dive") list and let you know my thoughts.
