06-June-2023: Funds-Under-Management---May-2023.PDF
Better! No insto outflows and small amount of retail outflows - in the context of their overall FUM of $41.4 billion. Plus a little loss on share price movements during May. Not too bad. The brakes are on. They've almost come to a stop. Now for the turnaround.
Disclaimer: I hold MFG in one RL portfolio and I also hold MGF (MFG's flagship global equities fund) in the small portfolio I manage for our two children. I have MFG (the manager) under review currently. I want to see these FUM outflows stop and some inflows begin, but I understand that could take some time. It's a confidence thing, and there are plenty of reasons why people have lost confidence in Magellan.
I'm probably being too patient.
05-April-2023: Looking at today's FUM update from MFG:
What's interesting to me is that the FUM outflows have been from their Australian Equities, i.e. Airlie Funds Management, which I reckon might have something to do with the founder of Airlie announcing (in early March) his intention to retire - John-Sevior-announces-intention-to-retire.PDF
Airlie's FUM has dropped -33% from 9 billion to 6 billion!
Oof. Everytime I think Magellan are starting to stem the outflows of FUM the subsequent month comes along to show they aren't quite there yet
19-June-2022: I sold out of MFG in December at $23.50, then bought some back at $20.99 in February when Magellan co-founder Chris Mackay was brought back, then more at $14.53 in March, then more at $13.02 on June 6th (2 weeks ago). They closed on Friday at $12.48.
Here on SM I sold later, for less, at $16.43 then bought back in at $13.12 (+ some tiny top ups below $13).
While they look very cheap to me at current levels, I believe I already have significant exposure to the management company (MFG), so I intend to watch and wait now, rather than to keep adding to those positions. The thing is - they're not Robinson Crusoe there because there are a lot of quality companies that look cheap at this point.
And there have been some significant changes since Hamish Douglass stepped back and Chris Mackay stepped back in. I don't have a strong opinion on what Chris should or should not do with MFG now, but I understand that he has been keen to return to basics somewhat, or to focus more on what they focused on back when he started the company with Hamish, and less on the newer stuff, such as Australian direct investments (GyG - Guzman y Gomez), other private equity ventures (Barrenjoey), and investing in China, particularly Chinese Tech. Alibaba was 3.2% of the MGF (Magellan Global Fund) portfolio at 31 December, but word is Chris and the other PMs have sold out of BABA now. Hamish had previously sold out of Ten Cent at a big loss.
Also, at the end of December (as listed above), Netflix was their second largest position and Meta (Facebook) was 9th largest position. Neither are top 10 positions now. Nor is Starbucks or Pepsico. The following is from their May 2022 report:
Dumping or reducing exposure to Netflix was a sensible move because NFLX is being seriously challenged by other streaming services from every direction - and they no longer have a strong moat. Netflix isn't just being sold down as part of the big tech sell-off, they really should not be part of the FAANG group anymore because they have become structurally challenged. FAANG should really now be MAAAM - Meta (FB), Alphabet (Google), Amazon, Apple & Microsoft.
Source: Commsec.
That's a BIG decline - from almost $700/share to $175/share in 7 months. Like I said, that's more than just a "tech sell-off".
Another thing to note is that up until February, MGF was splitting out China as part of their geographical exposure disclosure:
However from their March 2022 report, China exposure has been included in "Emerging Markets":
So, they don't see exposure to China tech stocks (or China in general) as a positive so much now. Or at the very least they have decided to no longer highlight their China exposure.
While I understand the benefits of diversification, I also feel that Chris may be of the opinion that Hamish lost his way somewhat and that getting back to what they did best at the start, and what they were doing when they had their greatest success - even what Hamish was doing after Chris left when Hamish had his greatest period of outperformance - is the best way forward.
That is entirely understandable, and probably what people should have expected from Chris Mackay when he was brought back in. I don't think he was ever going to be a silent caretaker type. He is going to manage, and make sensible calls. He has been successfully managing MFF for years, and he knows what he's doing.
Hamish is returning as a consultant, but not as a portfolio manager, so it will be interesting to see how the Magellan funds (like MGF) continue to evolve, and when the FUM outflows (for MFG) stabilise and actually reverse (become inflows once again). Unlikely to happen in the current "correction" environment, but at some point it will happen.
Magellan is invested in some very high quality global companies, and I have retained my exposure to MGF (the fund) through the past year of troubles with the manager (MFG), and have sold out and then bought back in (at lower levels) to the manager (MFG). Now I'm happy to wait and watch. It may well get worse before it gets better, but it will get better. Chris has made some sensible moves and Hamish's insights and brilliance (despite some miss-steps in recent years) has not been entirely lost to Magellan.
Hamish and Chris a couple of years after they started Magellan Financial Group. [Source: The Australian Newspaper]