Was wondering who was buying at the lows the last few days

Need to do some research and find out why Yarra thinks this is good value especially when one of the directors sold recently and after the last update.

Some price targets but not sure of the reco:

Pinnacle Target Price Cut 4.1% to A$11.70/Share by Wilsons

Pinnacle Investment Target Price Raised 2.2% to A$9.20/Share by Ord Minnett

Also Ethical partners reduced their holding last week.

Despite that and the recent market update shares rallied yesterday.

Hard to predict

Held

Pinnacle's share of performance fees lower than last year (just 2m short) and explains the falling share price

Pinnacle Investment Management Group Limited (Pinnacle) advises that nine Affiliates have crystallized performance fees for the financial year ended 30 June 2023 (FY23) totalling approximately $58.0 million at 100% gross in aggregate, of which $54.8 million crystallized in the second half of the financial year (2H FY23).

For the financial year ended 30 June 2022 (FY22), these fees were $57.8 million at 100% gross in aggregate, from ten Affiliates. Pinnacle’s net share of these performance fees, after tax payable by the Affiliates on this revenue, is in the order of $14.6 million, of which $13.6 million was earned in 2H FY23. For FY22, Pinnacle’s net share of performance fees, after tax payable by the Affiliates on this revenue, was $16.6 million. Within the Affiliates, there are now 24 diverse strategies with the potential to produce significant performance fees each year (up from 22 as at 31 December 2022). Of those 24, 13 strategies delivered this financial year

Fund management is a tough biz when the stocks you own doesn't entirely go your way.

[held]

The intra-day low today was a decent spot to add to positions. It could be tough sledding over FY23, but the shares look attractive enough over a longer timeframe.

From morningstar. I decided to copy/paste rather than just link the article as it is a generic link:

Pinnacle’s Economic Moat at Work in Fiscal 2022; Earnings Outlook Good and Shares Fairly Valued

Shaun Ler Equity Analyst

Narrow-moat Pinnacle delivered a laudable result for what was a turbulent fiscal 2022. Profit after tax, EPS, and DPS were up 14%, 8%, and 22%, respectively. Due to negative market movements, affiliate funds under management, or FUM, fell 6% from the prior year to AUD 84 billion, while performance fees also fell 33%. But we were encouraged by the positive net inflows and higher base fee margins, due to mix shift to higher-margin channels. Together with higher average affiliate FUM in fiscal 2022, it helped drive total revenue growth above growth in expenses and one-off seed investment losses.

Our fair value estimate remains AUD 11.80 per share. Evidence of Pinnacle’s economic moat was evident over the year. First, while most active managers lost mandates in fiscal 2022 from super fund consolidations, the shift to passive and industry redemptions, Pinnacle affiliates attracted new money, on aggregate. This reflects their solid long-term record, wider investment universe given their boutique structure, modest fees, and product variety. Second, Pinnacle’s asset class diversity helped cushion market losses. In fiscal 2022, aggregate portfolio losses were below 10%, less than the S&P/ASX 300 and MSCI World, which lost 10.4% and 17.1%, respectively. Third, more of Pinnacle’s products are being used in the retail market. Its top 20 wealth clients now invest with three or more affiliates on average. Around 65% of Australia’s financial advisers invest with Pinnacle.

Pinnacle’s earnings outlook is bright. We model EPS growing at a low teen CAGR through to fiscal 2027, backed by growing affiliate FUM, steady base fee margins and performance fees, and operating leverage as affiliates grow in scale. On FUM, we believe efforts to expand the sales channel (notably in retail and offshore) and distribute in-demand asset classes (such as real assets and infrastructure) can help cushion the headwinds from superannuation fund consolidations and attract continuous new mandates.

My view is that anyone that can extract performance fees during a downturn and outperform the market is definitely going to be highly regarded in the long run.

[held]

Pinnacle updated the market this morning confirming their share of performance fees post tax was $16.4m from 10 x affiliates this year (unaudited). This is down from $19.5m FY21 over 7 x affiliates.

I think this is a pretty good result considering the FY we have had, it was better than I expected, and i am optimistic about their full year results. My thought is this reinforces the quality of their business model. Lackluster sharemarket performance is cushioned by their ability to onboard affiliates, which when the sharemarket turns positive should create great leverage in their results.

See announcement here

Pinnacle released their half yearly report last night after close. You can find it here

EPS of 21c up from 16.7c PCP and up from 19.8c last half. Giving a TTM EPS of 40.8c.

PNI dividend increase of 50% on PCP to 17.5c per share fully franked.

FUM is up $4.2B to $93.6B overall despite net institutional outflows of $1.7B. Retail inflows of $2.9B and general market increases kept the FUM on the up. Pinnacle affiliates performance over the last 5 years has been amazing with 77% of funds outperforming their benchmarks. This continued last year and I surmise that the retail inflows is due to investors chasing this performance.

Pinnacles leverage on the share of NPAT continues to increase as the companies incubated "horizon 2" affiliates mature. This is evident as 1H22 affiliate NPAT increased to $137.4m from $118.2m in 1H21, an increase of 18%. Whereas Pinnacles share of this NPAT increased from $31.8m to $39.2m, an increase of 23%.

Pinnacle has seen a big pullback in share price in the last 6 months. The share price got too far away from reality especially when it was trading around $19, which was over 50x trailing PE extrapolating last years performance into the future. Now we are sitting at more reasonable multiples and the case to buy more shares is appealing. The big test will be, if this half continues as it has with further sell offs, how well will Pinnacles FUM and affiliate fees hold up. My opinion is that their strategy of broadening asset classes will help them weather any serious downturn. Obviously they will still be impacted by the cycles of financial markets, however i feel their wide variety of assets and strategies will soften the impact. As you can see from below graph management have been intentionally diversifying into an "all weather" portfolio of affiliate managers with varying strategies and asset classes. Their holdings in real assets, credit and value equities should do well if we have an extended inflationary environment.

Pinnacle announced investment into Fire V Capital giving them 25% equity stake. Fire V is Pinnacles first exposure to private equity and venture capital. This has the potential for superior returns on FUM however with greater risk. But Five V’s seems to have demonstrated a strong track record. Pinnacle management has shown an exceptional ability to choose its affiliates wisely. I am confident this investment will again be beneficial to shareholders. 

PNI are also raising $105m fully underwritten and offering a non-underwritten SPP to retail shareholders.

https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02455935-2A1340579?access_token=83ff96335c2d45a094df02a206a39ff4

Wow what a year for Pinnacle!

FUM continues to pile into Pinnacle's affiliates. With the current economic situation where equities are the only place to go for decent returns Pinnacle is thriving. Institutions and Retail FUM has boomed over the last 12 months, this accompanying 80% of their affiliates beating their relative benchmarks contributing performance fees has seen earnings more than double!

The company strategy of funding and backing small boutique fund managers is paying off. This gives them great diversification in earnings with potentially greater opportunity to outperform and minimising risk of significant underperformance. Boutique funds tend to be more nimble and can adjust their strategies to suit current market conditions. Pinnacle also provides some of these funds with the back end operating systems, internal infrastructure and services so they can purely focus on their investments, while also adding another steady reliable income stream for Pinnacle. 

I expect over the next few years these tail winds to continue for PNI as equities really are the only place to be at the moment. 

See highlights below:-

Pinnacle Investment Management Group Limited (ASX: PNI) FY2021 financial results

Pinnacle Investment Management Group Limited (PNI) is pleased to advise shareholders that the highlights of the financial results for the financial year ended 30 June 2021 (FY21) are as follows:

• Net profit after tax (NPAT) attributable to shareholders of $67.0 million, up 108% from $32.2 million in the prior financial year (FY20)

• Basic earnings per share (EPS) attributable to shareholders of 38.2 cents, up 103% from 18.8 cents in FY20

• Diluted earnings per share (EPS) attributable to shareholders of 36.5 cents, up 104% from 17.9 cents in FY20

• Fully franked final dividend per share of 17.0 cents (up 100% from the fully franked FY20 final dividend of 8.5 cents), taking total fully franked dividends for the financial year to 28.7 cents (up 86% from the fully franked FY20 total dividends of 15.4 cents)

• Pinnacle’s share of Affiliates’ NPAT was $66.4 million, up 75% from $38.0 million in FY20

• Aggregate Affiliates’ funds under management (FUM) of $89.4 billion at 30 June 2021 (at 100%)

• Aggregate Retail FUM of $20.3 billion at 30 June 2021 (at 100%)

• Net inflows for FY21 of $16.7 billion4 ($11.25 billion in the six months ended 30 June 2021 (2H FY21)), including $4.5 billion retail ($2.6 billion in the six months ended 30 June 2020 (2H FY20)), of which $0.2 billion was LICs/LITs, all in 2H FY21

• Significant growth in both aggregate funds under management and net inflows from outside of Australia during FY21

• Closing FUM of $89.4 million is in excess of 20% higher than average FUM through FY21

• Continued Affiliate medium-term outperformance – 80% of 5-Year Affiliate strategies have outperformed as at 30 June 2021

• Cash and Principal Investments of $155.0 million at 30 June 2021. Facility from CBA extended from $30.0 million to $100.0 million and fully drawn down on 30 June 2021. The additional $70.0 million cash was invested into liquid funds managed by Affiliates on 1 July 2021 until required, providing ‘dry powder’ for potential business investments