(AUSTRALIA) – According to brokers at Barrenjoey Capital Partners, Platinum Asset Management, one of the largest equity investors on the ASX, is experiencing “severe organic decay” after more than $900 million was withdrawn from its funds last month.
The company’s funds under management fell from $17.8 billion at the end of July to $16.7 billion on August 31, primarily due to a $650 million redemption from a single institutional client.
Barrenjoey’s Gerardo Covarrubias stated that Platinum’s funds under management and earnings are on a “severe downward trajectory,” with August outflows of $262 million from retail and other investors putting the firm on track for an annualized decay rate of 17.7 percent.
Financial challenges
Platinum’s organic rate of decay on a monthly basis is 5.1 percent, or 1.5 percent when excluding the single large redemption and accounting for market movements, according to Mr. Covarrubias.
The broker forecasts that Platinum’s net profit will drop from $80.9 million in the last financial year to $72.8 million in 2024 and has a $1 share price target with an “underweight” rating on the shares.
Goldman Sachs is also pessimistic about the outlook, with a sell rating and a $1.50 share target.
Platinum co-chief investment officer Andrew Clifford expressed confidence in the firm’s strategy to reduce fees in a competitive market and retain clients in the financial adviser wholesale market.
However, the firm’s billionaire co-founder, Kerr Neilson, has called for Mr. Clifford’s resignation from the chief executive role, advocating for further changes at Platinum, including capital returns and potential merger or acquisition activity.
