The correct conclusion to draw

Questor: Brooks Macdonald is that rare thing, a promising stock that isn’t at a pricey valuation

Therefore not many people think it’s a promising stock.

They might be right, they might be wrong, but not many people do.

6 thoughts on “The correct conclusion to draw”

  1. Yeah,well looking at what Brooks Macdonald do for a living, I wouldn’t touch ’em with a barge pole either.

  2. So its shares have traded between £17 and £22 over the last year. Historical PE ratio over 20, albeit it rose to 70 last year. The share price held up but earnings took a dive.

    Increasing cash on the balance sheet and no debt. EPS over last 4 years 68, 68, 94, 43.

    Declining ROCE 15, 14, 12, 6. This merits closer examination than I want to give.

    It looks solid enough at a quick glance but I don’t like to invest in asset managers as a rule.

    There are a lot of companies out there so it’s only a very few that get covered in any detail – maybe the FTSE 100 and about 10 % of the 250? That leaves a lot of room for discovery. The trick for these companies is to get attention and a re-rating.

    A pair of asset managers that are current darlings, Liontrust and Miton, have traded on PEs in the 20s but are now mid teens, lower than Brooks.

    It’s not obviously under priced unless there is something that’s going to increase its scale or its margins. The writer of this piece must think they know what this is. They want people to jump on the bandwagon and get the price up

  3. Aah, the entitlement mentality that our poorest have the absolute right to live in some of the most expensive postcodes on the planet at everyone else’s expense.

  4. The reason is that a company that Brooks Maconald acquired a year or two ago subsequently discovered that there were some problems about advice given by a non-core subsidiary and until they can be proven innocent or the loss suffered by clients due to bad advice quantified and reimbursed there will be an unquantified liability and a shadow hanging over them.
    BM are basically a decent company providing good quality investment management (not cheap but worth what the client is paying for it). Unfortunately the due diligence for which they paid wasn’t worth the fee that they paid.

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