AUM fell 15% in H1-23, from £22.1bn on 1 Apr 22 to £18.8bn on 30 Sep 22. Unsurprisingly, given the widespread sell-off in equities, investment performance accounted for -£2.1bn of the fall, with net outflows of -£0.8bn, and the closure of the Phaeacian funds in the US -£0.5bn.
- Despite gloomy markets, there are multiple positive signals and signs of management confidence:
- Positive net inflows were recorded in multiple funds, including Global Insurance, Biotechnology, Healthcare Blue Chip, Smart Energy, European ex-UK Income, Emerging Market Stars, Forager and Global Absolute Return, and net outflows from open-ended Technology funds have slowed.
- Polar has reported a strong pipeline of investor interest in multiple strategies, and that the short list of new potential investment teams is larger than for many years.
- The board has declared an interim dividend of 14.0p per share, unchanged from H1-22 (if the total full-year dividend is maintained at 46p, that would be a yield of 9.7% at today’s share price).
- Directors’ have made over £2.2m of share purchases, in cash, during 2022.
We maintain confidence in the strength of Polar’s strategic positioning, and that it is well positioned to return to growth, despite significant short-term uncertainty.
Our fundamental valuation is 600p per share, 27% above the current share price, and we flag that Polar’s PER of 9.3, is undemanding and below a peer group median of 10.0.
