Sygnia was another company with a good set of numbers, although – as I wrote when it issued an update to assets under management (AUM) – AUM was flat for the last quarter. Trading on a price-to-earnings ratio (P/E) of just over 30 times, the stock is expensive but should be able to grow earnings at over 30% for the next year. What’s important to understand with Sygnia is that it is different from other asset managers such as Anchor Capital and Coronation, as it is not in the business of earning performance fees. It passively manages money and as such will earn a modest percentage of AUM as income, rather than the potentially lucrative performance fees we see from active managers. This means that it should be sitting on a mid-teen P/E at most. So even with growth potential, the stock is expensive.
It is different from other asset managers such as Anchor Capital and Coronation, as it is not in the business of earning performance fees.