Too ex­pen­sive

Finweek English Edition - - MARKETPLACE -

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.

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