Impax Asset Management (LON:IPX) is widely followed on the Small Cap Valued Report, especially by Graham Neary. The share price has risen sharply recently and I have come to the conclusion it is now significantly over valued.

I calculate market cap as a percentage of assets under management (Graham's preferred measure I think) to be 3.1%. I don't think it has ever been this high before and the closest I can see it has ever been was back in early 2014 with 2.8% on a share price in the mid-50s. Following this the share price was under 50p in Autumn 2016 with a ratio of 1.4%. I accept that scale means a higher ratio is justified, but I don't think to this extent and they have also been much cheaper on this basis recently.

Furthermore TNAV is much weaker than a year ago even before the payment of a special dividend and I think this will constrain future distributions and growth by acquisition. And even if they could fund further takeovers without significant dilution I don't think there is another PAX and so the positive effect from this must be considered a one-off.

Finally, although inflows remain impressive in their non-PAX funds, both these and investment returns have faltered somewhat recently especially when including PAX. There remains (IMHO) a risk of a 40%+ correction in US stocks which would badly affect both.

Consequently I have now sold almost all of my holding. I think they are well run in an attractive sector and am hoping to buy back much more cheaply in 1-3 years time.

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