In October last year, I discussed Jupiter Fund Management (LON:JUP) as a possible buying opportunity in an article looking at UK fund managers with high StockRanks. I concluded:

[ … ] the group’s balance sheet suggests to me that the current operating business might only be valued at five or six times forecast earnings. With a well-supported 5%+ dividend yield, I think Jupiter could also be worth a closer look.

Since then, Jupiter shares have risen by 60%:

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At the time of the article, Jupiter had a StockRank of 90 and Super Stock styling. As I write in mid-August, the StockRank stands at 99.

Given the stock’s strong progress and the algorithm’s continued positive view on this previously unloved business, I thought it would be interesting to take a longer look at Jupiter. After all, it’s worth remembering that on a longer view, the Jupiter share price is still trading quite close to all-time lows:

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I think there’s a reasonable argument to be made that Jupiter may still be attractively priced, with strong recovery potential. But there are risks too – this sector has been facing some profound changes. I don’t think Jupiter is out of the woods yet.

Summary

Pros:

  • Growing scale, tentative signs of a return to net inflows;

  • Strong, asset-rich balance sheet;

  • Operating margins remain high.

Cons:

  • Too soon to know if Jupiter can deliver sustained net inflows and AUM growth;

  • Pressure on fee margins is unlikely to abate;

  • Jupiter may lack the scale, niche focus and franchise strength of some rivals.

Profile

About the stock

Jupiter Fund Management is a UK asset management company that’s listed in the Investment Banking & Investment Services industry group, within the Financials sector.

Jupiter is a member of the FTSE 250 index, with a market cap of £676m and a recent share price of 131p.

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The StockRank’s reflect Jupiter’s broad spread of positive factors, albeit with some relative weakness in value reflecting strong recent share price gains.

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About the opportunity

UK fund managers have been out of favour for some years. Jupiter’s share…

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