Warm up on Polar Capital!

Wednesday, Sep 10 2014 by
4

Polar Capital: A Good Time To Warm Up

Polar Capital (LON:POLR) is an asset manager, managing a selection of investment trusts (like the Polar Capital Technology Trust, PCT; and the Polar Capital Global Financials Trust, PCFT). They also manage a number of unit trusts and hedge funds, with their Assets Under Management (AUM) up to $13.6bn as of the end of June this year.  

Why I Like Asset Managers

I like asset managers for a number of reasons: 

  • Firstly, their business model tends to be asset-like, but highly profitable. 
  • Secondly, as a result of this they are often serial dividend payers and growers, and 
  • Thirdly, they also tend to hold net cash on their balance sheets, a good buffer to have against periodic stock market and economic downturns. 

They Should Benefit from Financial Repression

We remain mired in a strange economic scenario, where global economic growth is struggling and requires a very helping hand from central banks around the world, in the form of Zero Interest Rate Policies (ZIRPs) and Quantitaive Easing (QE) programs. While these ultra-low interest rates have been manna from heaven from borrowers, they have been dreadful news for savers, with UK deposit savings rates falling year on year (Figure 1).

1. UK Deposit Rates Hit a New Historic Low

UK Deposit Rates ></p><p style=

And yet, scarred no doubt by 2 stock market crashes since the year 2000, the average UK household has preferred to keep a large amount of savings in the form of cash, rather than any other higher-yielding investments like stocks and shares. This is a global trend; In the US and Germany, for example, cash held on deposit by households continues to hit new highs at over 0.4% of GDP (red line and right-hand scale on Figure 2), in spite of the five-year old stock market rally and the US S&P 500 index recently breaching the 2000 level. 

2. US Savers Keep Record Amounts in Cash

5410782a5011aUS_total_savings.jpg

As these ultra-low interest rates on cash deposits remain, there will be added pressure over time on households to find better yields elsewhere, in other asset classes like stocks and bonds.

Right Now, Stocks Yield the Most

The Hunt for Yield should push investors towards stocks, given the already-depressed yields now available on government bonds; note that you now have to pay the…

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Disclaimer:  

My opinions only, not investment recommendations: Please Do Your Own Research

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Polar Capital Holdings plc is an investment management company. The Company is engaged in the provision of investment management and advisory services. The Company offers professional and institutional investors a range of geographical and sector investment opportunities. The Company offers fundamental funds diversified by asset class, geographical, sectoral specialization, strategy and structure. Its subsidiaries include Polar Capital Partners Limited, Polar Capital Partners (Jersey) Limited, Polar Capital (America) Corporation, Polar Capital Limited Liability Partnership and Polar Capital European Income Fund. more »

LSE Price
558p
Change
3.3%
Mkt Cap (£m)
538.3
P/E (fwd)
14.1
Yield (fwd)
5.8

Janus Henderson Group PLC is an independent global asset manager. The Company specializes in active investment across all asset classes. It operates through the investment management business segment. It manages a broad range of investment products for institutional and retail investors across five capabilities: Equities, Quantitative Equities, Fixed Income, Multi-Asset and Alternatives. It operates across various product lines, distribution channels and geographic regions. Its regional focus includes United States, Europe, Asia and Australia. more »

LSE Price
233.7p
Change
-0.5%
Mkt Cap (£m)
2,595
P/E (fwd)
n/a
Yield (fwd)
n/a

Schroders plc is an asset and wealth management company. The Company has three business segments: Asset Management, Wealth Management and the Group segment. Asset Management principally comprises investment management including advisory services, equity products, fixed income securities, multi-asset investments, real estate and other alternative asset classes, such as commodities. Wealth Management principally comprises investment management, wealth planning and banking services provided to high net worth individuals and charities. The Group segment includes returns on investment capital, income from financial investments, including RWC Partners Limited. The Company invests in a range of asset classes across equities, fixed income, multi-asset, alternatives and real estate. It operates from approximately 40 offices in over 20 different countries across Europe, the Americas, Asia, Africa and the Middle East. more »

LSE Price
2405p
Change
0.2%
Mkt Cap (£m)
8,281
P/E (fwd)
11.6
Yield (fwd)
4.8



  Is LON:POLR fundamentally strong or weak? Find out More »


1 Post on this Thread show/hide all

johnrosier 10th Sep '14 1 of 1
1

Held this in the JIC Portfolio since February. The worst stock in the portfolio; down 9.0% but I'm holding on. Agree very much with your point about the directors' and employees shareholdings; our interests are aligned and the dividend yield at a forecast 7.25% is extremely attractive. Some of its main investment areas are doing well. e.g. technology and after a poor first half of the year Japan is doing better (Topix closed at the highest level since March 2008 today). So unless we go into a full blown bear market I think the shares should do much better from here although they do tend to trade around on pretty low volume!

Website: JohnsInvestmentChronicle
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