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I’m on the hunt for the UK’s most fun worth inventory, and asset supervisor abrdn (LSE: ABN) fulfils a lot of the factors.
The FTSE 250-listed firm has been by means of hell over the past seven years. But the worst might lastly be over.
abrdn is the ungainly progeny of the 2017 merger between fund managers Customary Life and Aberdeen Asset Administration. Their mixed worth was initially £11bn. Right this moment, abrdn is price a meagre £2.63bn. Discuss a burning platform.
Will the abrdn share worth ever cease falling?
The 2 teams turned out to have enormous fund overlap and needed to cull 100 of them. It additionally stumbled right into a authorized battle with Lloyds, which pulled £25bn of its mandate.
Each events introduced their issues. Aberdeen was an rising markets specialist, however China went into meltdown. Customary Life’s International Absolute Return Methods (GARS) was the UK’s hottest fund price £24bn, however that folded final 12 months. I received’t go into the misguided abrdn rebrand. That may be merciless.
The group dropped out of the FTSE 100 in August 2022 and once more final summer season. Right this moment, it stays within the FTSE 250. Its shares peaked at 499p in Might 2015 however now commerce at 147p, down 70%. They usually proceed to wrestle, falling one other 6.97% over the past 12 months.
I’ve simply noticed its title on an inventory of high 10 most shorted UK shares, with six fund managers betting it has additional to fall. Collectively, they maintain 5.63% of the entire share depend.
Who would spend money on a inventory like this? Properly I’m tempted. The punishment beating has gone on lengthy sufficient. It obtained one factor proper, shopping for the interactive investor buying and selling platform, which widens its providing.
Better of all, it affords a shocking yield of 9.89%. That’s a sensible charge of earnings, offering it holds.
And it delivered some excellent news on 6 August, with half-year revenues and earnings beating analyst estimates. CEO Jason Windsor, talked up the group’s “encouraging start” however let’s not get too excited. Adjusted working earnings rose simply 1% to £128m. Revenues fell 7% to £667m.
Dividend to die for
Value-cutting helped abrdn ship a £187m revenue earlier than tax. Final 12 months, it misplaced £169m. Web fund flows rose by £600m. A inventory market restoration would assist.
The abrdn yield is fab however that’s all the way down to the ailing share worth. Dividends have been frozen at 14.6p per share for the final 4 years. This chart reveals how they’ve flatlined.
Chart by TradingView
I’m anxious that abrdn’s status might deter brokers from putting enterprise with the group. Plus I anticipated the shares to be cheaper, though at the moment’s trailing P/E of 10.41 instances earnings is hardly demanding.
One factor happens. abrdn isn’t the one monetary companies firm providing a mighty yield. FTSE 100 asset managers Authorized & Common Group and M&G are additionally across the 9% mark. Their shares have averted meltdown, however hardly flown. This can be a struggling sector.
Since I maintain each L&G and M&G, shopping for abrdn would solely replicate the dangers and rewards. In any other case, I’d fill my boots. Abrdn would possibly simply be cut price of the last decade.
