The UK equity market appears to have recovered from a turbulent period in August, but the share prices of many of the (private client) Asset Managers, and the institutional (corporate) stockbrokers, have not. In this note we look at recent news & sentiment affecting the wider quoted sub sector.
Our note shows the wide spread of ratings for asset manager/stockbrokers. Rathbones, being the most profitable, does deserve a premium – we just think that it is too large. It is not that Rathbone’s is noticeably overvalued: rather that the others are valued at a fraction, usually a small fraction, of the price paid for acquisitions in the sector. It appears that Charles Stanley’s and W H Ireland’s corporate broking divisions are still accorded negative values despite WHI’s being, pretty soundly, profitable and Charles Stanley’s having been sold!
WH Ireland is one of the few quoted stockbrokers which combines a growing Asset Management division with a successful corporate broking operation (acting for nearly 100 AIM listed companies). WHI’s valuation, with its market cap. of £25 million at just 0.88% of Assets under Management (£2.8bn) – or nearer 0.7% if its head office building in Manchester and cash on its balance sheet are taken into account, and ascribing no valuation (at all) to its profitable corporate broking arm – continues to look extremely modest in comparison to others in the sector. WHI is likely to update the market with a (November financial year end) trading update in mid December.