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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 via hell during the last 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. At this time, 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 big fund overlap and needed to cull 100 of them. It additionally stumbled right into a authorized combat 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 World Absolute Return Methods (GARS) was the UK’s hottest fund price £24bn, however that folded final 12 months. I gained’t go into the misguided abrdn rebrand. That might be merciless.
The group dropped out of the FTSE 100 in August 2022 and once more final summer time. At this time, it stays within the FTSE 250. Its shares peaked at 499p in Could 2015 however now commerce at 147p, down 70%. And so they proceed to wrestle, falling one other 6.97% during the last 12 months.
I’ve simply noticed its title on an inventory of prime 10 most shorted UK shares, with six fund managers betting it has additional to fall. Collectively, they maintain 5.63% of the whole share rely.
Who would put money into a inventory like this? Nicely I’m tempted. The punishment beating has gone on lengthy sufficient. It received one factor proper, shopping for the interactive investor buying and selling platform, which widens its providing.
Better of all, it provides a shocking yield of 9.89%. That’s a superb fee of revenue, offering it holds.
And it delivered some excellent news on 6 August, with half-year revenues and income beating analyst estimates. CEO Jason Windsor, talked up the group’s “encouraging begin” however let’s not get too excited. Adjusted working income 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. Internet 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 apprehensive that abrdn’s repute might deter brokers from inserting 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 & Basic Group and M&G are additionally across the 9% mark. Their shares have prevented 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 may simply be discount of the last decade.
