M&G - a spin-off opportunity? Chris Bailey reviews...

Tom Winnifrith Bearcast: On Mike Ashley opinion is truly divided. Listen HERE

For full disclosure, I happened to find myself in the then very new London offices of M&G (MNG), the fund management spin-off from insurance giant Prudential (PRU), a few months ago. I was helping out a couple of contacts of mine figure out if a couple of their fund managers knew their stuff or not. We will gloss over what I specifically thought...but the other lasting impression from the meeting was that the very nice offices amusingly had intermittent IT problems. It is always thus with a spin-off. An investor has to balance the potential from newly liberated entrepreneurial flair with the reality of teething issues. Prospective numbers and targets are always a bit up in the air and credibility only builds with the publication of some truly independent numbers. The share listed a week ago at 220p a share (an implied market cap of £5.6 billion) and is currently trading as I write at...221p! So what to think?

Some crazy valuations are being given for Eurasia Mining - given its lack of reserves! Gary Newman writes HERE

With fund management companies, there are three ways to value. The first is naturally earnings – and adjusted operating profits of just over £700 million should get the value investors interested. But hang on...year-on-year profits in 2019 are down versus a year previous, even before we dig into the 'adjusted' rationales. And with active management challenges such as an enhanced fee focus and the rise of passives...perhaps a single digit earnings multiple is justified. Certainly the profit declines were coming from the core asset management operations, with new areas such as with-profits funds not fully offsetting.

Blackmore Bond – timber! Now that it is too late will the FCA finally wake up? Read Tom Winnifrith HERE

So what about cash flows? Chat about a three year target of £2.2 billion worth of capital generation and £465 million of dividend generation this year should excite cash flow watchers. Yes, that is a decent higher single digit dividend yield and seemingly the underlying capital generation to make it sustainable, especially as the solvency ratios quoted by the group look solid enough. Naturally as per the above, you could highlight industry-level challenges that could impact...but overall I can see why income-centred investors may want to take a look. And then there's funds under management. £341 billion (diversified between retail and institutional), up 6% year-on-year, puts the group's market cap at not even 2% of assets under management and administration. The latter is an important word but ceteris paribus there does appear a value story on this metric too, as typically for a big beast such as M&G I would expect this figure to be 2-3%.

Eckoh – emphasises “a very strong first half”… but what does the valuation already demand? Reviewed HERE

In short, there are three measures which suggest a spin-off value opportunity for investors. When I look at M&G I see history and relative solidity plus - as seen by the asset-driven and international push (sometimes using the Prudential name and sometimes M&G) - there is some scope in a world where progressively I think active management is going to come back into fashion, even if global capital markets are a bit all over the place. It may have a Tower of Babel style new HQ...but in the wider scheme of things I will not hold it against it. Buy – I am targeting a 250p+ share price target over the next year plus a collecting of a reasonably chunky dividend. And if you are worrying about how prospectively volatile investment markets may impact...then there are always bad boys St James's Place (STJ) and Hargreaves Lansdown (HL.) to use as a short against it.

It is not an April Fool: Peace foundation launched in memory of Martin McGuinness. Read from TomWinnifrith.com HERE

Filed under: M&G, Bearcast, Mike Ashley, Eurasia Mining, Blackmore Bond, Eckoh, TomWinnifrith.com

PetroTal - failure of finance & corporate governance control. Sell says Peter Brailey...

11/21/2019

Time for General Inaction but still short Sirius Minerals argues Lucian Miers

11/20/2019

RiverFort Global Opportunities - remains a buy say the team at HotStockRockets

11/19/2019

Volex - positive interims, a good share tip and now we upgrade...

11/18/2019

Oops...FirstGroup did it again. Chris Bailey writes...

11/15/2019

Eco Atlantic - following Jethro & Joe wells initial results analysis, Peter Brailey reviews...

11/14/2019

KEFI Minerals - financial & Tulu Kapi project updates... shares soar again & stance upgraded

11/13/2019

Bluebird Merchant Ventures - Gubong permit received, shares very cheap?...

11/12/2019

Rolls Royce remains an attractive long cycle stock considers Chris Bailey

11/11/2019

A terrible deal for Sound Energy? Gary Newman reviews...

11/08/2019

Marks & Spencer - you know what happens when there are no believers...

11/07/2019

Kicking when down - ref. Sirius Minerals. Tom Winnifrith writes...

11/06/2019

Columbus Energy Resources - Saffron prospect spud update, drilling excitement ahoy...

11/05/2019

Image Scan Holdings - a buy considers the HotStockRockets team...

11/04/2019

Large-cap earnings frenzy - Shell, Lloyds, BT, Crest Nicholson & DS Smith. Buys amongst them?

11/01/2019

Tom Winnifrith reviews - is lying and fraud acceptable on the London Market?

10/30/2019

M&G - a spin-off opportunity? Chris Bailey reviews...

10/29/2019

Solid State - half-year trading update, still a buy?

10/28/2019

Ariana Resources - a junior gold conviction buy? Nigel Somerville reviews...

10/25/2019

Whitbread - a buy at/around the forty quid level?

10/24/2019

After the Woodford scandal...how is the house of Hargreaves Lansdown looking?

10/23/2019

If it sounds too good to be true...which brings me back to Versarien writes Tom Winnifrith...

10/22/2019

JKX Oil & Gas - a buy at current levels says Gary Newman

10/21/2019

Ariana Resources - key licence renewal, value soon to be highlighted?

10/18/2019

Next plc - would I be selling too? Reviews Chris Bailey

10/17/2019

Yourgene Health - much more to come? A review from HotStockRockets...

10/16/2019

OptiBiotix Health - looks good reasons to continue to consider a strong buy

10/15/2019

Bushveld Minerals currently offers a buying opportunity says Gary Newman

10/14/2019

Altyn - pleasing Resources & Reserves upgrade, remains a gold recovery buy

10/11/2019

GVC ups its numbers again - still happy to make a bet on this one

10/10/2019

Staffing naturally struggles but easyJet continues to impress says Chris Bailey

10/09/2019

Good luck BP shareholders with the man to win over the millennials says Chris Bailey

10/08/2019

Could Ted Baker be a zero? Tom Winnifrith reviews...

10/07/2019

BigDish - evil spin doctor, the Sith Lord Zak Mir, needs to get his act together...

10/04/2019

Tesco and Metro Bank prove management matters

10/03/2019

I descend to the AIM cesspit but emerge still loving up Breedon Group says Chris Bailey

10/02/2019

Big Sofa - interims & placing, Strong buy says Tom Winnifrith for HotStockRockets

10/01/2019

Purplebricks - time to get off the fence, sell at 110p says Lucian Miers

09/30/2019

Columbus Energy Resources - SWP updated prospectivity, drilling excitement ahoy

09/27/2019

Thoughts on PZ Cussons & on Aston Martin raising money at 12% from Chris Bailey

09/26/2019

The Penny Finally Drops at PureCircle says Lucian Miers

09/25/2019

Is it good or bad that M&S loses another CFO? Chris Bailey reviews...

09/24/2019

Petra Diamonds - a speculative buy suggests Gary Newman

09/23/2019

Next, Diageo & Johnson Matthey - large caps are all about levels says Chris Bailey

09/20/2019

Petropavlovsk - remains a buy after interims say Tom Winnifrith & Steve Moore

09/19/2019

Eco Atlantic - good value or guidance required from a film star? Peter Brailey writes...

09/18/2019

Versarien - the point at which it must deliver is approaching says Lucian Miers

09/17/2019

5 slam-dunk sells for 2019 - September update. Nigel Somerville writes...

09/16/2019

Barclays & Lloyds fess up to new PPI horrors... but that is fine. Chris Bailey writes...

09/12/2019

Finding it hard to find any reason not to invest in Jadestone Energy says Gary Newman

09/11/2019

Ferrexpo - time for another go says Lucian Miers...

09/10/2019

Intu Properties - when even a takeover cannot help...

09/09/2019

Boohoo says boo hoo to the doubters. Chris Bailey writes...

09/06/2019

President Energy can weather the economic problems in Argentina considers Gary Newman

09/05/2019

IQE - why that shiny new debt facility?

09/04/2019

Horizonte Minerals - after positive news on funding...

09/03/2019

Whilst some go back to school, M&S goes back to the FTSE-250...

09/02/2019

Optibiotix - interims do not impress but it really is a strong buy argues Tom Winnifrith

08/30/2019

Another Crack at Wayfair says Lucian Miers

08/29/2019

Motels, gold and the stock no active investor should buy. Chris Bailey writes...

08/28/2019

ITM Power - a buy on a long term investment basis considers Peter Brailey

08/27/2019

Rockhopper Exploration - update following further positive news on Sea Lion

08/23/2019

Ferguson plc & woe betide the future of the UK stockmarket?

08/22/2019

Wood Group - I remain a buyer says Chris Bailey

08/21/2019

ConvaTec - still a buy after further management change?

08/20/2019

A share tip of the year for 2019 update...

08/19/2019

GVC raises numbers but please no more number of the beast share sales says Chris Bailey

08/16/2019

The thoughts of Lucian Miers on the Burford fiasco

08/15/2019

Gold - rushing ever-higher. What I will do reviews Nigel Somerville...

08/14/2019

Eco Atlantic - what to do after a great first drill?

08/13/2019

Spin City at G4S. Chris Bailey writes...

08/12/2019

Aviva, Cineworld and Funding Circle reviewed by Chris Bailey

08/09/2019

Thomas Cook - doing the Fandango. Lucian Miers writes...

08/08/2019

Chris Bailey confesses he is now a Dominos Pizza customer, but to buy the shares?

08/07/2019

Volex - ahead of expectations. Buy say Tom Winnifrith & Steve Moore

08/06/2019

Petra Diamonds could still turnaround considers Gary Newman

08/05/2019

Opportunities in Barclays, Lloyds and ConvaTec? Chris Bailey reviews...

08/02/2019

Fresnillo - big drop in share price an opportunity? Gary Newman reviews...

08/01/2019

Columbus Energy Resources - a buy ahead of South West Peninsula drilling?

07/31/2019

Tesla Q2 another milestone on the road to bankruptcy and ruin says Lucian Miers

07/30/2019

Amino Technologies - a recovery buy suggest Tom Winnifrith & Steve Moore

07/29/2019

I remain calm and collected amidst the heat, M&A activity & as Sage stumbles says Chris Bailey

07/26/2019

RockRose Energy tip up nearly 450%, so what now reviews Gary Newman

07/25/2019

PZ Cussons - losses in Africa... but still a buy? Chris Bailey reviews...

07/24/2019

Block Energy - let winner run or take a healthy profit?

07/23/2019

Sell Netflix short as US subscribers back off says Lucian Miers

07/22/2019

OptiBiotix Health - scientific and commercial update adding to confidence?

07/19/2019

Thoughts On Thomas Cook & Kier from Lucian Miers

07/18/2019

Burberry - excitements sufficient? Chris Bailey reviews

07/17/2019

KEFI Minerals - Q2 2019 operational update, shares remain a Buy says HotStockRockets

07/16/2019

Angling Direct could have long-term potential says Gary Newman

07/15/2019

Hurricane Energy - Lancaster early production system delivering, Buy says Peter Brailey

07/12/2019

I remain to be convinced that asset sale will justify the valuation of Sound Energy says Gary Newman

07/11/2019

Imperial Brands goes progressive on its dividend...and the market likes it

07/10/2019

Tesla and me - Chris Bailey writes...

07/09/2019

Woodford Patient Capital Trust - still a sell says Lucian Miers

07/08/2019

Versarien - the only question is WHEN do the shares collapse says Lucian Miers

07/05/2019

Sainsbury - still searching for a strategy?

07/04/2019

Creightons - we having said we expected the results to highlight the value…

07/03/2019

PetroTal - rapid growth possible; Buy says Peter Brailey

07/02/2019

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