Pinnacle Investment Management is a multi-boutique fund manager that owns stakes in 16 Australian fund managers across Australia of between 23 to 49 per cent. It is led by CEO Ian Macoun who is said to be famous for picking star portfolio managers.
David Allingham says with $90bn in funds under management today, Pinnacle has the capacity to grow to $300bn based on its existing number of managers that also includes Hyperion Asset Management. And that’s before it expands offshore, which is expected in 2022 once the borders reopen.
“When you buy a share, you buy a share in 16 underlying managers,” says Allingham. That “gives you diversification by asset class, style and by strategy and there is no key man risk which makes it very unique in the asset management space.”
The firm’s three areas of growth come from the existing managers, the seeding and starting of new greenfield managers and by acquiring managers. They provide infrastructure, back office support, compliance and distribution, allowing the firms to focus on managing money.
Over the last five years, compound earnings per share growth of 56 per cent, up from 5 cents to 37 cents as at June 2021. Allingham expects revenues to at least triple overtime as FUM climbs to the forecast $300bn.
“With up to 20 per cent upside to margins as Pinnacle scales its revenue, it will lead to extraordinary EPS growth overtime,” the fund manager says. “We also think there is transformational acquisition potential to roll this model overseas by acquiring managers and distribution capability.”
They have an EPS long term target of above $2 a share.
This article was originally posted by The Australian here.
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