Eley Griffiths small-cap portfolio manager David Allingham has picked Ian Macoun’s multi-boutique funds management group Pinnacle Investment Management as his top stock pick for the Sohn Conference 2021.
“When you buy a share in Pinnacle, you buy a share in 16 underlying managers, which is quite unique and what that brings to you as a shareholder in Pinnacle is it gives you diversification by asset class, by style, and by strategy, and there’s no key man risk, which makes it very unique in the asset management space,” Allingham says.
The fundie goes on to say that Pinnacle has delivered 56 per cent compound EPS growth over the past five years.
“You will struggle to find another ASX-listed company that’s delivered this kind of compound EPS growth,” he says.
“We just love the scalability of this business. There are three horizons of growth – organic flows within their existing managers, seeding and starting new greenfield managers, and of course acquiring managers,” Allingham says.
“On that basis, we think at the moment they’ve got a very successful business in Australia, and we think they’re in the process of exporting the model offshore and we think calendar 2022 as the borders reopen will be a big catalyst for them in their move offshore.”
He believes Pinnacle can earn north of $2 per share over the long term in part because of its significant stake in fast-growing Brisbane-based asset manager Hyperion Asset Management.
However, the fundie warns that Pinnacle is exposed to downside risk in equity markets. “This stock is not for you if you’re bearish,” he says.
This article was originally posted by The AFR here.
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