2015 was a bumpy year for stock markets and thatwould typically signala bumpy year for financial stocks, but ithasntworked out that way. Fund managers and financial adviserscan buck the market, as two of these three companies have done to greateffect.
Aberdeens Asset Trap
Asset managerAberdeen Asset Management (LSE: ADN)is the unhappy exception having endureda dismalyear, itsshare price down30% thanks to growing concerns over the fate of Asianand emerging markets, where itspecialises. Net outflows of a punishing 34bn cut assets under management to284bn, as disgruntled investors fled for the exits. That is what happen when investment fashionschange.
The successful integration of newacquisition Scottish Widows Investment Partners marginally boosted profits to 491.6m, but did little to reverse the downswing in sentiment. Chairman Martin Gilbert has warned things could get worse before they getbetter, and I reckon 2016 could be sticky because we havent yet mined the bottom of Chinas misfortunes. Someday, market sentiment will reverse, and the cycle will swing in favour of Aberdeen again.
Year-end net cash of 568m puts itin a strong position and allowed management to increase the full year dividend by 8.3%, so there are reasons to buy. Aberdeen tradesat just 9.44 times earnings and yields a juicy 6.83%, which should keep you happy until the company recovers, or is acquired.
Lansdown Goes Up And Up
Market troubles should have leftinvestors inHargreavesLansdown(LSE: HL) fretting but instead they have plenty to celebrate, with the stock up 55% this year. It has leapt22% in the last three trouble months alone, against a 1% drop on the FTSE 100 over the same period.
Hargreaves has clearly decoupled. That is tribute to itsbooming business model, resort adding another 24,000 new clients in the first quarter of this year, 140% year-on-year, taking total client numbers to a record 768,000. While Aberdeen is losing money, Hargreaves enjoyed net new business inflows of 1.43bn, up 47% on Q1 last year. The company has negotiated many pitfalls, including the financial advice overhaul Retail Distribution Review and the shift to low-cost funds, while maintaining profits and reputation.
Operating margins of 50% and return on capital employed of 85% help to explain the priceyvaluation of44 times earnings. The only problem with Hargreaves is that it is soexpensive.
Go With The Inflow
Global asset managerSchroders (LSE: SDR)has also shrugged off market volatilityto grow 14%, demonstrating toAberdeen the benefits of diversifyingrather specialising.Recent Q3 results showedpre-tax profits up16% to 404.4m, despite a 27m currency headwind. Net inflows over the nine months to 30 September shame Aberdeen at7 billion, taking total assets under management to 276 billion. It isnt cheap at 17.58 times earnings and yields a modest 2.68%, but looks a good solid long-term buy to me.
Hargreaves Lansdown and Schroders have negotiated this years market stormswith aplomb. But Aberdeen hasexciting recovery potential, if you are feeling optimistic, and brave.
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Harvey Jones has no position in any shares mentioned. The Motley Fool UK has recommended Aberdeen Asset Management and Hargreaves Lansdown. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.