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SJP shares sliding as £100bn AUM mark approaches

Shares in advice giant St James’s Place are “irrationally” undervalued given the firm alone makes up 12 per cent of the advice market, analysts have said.

SJP had £96.6bn in assets under management in August and is expected to surpass £100bn when it releases its interim report on Q3 later this month.

Shares in the firm closed at 1,039p last night, close to 20 per cent down on their 52-week high of 1,279.5p.

In a research note this morning, investment bank and stockbroke Panmure Gordon says the continuing slide of SJP share prices is in line with falling indexes, but are now well undervalued.

The broker says: “The share price has been impacted by the recent fall in investment markets, but in our view this has created an excellent buying opportunity given the valuation and a 2019 forecast dividend yield of 5.5 per cent.”

Panmure Gordon estimates gross inflows of £4.1bn, up 14.2 per cent and net flows of £2.6bn, up 10.2 per cent from 2017 ,in SJP’s upcoming third quarter results for this year.

As that release nears, SJP investments managing director David Lamb and partnership managing director Ian Gascoigne are increasing their stake in the business.

Ex-SJP chair joins Buxton’s OMGI spin-off

Both bought £8,996 worth of company shares three weeks ago.

Panmure also says reports of a cut to pension tax relief in the Autumn Budget on 29 October are not likely to impact SJP’s performance.

The broker says a reduction on the annual allowance from £40,000 to £30,000 may bring in more business as people look for more pensions advice.

Panmure says: “We think that [SJP’s] outlook for growth is very positive. We suspect this could only service to increase demand for SJP services.”

The broker says SJP is maintaining its own 12-20 per cent per annum medium to long-term growth forecast.

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. A lot of investors must be selling to knock the share price by 20%.

    Do they know something nasty is coming?.

  2. Not really surprising if you think about it. The advice arm loses money. As a vertically integrated firm it is the fund management side that makes money and relies on the advice arm to stoke the business.

    It seems that the Chancellor will be visiting the status of self employed in the forthcoming budget. When you consider that one of the main tests of self-employment is the ability to work with several firms. This is patently not the case with SJP as they are tied. In which case if the boom does come down SJP will have to restructure. Hence the drop in share value. No?

    Additionally as someone has already pointed out they may well be struggling with disclosure following MIFID 2.

  3. The article says, “Panmure Gordon says the continuing slide of SJP share prices is in line with falling indexes, but are now well undervalued.”

    In my opinion, that suggests the fall is market related, not mysterious news lurking

  4. Perhaps people are concerned about the £50k FSCS limit on their entire SJP portfolio.

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