12-14-2015, 01:07 PM
We had a good discussion of BEN a little while back in this general thread about financial stocks, but I though it deserved its own thread.
Share price is taking a beating again today, falling into territory it hasn't seen in three years. I'm not seeing news from today that is causing the drop, but there has been plenty of press about it AUM decline over the last year or two. AUM is its lifeblood, in combination with with level of fees it can take on that amount. If AUM continues to decline, and pressure from robo-advisors, cheaper competitors, and other changes to the industry get more intense, BEN could be in for a long slow slide.
On the other hand, they are still very profitable, with lots of cash on hand, a really low payout ratio, and a 1.7 percent yield that doesn't even factor in the special dividends they occasionally pay. In that previous thread, rapidacid did some calculations that suggest the yield is more than twice as high over the past 15 years when you factor in the special dividends. Of course, the special dividends could become less frequent or less generous if the business is slowly slipping. I suspect the buybacks are going to pretty healthy too, with the share price so low.
I'm tempted to pick up another good-sized chunk at these prices, but am wary of increasing my exposure to financials too much. Opinions?
Share price is taking a beating again today, falling into territory it hasn't seen in three years. I'm not seeing news from today that is causing the drop, but there has been plenty of press about it AUM decline over the last year or two. AUM is its lifeblood, in combination with with level of fees it can take on that amount. If AUM continues to decline, and pressure from robo-advisors, cheaper competitors, and other changes to the industry get more intense, BEN could be in for a long slow slide.
On the other hand, they are still very profitable, with lots of cash on hand, a really low payout ratio, and a 1.7 percent yield that doesn't even factor in the special dividends they occasionally pay. In that previous thread, rapidacid did some calculations that suggest the yield is more than twice as high over the past 15 years when you factor in the special dividends. Of course, the special dividends could become less frequent or less generous if the business is slowly slipping. I suspect the buybacks are going to pretty healthy too, with the share price so low.
I'm tempted to pick up another good-sized chunk at these prices, but am wary of increasing my exposure to financials too much. Opinions?