How would you like to buy an ASX stock at a historical low, then watch it as it soars?
One expert reckons you might have a chance of fulfilling this fantasy if you get onto Regal Partners Ltd (ASX: RPL) right now.
The last four years haven’t been kind to investors of the alternative investment manager, with the share price plunging more than 85%.
Regal shares are now almost back down to where they started on the ASX back in 2014.
So why should you be bullish about it now?
‘Ability to add alpha’ and raise fees
After losing another 30% since January, Shaw and Partners portfolio manager James Gerrish reckons Regal Partners now “presents strong value for a few reasons”.
“They have grown FUM [funds under management] by nearly $900 million in the first 9 months of FY23, on track to exceed their $1 billion target for the year,” Gerrish said in a Market Matters Q&A.
“They have launched a number of new strategies which, historically, [lead] to strong early inflows.”
The funds are flowing in because investment performance has been “strong”, according to Gerrish.
“And we expect performance fees to follow suit,” he said.
“The outlook for their alternate and active investments strategies is positive with both additional interest in the space and Regal’s ability to add alpha, further increasing management fees.”
Moreover, the company has “plenty of cash on their balance sheet“, and this could lead to acquisitions or capital returns to shareholders.
“Overall, we like Regal and expect conditions to support their strategy,” said Gerrish.
“This does rely on a solid FUM update due out next week, and subsequent earnings report next month, as they are on a high valuation based on their current FUM relative to other managers.”
While coverage is sparse for the $660 million fund manager, two of the three analysts surveyed on CMC Markets who cover Regal Partners reckon it’s currently a buy.
