The Pinnacle Investment Management Group Ltd (ASX: PNI) share price has risen in response to its impressive FY24 result.
Pinnacle is an investment manager that takes stakes in fund managers, helps them grow by offering various services, and benefits from their growth. Its manager investments are called its ‘affiliates’.
FY24 result
Here are some of the highlights from the 12 months to 30 June 2024.
- Total affiliate funds under management (FUM) reached $110.1 billion, up 20% year on year, and up 10% half on half
- FY24 net inflows of $9.9 billion
- 85% of 5-year affiliate strategies have outperformed their respective benchmarks over the five years to 30 June 2024
- Net profit after tax (NPAT) increased 18% to $76.5 million
- Final dividend per share of $0.264 (up 29%)
- Total dividend per share of $0.42 (up 17%)
Some of the most important areas of Pinnacle’s FUM continued to perform well. Total affiliate retail FUM reached $28.8 billion at 30 June 2024 (up 27% year on year), while total affiliates’ international FUM rose 77% year on year to $18.4 billion.
During the year, there was $3.9 billion of retail net inflows and $7 billion of international net flows. The good progress here can help the Pinnacle share price in the foreseeable future if it leads to further inflows.
Pinnacle ended June 2024 with $186.3 million of cash and principal investments, with assets deployed into liquid funds managed by affiliates.
Management commentary
The Pinnacle Managing Director Ian Macoun said:
Following the extremely challenging market conditions we faced in the second half of FY22 and across FY23, there was something of a recovery, at least in headline market returns, during FY24, as inflation began to stabilize and central bank rhetoric shifted toward base rates moderating (albeit leaving investors guessing as to the timing). That headline picture, however, masked significant volatility and complexity within certain sectors.
As shareholders will be aware, we have sought to build a platform of Affiliates and investment strategies that enables us to be ‘more relevant to more clients, more often’ and have invested in our distribution and infrastructure capabilities meaningfully to allow us to make this broader range of products available to a wider range of clients and geographies. We have particularly seen the benefits of this diversification in our business outcomes during FY24.
Final thoughts on the Pinnacle share price
The business said the fundamentals are “in place for organic sales growth and improving the underlying FUM composition”.
Pinnacle said that new affiliates, strategies, channels and geographies provide new levers for expansion.
It also said the balance sheet capacity and flexibility is “an important enabler of growth”.
The business can see ongoing FUM growth of its existing managers, they can launch new funds and Pinnacle can invest in new managers.
I think it’s a compelling business, but it’s not one I’d call good value today. It could be a great opportunity to invest in when the market goes through a sizeable decline, like we saw during 2022 and 2023.
