The Platinum Asset Management Limited (ASX: PTM) share price surrendered early gains to trade lower ahead of the market close and Morgan Stanley warns that the international fund manager is at risk of underperforming over the next 60 days.
The Platinum share price dipped 0.3% to $4.88 after trading as high as $5.00 a share during morning trade while the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) index traded just above breakeven.
In contrast, the Platinum Asset Management Limited (ASX: PTM) share price is down 0.2% at $4.89 while the Magellan Financial Group Ltd (ASX: MFG) share price and Pendal Group Ltd (ASX: PDL) both lost 1.4% each.
But Morgan Stanley thinks it's the PTM share price that investors should be worried about as the broker reckons there is a 70% to 80% chance the stock will fall relative to the ASX 200 over the next two months.
"We estimate PTM saw ~A$30m net outflows in November (-1.5% annualised run rate)," said Morgan Stanley.
"These are the first monthly outflows since June 2017 and compare to ~A$100m net inflows in October (~4% annualised run rate) and ~A$35m of inflows (~1.5% run rate) in September."
The broker explained that the November outflows could relate to the slowing investment performance and recent market volatility, both of which tend to impact retail flows.
"Given this, we think the risk is that PTM's outflows could deteriorate from here. PTM's business is predominantly retail (~80%)," said Morgan Stanley. "We note MFG recorded ~A$70m of retail inflows in November."
The silver lining is that PTM's shares do not look expensive on fundamentals with Morgan Stanley rating the stock "equal-weight" and pegging a price target of $6 a share.
I have a preference for Magellan too but there is one reason why you might want to buy shares in Platinum.
Some experts believe that emerging market (EM) equities have been oversold during the latest market meltdown and are primed for a rebound.
Buying shares in PTM is one way to gain exposure to the recovery.
