Why the Navigator Global share price has fallen 33% in 2019

The Navigator Global Investments share price has fallen 33% in 2019 following a disappointing business and earnings update.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The share price of investment management company Navigator Global Investments Ltd (ASX: NGI) has fallen 33% in 2019 to $2.82 at the close of Friday trade. The steep fall in the stock has occurred following the release of a disappointing business and earnings update last Wednesday.

Falling AUM

Navigator reported that its Assets Under Management (AUM) had declined for the December 2018 quarter. The decline in AUM was attributed to a number of factors, including slower than expected inflows and investment losses due to falling prices in global asset markets. Moreover, a faster than expected redemption cycle from particular transitioned MAS assets and an elongated sales cycle regarding new opportunities has also impacted AUM.

The company noted that its first-half FY19 result will not be materially impacted by the quarterly decline in AUM with earnings before interest, tax, depreciation and amortisation (EBITDA) of around US$20 million expected for the period.

However, the cumulative effect of the decline in AUM is likely to result in management fee revenue falling by around 10% in the second-half compared to the first-half. As a result, Navigator expects second-half FY19 EBITDA to be around 20% lower compared to the first half.

Navigator also noted that the projected efficiencies from the full integration of MAS into its existing business processes are on schedule but are unlikely to have a material impact on earnings for this fiscal year.

Foolish takeaway 

Navigator has not been alone in being impacted by the downturn in global asset markets over the last few months. Platinum Asset Management Limited (ASX: PTM) has seen its share price fall 5% in 2019 after it released an update last week regarding its investment income and performance fees for the first-half of FY19. The update revealed that Platinum will book an unrealised loss on its seed investments and is expected to "receive little in the way of absolute return performance fee income for the half-year ending 31 December 2018".

In contrast to the fortunes of Navigator and Platinum, the share price of Magellan Financial Group Ltd (ASX: MFG) has been one of the best performers on the ASX in 2019. The fund manager's share price has risen 12% in 2019 following the release of its monthly update last Tuesday.

Magellan announced that it expects to earn $42 million in performance fees for the December half-year. Furthermore, average funds under management have risen to $72.1 billion versus $53.6 billion in the prior corresponding period.

Magellan is increasingly looking like the best prospect in this sector with the stock currently trading for around 17 times adjusted trailing earnings and with double-digit earnings growth expected in FY19.

Motley Fool contributor Tim Katavic has no financial interest in any company mentioned. The Motley Fool Australia owns shares of Platinum Investment Management Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Fallers

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Share Fallers

Why Megaport, Pilbara Minerals, Vysarn, and WiseTech shares are falling today

These shares are ending the week in the red. But why?

Read more »

A young man clasps his hand to his head with his eyes closed and a pained expression on his face as he clasps a laptop computer in front of him, seemingly learning of bad news or a poor investment.
Share Fallers

Why Accent, Sayona Mining, Web Travel, and Weebit Nano shares are dropping today

These shares are having a tough time on Thursday. Why are they being sold off?

Read more »

A smartly-dressed man screams to the sky in a trendy office.
Share Fallers

Why Appen, DroneShield, PWR, and Webjet shares are sinking today

These shares are having a tough time on hump day. But why?

Read more »

a car driver sits up and looks alert with wide eyes and an expression of concentration while he holds the wheel of a car.
Share Fallers

Why this ASX All Ordinaries stock just crashed 24%!

Investors are punishing the ASX All Ords company today. Let’s find out why.

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Share Fallers

Why Elders, KMD, Lovisa, and Telix shares are dropping today

These shares are missing out on the good times on Tuesday. But why?

Read more »

A woman with short brown hair and wearing a yellow top looks at the camera with a puzzled and shocked look on her face as the Westpac share price goes down for no reason today
Share Fallers

Why Life360, Lovisa, NAB, and Resolute shares are falling today

These shares are starting the week in the red. But why?

Read more »

A young woman holds an open book over her head with a round mouthed expression as if to say oops as she looks at her computer screen in a home office setting with a plant on the desk and shelves of books in the background.
Healthcare Shares

This ASX All Ords share is diving 18% as inflation pain draws blood

This healthcare company delivered a trading update at its annual general meeting today.

Read more »

A woman with a sad face looks to be receiving bad news on her phone as she holds it in her hands and looks down at it.
Share Fallers

Why Healius, Opthea, Peninsula Energy, and Wildcat shares are falling today

These shares are having a tough finish to the week. But why?

Read more »