Why the Pinnacle share price jumped 10% higher today

The Pinnacle Investment Management Group Ltd (ASX:PNI) share price jumped 10% on Thursday. Here's why it is charging higher…

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The Pinnacle Investment Management Group Ltd (ASX: PNI) share price has been a strong performer on Thursday.

In morning trade the investment company's shares were up as much as 10% to $5.50 before giving back some of these gains.

The Pinnacle share price is up 4.5% to $5.24 at the time of writing. This gain has lifted the company's year to date gain to just under 12%.

Why is the Pinnacle share price charging higher?

Investors have been buying the investment company's shares following the release of a solid half year result this morning.

For the six months ending December 31, the company reported a sizeable 32.6% increase in revenue on the prior corresponding period. 

On the bottom line, Pinnacle posted a profit of $13.8 million and diluted earnings per share of 7.7 cents. This is a 36.6% and 35% increase, respectively, on the prior corresponding period.

This allowed the Pinnacle board to declare a fully franked interim dividend of 6.9 cent per share. This represents a payout ratio of 90% of its diluted earnings per share. This dividend will be payable on March 20 to shareholders registered on the record date of March 6.

A key driver of its solid result was an increase in aggregate affiliates' funds under management. These increased by 13% during the half year from $54.3 billion at June 30 to $61.6 billion at December 31. Aggregate Retail funds under management have now hit $14.9 billion. This is up 28% from $11.6 billion at the end of June.

Management appears optimistic this solid form will be sustained and has continued to invest in medium term Horizon 2 initiatives. This includes offshore distribution, ETF, direct to retail consumers, and servicing new, not-yet-profitable Affiliates.

It believes these initiatives are laying the foundation for future revenue growth. Judging by its share price jump today, it appears as though investors agree with this view.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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.

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