The Magellan Financial Group Ltd (ASX: MFG) share price fell 4.81% to close at $10.30 on Thursday. The drop comes amid the company holding its annual general meeting (AGM) in Sydney today.
Today's share price fall represents a compounding of yesterday's losses when the stock fell 3.22%.
That's a really tough couple of days for this once-lauded ASX financial sector darling.
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Magellan CEO envisions $100 billion FUM within 5 years
In a presentation delivered to shareholders, CEO David George said Magellan could rise from the ashes.
Specifically, George said he believed the company could once again grow its funds under management (FUM) to above $100 billion within the next five years.
The significance of that particular benchmark is that Magellan was managing $116.4 million in FUM back in November 2021. Then it lost the St James's Place mandate in December 2021. That represented 12% of Magellan's annual revenue, so it punched a hole in the manager's earnings right quick.
As we reported earlier this month, total FUM is now $50.9 billion. So, George is talking about a doubling.
George said:
Through growth of our existing strategies and new products, I believe we will be a fund manager of global scale once more with over A$100 billion of funds under management after five years.
This will not be growth for the sake of growth. It will be considered growth, driven by creating long-term shareholder value. We have a strong balance sheet and capacity to execute this, while continuing with the existing on-market buyback programme and pay dividends.
This growth will also be more diversified, as we expand our range of capabilities, we will be less dependent on our global equities business.
What are the priorities for Magellan in FY23?
George said Magellan would expand its distribution team, particularly in Europe and the United States, redirect efforts toward the core series of products, and launch an energy transition strategy.
He said Magellan would "focus on employees' experience through revisiting our values and culture".
George said:
We are a people business and I want a culture that drives high performance and career development.
To get this right, I will need to directly align employees with the outcomes of both clients and shareholders. This will include a long-term incentive plan that aligns them to the long-term strategic objectives of the business that I have outlined today.
I want teams that think long term and are committed to Magellan now and the Magellan in five years.
Fresh staff appointments
Magellan also announced another new staff appointment today — that of David Dixon.
Dixon has been appointed a non-executive director and deputy chair of the board of Magellan's main operating subsidiary, Magellan Asset Management.
The company said it intends to give Dixon a seat on the Magellan Financial Group's board in due course.
Dixon has more than 30 years of experience in leading and growing investment businesses. From 2013 to 2020, he was the chief investment officer of equities at First Sentier Investors.
As we reported yesterday, recent investment team changes at Magellan have concerned some ratings agencies. As a result, Zenith has put about 20 Magellan funds under review and Lonsec has placed four funds 'on watch'.
Zenith explained the move in a recent note to clients, as reported by The Australian:
Zenith believes the executive and investment personnel changes are material, noting that Magellan's entire product suite is affected by the changes.
As such, Zenith has placed the following products Under Review until we meet with the relevant personnel, following which we will provide an update.
Among the changes was expanding George's own role, just three months after he joined Magellan. Not only is he the CEO and managing director, but he's now also the chief investment officer (CIO).
Gerald Stack, previously the portfolio manager of the Magellan Infrastructure Fund, is now deputy CIO.
