Magellan Financial Group Ltd (ASX: MFG) shares are seeing green on Thursday as the fund manager reported net fund outflows of $500 million in February.
This brings total funds under management (FUM) down to $38.6 billion.
Despite this, shares are up more than 1% from the open today, swapping hands at $8.12 apiece. Let's take a look.
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Magellan shares drift higher despite FUM outflows
The fund manager has struggled to stem outflows for a while now. FUM in March of 2023 was $43.2 billion, down from $45.4 billion the month prior. Ultimately, this has impacted Magellan shares.
Magellan saw net retail outflows of $200 million and net institutional outflows of $300 million last month.
This reverses a brief period of stability in January when total FUM rose by $500 million, thanks largely to market movements.
But that reversed in February too. Its global equities division saw assets fall to $14.2 billion from $14.5 billion, while Australian equities dipped by about $200 million.
Meanwhile, the infrastructure equities segment saw positive gains of $100 million.
Is now the time to buy Magellan shares?
Taking stock of the fund manager's current position, there's valid points on both side of the debate.
Magellan reported its H1 FY25 earnings last month, where profits in its funds management business fell 10% to $72 million.
This resulted in a 10% cut in its interim dividend to around 26 cents per share.
One bright spot was an increase in performance fees, which rose to $6.1 million from just $100,000 in the previous corresponding period.
But Magellan shares took another hit last month following the announcement that Gerald Stack, the firm's head of investments, will depart in July this year. Stack started with the firm in 2007.
His exit triggered a sharp decline in Magellan's share price last month, with little to no recovery.
Shares are down more than 18% in the past month as investors drove the stock down from a yearly high of $12.41 on January 28 to a low of $8.07 by February 28. See it on the chart below.
But some fundies believe the sell-off may be overdone.
As reported by The Australian Financial Review, Activist investor Sandon Capital reckons the market is "not adequately valuing" Magellan's 36% stake in investment bank Barrenjoey.
But brokers reckon the opposite on aggregate. According to CommSec, the consensus of analyst estimates rates it a sell.
Meanwhile, the consensus price target is $9.36 apiece, according to Trading View.
Foolish takeaway
The outlook on Magellan shares hinges on the company's ability to stabilise outflows and improve investment performance.
Whether or not it can do that, time will tell. In the last 12 months, the stock is down 11%.
