Why the Pinnacle Investment share price has rocketed 40% since 1 July

Investment management firm Pinnacle Investment Management Group Ltd (ASX: PNI) saw its share price rocket 28.8% higher in July alone, and it’s now up by 40.3% since the start of last month.

The Pinnacle Investment share price hit a monthly high of $5.19 on 30 July, before following the broader market down to close the month at $5.01 per share. That earns it a spot among the top performers on the All Ordinaries Index (ASX: XAO) last month.

Year-to-date, the Pinnacle Investment share price has gained 18.02%, after falling 1.96% in today’s trade. Over that same time the All Ords — down 0.5% today — lost 9.9%.

Like most stocks, Pinnacle fell sharply during the big pandemic-fuelled equity selloff in late February into mid-March. Pinnacle shares bottomed on 25 March at $2.51 per share. Since then, the Pinnacle Investment share price has gained a whopping 119%.

What does Pinnacle Investment Management do?

Pinnacle is an Australian-based investment management firm with multiple affiliates. The company works to establish and support a wide range of investment management firms. It provides investment managers with distribution, fund infrastructure and support services. Its affiliated managers operate autonomously.

As at 31 May 2020, Pinnacle’s 15 affiliates managed a combined $57.0 billion in assets covering a range of asset classes.

Why did the Pinnacle Investment share price shoot higher?

In an announcement on 6 July, Pinnacle reported that 5 its affiliates earned approximately $25.8 million in performance fees for the 2020 financial year. At the time, Pinnacle forecast the performance fees would increase its net profit after tax (NPAT) by $6.7 million. Pinnacle’s share price surged 10.4% the day following its announcement.

Pinnacle also is a likely beneficiary of a wider shift away from traditional banks as investors seek to take more control of their finances. This trend gained traction after the Royal Commission into banking and financial services unearthed a range of unethical practices amongst some of Australia’s best known banks and financial institutions.

Annual shareholder report

Pinnacle released its annual shareholder report yesterday. Coming in at $32.2 million, the company’s NPAT attributable to shareholders is up 5.6% from the $30.5 million achieved in the 2019 financial year (FY19).

Earnings per share (EPS) attributable to shareholders also increased year-over-year to 17.9 cents. That’s up 4.7% from 17.1 cents in FY19.

Pinnacle’s fully franked final dividend per share of 8.5 cents saw total dividends reach 15.4 cents, the same total dividend payout as the previous year.

The Pinnacle Investment share price is currently sitting at $5.50 per share with a market capitalisation of $1.02 billion.

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Motley Fool contributor Bernd Struben 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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