The Australian Ethical Investment Limited (ASX: AEF) share price holds the unfortunate title of being the worst performer on the S&P/ASX 300 Index (ASX: XKO). Down 1.8% at the time of writing, Australian Ethical’s share price has dropped 32% so far in August. That compares to a 3% gain for the ASX 300.
Like most shares trading on the ASX, Australian Ethical was savaged by the COVID-19 driven market rout. Australian Ethical’s share price tumbled 59% from February 18 to March 23. From that low, shareholders enjoyed meteoric rise through June 19. The share price gained 316% to reach an all-time high of $9.07 per share. Shares have dropped 54% since that high, but the Australian Ethical share price is still up 5% year-to-date.
What does Australian Ethical do?
The company is one of Australia’s leading ethical wealth managers. It has provided investors with ethical wealth management products since 1986. Its investments are guided by the Australian Ethical Charter which underpins the company’s culture and vision.
As at June 30 2020, Australian Ethical had more than $4 billion in funds under management, across superannuation and managed funds.
The company listed on the ASX in 2002.
Why is the share price down 32% in August?
Australian Ethical’s share price began its slide in late June, after the fund manager released its guidance for FY 2020. While still forecasting an increase in underlying profit after tax before performance fees, the forecast profit growth was less than half the 38% delivered in its first half.
The selloff continued after financial services company IOOF Holdings Limited (ASX: IFL), announced on August 7 that it had sold approximately 14.2 million shares or 72% of its holdings in Australian Ethical. At a total consideration of $74.5 million, IOOF received an average of $5.25 per share. That’s well above the current share price of $4.14.
Atop its reduced forward guidance and IOOF’s major divestment, it’s worth noting that momentum works in both directions. When a company’s share price is falling, it may trigger investor’s pre-set stop losses. It will also likely raise red flags for other shareholders, who may be drawn to the companies making headlines, like gold and technology shares.
While Australian Ethical’s share price kept climbing in the first months of the global pandemic, it’s also possible that investors have temporarily shifted their ethics to the backburner.
These 3 stocks could be the next big movers in 2020
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.
Find out the names of our 3 Post COVID Stocks – For FREE!
*Returns as of 6/8/2020
More reading
- Opthea share price bounces with Nasdaq listing on the cards
- What’s driving Arena REIT’s huge weekly share price gain?
- These were the worst performing ASX shares last week
- Why Australian Ethical, Northern Star, ResMed, & TPG Telecom are dropping lower
- Australian Ethical share price crashes 15% lower after IOOF selldown
Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Australian Ethical Investment Ltd. The Motley Fool Australia has recommended Australian Ethical Investment Ltd. 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.
The post Why Australian Ethical Investment’s share price has slid 32% in August appeared first on Motley Fool Australia.
from Motley Fool Australia https://ift.tt/31mC3K1
Leave a Reply