Magellan share price lifts amid buyback speculation

Smiling man sits in front of a graph on computer while using his mobile phone.Smiling man sits in front of a graph on computer while using his mobile phone.

The Magellan Financial Group Ltd (ASX: MFG) share price is bouncing back from yesterday’s carnage amid calls for the company to kick off its promised on-market buyback.

Bell Potter’s Richard Coppleson reportedly believes the “whole market will now be watching” the company, expecting it to announce the start of the buyback aiming to snap up 10 million shares.

At the time of writing, the Magellan share price is $13.28. That’s 3.35% higher than the near-eight-year low it closed yesterday’s session at.

For context, the S&P/ASX 200 Index (ASX: XJO) isn’t having such a great day. It’s currently down 0.78%.

Let’s take a closer look at the commitment Bell Potter is reportedly calling for the company to make.

Will Magellan kick off its promised buyback?

Coppleson – Bell Potter’s head of institutional sales and trading – believes now is the time for Magellan to kick off its on-market buyback after its share price slipped to a multi-year low yesterday, reports The Australian.

The stock took another hit on Monday when the company announced its funds under management had tumbled 5.2% in May, reaching $65 billion.

Additionally, news the company will be removed from the S&P/ASX 100 Index (ASX: XTO) later this month dropped after Friday’s close and likely weighed on its shares yesterday.

The resulting fall could have brought about the best time for the company to start snapping up its own shares. And not doing so is “sending a message”, according to Coppleson.

“I think they have to go through with it soon – it’s a joke if they don’t action it at all – otherwise the market will crucify them for saying they would but not going through,” Coppleson said, courtesy of The Australian. He continued:

They cannot sit back after their stock has collapsed from $21.70 [when the company first flagged a buyback] and still not buy a share …

It’s sending a message to the market they still think their stock is still too expensive and they are waiting for it to drop further before they buy back any stock.

The company announced the planned buyback in March. It’s expecting to buy up to 5.4% of its outstanding shares, using cash from reserves to do so.

Though, it noted the timing and actual number of shares purchased would depend on the company’s share price, market conditions, and other factors.

Magellan share price snapshot

Today’s gains included, the Magellan share price is still 30% lower than it was at the start of 2022.

It has also slipped 70% since this time last year.

The post Magellan share price lifts amid buyback speculation appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia

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