A rare day in the green: Magellan share price soars 5%

The Magellan Financial Group Ltd (ASX: MFG) share price is enjoying a day in the sun on Friday.

In earlier trading, the embattled ASX financial stock reached an intraday high of $9.55, up 4.95%.

This is 10.5% up on its 52-week low of $8.65 reached on 6 January. Investors killed the stock that day after the company lodged another gloomy funds under management (FUM) report with the ASX.

As my Fool colleague James reported, Magellan now has $45.3 billion in FUM, which represents a 10% fall since the end of November.

Over the six months to 31 December, Magellan averaged $53.8 billion in FUM. That’s more than half its average ($112.7 billion) in the prior corresponding period. It’s an OMG sort of situation for shareholders.

The outlook for Magellan shares in 2023

Not surprisingly, as direct institutional investors have continually withdrawn their money from Magellan’s various investment funds over the past couple of years, ordinary ASX shares investors have lost faith.

Arguably the biggest hit to Magellan’s image occurred in December 2021 when it announced it had lost the St James’s Place mandate. That represented 12% of Magellan’s annual revenue alone. Ugh.

Then came a dog of a year with the Magellan share price tumbling a distressing 58% in 2022. That is more than 10 times the loss incurred by the benchmark S&P/ASX 200 Index (ASX: XJO) at 5.45%.

In late 2022, there were “material” staff changes across Magellan’s investment teams. This led to some ratings agencies putting several Magellan funds on watch.

At the time, Zenith noted that “Magellan’s entire product suite is affected by the changes”.

All of this added to investors’ nerves, too.

Do the experts see any hope for Magellan?

Shaw and Partners portfolio manager James Gerrish is not upbeat on Magellan shares.

In a Market Matters Q&A, Gerrish said:

Performance is what this stock needs to get back on track. However, if outflows continue at similar rates and possible management fees are lowered in an attempt to maintain FUM [funds under management], we think the stock will simply continue to slide lower.

In the year to date, the stock market has risen pretty strongly.

The ASX 200 is up 8.7% while the Magellan share price is up 7%.

So, the financial share seems to be benefitting from broader market optimism. For the time being, it’s at least keeping up with its ASX 200 counterparts.

But will this last? Time will tell.

The post A rare day in the green: Magellan share price soars 5% appeared first on The Motley Fool Australia.

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Motley Fool contributor Bronwyn Allen has positions in Magellan Financial Group. 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.

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