Inflows: Magellan shares spike 7% as institutions pile in

Magellan Financial Group Ltd (ASX: MFG) shares have surged by 7% on Thursday and are currently swapping hands at $9.12 per share at the time of writing.

The spike follows an update on the company’s funds under management (FUM) for June.

Magellan shares have been in an uptrend in the last month. They lifted off their monthly lows of $8.13 on 17 June and have advanced more than 12% since then.

This rally is accompanied by a trailing dividend yield of over 8%, based on the company’s trailing dividend of 59 cents per share. Let’s take a closer look.

Magellan shares higher on FUM update

The primary driver behind the rise in Magellan shares today is its FUM and performance fee update for June 2024. Money flows are integral to the performance of Magellan shares.

In it, the company advised that new flows of money into and out of its funds were flat on the prior month.

Magellan said that retail investors pulled a net $0.2 billion out of the fund in June. Money managed for retail clients hit $17.1 million for the month.

But institutional flows – those investments and redemptions made from institutional investors, which are entities such as Super funds, mutual funds, hedge funds, and other large-scale asset managers – were a net positive $0.2 billion.

As a result, institutional funds under Magellan’s management came to $19.6 billion at the end of the month.

Aside from that, the fund will “pay distributions (net of reinvestment) of approximately $0.2 billion in
July”. This could be another catalyst behind the movement in Magellan shares today.

Magellan also said it was entitled to estimated performance fees of approximately $19 million for FY24.

The firm’s June FUM flows see it now managing $36.7 billion of client money, slightly up from $36.3 billion in April.

Additionally, the trend in Magellan’s FUM has been turning more positive in 2024. This has been positive for its shares lately.

In its May FUM update, Magellan experienced net outflows of $0.1 billion, consisting of $0.2 billion in net retail outflows and $0.1 billion in net institutional inflows.

April flows, on the other hand, were positive, rising by 2.5%.

Director transactions and analyst views

A significant point of interest is that insiders have been buying and selling Magellan shares recently. Deputy chair and non-executive director Hamish McLennan recently sold nearly $545,000 of his shares in recent filings, over 60% of his interest in the listed investment company.

The sale was tendered at an average price of $8.515 per share. A month prior, director Cathy Kovacs purchased $100,000 of Magellan shares.

Analysts also have mixed views on Magellan shares. According to my colleague Bronwyn, UBS remains bullish on Magellan with a buy rating and a target of $10.25.

But Macquarie has an underperform rating with a price target of $8.40, while Morgans rates the stock as a hold with a target of $9.67.

Magellan shares in focus

Magellan shares have spiked during Thursday’s session following an update on the company’s June FUM and money flows. In the last 12 months, the stock is down 6%.

The post Inflows: Magellan shares spike 7% as institutions pile in appeared first on The Motley Fool Australia.

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