Playing limbo… Magellan (ASX:MFG) share price hits 7-year low

To be fair, the S&P/ASX 200 Index (ASX: XJO) hasn’t had the best end to the week this Friday. The ASX 200 ended up closing 0.57% lower today at 7,110.8 points. But that’s nothing compared to the Magellan Financial Group Limited (ASX: MFG) share price.

Magellan shares had a horrible day, no other way to spin it. The fund manager opened at $15.84 a share this morning, but has closed at $15.48 this afternoon, a drop of 3.25%. What’s worse, Magellan shares fell to a low of $15.18 during intra-day trading. Not only is that low point a new 52-week low for Magellan. But it’s also the lowest point the company’s shares have plumbed in more than 7 years. Yes, the last time Magellan had a share price with a 15 in front of it was way back in December of 2014.

The company, once an ASX 200 high flyer, has now fallen close to 80% from the all-time highs of more than $73 a share that we saw back in early 2020.

There’s been no major news or announcements out of Magellan over the past week. That’s despite the fact that the Magellan share price has fallen more than 13% since Monday morning.

We can probably attribute some of that weakness to the gyrations of the broader market, which has been volatile this week. This has affected many other ASX 200 financial shares.

Magellan share price hits new 52-week low. How did we get here?

However, Magellan’s woes arguably started long before that. This company has been battling a series of negative developments for months now.

For one, the performances of some of Magellan’s most popular funds, such as the Magellan Global Fund (ASX: MGF), have been lagging behind their benchmark indexes for a while now. In the Magellan Global Fund’s case, it has returned 9.9% over the year to 28 February, a good 8.25% below its MSCI World Index benchmark. Its unlisted equivalent also lags its benchmark index over the past 3, 5 and 7 years.

Then there was the dramatic departure of Magellan’s co-founder and star stockpicker Hamish Douglass. Mr Douglass took a leave of absence for health reasons a few months ago amid revelations of his divorce. Another Magellan co-founder, Chris Mackay, has been brought in to fill Douglass’ shoes. But after years of being the face of Magellan, there’s little doubt his departure has shaken at least some investors’ confidence.

Then there is the matter of what has become a sustained outflow of funds under management from Magellan. Over the past few months, the company has revealed an exodus of funds under management (FUM), from both retail and institutional investors. This included the largest institutional mandate Magellan had, that of St. James Place. Late last month, Magellan revealed an 11.37% drop in FUM between 11 February and 25 February.

All of this has likely combined to give investors the new lows we see in the Magellan share price today. No doubt investors will be hoping that the company finds a bottom soon.

The post Playing limbo… Magellan (ASX:MFG) share price hits 7-year low appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen owns Magellan High Conviction Trust units. 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 Bruce Jackson.

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