View the article online at http://citywire.co.uk/wealth-manager/article/a728657
UK wealth stocks: further upside or value trap?
by Danielle Levy on Jan 29, 2014 at 13:42
Citywire AAA-rated Alex Wright at Fidelity believes Brewin, a holding across his funds, has further to go in 2014 and that the good news is not fully priced in.
‘The significant changes in the wealth management industry should create a tailwind for companies with scale and a strong brand, such as Brewin Dolphin. Additionally, there is a significant cost-cutting programme under way at the company, which should see it moving more towards the margins of peers, having earned a lower margin for many years.
‘The shares had a good 2013 but I don’t think the market has yet fully priced in how much more efficient the Brewin Dolphin business model could be. There is more to go for in 2014, and the company remains a key holding for Special Values and the Smaller Companies fund,’ Wright said.
Asked if Brewin Dolphin’s turnaround will continue into 2014, Lenardos said it is a ‘resounding yes’ in his view. He highlights the company’s strong brand, footprint, potential for organic growth and favourable market conditions.
‘Brewin Dolphin has a relatively new management team with a credible plan. [Their] ability to deliver against that plan should continue to drive the share price,’ he said.
Despite Himsworth’s concerns about valuations in the sector, he continues to back Ashcourt Rowan, another business undergoing substantial change under chief executive Jonathan Polin. He says it ‘is still on an attractive valuation versus the rest’
Himsworth supports the firm’s recent acquisition of UK Wealth Management. He expects Ashcourt Rowan could positively surprise this year, alongside Mattioli Woods.
‘It has a great management team anyway and Atkinson Bolton (AB) was a fantastic acquisition for them. I think the AB guys are switched on. It is a good business and there is great strength and depth there. Mattioli Woods is a good quality business and there is a reason why the market may start to look at it differently,’ he explained.
If direct-to-consumer platform Charles Stanley Direct gains traction this year, Himsworth also believes Charles Stanley could surprise on the upside. ‘It could be significant for Charles Stanley and it could transform the fortunes for the company.’
McCann’s top pick for 2014 is SJP. Although its share price has had a strong run, he believes shareholders could expect a 10% capital return and 3-4% dividend yield this year.
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- Mattioli Woods PLC (MTWL.L)
- St. James's Place PLC (SJP.L)
- Brewin Dolphin Holdings PLC (BRW.L)
- Charles Stanley Group PLC (CAY.L)
- Rathbone Brothers PLC (RAT.L)
- Ashcourt Rowan PLC (ARPR.L)