MN- Manning & Napier

[whistlerbumps]

MN looks pretty interesting.  82mln market cap, 65mln of net cash as of Q2.  Potential turnaround story under a new CEO who is investing in technology and cutting costs.  TTM EBIT margin is 3% as reported but 12% when you remove restructuring expenses and should go higher as turnaround plans bear fruit.

 

AUM is the big question but some positive signs there as both inflows and outflows have improved.  The investment performance has been strong and the company has finally started to cycle out some very weak years from 2014/15. 

 

Trades at 10% of AUM and 6x adj EPS.  Anyone looked at this?

[Guest roark33]

aren't these always just value traps....

[awindenberger]

I've been watching MN for 5-6 years now and it has been nothing but a melting ice cube. Thankfully I never put any money in.

 

New CEO could be helpful, but they are also playing against the trend.

[kab60]

I think there is a lot of money to be made when investors confuse cyclical headwinds with structural headwinds. But there's also a lot to lose if one gets it wrong. I'd say there are much lower hurdles to clear than this one.

[Sportgamma]

Manning & Napier was crazy cheap at $1.02. I kick myself for not pulling the trigger.

 

What I didn't like at the time was that the structure seemed deliberately unfriendly to public shareholders. If I remember correctly the insiders own +80% of the operating company through a seperate co and the public investors own a piece of a another holding which also has a super voting shares that are held by the Manning family, or something like that.

 

If you are interested in active asset managers that are bleading out slowly, you should take a look at Gamco Investors.

[Gregmal]

I agree with Sportsgamma. I looked at this several years ago at the request of a friend who owns a bunch of BDs and concluded that the share classes here make this uninvestable. The business is very "cheap". But once you account for that, there are plenty of other asset managers out there that at least offer you a vote.

 

Others that may be interesting that are in similar categories would be NHLD and OPY. This has always been a tough space though.

 

Bigger fish in the asset manager category thats IMO very ownable is AMG.

[Packer16]

I think a big block of the insider ownership was purchased so now the public co owns like 80%+ of the underlying asset manager. My question is why did the insider sell at such a low price if this is worth so much?

 

Packer

[Sportgamma]

Insider stock was convertable into stock in the public company, so the insiders didn't necessarily sell.

[Packer16]

I am referring to the 60m A units sold for cash of $88m per the May 7th press release. That leaves 12% in the remaining A units plus 16% owned by insiders so 28% owned by insiders at this point versus 83% before the deal (80% A units) plus 3.2% of remaining 20%.

 

Packer

[Sportgamma]

I am referring to the 60m A units sold for cash of $88m per the May 7th press release. That leaves 12% in the remaining A units plus 16% owned by insiders so 28% owned by insiders at this point versus 83% before the deal (80% A units) plus 3.2% of remaining 20%.

 

Packer

 

Wow...I read the release and this is a head-scratcher.

 

So, they take out 60,012,419 Class A units of Manning & Napier Group for $90.8 million cash ($1.51 per unit). Post transaction, cash per Manning & Napier, Inc share is ~$3.49.

 

I must be missing something here?

[Packer16]

They redeemed out the founder/major shareholder so this name may be up for sale or other types of restructuring moves.