Morningstar marks down Magellan on Stack departure | Australian Markets

Analysis and scores home, Morningstar has cut its honest worth estimate for Magellan Monetary Group from $10.20 per share to $8.90 per share based mostly on the July exit of the fund supervisor’s head of infrastructure, Gerald Stack.

Morningstar analyst, Shaun Ler mentioned Stack’s departure raises the risk of redemptions and that it might take time for buyers to gain confidence within the new workforce, noting that Stack had led the infrastructure since 2007.

Ler mentioned that the steadiness of Stack and his during Magellan’s turbulence in 2022-23 had been a reassuring issue for buyers.

He additionally pointed to the extent of institutional money tied up in Magellan’s infrastructure funds (75%) and urged it “typically less sticky”.

“These clients may redeem funds following a key manager departure, a concern compounded by the strategy’s underperformance relative to its benchmark,” the evaluation mentioned.

Ler mentioned it was additionally more likely to take time for shoppers to retain confidence in Magellan given modifications to its investment fund including that “Also, the flagship global equities strategy continues to trail its benchmark, limiting prospects for inflows for now”.

“We cut our fair value estimate to $8.90 per share from $10.20, reflecting higher redemptions. We assume roughly $8 billion of one-off redemptions from the Infrastructure strategy – around 50% of infrastructure FUM and 22% of group FUM – throughout fiscal 2025-26,” the evaluation mentioned.

“While Stack’s brand reputation may not hold the same weight for Magellan as Hamish Douglass once did, the reliance on predominantly less-sticky institutional money within the infrastructure strategy highlights the persistent risk of mass redemptions following key personnel changes.”