Forget Grab Holdings, Buy These 3 Asset Management Stocks Instead

Singapore-based transportation and fintech platform operator Grab Holdings Limited’s (GRAB) revenue decreased 8.7% year-over-year to $157 million in its third quarter (ended September 30, 2021). Its loss for the period was $988 million, versus $621 million in the year-ago period. Also, its adjusted EBITDA came in at a negative $212 million compared to negative $128 million a year ago. And its 0.09% trailing-12-month asset turnover ratio is 91.4% lower than the 1.04% industry average.

The stock has declined 65.4% in price over the past year to close yesterday’s trading session at $4.98. In terms of forward EV/S, the stock’s 41.05x is 2,969.2% higher than the 1.34x industry average. In addition, its 27.75x forward P/S is 2,384% higher than the 1.12x industry average. So, the stock looks overvalued at the current price level.

However, despite the potential for multiple interest rate hikes this year, the asset management industry is optimistic because the current inflation-driven market volatility is projected to improve over time. Furthermore, with an increasing number of people awakening to the benefits of investing, various segments of the asset management industry are witnessing significant growth.

Therefore, we think investors looking to benefit from the industry’s growth could instead bet on quality asset management stocks SEI Investments Company (SEIC), Janus Henderson Group plc (JHG), and Affiliated Managers Group, Inc. (AMG).

SEI Investments Company (SEIC)

SEIC is an Oaks, Pa.-based publicly owned asset management holding company that offers technology and investment solutions. With capabilities across investment processing and operations and asset management, the company currently manages, advises, or administers approximately $1.3 trillion in assets.

On Jan. 26, 2022, Alfred P. West, Jr., SEIC Chairman and CEO, said, “We believe our recent acquisitions enhance our capabilities, expand our competitive market presence, and enhance our growth opportunities in our markets. We also continued our research and development investments that have advanced our technology and new business initiatives.”

SEIC’s revenues increased 13.1% year-over-year to $501.65 million for the fourth quarter, ended Dec. 31, 2021. The company’s net income came in at $145.30 million, up 15.4% year-over-year, and its EPS was $1.03, up 19.8% year-over-year.

Analysts expect SEIC’s revenue to increase 3.7% year-over-year to $1.99 billion for fiscal 2022. Its EPS is also expected to increase 8.3% to $4.17 in 2023. In addition, it has surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 6.6% in price to close yesterday’s trading session at $59.00.

SEIC’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which indicates a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.

SEIC has a B grade for Stability and Quality. In the Asset Management industry, it is ranked #7 of 54 stocks. Click here to see the additional POWR Ratings for Momentum, Growth, Value, and Sentiment for SEIC.

Janus Henderson Group plc (JHG)

JHG is an asset management holding entity based in London. Its subsidiaries provide services to institutional, retail, and high-net-worth clients and manage separate client-focused equity and fixed-income portfolios, along with equity, fixed-income, and balanced mutual funds.  

On Feb. 3, 2022, Dick Weil, CEO, JHG, stated, “We continued to generate significant cash flow and increased capital returns to shareholders through both dividends and share buybacks. As we enter 2022, we believe that the significant progress towards our strategic objectives and the momentum in our business positions Janus Henderson well on the path to sustained growth.”

JHG’s total revenue increased 6.1% year-over-year to $697.20 million for its fiscal fourth quarter, ended Dec. 31, 2021. Its adjusted EPS came in at $1.05, compared to $1.04 in the year-ago period. Also, its other revenue was $55.30 million, up 8.6% year-over-year.

For its fiscal year 2022, JHG’s revenue is expected to be $2.70 billion. Its EPS is expected to grow 13.1% per annum for the next five years. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 15.5% to close yesterday’s trading session at $37.45.

JHG has an overall B rating, which equates to a Buy in our proprietary rating system. The stock has a B grade for Value. JHG is ranked #6 in the Asset Management industry. Click here to see the additional POWR Ratings for JHG (Growth, Momentum, Stability, Sentiment, and Quality).

Affiliated Managers Group, Inc. (AMG)

AMG, through its affiliates, operates as an asset management company that provides investment management services to mutual funds, institutional clients, and high net worth individuals in the United States. AMG is based in Prides Crossing, Mass.

On Nov. 1, 2021, Jay C. Horgen, President and CEO, AMG, said, “With our strong financial profile and free cash flow generation, and unique competitive advantages developed over our three-decade track record as a partner to independent firms, we are confident in our ability to continue to compound our earnings growth and create meaningful shareholder value through the consistent execution of our strategy over time.”

For the third quarter, ended Sept. 30, 2021, AMG’s consolidated revenue came in at $575.20 million, up 16.2% year-over-year. Its net income was t $128.40 million, up 80.1% year-over-year, and its EPS increased 96.1% year-over-year to $3.

AMG’s revenue is expected to be $2.6 billion in fiscal 2022, representing a 10.6% year-over-year rise. In addition, the company’s EPS is expected to increase 13.4% year-over-year to $20.53 in 2022. It surpassed EPS estimates in each of the trailing four quarters. And over the past year, the stock has gained 28.3% in price to close yesterday’s trading session at $144.13.

It is no surprise that AMG has an overall B grade, which equates to a Buy in our POWR Ratings system. It has a B grade for Growth and Quality. AMG is ranked #3 in the Asset Management industry. Click here to see the additional POWR Ratings for AMG (Value, Momentum, Stability, and Sentiment).

SEIC shares were trading at $59.25 per share on Friday morning, up $0.25 (+0.42%). Year-to-date, SEIC has declined -2.77%, versus a -5.67% rise in the benchmark S&P 500 index during the same period.

Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.

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