GQG Partners: Quality Fund Manager
Available at a Discount?

We looked at recently beaten-down companies with potential buying opportunities due to attractive valuations and expected financial growth. We used the software tool Tikr to set up screens and find potential buying opportunities.

We looked at companies that had grown by less than 5% in the last month (or fell), were expected to increase revenue and EPS in the next fiscal year and had a Price/Earnings (P/E) of <30.

We then screened for companies that had grown over the last 3 years, meeting the criteria below:

• Revenue: 3-Year CAGR of >8%

• EPS: 3-Year CAGR of >10%

• Free Cash Flow: 3-Year CAGR >10%

We were left with eight companies on the ASX with a market cap of over $400 million. Today, we will examine GQG Partners in detail. If you want to see the other seven, jump to the bottom.

Company Overview

GQG Partners is a global asset management firm focused on active equity portfolios through four primary strategies. In other words, it invests money for people and institutions in shares of companies worldwide.

The company listed in October 2021, opening at $2.00 per share. It reached a high of $2.94 in August last year but has since fallen to $2.15. The company’s shares have dropped 15.8% in the last month.

GQG Partners earns revenue through management fees calculated as a percentage of managed assets, known as Funds Under Management (FUM). In 2024, GQG reported a weighted average management fee of 48.8 basis points (bps) or 0.488% of FUM.

The company reported full-year earnings as of December 2024:

• FUM was US$153.0 billion, +26.9% yoy

• Net Revenue was US$760.4 million, +46.9% yoy

• Net Operating Income was US$577.9 million, +50.4% yoy

• Dividend of $0.14 per share, +50.2% yoy

• Dividend payout ratio of 85.8% yoy

• As of the end of February, FUM grew to US$160.5 million.

More notably, all four of the companies’ primary strategies have outperformed their benchmarks on a 3-year, 5-year and 10-year basis ⬇️

5-Year Performance as of 31 December 2024

Holdings

Here are the company's top three holdings across the different strategies as of the end of January 25. You can access their factsheet here.

The Positives

• Ownership profile: The company’s chairman and CIO, Rajiv Jain, holds 70.1% of the shares. During March, Mr. Jain bought stock at a rate of ~$250k daily. This was initially flagged in our Directors Transactions sector, which you can find later in the newsletter.

• Low P/E: The company trades at a historically low Forward P/E of 8.5x. Since listing, it has traded between 9x and 14x. The current P/E is below that of its listed competitors, Magellan (9.74x), Platinum (9.64x), and Pinnacle (26.2x).

The Negatives

• Market sell-off: March’s sell-off on global markets will likely negatively impact GQG’s FUM, even without clients withdrawing funds. Less FUM means fewer fees and revenue for the company. March’s FUM will be important for assessing the recent downturn's impact on GQG Partners.

Conclusion

Despite GQG Partners' 15.8% share price decline over the past month, this decline appears more reflective of the broader market downturn that typically impacts fund managers than any fundamental issues with the company itself.

While GQG has a relatively short public history since its October 2021 listing, it has demonstrated exceptional investment performance, with all four primary strategies consistently outperforming their benchmarks across 3-year, 5-year, and 10-year periods.

From a valuation perspective, GQG looks particularly attractive. Its forward P/E is just 8.5x, below its historical range of 9x-14x since listing and cheaper than its industry peers.

Additional Notes 

The seven other companies that met the initial filters were:

If you’re not already subscribed, you can read more content like this in our daily newsletter.

DISCLAIMER: Please note that the information provided in this newsletter is for educational purposes only and should not be considered financial advice. It is not intended to encourage you to buy/sell assets or make economic decisions. We strongly recommend conducting your own research before making any investment.