Coronation (CML) is one of South Africa's largest asset managers and the only one listed on the JSE. Founded in 1993, the company grew very well until 2015. At that point, the founding CEO resigned and a new CEO, Adrian Pillay, took over. Pillay is eminently well-qualified for the job, but things have not gone well since he took over.
The company was heavily invested in African Bank and lost a lot of money there. It was also heavily invested in Steinhoff. These missteps have caused the investment community to re-evaluate Coronation's ability to keep choosing winners on the JSE and elsewhere. The result has been an outflow of institutional funds. The fund management business is all about confidence. As a fund manager, you need to get institutional fund managers to trust your judgment. Usually, that means employing a team of very highly qualified people with solid track records in managing funds. Unfortunately, no matter how good your team is, they are going to make mistakes and lose money sooner or later.
On 8th February 2023, the company announced that it had lost a SARS appeal to have it pay additional taxes. Accordingly, it may have to suspend its dividend. This caused the share price to drop sharply.
In its results for the six months to 31st March 2024, the company reported revenue up 4.3% and headline earnings per share (HEPS) of 200.5c compared with 6.2c in the previous period. Assets under management (AUM) increased 5% to R631bn. The company said, "Net outflows for the period were in line with our expectations at 4% of average AUM. This is largely due to the weak SA savings industry, to which Coronation is significantly exposed. It also reflects the experience of the broader industry, as active asset managers around the world experience persistent net outflows."
Technically, Coronation's shares rose very strongly from 2008 until its peak at R115 per share on 30th December 2014. After that, and under new management, it fell to a low of 2541c with the outbreak of COVID-19. We recommended applying a long-term downward trendline and waiting for a clear upside break, which happened on 21st June 2024 at 3599c. The share was added to our Winning Shares List (WSL) on 11th May 2024 at 3281c. It has since moved up to 3599c and looks like it will rise further.
On 21st June 2024, the Constitutional Court handed down a ruling in Coronation's favour, which means that the company is not liable for a R794m claim by SARS. The company has said that the money it had put aside to meet an adverse judgment could be returned to shareholders.
The company was heavily invested in African Bank and lost a lot of money there. It was also heavily invested in Steinhoff. These missteps have caused the investment community to re-evaluate Coronation's ability to keep choosing winners on the JSE and elsewhere. The result has been an outflow of institutional funds. The fund management business is all about confidence. As a fund manager, you need to get institutional fund managers to trust your judgment. Usually, that means employing a team of very highly qualified people with solid track records in managing funds. Unfortunately, no matter how good your team is, they are going to make mistakes and lose money sooner or later.
On 8th February 2023, the company announced that it had lost a SARS appeal to have it pay additional taxes. Accordingly, it may have to suspend its dividend. This caused the share price to drop sharply.
In its results for the six months to 31st March 2024, the company reported revenue up 4.3% and headline earnings per share (HEPS) of 200.5c compared with 6.2c in the previous period. Assets under management (AUM) increased 5% to R631bn. The company said, "Net outflows for the period were in line with our expectations at 4% of average AUM. This is largely due to the weak SA savings industry, to which Coronation is significantly exposed. It also reflects the experience of the broader industry, as active asset managers around the world experience persistent net outflows."
Technically, Coronation's shares rose very strongly from 2008 until its peak at R115 per share on 30th December 2014. After that, and under new management, it fell to a low of 2541c with the outbreak of COVID-19. We recommended applying a long-term downward trendline and waiting for a clear upside break, which happened on 21st June 2024 at 3599c. The share was added to our Winning Shares List (WSL) on 11th May 2024 at 3281c. It has since moved up to 3599c and looks like it will rise further.
On 21st June 2024, the Constitutional Court handed down a ruling in Coronation's favour, which means that the company is not liable for a R794m claim by SARS. The company has said that the money it had put aside to meet an adverse judgment could be returned to shareholders.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.