After the crisis of 2008, many financial companies were undervalued. You could make good money holding a bunch of well-known names. It is tougher now after a prolonged up market. Although you still see big companies like Goldman Sachs and asset manager Legg Mason in portfolios, there is a move to look elsewhere for the next financial trade.
Such as among fund administrators. After losing assets and revenues in 2009, administrators have been recovering. The idea is that with investors pushing for funds to have outside administrators, demand for administrator services is bound to grow.
But major administrators are privately held, so there isn’t a lot of choice for investors in public markets. GlobeOp is one administrator that is listed (on the London Stock Exchange, where it recently applied to sell additional shares).
GlobeOp does not look cheap. On the other hand, it is seen as an enterprising firm that can take advantage of new synergies. A few months ago GlobeOp introduced an index series on capital movements based on subscription and redemption data for the $167 billion in assets it administers—8% to 10% of the worldwide hedge fund industry.
There may also be other ways of using administrator platforms, potential synergies with benefits for clients that can increase revenues, an investor says.
Certain asset managers may be good buys. Blackstone – which remains below the peaks that followed its 2007 IPO – is the kind of less widely held stock that could have an upside for those who want to diversify away from the financial mainstays. While its private equity business catches attention, the hedge fund business has grown substantially.
Some funds continue to buy Goldman Sachs, despite the government scrutiny it faces and the much talked-about decline in the share price this year. One fund that holds Goldman is unexpected: Winton Capital, not a stock trader but one of the largest commodity trading advisors.
Tags: Blackstone Group, GlobeOp, Winton Capital
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