Why Platinum still looks like a gold medal: AFR Letter to the Editor
Jonathan Shapiro’s analysis piece: (“Is Platinum a great value play or a value trap?“, February 7) acknowledges there have been some perceived “false dawns” with respect to value investing and explains why Platinum might be seen as a “value trap”, but the opposite is true.
Platinum is the ultimate “value play” for two reasons not included in the analysis:
- Assessing an investment’s merits on recent performance, without putting sufficient weight on long-term performance, is always going to trip up prospective investors. It’s the numbers around long-term performance that really matter, and Platinum’s long-term numbers are well above its benchmarks for almost all its funds. (The reason for its short-term performance issues stem more from money chasing “sexy” technology narratives and not the fundamentals, and will likely improve as interest rates rise and investors re-embrace investment fundamentals.)
- When Platinum listed for $5 in 2007, it had $22 billion in funds under management. Today, it has $21.6 billion (roughly the same amount), but a share price of about $2.50, meaning it’s managing the same revenue – and likely generating similar earnings – but is valued at half the price. (You don’t need to be Charlie Munger to understand its appeal.)
Platinum’s preparedness to stand out in the cold with its contrarian positions will result in it having the last laugh.
And while following trends may work in fashion, the same doesn’t apply to prudent investing where you’ll always find the tortoise lapping the skittish rabbit at the final turn.
Josh Derrington, Eddie Barrett
Alvia Asset Partners, Brisbane
