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RBC Capital Markets analyst surprised to see $43-million in net redemptions in the quarter, compared to his forecast
of $71-million positive net sales.
Funds managed by Mr. Tardif experienced about $80-million in net redemptions in July. AUM was $460-million at the
end of June. The manager announced his departure in late May.
(How soon before Tardif gets back in the "Game"?) ;-)Sprott IncSII_________________________________________________________________________________________Sprott sees $80-million in redemptions from Tardif funds: RBC August 07, 2009, 8:49 AM by Jonathan Ratner
Sprott Inc.’s second quarter earnings per share were in line with analysts’ expectations, but the results show net redemptions and slightly lower-than-forecast EBITDA for the firm’s base business.
RBC Capital Markets analyst Geoffrey Kwan said he was surprised to see $43-million in net redemptions in the quarter, compared to his forecast of $71-million positive net sales. This projection reflected expectations that significant redemption activity in the fourth quarter of 2008 and first quarter of 2009 (primarily in offshore funds) had dissipated.
He noted that the net redemptions were primarily from offshore funds and to a lesser extent, redemptions at funds managed by Jean-François Tardif, who recently left the company.
Mr. Kwan trimmed his price target on Sprott shares from $4.25 to $4.00 and maintained an Underperform rating. The stock has lost more than 50% of its value in the past 12 months and is down about 20% year-to-date.
The analyst told clients that the reduced target reflects a low value for the base business, driven largely by lower assets under management (AUM) forecasts due to lower net sales forecasts. This is slightly offset by reduced expenses.Mr. Kwan said Sprott shares are fully valued and there is more attractive upside in other financial services stocks
. He also noted that the valuation may be constrained in the near term from net redemption concerns and reduced performance fee visibility for 2009 as many funds are significantly below their high water marks.
The analyst estimated that the funds managed by Mr. Tardif experienced about $80-million in net redemptions in July. AUM was $460-million at the end of June. The manager announced his departure in late May.
Sprott also indicated that it wants to expand its product offering and is pursuing an acquisition.
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