Perpetual upgraded to Buy
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Perpetual's share price has fallen 11% since Perpetual: Interim result 2014 (Hold – $50.79), despite a flat sharemarket and another quarter of net inflows.
There was a net inflow of $0.3bn in the third quarter, to 31 March, to follow inflows of $0.2bn and $0.4bn in the first and second quarters. The significance of these inflows is greater than their size, because they're the first in more than four years. Market movements have had the greater impact on funds under management, adding $0.3bn in the third quarter and taking funds under management to $31bn – up from $25bn when we upgraded the stock in Pulling the trigger on Perpetual on 19 Sep 13 (Buy – $38.72).
So the business continues to do well, but with the share price about 10% below the relevant price trigger, we're upgrading to Buy. Bear in mind, however, that this stock will be very sensitive to market movements, so you may need to hang tough if the market takes a tumble, and it's worth keeping some powder dry in the hope of cheaper prices.
Although we have a recommended maxiumum portfolio weighting for the stock of 7%, bear in mind that this is a maximum and we'd recommend much less than that at the moment. Our model portfolios, for example, have weightings of just over 3% and we're happy with that. BUY.
Note: Our model Growth and Income portfolios own shares in Perpetual.
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