Magellan shares extend losses after Jarden downgrade
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The news: Magellan Financial Group shares slumped for the second consecutive session as Jarden warned of "sizeable redemption risks" following the departure of fund manager's long-serving head of investments and infrastructure lead Gerald Stack.
The numbers: Magellan shares were down 9% to $10.36 by 1:15pm AEDT, having closed 8.3% lower on Thursday.
Jarden downgraded the stock from 'neutral' to 'underweight' and slashed its target price from $10.25 to $9.35.
The context: Jarden analysts said the departure Stack poses sizeable redemption risks to Magellan's $17 billion infrastructure funds under management (FUM), which forms 43% of the company's total FUM.
They estimate Magellan's infrastructure FUM will fall by around 30% "over the coming few years".
Stack, who is set to depart Magellan in July after 18 years with the firm, founded the company's infrastructure strategy in 2007.
Jarden analysts also noted that the infrastructure fund's relative performance remains "materially below" benchmarks, adding to redemption risks.
The source: Jarden research
