Morningstar cuts Magellan fair value as it forecasts $8b in infrastructure outflows
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The news: Morningstar analysts have cut their fair value estimate on Magellan Financial Group, citing the increased risk of redemptions following the exit of its long-serving head of investments and infrastructure lead Gerald Stack.
The numbers: The research house cut its fair value estimate on Magellan to $8.90 from $10.20 previously.
Magellan shares are up 1.5% to $9.64 in early trading but have lost more than fifth in value since last week’s announcement of Stack’s exit.
The context: The analysts have assumed roughly $8 billion in one-off redemptions from Magellan’s Infrastructure strategy throughout FY2025-26. Roughly 75% of the infrastructure funds under management are institutional money, which is typically less sticky, the analysts added.
The $8 billion in assumed outflows is around 50% of the fund manager's infrastructure FUM and 22% of group FUM.
At 31 December 2024, Magellan's funds under management was at $38.6 billion, a fraction of its FUM held at the end of FY2021 at $113.9 billion.
What they said: “Stack’s departure raises the risk of redemptions, given it could take time for investors to gain confidence in the new team," Morningstar said.
"Stack has led the Infrastructure strategy since 2007 and his team’s stability during Magellan’s turbulence during 2022-23 was a reassuring factor for investors."
The source: Morningstar research
