With a market cap of £1.76 bln is less than a quarter of the size of rivals Hargreaves Lansdown however size may not be everything as AJ Bell’s stock price has comfortably outperformed its peers Hargreaves Lansdown stock is down by just over -14.0% year to date whilst The AJ bell share price has dipped by just 0.90% in that time.
The sector laggard is Brewin Dolphin whose shares are down by 38.00% YTD.
Finn Cap flag that AJ Bell has grown its market share from +3.90% to +6.50% since 2012 however there still some obstacles to overcome on the positive side for the 6 months ending 31st March 2020 the company grew revenue by 22% over the comparable period in 2019 and profit before tax grew by 28% and whilst the numbers of retail clients increased by 30,000 the amount of assets under administration that the firm addresses fell to £48.30 bln from £52.3 bln in 2019 just how much of that drop was down to withdrawals and how much to market performance may be revealed in the year-end trading update that is scheduled for October the 22nd.
Nik Lysiuk believes that AJ Bell can grow organically by leveraging their existing customer base through fund and investment performance referrals and top-ups etc though he also believes that there will be consolidation in the sector though that will lead to new starts up being formed as advisors and their clients leave and take their business with them.
However, AJ Bells’ major differentiator to much of its competition is its D2C or direct to consumer platform marketing style much beloved of millennials and younger generations.
Mr. Lysiuk feels that £5.0bn of AUA is the minimum that new rivals would need to reach critical mass in this space and large US house such as Vanguard could pose a threat they only offer their own funds thereby limiting customer choice, wide-ranging customer choice being one of the selling points of AJ Bells offer and that threat could be further deferred through
“The education of large addressable market of people that have cash but are not investors”
An area that Nik Lysiuk believes AJ bell should focus on from here on in.
Darren is a veteran of the financial markets with almost 36 years of experience under his belt. He has worked in trading, sales, analytical, and research roles, he has been a regular guest & commentator on financial television channels and publications. During his career, Darren has been fortunate to act for and advise major hedge funds and investment banks as well as HNWI. Darren analyses the markets using a blend of technical and fundamental analysis