Is Polar Capital the ultimate play on the global tech boom?

 

UK fund manager Polar Capital Holdings is the first stock of the week selection for July 2026.

The firm has a reputation for being something of a specialist. However, I feel it should have a broader appeal, both to those looking to allocate money to its funds and equity investors looking for a growth business with a long-term track record.

The money manager marked its 25th anniversary in January, and it can be proud of its track record over that time.

Why do I say that?

Well, how many fund managers can point to the fact that their UCITs-compliant funds have been in the top two quartiles, in terms of performance vs their peers, since inception?

That track record helps to explain the growth in AUM at the business, which rose to £30.60 billion by the end of March and to $44.70 billion by June 19th.

The firm has seen flows from both retail and institutional clients who value the fund manager’s expertise in areas such as Technology and Artificial Intelligence.

The AI fund is now the firm’s 3rd largest open-ended vehicle with AUM of $3.10 billion.

Though intriguingly, more than +50.0% of that money is invested outside of information technology, as the fund’s focus is on AI adoption, in other sectors, putting money to work in areas such as industrial materials, healthcare and consumer discretionary.

Full-year results, published last week, showed that it’s not only the funds that are doing well.

EPS at the firm rose by +10.0% to 57.8p, core operating profits by +11.0% to £62.80 million, whilst net management fees rose by +10.00% to come in at £196.90 million, helped by a +14.0% average increase in AUM across the period.

The firm maintained a 46.0p a share dividend that represents an 80.0% payout ratio, which, when combined with the firm’s ongoing £15.0 million share buyback, demonstrates a focus on shareholder returns.

Performance

The share price of Polar Capital, which trades under the ticker POLR LN, has risen by more than +100.0% over the last 12 months and by an impressive +18.66% in the last 5 days, post its earnings release. The stock has posted a total of 35 new highs year to date, 10 of those in the last month, and 25 in the last three months. And though it’s not the most liquid of stocks, we have seen several days of late when volume traded has exceeded a million shares.

The fund management sector is no stranger to M&A activity at the moment, and though there is no suggestion of that around Polar Capital right now, its rivals both in Europe and the USA will surely be monitoring its performance in terms of its funds, asset gathering ability, and stock price.

Pros:

• A specialist approach to fund management is generating returns, attracting assets and bolstering the firm’s reputation. Expansion opportunities in the US offer the firm a conduit for significant growth through fund distribution arrangements and institutional allocations. US clients account for just 2.0% of the client base; at the same time, money from international clients makes up 45.0% of the firm’s AUM.
• Revenue and earnings are increasing ahead of costs, for example, core operating profit margin, which currently sits at 32.0% are forecast in the range 38.0-40.0% for H1 2027.

Cons:

• 
  Fund managers need to pay to attract and maintain talent. Staff compensation fees hit £122.30 million in the last year, and the talent walks out of the office every night, and may well be coveted by industry peers and hedge funds. Fund management is a cyclical business.
• Polar Capital funds are focused on specialist areas and investment niches that may not perform in a downturn. There is no guarantee that the firm can expand into the US or scale its business significantly from here.

Technical outlook:

The most important thing on the chart of Polar Capital is the breakout seen in recent trading, which has taken the stock to new all-time highs. Brokers RBC have raised their target price for the shares (in a note out today) to £12.60, a +28.0% premium to even the current levels. The stock sits well above its 10, 20, 50 and 200-day Moving Averages. On an RSI 14 basis, it looks overbought short term with a reading just below 80, but any pullback will likely provide a buying opportunity. Buy the dip if you see one; might be the best strategy here. But given the recent momentum, that may not happen.

Fundamental outlook:

Fundamentally, the stock looks very strong. It’s only the cyclical nature of the business and the strength that the wider market has had recently that prevents Polar Capital from getting top marks here. How can you argue with a forward PE ratio of 12.27 times when EPS and operating profits are growing at +10.0 and +11.0%, respectively? True book value per share is light, but that’s the nature of a business that manages assets for others, acting as an agent and not a principal. The opportunities to grow the client base and source significant allocations from the US are the potential cherry on the cake. Indeed, the firm has recently secured a new Healthcare mandate from a US institutional investor.