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The FTSE 250 funding agency aberdeen group (LSE: ABDN) was as soon as dubbed the “most shorted firm within the UK”.
CityAM made the remarks in December 2024, though Ocado and Domino’s Pizza have attracted much more shorts since. Clearly, that’s not an accolade that any firm strives to realize.
But not everyone seems to be so pessimistic. Deutsche Financial institution maintains a Purchase ranking on the inventory that it reiterated this Wednesday, 2 April — albeit with a minor lower in goal worth.
So with a 9.6% yield and a reasonably spectacular fee observe report, why are analysts so down on aberdeen? It’s a well-established firm that’s been round in a single kind or one other for 200 years. Nevertheless, a latest string of unfavourable occasions has introduced its operations into query.
That could be trigger for concern, so I made a decision to research additional.
A wealth administration powerhouse
Previously often called abrdn, aberdeen is a worldwide funding firm headquartered in Edinburgh, Scotland. It presents a variety of asset administration providers, together with fairness investing, mounted earnings, liquidity, sovereign wealth funds, actual property, and personal markets. As of December 31, 2024, it managed and administered £511bn in property below administration and administration (AUMA), with operations in over 25 places worldwide.
Courting again to 1825, it has undergone a number of adjustments. Most just lately, it merged with Customary Life solely to promote that arm to Phoenix Group a couple of years later. In 2021, it rebranded to abrdn, a controversial capital- and vowel-free title supposed to attraction to a youthful, digital-focused world.
Issues have been rocky ever since, however this yr it’s exhibiting indicators of a possible restoration.
Progress and dividends
Previous to Covid, the corporate loved spectacular dividend development. It raised the ultimate quantity by round 7% yearly, climbing from 11.7p per share to 21.6p (between 2008 and 2019).
However the pandemic pressured a 32% minimize right down to 14.6p per share, the place it has remained ever since. The result’s damaging development over the previous 10 years, throughout which period the share worth has dropped 72.7%.
Understandably, shareholders are dissatisfied and changing into impatient.
Restoration potential?
In recent times, the agency underwent a number of essential administration adjustments and a catastrophic rebranding. But via all of it, it has managed to uphold robust monetary efficiency.
2022 noticed a quick interval of unprofitability, however it has since raised its web margin from -36% to fifteen.7%. For 2024, it reported a 2% improve in adjusted working revenue to £255m and a 3% rise in property below administration.
The improved efficiency follows a renewed give attention to core funding administration providers and is the most definitely cause Deutsche Financial institution stays optimistic in regards to the inventory.
The state of affairs stays tense
The controversial rebranding has been principally reversed and CFO Jason Windsor is standing in as interim CEO after Stephen Chicken stepped down. Whether or not a brand new CEO can flip issues round for the corporate stays to be seen.
Though Deutsche Financial institution nonetheless has a Purchase ranking on the inventory, it lowered its worth goal from 200p to 195p. It hasn’t traded above 195p since August 2023 — and traded beneath that degree for many of 2022. A transfer above would deliver many traders into revenue, doubtlessly igniting a rally for the inventory.
If that occurs, nice. However I gained’t think about the inventory proper now because it’s nonetheless a bit dangerous.
