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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 attain.
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 document, 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.
Which may be trigger for concern, so I made a decision to research additional.
A wealth administration powerhouse
Previously often known as abrdn, aberdeen is a world funding firm headquartered in Edinburgh, Scotland. It presents a variety of asset administration providers, together with fairness investing, fastened revenue, liquidity, sovereign wealth funds, actual property, and personal markets. As of December 31, 2024, it managed and administered £511bn in belongings underneath administration and administration (AUMA), with operations in over 25 areas worldwide.
Relationship again to 1825, it has undergone a number of modifications. Most just lately, it merged with Commonplace 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 identify supposed to enchantment 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 progress. 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% lower all the way down to 14.6p per share, the place it has remained ever since. The result’s unfavorable progress over the previous 10 years, throughout which period the share worth has dropped 72.7%.
Understandably, shareholders are upset and turning into impatient.
Restoration potential?
In recent times, the agency underwent a number of essential administration modifications and a catastrophic rebranding. But by all of it, it has managed to uphold sturdy monetary efficiency.
2022 noticed a quick interval of unprofitability, however it has since raised its internet margin from -36% to fifteen.7%. For 2024, it reported a 2% improve in adjusted working revenue to £255m and a 3% rise in belongings underneath administration.
The improved efficiency follows a renewed deal with core funding administration providers and is the most certainly cause Deutsche Financial institution stays optimistic concerning the inventory.
The scenario stays tense
The controversial rebranding has been largely reversed and CFO Jason Windsor is standing in as interim CEO after Stephen Hen 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 decreased its worth goal from 200p to 195p. It hasn’t traded above 195p since August 2023 — and traded under that degree for many of 2022. A transfer above would convey many buyers into revenue, doubtlessly igniting a rally for the inventory.
If that occurs, nice. However I gained’t take into account the inventory proper now because it’s nonetheless a bit dangerous.
