Q: What point would you become more positive on FSZ ? The company has exceded estimates the past 2 quarters. What else could help?
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5i Research Answer:
The stock is up 30% this year so it is getting some notice. While assets are growing, most of the growth is coming from market gains, and we think more organic sales would help. Last quarter it did lose more than $2.7B in sub-advisor assets. The ownership issue has been resolved, and some earnings growth is now expected. Sentiment towards the industry remains weak, and investors still express concern on the dividend. But the recent trends are encouraging. It is not the type of stock to get a 15X earnings multiple, but if trends continue it should be able to improve its current < 8X multilple.