Sell Platinum and Buy Magellan

Richard Coppleson

Magellan is up the last 5 days straight and hit its highest level in 1 ½ years. About 8 months ago I pushed a pairs trade – sell Platinum and Buy Magellan. Despite the massive move (especially) in the last 4 months I’d keep in on still. I can’t see any value in Platinum, while Magellan are back after a period of inertia, so I would stay with this trade.

Magellan’s May 2017 Flows were +$142m inflows (+3.4% of FUM annualised). 2H17 to date, net flows at +3.6% of opening FUM are exceeding our forecast, but remain below our +>5% ‘benchmark’. Net inflow mix: +$35m Global Equities Retail; +$30m Infrastructure Retail; and +$77m Institutional. Magellan is on track for ~$41m in Performance fees in 1H17.

Source IRESS / Coppo Report

What do the shorts think - are they shorting MFG or PTM? Magellan - NO they don't dare - it's steady at 1.4%. However, Platinum shorts are rising from 1.7% as of 2 months ago … to 2.74% now.

The Coppo Report

This article is an excerpt from The Coppo Report contributed to Livewire by Richard Coppleson, Director - Institutional Sales and Trading, Bell Potter. you can find out more here.

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