Macquarie Group (ASX:MQG) looks reasonable value at the moment trading at a 33% discount to the Industrials ex Banks vs. the five year average discount of 25% on a 5.6% dividend yield. It appears to us that its earnings are transitioning from more volatile investment bank-style earnings to annuity-style funds management earnings. We believe this transition will decrease its earnings volatility, but we feel this has yet to translate into its valuation. In the next few years, we also expect it to realise a number of performance fees from its less liquid funds. (Don Hamson, Managing Director)



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