Paragon Funds Management: Macquarie capitalising on buoyant conditions

Macquarie is currently yielding a 4.6% forward dividend (March year-end FY16F), and based on our estimates is growing earnings at 30% CAGR for the three years to FY16F. Macquarie is taking advantage of buoyant conditions across key segments including 1) Asset Management, 2) Corporate & Asset Finance, 3) Commodities & Financial Markets and 4) Banking & Financial Services; all of which are contributing to its growth. Macquarie is well capitalised and in our view still in an earnings upgrade cycle. We expect solid yield + growth to continue as Macquarie’s key segments drivers - low global rates, loose monetary policy, strong net inflows, buoyant and liquid market conditions and AUD risk to the downside - remain in place. Macquarie Asset Management – a leader in global Infrastructure – has grown significantly and offers annuity style earnings from its base management fees, and scope for material ongoing contributions from its performance fees. We went long Macquarie at $56.58/sh on the 18th of Dec 2014 for the above very reasons and despite its near 50% increase, continue to like the stock’s risk:reward. Read the full report (VIEW LINK)