Q: I'd appreciate your comments on FSZ's results released today and outlook. I noticed that you lowered your position and implied it is on its way out of your income portfolio. Do you see it as a SELL. While I hold it for the income, I'm also hoping that another company will take it over. Thanks for your help.
5i Research Answer:
With a low valuation and substantial assets under management, a takeover is always a possibility but not something to count on. But it was another weak quarter, with FSZ missing on sales and earnings vs estimates. Revenue declined about 9% and assets declined 5.6% to $165B. EBITDA fell 18%. The dividend was maintained and now yields 12%. But the stock is down 19% in 2023 so no one is making any money here. The outlook of course is still tied to capital markets. We would still officially see it as a HOLD but our patience is thin. Yes, it may do better in a market rally but other stocks may move even more. The dividend is nice but not what we would consider secure. Very little excitement here overall.