Is there a buyout in the future of struggling fund company Seamark Asset Management?
The Halifax-based money manager reported disappointing results on Thursday, with two large institutional clients walking and redemptions hitting $640-million. Seamark's assets under management are now $1.96-billion, down 44 per cent, year-over-year. The 20-employee company posted decent performance in its funds, but is plagued by executive turnover.
At best, Seamark's earnings and assets under management are expected to go sideways over the next year. Analyst Michael Mills at Halifax-based Beacon Securities said in a report Friday: "This story remains very difficult to forecast, with uncertain market movement and client redemption activity."
Then Mr. Mills looked at where Seamark may be headed.
"Given its dwindling size, we do not foresee a future for Seamark as a stand-alone public entity," said Mr. Mills, who has a "sell" recommendation on the stock. The company was spun out of Manulife Financial, and the insurer remains the largest shareholder, with a 31 per cent stake.
"Seamark appears to be trading at a level that partly anticipates an offer for the shares," said Mr. Mills, adding, "Our best estimate for a take-out value is in the $1.50-$1.75 range, but a buyer will require assurances that remaining assets are sticky."
The logical buyer of the fund company is Manulife or existing management. Seamark's market capitalization is $13-million.