The Magellan share price is on fire today.
The post Why is the Magellan share price soaring 7% today? appeared first on The Motley Fool Australia. –
The S&P/ASX 200 Index (ASX: XJO) can’t seem to decide what it wants to do so far today. At the time of writing, the ASX 200 is down by 0.14%. That comes after a big drop after open was partly mitigated by a mid-morning rally. But one company that seems to have a better idea of what it wants to do today is the Magellan Financial Group Ltd (ASX: MFG) share price.
Magellan shares are well in the green today. The company has risen by an impressive 7.43% at the time of writing to $17.50. That’s looking a lot better than the $16.29 the fund manager closed at yesterday.
So what’s behind Magellan’s stellar outperformance today? Well, it’s not entirely clear. There hasn’t been any official news out from the company itself. However, there have been some media reports out today that might have something to do with this decisive move upwards.
According to reporting in the Australian Financial Review (AFR), Magellan has decided to move on from the era of its co-founder and long-term chief investment officer (CIO) Hamish Douglass. Mr Douglass helmed Magellan for over a decade as CIO. He was also the public face of the company. However, a series of unfortunate events over the past 12 months culminated in Mr Douglass taking a leave of absence from his duties at Magellan. These included what turned into a chronic period of underperformance for Magellan’s investment funds. As well as the abrupt resignation of Magellan’s CEO Brett Cairns. There was also the revelation of Mr Douglass’ divorce.
Douglass was replaced as CIO by another Magellan co-founder Chris Mackay earlier this year.
Magellan shares rise amid reports company is moving on from Douglass
The AFR reports that, after several months of absence, “it’s understood the remainder of Magellan’s directors has come to accept that Douglass will not rejoin the board nor return as the fund manager’s chief investment officer”.
Mr Douglass reportedly won’t be leaving the company though. Instead, “the board is now working with Douglass to create for him a new role providing macroeconomic and geopolitical counsel to the investment team and directly to key Magellan clients”. However, the report is firm that “he [Douglass] would no longer pick stocks or face the market” under the arrangement.
Nikki Thomas is reportedly set to replace Douglass as permanent CIO, taking back over from Mackay. Thomas was a former fund manager at Magellan who was brought back into the fold when Douglass stepped back.
So it’s perhaps this certainty about Magellan’s future that is helping to lift the company’s shares today. After all, markets hate uncertainty. And, if this report is to be believed, Magellan is about to remove several ‘uncertainties’ about who is running the show.
But one thing is for sure. If investors want a Magellan back to its glory days, there is still a long way to go.
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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.