Editor's note: What follows below is an excerpt from Hedgeye Financials Equity Analyst Jonathan Casteleyn in this weekend's Investing Ideas. Investing Ideas is for the longer-term investor looking for actionable long-only opportunities. With your subscription, you'll know immediately when one of our analysts uncovers a new idea or changes a current one. Every Saturday morning you'll receive our special newsletter full of all the important investing information of the week. Click here to subscribe.
T Rowe Price
During our recommendation of T Rowe Price as a core long position, we have solely been using industry information on equity flows from the Investment Company Institute (ICI), the trade group for the asset management industry. However, there is a private survey of asset management performance and flows called Simfund which we don’t use that projected a very positive outlook for TROW separately from our research process using ICI data.
Last week, this private Simfund survey calculated that in October alone that T Rowe has netted over $1.8 billion in new net inflows, more than the prior 3 months combined which totaled just $1.2 billion. Thus it is safe to say that the fourth quarter has started in very strong fashion for this leading equity manager.
In addition, Simfund projected that TROW’s industry leading performance gap has widened favorably, meaning TROW’s mutual fund families have increased their lead as the best performing mutual funds of the public asset managers. According to Simfund, now 70% of TROW’s assets are 4 or 5 star Morningstar rated, the only mutual fund products that have historically generated any significant inflow (see annual 4 and 5 star inflow versus 1 to 3 star rated products below).
In a nutshell, TROW stock is a prime beneficiary of the positively trending U.S. stock market with industry leading performance and improving retail equity mutual fund flows.
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