Selling Record (LON:REC)

Progress is too slow (or I'm too impatient)

Just a quick note to say that I sold Record Plc from my UK trading portfolio yesterday. Net flows have been slightly negative in each of the past five quarters and assets under management have remained steady at around $100 billion over the same period.

The chief economist at Goldman Sachs reckons the US dollar will continue to weaken (and for what it is worth I agree with him) and so unless flows turn positive, it looks like Record’s management fees (which make up most of its revenue) might decline.

I had expected flows to pick up by now due to currency volatility and this was the primary reason that I bought the stock. They might still, but Record has a recent history of disappointment including the failed promise of £60 million in revenue and 40% operating margins by FY25.

Yesterday’s fourth quarter trading update confirmed that results for FY25 will be in line with expectations which include revenue of £41.6 million according to Stockopedia. Meanwhile, the company’s operating margin for the past 12 months was 26.9%.

Record has recently changed its CEO and I will continue to keep an eye on the business for signs of improvement. It has some attractive qualities such as strong cash generation, very high return on equity and occupying a niche position within the asset management sector.