I decided to buy 60 shares of Franklin Resources @33.85. I analyzed company twice (initial analysis + update) and I think that valuation is appealing. During last days share price dropped to my investable level so patience is rewarded (hopefully). I could have bought it a little bit better/earlier, but I had some technical difficulties (and no one can predict what Brexit polls will be)…

Why I bought?

  • high quality company, which share price dropped a lot (special offer?)
  • cash and equivalents around $8b (i do not include investments as they are probably needed from regulatory perspective), so market cap cash adjusted is $20b – $8b = $12b, so value of shares after excluding cash is around $20 with expected EPS 2.79 it gives P/E = 7.3 (wow)
  • dividend yield 2% is maybe not impressive, but if we add buyback (around 4-5% annually, can be more as new authorization is for 50m shares out of 584m, so 8.5%) then situation is decent
  • I do not believe in the end of active asset management industry, company has a strong brand and there always will be people willing to invest with Franklin Templeton
  • Company was struggling partially due to weak emerging markets, I hope trends are mean reverting


So, we will see how BEN is performing and it is a high time to look for a new investment!