Manning And Napier Positioned For A 'Multi-Year, Gradual Transition,' Says Credit Suisse

Although the investment performance of Manning and Napier Inc (NYSE: MN) has improved across various products, the company’s overall performance is among “the weakest in our coverage,” Credit Suisse’s Ari Ghosh said in a report. He reiterated a Neutral rating on the company, with a price target of $9.

Transition To Be Slow

In 1Q15, Manning and Napier appointed longtime research veteran Ebrahim Busheri as the dedicated Director of Investments and embarked on a reorganization of the research team. Since then, investment performance had improved, especially in non-US products, analyst Ari Ghosh mentioned. He added, however, that the transition was expected to be gradual and multi-year.

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Manning and Napier had also announced the resignation of CEO Patrick Cunningham in April 2016, as well as that of CFO James Mikolaichik on July 13, 2016. The company’s co-founder Bill Manning, along with a new Operating Committee comprised of senior management, have assumed the responsibilities of the CEO role, Ghosh stated.

Noting some of the key risks to Manning and Napier stock, the analyst mentioned that 64 percent of the company’s AuM was in blended/balanced strategies, with a substantial portion of earnings tied to performance, net flow generation, and client retention in these products. He added, “MN is an active manager, and the continued shift to cheaper, passive products at the expense of more expensive active products, could negatively impact the net flow outlook for the company.”

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