February 16, 2010 - TSCI Street Pulse
eResearch Stock of the Week: Integrated Asset Management (TSX: IAM)
IAM is a Toronto-based alternative asset management company with approximately $2 billion (as of December 31, 2009) in assets and committed capital under management in Real Estate, Private Corporate Debt, Private Equity, Managed Futures, Retail Alternative Investments, and Mining Asset Management. The Company offers its asset management services to institutional, pension, and private clients.
The shares of IAM rose 19% on February 11 following the release of Q1/2010 results, and closed the day at $0.63 on more than 3x the recent average volume. At its closing price of $0.66, it is at a 52-week high.
It has been our opinion for some time that share performance of IAM is likely to be constrained until the Company provides evidence that it is solving its corporate challenges, which include: (i) turning around Retail Alternative Investments (BluMont); and (ii) resuming growth in assets under management. Despite the improved profit performance in Q1/2010, these two challenges remain.
However, Q1/2010 makes a good beginning to the current fiscal year. As a result, we are raising our full-year earnings per share estimate from $0.04 to $0.15. This includes $0.04 per share for an extraordinary item relating to an expected one-time real estate asset disposition.
IAM is in the process of acquiring Northern Rivers Capital Management Inc., which offers specialized investment funds. The acquisition will bring to IAM two highly-acclaimed portfolio managers who will augment IAM’s team of over 20 investment professionals. Closing should be completed in about two months from now.
We are maintaining our 12-month Target Price of $1.00 per share. That represents a forward p/e of 6.7x, which seems reasonable at this stage of the Company’s recovery. Excluding the non-recurring item, the p/e is 9.1x.
Higher multiples are predicated on solving those problems to which we referred earlier.
Equity Research Available: Integrated Asset Management
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Bob Weir, B. Comm, B.Sc., CFA. - eResearch
Mr. Weir has 43 years of investment research and analytical
experience in both the equity and fixed-income sectors, and in the
commercial real estate industry. He was at Dominion Bond Rating Service
(DBRS) from 1994 to 2001, latterly as Executive Vice-President
responsible for supervising the firm’s 34 analysts and conducting the
day-to-day management affairs of the company. He joined eResearch in 2004 and has been its President, CEO, and Managing Director, Research Services since May 2005.
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