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Institution broker and investment bank, Panmure Gordon (LSE:PMR) published its first half results for 2012 earlier today. It’s share price rose nearly 10% to 11.50 in early trading before retreating steadily throughout the morning hours to 10.75 by early afternoon. It’s likely that new CEO, Phillip Wale, was expecting a much more significant response following a report that include at least one positive trend. He probably did not expect a return to the height of PMR’s glory days before the financial crisis near 150. He may not have even have hoped for a return to the post crisis days in 2010 when the stock traded in the 45.00 range. On the other hand, he probably was hoping for at least a return to the 16.00 range that company had reached just six months ago.
Panmure may just be the most obviously demonstration of lack of trust by investors in the financial markets in general. Whatever the reason they have responded with apathy, the one thing that opportunists seem to be missing is that the company seems to have established a trend that may be an indicator of even better things yet to come. Whilst one might respond that one good half-year report does not a trend make, one must also remember that a half-year is comprised of several shorter reporting periods that can indicates a trend. Phil Wale made it a point to try to bring attention to the fact that PMR was profitable in every month from January through June and in each of the ensuing months as well.
Considering the performance of Panmure, and many other companies post 2008-2009, eight straight profitable months is not something to be taken lightly. Maybe the (a)pathetic investor response is due to the habit of investors looking at a six-month report as a snap shot, instead of looking at it as a summary. Isn’t that right? Don’t we tend to look at quarterly, semi-annual, and annual reports as a single point in time. We call a trend something that happens consistently over quarters. The fact is that the people operating the business — the people we are depending upon for a return on our investment — are looking the day-to-day, week-to-week, and month-to-month plays the determine the score at half-time or at the end of the game. We tend to invest based on the score at halftime and ignore the teamwork and the plays that produced that halftime score. I guess what I am saying is that, with a new coach and a new game plan, PMR has won every game it has played this year.
The rest of the report wasn’t bad either, including great news that adminstrative costs have been reduced by 24% from £11.4 million to £8.7 million. That will help a bottom line. In fact PMR moved out of the red from a loss of £2.7 million to a profit of £1.2 million year on year. The company realized an 18% increase in revenue generated from commission income. That alone generated almost £2 million additional from £9.5 million to £11.2 million. Operationally, revenue gained from corporate transactions increased 41% to £6.6 million from £4.7 million.
Mr. Wale said, “Being profitable every month so far this year reflects the impact of actions taken to reduce costs in 2011 and the inherent strength of Panmure Gordon’s business.”
By the way, PMR is debt-free. That’s not bad either.
Trading volume has been quite low for Panmure Gordon, simply because investors have been ignoring it. With the share price as low as it is and the month-to-month results trending positively, the PMR train is beginning to build up steam. It might be worth getting on board before starts running so fast that ticket prices rise based on demand.
