Down 70% and yielding 10%! Is that this closely shorted worth inventory now cut price of the last decade?

I’m on the hunt for the UK’s most fun worth inventory, and asset supervisor abrdn (LSE: ABN) fulfils a lot of the standards. 

The FTSE 250-listed firm has been by means of hell over the past seven years. But the worst might lastly be over.

abrdn is the ungainly progeny of the 2017 merger between fund managers Commonplace Life and Aberdeen Asset Administration. Their mixed worth was initially £11bn. In the present day, abrdn is price a meagre £2.63bn. Speak about a burning platform.

Will the abrdn share value ever cease falling?

The 2 teams turned out to have enormous fund overlap and needed to cull 100 of them. It additionally stumbled right into a authorized combat with Lloyds, which pulled £25bn of its mandate.

Each events introduced their issues. Aberdeen was an rising markets specialist, however China went into meltdown. Commonplace Life’s World Absolute Return Methods (GARS) was the UK’s hottest fund price £24bn, however that folded final 12 months. I received’t go into the misguided abrdn rebrand. That will be merciless.

The group dropped out of the FTSE 100 in August 2022 and once more final summer time. In the present day, it stays within the FTSE 250. Its shares peaked at 499p in Could 2015 however now commerce at 147p, down 70%. They usually proceed to battle, falling one other 6.97% over the past 12 months.

I’ve simply noticed its identify on a listing of prime 10 most shorted UK shares, with six fund managers betting it has additional to fall. Collectively, they maintain 5.63% of the overall share rely.

Who would spend money on a inventory like this? Effectively I’m tempted. The punishment beating has gone on lengthy sufficient. It bought one factor proper, shopping for the interactive investor buying and selling platform, which widens its providing.

Better of all, it gives a shocking yield of 9.89%. That’s an excellent price of earnings, offering it holds.

And it delivered some excellent news on 6 August, with half-year revenues and earnings beating analyst estimates. CEO Jason Windsor, talked up the group’s “encouraging start” however let’s not get too excited. Adjusted working earnings rose simply 1% to £128m. Revenues fell 7% to £667m.

Dividend to die for

Price-cutting helped abrdn ship a £187m revenue earlier than tax. Final 12 months, it misplaced £169m. Internet fund flows rose by £600m. A inventory market restoration would assist.

The abrdn yield is fab however that’s all the way down to the ailing share value. Dividends have been frozen at 14.6p per share for the final 4 years. This chart reveals how they’ve flatlined.

I’m apprehensive that abrdn’s fame might deter brokers from putting enterprise with the group. Plus I anticipated the shares to be cheaper, though in the present day’s trailing P/E of 10.41 instances earnings is hardly demanding.

One factor happens. abrdn isn’t the one monetary providers firm providing a mighty yield. FTSE 100 asset managers Authorized & Basic Group and M&G are additionally across the 9% mark. Their shares have averted meltdown, however hardly flown. This can be a struggling sector.

Since I maintain each L&G and M&G, shopping for abrdn would solely replicate the dangers and rewards. In any other case, I’d fill my boots. Abrdn may simply be cut price of the last decade.