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Macquarie Group is up 1.97 per cent this morning to an all-time high of $136.47.

 

This gives the 'millionaires factory' a market capitalisation of $46.4 billion and makes it the 7th biggest company in Australia, behind the four banks, CSL and two miners, but ahead of Woolworths, Wesfarmers, and Telstra.

- I've been thinking that Macquarie is probably as sensible a way of taking up some Private Equity exposure as any: there's a diverse set of assets, the management is lean, keen and hungry, the rewards pathway is approximately appropriate. And those pesky layers of ticket clipping are reduced by being in-house.
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Macquarie is often labelled the âââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’‹Ã…“fifth bankâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢ of the ASX, but in reality, traditional banking like credit cards and mortgages makes up a very small portion of this companyâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢s earnings âââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã¢â‚¬Å“ around 12%. Macquarieâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢s real powerhouse is its investment banking business which is made up of its Macquarie Capital (MacCap) and Commodities and Global Markets divisions and accounts for around half of Macquarie Groupâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢s earnings.

 

Another chunk comes from Macquarieâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢s Asset Management business, which has grown considerably over the past decade and now places Macquarie in the top 50 global asset managers, with $542 billion of funds under management. The company offers both a range of managed funds and other investment vehicles as well as its popular âââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’‹Ã…“Macquarie Wrapâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢ investment management platform.

 

So in comparison with the other big four ASX banks, I think Macquarie has a far superior and diverse earnings model, which has enabled it to return a Compounded Annual Growth Rate (CAGR) in earnings per share of 15% over the past five years and 12% since the companyâââہ¡Ãƒâ€šÃ‚¬ÃƒÆ’¢Ã¢Ã¢â€š¬Ã…¾Ãƒâ€šÃ‚¢s public ASX listing in 1996.

 

For the 2019 financial year, Macquarie posted earnings per share of $8.83 and a full-year dividend of $5.75 per share (which equates to a yield on current prices of 4.35%). This means that in FY19, Macquarie paid out 66% of its earnings as dividends. This is among the higher-yielding shares we are looking at today (with a payout ratio to match), but I think that Macquarie will be able to keep its earnings growing at double digits over the coming years, and its dividend as well (especially considering the dividends have been growing at 17% over the past five years).

(But the change ... 15 for the five year period but only 12% over it's lifetime ... hides a huge wobble, when investors got nervous as Macquarie had to morph it's model, post GFC)

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(But the change ... 15 for the five year period but only 12% over it's lifetime ... hides a huge wobble, when investors got nervous as Macquarie had to morph it's model, post GFC)

 

 

But their ability to adapt to a new environment is remarkable.

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The Millionaires factory may be in a spot of regulatory bother.

Sixty current and former Macquarie employees, including its chief executive Shemara Wikramanayake, have been named as suspects in a German investigation into short-selling activities.

 

Key points:

60 former and current Macquarie employees are among 400 suspects in a German tax scam probe

The schemes being investigated are known as "cum-ex trades", where two parties simultaneously claim ownership of the same shares and therefore claim tax rebates they are not entitled to

The practice was banned in Germany in 2012, but could have cost German coffers billions

German prosecutors and tax authorities are seeking to recover billions of euros from traders and banks that allegedly profited from schemes known as "cum-ex trades".

 

It is being alleged that financial institutions exploited a legal loophole which, at the time, allowed two parties to simultaneously claim ownership of the same shares, and therefore claim tax rebates which they were not entitled to.

 

Macquarie is among 400 suspects in total that are being investigated by German authorities.

 

The investment bank acted as a lender to a group of funds involved in the share trading in 2011, from which it withdrew in 2012.

 

The practice was banned in Germany in 2012.

 

In a statement to the Australian Stock Exchange, released to the market after close of trade on Thursday, Macquarie said the probe, which originally involved 22 original suspects including its chief executive Ms Wikramanayake, and the company's former chief executive, Nicholas Moore, had now extended to 60 current and former employees.

 

Ms Wikramanayake, who was previously Macquarie's head of asset management, replaced former chief executive Nicholas Moore as CEO in December 2018.

 

Macquarie said most of the 60 suspects are no longer at the investment bank, and no current Macquarie employees had yet been interviewed as part of the investigation.

 

Obviously the market sees it as a storm in a teacup.

Up another 1,36 today.

Resilience at its very best.

Mick

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Should I Buy Macquarie Bank Shares? Highlights

 

MQG Share Price

 

Much like the rest of the market MQG shares have now fully recovered from the COVID Crash, and are now pushing all-time highs. At the time of writing MQG is priced at $153.71. Their share price is up 10.72% over the last 6-months and up 22.79% over the last 12 months. These results are largely in line with the market average being up 21.73% in the last year.

 

MQG has dropped off slightly from its all-time high in May, their 52-week range is 118.36-162.06. Its current market capitalization is $56.6 Billion.

 

Over the past 10-years, MQG has made excellent returns for investors with their share price increasing 466.92%. Each year the share price has made an average gain of 41.66%, while also averaging a dividend yield of 15.04% over a ten-year period. Investors have enjoyed a 56.70% return averaged over the long term.

 

About

 

Macquarie Group is an international company in the financial services space. They operate in 32 markets in asset management, retail and business banking, wealth management, leasing and asset financing, market access, commodity trading, renewables development, specialist advisory, capital raising, and principal investment.

 

Macquaries Businesses:

 

Macquarie Asset Management – A top 50 global asset manager, managing over $495 billion of assets on behalf of superannuation funds and other institutional investors Macquarie Asset Management oversees three stand-alone businesses:

 

Macquarie Infrastructure and Real Assets (MIRA)

Macquarie Investment Management (MIM)

Macquarie Specialised Investment Solutions (MSIS)

Banking and Financial Services – This is Macquarie’s retail banking business that provides personal banking, wealth management, and business banking products.

 

There are two capital markets facing businesses:

 

Commodities and Global Markets – Conducts market research on behalf of clients covering equities, derivatives, fixed income, foreign exchange, and commodities.

 

Macquarie Capital – Advisers and facilitates the listing of companies on the share market, and provides other Investment banking services.

 

Macquarie Asset Management (MAM) and Commodities and Global Markets (CGM) are by far the most profitable ventures for Macquarie, each generating over $2 Billion in profits over the FY21.

 

Dividend History

 

MQG shares typically announce a dividend with the release of its half-yearly results in November and full-year results in May as seen in their financial calendar. Dividends are typically paid twice a year, in July (Final Dividend) and December (Interim Dividend).

 

The current average yearly dividend for MQG shares is $4.70 giving them a solid net yield of 3.07% or a gross yield of 3.59% at the current share price.

 

Financials

 

In May MQG released its Full Year FY21 report. The group lists the following highlights:

 

FY21 net profit of $A3,015 million, up 10% on FY20; 2H21 net profit of $A2,030 million, up 106% on 1H21, up 59% on 2H20

International income representing 68% of total income

AUM of $A563.5 billion, down 6%

Financial position comfortably exceeds regulatory minimum requirements

Group capital surplus of $A8.8 billion

Bank CET1 Level 2 ratio 12.6% (Harmonised: 16.2%)

Annualised return on equity of 14.3%, compared with 14.5% in FY20

Macquarie Group’s profit of $3 Billion, represents their largest profit to date.

 

Current Broker Views

 

Citi: Sell, Target Price: $140

 

Macquarie’s acquisition of AMP Capital’s global equities and fixed income business (GEFI) adds a further $60bn of funds under management (FUM), lifting Macquarie Asset Management’s (MAM) total FUM to $720bn.

 

Citi expects no earnings contribution in FY22 with a minor benefit in FY23/24.

 

Forecast:

 

Citi forecasts a full year FY22 dividend of 520.00 cents and EPS of 797.40 cents.

Citi forecasts a full year FY23 dividend of 540.00 cents and EPS of 808.60 cents.

Morgan Stanley: Overweight, Target Price: $175

 

The acquisition of GEFI will add further diversity, scale, and relationships in the A&NZ market.

 

Forecast:

 

Morgan Stanley forecasts a full year FY22 dividend of 550.00 cents and EPS of 845.00 cents.

Morgan Stanley forecasts a full year FY23 dividend of 605.00 cents and EPS of 908.00 cents.

Morgans: Add, Target Price: $171

 

MQG’s full-year profit beat Morgans estimates. Morgans are expecting a flattish result for FY22, with positive results from the Macquarie Capital (MC) and bank.

 

Forecast:

 

Morgans forecasts a full year FY22 dividend of 526.00 cents and EPS of 832.40 cents.

Morgans forecasts a full year FY23 dividend of 590.00 cents and EPS of 918.00 cents.

Prophet’s Take

 

Macquarie Group has performed very strongly during the economic downturn. Their strong balance sheet has allowed them to act in this time and grow their portfolio by acquiring AMP Capital’s global equities and fixed income business (GEFI), this has added $60 Billion of funds under management (FUM).

 

Their ability to respond and grow profits to all-time highs has proven the long-term ability of MQG. We are bullish on MQG.

 

Full Analysis: https://prophet-invest.com/should-i-buy-mac...rie-bank-shares

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Macquarie expects half year profit to nearly double as market conditions remain favourable for the Australian investment bank.

 

Although Macquarie warned investors that its results for the six months through September will be slightly down compared to the $2 billion profit booked for the half year ending March, it means earnings for the six months through September this year will probably be significantly higher than the $985 million it recorded for the same period in 2020.

 

While the relatively benign market conditions pale in comparison to the volatility the company profited from in late 2020 and earlier this year, Macquarie is enjoying a strong flow of big transactions and market activity.

and up $10 to $182 on the news; now slipping a little from that all time high, holding an 8% gain to $179

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Ally Selby (Livewire Markets ) : Next up, we have Macquarie Group, whose CEO has realised pay of $16.39 million in FY20. It has been a really great 12 months for Macquarie. Its share price has risen more than 47 per cent. Stuart, staying on you. Is it a buy, hold or sell?

Stuart Welch (Alphinity ) : I think Macquarie Bank is a buy. It is an exceptionally well-managed business, that over many years has managed to reinvent itself to capture whatever the new opportunities are in the market at that point in time. And I do not think this point in its evolution is any different. They are certainly set, particularly through the green energy bank, to be a major player in the shift towards net zero emissions.

In the shorter term, they are benefiting from a lot of strong corporate activity in the Macquarie Capital business. And the volatility we are seeing in energy prices and commodity prices is really supportive of the global markets business that they have as well. A lot of the other businesses are also doing well. The retail side is taking share from the majors with better service levels and standards. In many respects, the business is doing really well and looks pretty reasonably valued. So, it is a buy for us.

Ally Selby (Livewire Markets ) : Speaking of green investment, it recently announced it will be raising $1.5 billion to step up its green energy investments. Rhett, over to you. Is Macquarie a buy, hold or sell?

Rhett Kessler (Pengana ) : It is a buy. And I think Stuart has covered it exceptionally well. What I can potentially add is that I think there’ is going to be a global war for talent going forward. And these guys, through their culture and very strong human resources, realised a long time ago that people are their most valuable assets. I think they are leaders in that field. And then everything else Stuart said just means it is a buy.

 

( .... just do not mention NUIX !!)

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