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Rating:Barron's Likes Hank Herrmann's Path Not Rated 5.0 Email Routing List Email & Route  Print Print
Tuesday, September 04, 2012

Barron's Likes Hank Herrmann's Path

News summary by MFWire's editors

Barron's reporter Leslie Norton gave Waddell & Reed [profile] a very bullish profile. Norton urges Barron's readers to look beyond the company's recent dip in stock price, caused in part by a second-quarter earnings report that disappointed some analysts, and focus on the firm's "long history of asset growth, superior mutual fund performance," and "penchant for returning capital to shareholders."

"Waddell is about as attractively priced as it's ever been," Tim Dalton of Dalton Greiner Hartman Maher told Norton. Investors could reap a return upward of "10 percent plus" by buying into W&R now, Dalton claimed.

Waddell's problem is one of perception rather than performance, writes Norton. The firm had plenty of bad press when it was implicated in the 2010 flash crash, even though it didn't end up losing money in the glitch, Norton reports.

And the recent redemptions from the firm's mutual fund business were tied to a single large pension plan, looking to reduce exposure to equities, which made a large withdrawal.

There are other factors fueling Norton's optimism. W&R CEO Hank Herrmann told Barron's that the 2003 launch of the firm's Ivy funds, which are distributed through B-Ds and wirehouses, effectively increased the firm's sales force twentyfold. And even though equities face no shortage of headwinds, Norton, and Hermann, think a rebound is inevitable.

"I may be a fossil, but I think this business is about greed and fear," says Hermann. Thus, says, Norton, an equities rebound is coming, which will boost W&R's prospects. 

Edited by: Chris Cumming

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