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Trust the Numis black box

Despite poor earnings visibility, the mid-tier investment bank has proved a sound long-term bet
Trust the Numis black box

Usually, this magazine extols the virtues of companies that make reliable cash flows from in-demand products sold to well-defined markets and run by executives that can manage clearly-forecasted costs. This week, forgive us for putting that hymn sheet aside, while we outline the buy case for an investment bank

Tip style
Risk rating
Long Term
Bull points
  • Excellent long-term returns
  • Strong demand for dealmaking
  • Overseas expansion
Bear points
  • Earnings opacity
  • Tough figures to beat

One glance at the past half-decade of income statements for Numis Corporation (NUM) tells the story. While revenues gradually climbed in the four years to 2018, alongside a steady expansion in client numbers, advisory fees and trading activity cratered in the 12 months to September 2019. The reason? In the words of the bank’s co-chief executives Alex Ham and Ross Mitchinson, “persistent political uncertainty, macro-economic factors and subdued, yet volatile markets”.

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