It is doubtful that, this time last year, anyone’s bingo card had St James’s Place (STJ) down as the worst-performing company in the asset and wealth management sector. However, regulatory intervention by the Financial Conduct Authority (FCA) over fees, combined with higher interest rates giving cash a shine that it has lacked for more than a decade, made 2023 a year to forget. Having once traded on a large premium, the FTSE 100 company is now barely in line with the laggards.
- Loyal, affluent customer base
- Resilient net inflows
- Corporate actions could have tangible impact
- Lingering regulatory risk
- Possible dividend cut
Such a fall from grace poses difficult questions for investors. Should we follow the Buffett/Munger formula and become greedy when others are fearful, or sit on the sidelines until a more obvious price recovery takes hold? The decision rests on two key points: what are St James’s Place’s strengths? And has the market overreacted to a short-term, external issue (in this case, fee pressure from the FCA)?