By
Brian D. Pacampara
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More Articles
December 15, 2010
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Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, asset manager Federated Investors (NYSE: FII ) has earned a respected four-star ranking.
With that in mind, let's take a closer look at Federated's business and see what CAPS investors are saying about the stock right now.
Federated facts
| Headquarters (Founded) |
Pittsburgh (1955) |
| Market Cap |
$2.7 billion |
| Industry |
Asset management |
| Trailing-12-Month Revenue |
$971.44 million |
| Management |
CEO John Donahue
CFO Thomas Donahue |
| Return on Equity (Average, Past 3 Years) |
43.8% |
| Dividend Yield |
3.6% |
| Competitors |
Affiliated Managers (NYSE: AMG )
Franklin Resources (NYSE: BEN )
T. Rowe Price (Nasdaq: TROW ) |
Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
On CAPS, 94% of the 273 members who have rated Federated believe the stock will outperform the S&P 500 going forward. These bulls include All-Stars BoiseKen and jsikorsk, both of whom are ranked in the top 10% in our community.
On Nov. 12, aordinaryguy tapped Innophos as an attractive way to make some income:
Long term investment -- will rise as fed rate rises. Nice dividend pays me to wait. What will cause the fed fund rate to rise? Inflation. This is my hedge. A hedge that drops dividends to my bottom line. Gold does not have that type of power. Sell gold, buy [Federated].
With about $260 billion in money market assets under management, Federated is becoming an increasingly popular way to bet on rising interest rates. Thanks in large part to its massive scale advantages, Federated's three-year average return on equity (43.8%) easily tops that of listed foes Affiliated Managers (6.2%), Franklin Resources (17.7%), and T. Rowe Price (19.3%), as well as other fund managers like BlackRock (NYSE: BLK ) (7.6%) and Legg Mason (NYSE: LM ) (-9.4%).
CAPS All-Star jsikorsk expands on the Federated opportunity:
Revenue is set to rise with a return of full-fare fees once interest rates rise. This may take a while, given QE2, but it will happen. Money Market funds will also see cash inflows as the economy improves and as bond prices decline. These two reasons aside, I value the company assuming conservative cash flow in the low $30s.
What do you think about Federated, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!
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