Federated Hermes, Inc. is a global asset manager specialising in investment capabilities across a wide range of asset classes. The company provides investment-related services to various investment products, including sponsored investment companies and other funds (Federated Hermes Funds) as well as Separate Accounts, which include separately managed accounts, institutional accounts, sub-advised funds, and other managed products, in both domestic and international markets. The company also provides stewardship and real estate development services.
The group recently reached record high levels of assets under management (AUM) and is currently among the top six companies by AUM in the industry. The company is also seen as a leader in the money market fund industry and is expected to benefit from the secular migration from banks to money funds.
Technically, the price remains close to the lower range of an inclining channel pattern, which makes for an attractive investment opportunity (see black parallel trendlines).
The pattern is formed when the price approaches the lower trendline of the channel and shows signs of bouncing off it. This is considered to be a bullish continuation pattern.
According to the RSI (Relative Strength Index), the stock will be overbought at ~$55. This classifies our profit target of $39 as realistic.
We suggest a medium capital at-risk allocation to this trade.
Share Information
| Share code | FHI |
|---|---|
| Industry | Financial Services |
| Market Capital (USD) | 2.99 billion |
| One Year Total Return | 5.36% |
| Return Year-to-date | -4.62% |
| Current Price (USD) | 33.87 |
| 52 Week High (USD) | 45.55 |
| 52 Week Low (USD) | 30.30 |
| Financial Year End | December |
| Several technical indicators confirm a bullish bias. The current price provides a decent entry point and is also below its 200-day simple moving average. |
Consensus Expectations (Bloomberg)
| FY22 | FY23E | FY24E | FY25E | |
|---|---|---|---|---|
| Headline Earnings per Share (USD) | 2.65 | 3.32 | 3.68 | 3.90 | Growth (%) | 25.43 | 10.77 | 6.00 | Dividend Per Share (USD) | 1.08 | 1.12 | 1.20 | 1.25 | Growth (%) | 4.07 | 6.49 | 4.43 | Forward PE (times) | 10.19 | 9.20 | 8.68 | Forward Dividend Yield (%) | 3.32 | 3.53 | 3.69 | Solid earnings growth is expected over FY23. The stock holds a Beta of 0.89, which indicates that it is slightly less volatile than the S&P 500 index. |
Buy/Sell Rationale
Technical Analysis:
Long-term fundamental view:
| Share Name and position | TSLA - Stop-loss (Close the position) |
CNC - Buy (Continue to hold) |
BTAL - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 266.50 | 66.44 | 19.20 | Current | 240.50 | 69.26 | 19.95 | Movement | -9.8% | 4.2% | 3.9% | The stock breached our stop-loss level, leading us to close the position. | The stock remains above key support levels and is testing its 200-day simple moving average. Upside momentum remains supportive. Our profit target is $76 with a trailing stop-loss of $65.60. Exit the position on 30 November 2023. |
A falling wedge pattern remains of interest. The stock is testing its 200-day simple moving average, with upside momentum supportive of the trade idea. Our profit target is $21 with a stop-loss of $19.30. Exit the position on 13 December 2023. |
| Share Name and position | UNH - Buy (Continue to hold) |
AZO - Buy (Continue to hold) |
STRA - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 505.45 | 2556.06 | 76.64 | Current | 510.10 | 2576.10 | 75.61 | Movement | 0.9% | 0.1% | -1.3% | The price is stable and remains of interest. Trading above its 200-day simple moving average. Upside momentum supports the trade idea. Our profit target is $560 with a trailing stop-loss of $490. Exit the position on 3 January 2024. |
The price appears to be developing an incomplete broadening top pattern, which remains of interest. Remains above its 200-day simple moving average. Upside momentum regained strength, thus supportive of the trade idea. Our profit target is $2 800 with a trailing stop-loss of $2 461. Exit the position on 8 November 2023. |
The price appears to be in the accumulation phase of the stock market cycle and remains of interest. Trading below its 200-day simple moving average. Upside momentum remains halted, which is a concern. Our profit target is $85 with a trailing stop-loss of $72.30. Exit the position on 22 November 2023. |
