Could the worst be over for the AMP Ltd (ASX: AMP) share price? For years, AMP shares have been synonymous with ‘poor investment’, no way around it. Over the past five years, AMP shares have lost a painful 77.5% of their value.
But the past month or so has proved to be quite a happy time for investors. The AMP share price closed on Friday at $1.18. That’s up significantly from the all-time low of just 86 cents that we saw in the early months of 2022. Indeed, AMP remains up a healthy 18% over the year to date and by the same amount over the past month.
So this marked recovery in AMP’s value might have some optimistic shareholders wondering if the worst is over for the long-suffering financial services company and former ASX 200 blue-chip share.
So is it?
Well, let’s see what one ASX expert investor reckons. Neil Margolis is the lead portfolio manager at Merlon Captial Partners. He was quoted in a report in the Australian Financial Review (AFR) this week on AMP.
When asked if the AMP share price had finally turned a corner, he replied “I truly hope so”. Here’s some more of what he said on AMP shares:
Now, more than ever, it is down to the discipline of the board to return capital to shareholders, rather than engaging in competitive M&A activity. While AMP’s private markets business was worth a lot more a few years ago, at least its carve-up and sale has exposed the excessive capital being ploughed into it to cash out opportunistic clients.
After completion of the divestments, the vast majority of the company’s current market capitalisation will be backed by cash, earn-outs and other investments, with upside from the remaining platform, banking and advice businesses. Again, we believe downside is limited unless the board allows investment banks into the room to sell the dream of an expanding empire once again.
AMP is indeed aiming to return capital to shareholders. As my Fool colleague Brendon covered earlier this week, the company is likely to undertake on-market share buybacks with the proceeds of its recent Collimate Capital sales. There is also the possibility of capital returns in the form of a special dividend or an off-market buyback program.
No doubt shareholders will be hoping AMP can keep the ball rolling.
At the current AMP share price, the company has a market capitalisation of $3.89 billion.
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