Research on Polar Capital Holdings Plc (POLR) from Equity Development
AUM grew 43% over H1 to £43.7bn and has doubled over 18 months. Q2 net flows were +£1.2bn, compared with +£2.4bn in Q1 and +£1.4bn in Q4 FY26, in an environment where most UK active equity funds have suffered heavy outflows. Investment performance was negative £2.4bn in Q2, mostly driven by a fall in technology valuations in July. Management stated that the strongest client demand was for its specialist strategies, namely Global Technology, Artificial Intelligence, Biotechnology and Smart Energy, with the geographic mix of new business continuing to broaden. In Q1, the Global Technology Fund (AUM £16.7bn) returned +60% against +33% for its benchmark. Our FY27 forecasts reflect revenue growth of 35%, core operating profit growth of 90% and PBT growth of 72%. Mark to market performance fee profits of £8.8m are above our previous forecast of £4.8m, although most crystallise in December and there is no guarantee they will crystallise at or above current levels, or at all. Core profit forecasts are unchanged, and average AUM remains the key driver. Our Fair Value of 1,250p per share compares with a share price of 805p, more than 50% above the current level. Polar has the lowest forward PER in the sector at 8.0x, alongside £151m of net cash and no debt, which in our view suggests its rating does not adequately reflect its earnings potential.
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