Directors have just approved the UK share’s dividend at last year’s level and issued an positive outlook statement. This means that it currently brings almost 10% profit and this is one I want to investigate further with a view to purchasing.

The company in question is Liontrust Asset Management (LSE:LIO). As the name suggests, it works as a specialist fund manager.

The history of the sector is that managed funds generally have fallen on challenging times due to negative investor sentiment. This has led to a steady outflow of people withdrawing money from managed funds.

Poor numbers

So today’s (June 26) Liontrust full-year earnings report looks like a slow-motion car crash with negative percentages when we’d all like to see positive numbers.

As the chart shows, long-suffering shareholders have had a terrible time:

However, there is a note of optimism in the forecast. Executives expect sentiment in the investor community to improve, especially if interest rates start to fall again.

If rates fall as expected, the environment for businesses, stocks and shares is likely to improve. This may mean that we will have a lasting period of good economic conditions and a stable boom. Although, of course, such positive effects are not certain.

Nevertheless, as mentioned, directors maintained their optimism by maintaining the all-important shareholder dividend at last year’s level. I think this speaks well to the quality and value at the core of the business.

If they can repeat this trick in the current trading year to March 2025, as analysts predict, the forward-looking profitability is now compelling – at least to me. With a share price of around 732p, that’s a whisker above 9.8%.

Value and opportunity

However, for dividend income to flow into my portfolio, I would have to account for the risk and uncertainty that comes with it. One is that the company is diminutive, with a market capitalization of just under £488m.

Another risk is the possibility that negative investor sentiment may never return to managed funds. It is well known that many – perhaps most – managed funds tend to underperform their benchmarks. As a result, there is a growing movement of investors choosing low-cost, mechanically managed tracker funds instead. Moreover, thanks to the Internet, choosing stocks and investing independently has become accessible and profitable for everyone.

By March 31, 2024, the company’s assets under management and advisory (AuMA) ratio was down 11.5% compared to the previous year.

Nevertheless, CEO John Ions said Liontrust has a growing and “compelling” a wide range of investment teams with stalwart processes. The brand is there “strong”, and Ions is confident the company has a platform capable of delivering growth.

These value-style opportunities never look so great when you analyze the numbers in isolation. But that’s why value often comes first.

Sometimes it’s darkest just before dawn. If this is the case, we may see economic recovery in the coming months and years. So I roll up my sleeves and delve into further and deeper research.