Sometimes the City falls back in love with a stock not because anything dramatic has changed, but because the mood music sounds a little better.
That seems to be the case with Polar Capital Holdings PLC (AIM:POLR), the fund manager whose shares jumped 5% after Deutsche Bank raised its rating from “hold” to “buy” and nudged up its target price from 550p to 600p.
The catalyst is a modest one. Analysts reckon that in September, Polar brought in £100 million of net inflows, mainly into its technology strategies.
That is hardly transformative in the grand scheme of a £20 billion-plus asset manager, but it comes at a time when the industry as a whole is struggling to attract fresh money.
Deutsche notes that Polar’s assets under management have risen by about 15 per cent since June, helped by buoyant markets and, in particular, the rally in technology and artificial intelligence-linked stocks.
In a business where rising markets lift fee income without any extra effort, that makes a difference.
The broker also likes the company’s niche. Polar is not a sprawling one-stop shop but a specialist, offering funds in areas such as technology, healthcare, financials and emerging markets.
That focus brings risks; concentration in just a few sectors can cut both ways, but it also sets it apart from more generalist rivals. Recent flows, Deutsche argues, show Polar has been more resilient than peers.
The shares had de-rated, meaning they had fallen relative to both their own history and to competitors, leaving the stock looking cheaper than it had for some time.
If markets stay friendly, and if those inflows keep trickling in, the case for a re-rating looks stronger. The next trading update is due on 9 October, and investors will be watching to see whether this early autumn bounce has legs.
The shares rose 24p to 529p.
---UPDATED TO AMEND BROKER NAME---