What Does GCM Grosvenor’s Newly Added Risk Factor Tell Investors?

Chicago-headquartered GCM Grosvenor (GCMG) provides asset management solutions. It has $66.9 billion in assets under management. The company’s board recently authorized a large stock repurchase plan.

Don't Miss our Black Friday Offers:

Unlock your investing potential with TipRanks Premium - Now At 40% OFF!
Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter

Let’s take a look at the company’s latest financial performance, stock repurchase program, and risk factors.

GCM Grosvenor’s Q2 Financial Results

The company reported a 33% year-over-year increase in revenue to $119.7 million for the second quarter. Revenue surpassed consensus estimates of $103 million. Adjusted net income rose 30% year-over-year to $19.3 million. The company plans to pay a quarterly cash dividend of $0.09 per share on September 15. (See GCM Grosvenor stock charts on TipRanks).

GCM Grosvenor’s Board Approves $25 Million Stock Repurchase Program

The company plans to buy back up to $25 million worth of its Class A shares from time to time. It may repurchase the shares on the open market or through privately negotiated transactions. GCM Grosvenor plans to cancel the repurchased shares.

GCM Grosvenor’s Risk Factors

The new TipRanks Risk Factors tool shows 76 risk factors for GCM Grosvenor. Since December 2020, the company has updated its risk profile to introduce one new risk factor under the Finance and Corporate category.

The company tells investors that the planned stock repurchase will reduce its cash reserves. As a result, that could impact its ability to pursue other opportunities such as acquisitions. Additionally, while GCM Grosvenor expects the repurchase to boost its stock price, it cannot guarantee investors that this will be the case.

Finance and Corporate is GCM Grosvenor’s main risk category, accounting for 70% of the total risks. That is above the sector average at 58%. GCM Grosvenor’s shares have declined about 13% since the beginning of 2021.

Analysts’ Take

In June, J.P. Morgan analyst Kenneth Worthington reiterated a Buy rating on GCM Grosvenor stock and raised the price target to $15 from $14.50. Worthington’s new price target suggests 29.53% upside potential.