When Jeff Bezos said that one breakthrough technology would shape Amazon’s destiny, even Wall Street’s biggest analysts were caught off guard. Fast forward a year and Amazon’s new CEO Andy Jassy described generative AI as a “once-in-a-lifetime” technology that is already being used across Amazon to reinvent customer experiences. At the 8th Future Investment Initiative conference, Elon Musk predicted that by 2040 there would be at least 10 billion humanoid robots, with each priced between $20,000 and $25,000 ...

Industry Overview - The Zacks Investment Management industry is under pressure from rising technology and AI-related expenses, which are expected to impact near-term profitability despite potential long-term efficiency gains [1][4] - The industry is characterized by companies managing securities and funds for clients, earning revenue through service fees or commissions [3] Key Themes Influencing the Industry - Rising Expenses: Increased technology and AI-related costs are expected to hurt profits in the near term, alongside elevated compliance costs due to regulatory requirements [4] - Demand for Passive Investing: A shift towards low-cost passive funds has compressed fees and intensified competition, leading to reduced revenue per dollar of assets and limiting earnings growth [5][6] - Mergers and Partnerships: Firms are pursuing mergers and partnerships to achieve scale, cut costs, and diversify offerings in response to competitive pressures [7][8] Performance Metrics - The Zacks Investment Management industry has underperformed the S&P 500 Index, with a collective gain of 8.4% over the past two years compared to 41.6% for the S&P 500 [13] - The industry's current Zacks Industry Rank is 137, placing it in the bottom 44% of over 250 Zacks industries, indicating a bleak earnings outlook [9][10][11] Valuation Insights - The industry has a trailing 12-month price-to-tangible book ratio (P/TB) of 4.07X, significantly lower than the S&P 500's 11.78X, indicating a discount compared to the broader market [17][19] - Compared to the broader Finance sector, the Zacks Investment Management industry is trading at a discount, with the Finance sector's P/TB at 6.06X [19] Company Highlights Ameriprise Financial (AMP) - As of December 31, 2025, Ameriprise had total assets under management of $1.7 trillion, with a CAGR of 9.2% in net revenues over the past five years [24][25] - The company has been restructuring its business and focusing on core competencies to improve market share [26] - Ameriprise shares have gained 4.2% in the past three months, with a Zacks Rank of 2 (Buy) [28] SEI Investments Company (SEIC) - SEIC administered $1.9 trillion in assets as of December 31, 2025, with a CAGR of 9.9% in total assets under management over the past five years [31][32] - The company has made strategic acquisitions to enhance its business capabilities, including the recent acquisition of Stratos for $440.8 million [35][36] - SEIC shares have gained 0.7% in the past three months, also carrying a Zacks Rank of 2 [36] Federated Hermes, Inc. (FHI) - Federated Hermes had $902.6 billion in assets under management as of December 31, 2025, with a CAGR of 7.8% over the past five years [38][39] - The company has been actively seeking alliances and acquisitions to expand its global presence [39] - FHI shares have gained 14.2% in the past three months, maintaining a Zacks Rank of 2 [42]

Core Insights - SEI Investments is well positioned in the outsourcing market, with a strong pipeline described as the best in the company's history, as large managers seek to consolidate vendors and move towards outsourced models [1] - The Investment Managers Services (IMS) segment has shifted from a 70% traditional and 30% alternatives mix to an inverse mix, indicating a significant trend towards alternative strategies [2][5] - SEI's strategy focuses on the "three A's" of financial services: administration, asset management, and advice, with recent expansion into the advice channel through the Stratos acquisition [3][6] Investment Management Services - The IMS segment is experiencing record pipeline growth as large managers outsource fund administration, although there may be near-term margin pressure due to new implementations and technology investments [5][6] - SEI's private banking business has improved margins to around 18%, recovering from previous negative margins, aided by leadership changes [8] Asset Management - SEI's asset management segment is viewed as a significant opportunity, with new leadership leading to early recovery, including approximately $200 million in positive inflows after a year of large outflows [4][11] - Plans to launch 7-8 new ETFs in 2026 are underway, with $1.4 billion in ETF flows recorded in 2025 [4][12] Stratos Acquisition and AI - The Stratos acquisition aims to enhance SEI's exposure to the advice channel, which is less affected by pricing pressures compared to other areas [13] - SEI is exploring AI and automation to improve efficiency and reduce costs, with ongoing ventures in AI technology [14] Capital Allocation - SEI has historically maintained conservative leverage but is considering moving towards a net leverage of 0x to 1x over time, with intentions to return 90%-100% of free cash flow to shareholders [15]

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SEI Investments Conference Call Summary Company Overview - SEI Investments is positioned as the "connective tissue" of the financial services industry, providing administration platforms, asset management platforms, and advice services. The recent acquisition of Stratos, a large Registered Investment Advisor (RIA), has expanded SEI's footprint in the advice sector, enhancing its three revenue drivers: administration, asset management, and advice [3][4][39]. IMS Business Insights - The IMS (Investment Management Services) business is viewed as the crown jewel of SEI, experiencing steady double-digit growth. The client base includes some of the largest fund managers globally, with a significant shift from traditional to alternative investments, now comprising approximately 70% of the business [5][6]. - SEI has a strong pipeline of potential new business, with expectations to announce significant wins in Q1. The company is seeing a trend of insourcers moving to outsourced fund administration models, which positions SEI favorably [7][9]. - There is an anticipated near-term margin pressure due to investments in technology and manpower to support new fund launches and client onboarding [10][12][14]. Private Banking Business - The private banking segment has shown improvement, with a notable increase in non-recurring professional services, which are becoming more frequent and lucrative. Margins in this segment are currently around 18%, with professional services margins reaching approximately 40% [20][23]. - The pipeline for private banking is robust, with a focus on regional and community banks, which can make quicker decisions compared to larger institutions. This strategy has led to increased sales events and revenue [27][29]. Asset Management Challenges - The asset management business has faced challenges, particularly in light of previous negative flows. However, new leadership has been brought in to revitalize this segment, with early signs of positive inflows and new product launches, including several ETFs planned for 2026 [34][36]. - The company aims to move upmarket and has successfully secured significant asset management engagements that were previously not pursued [36][37]. Stratos Acquisition - The acquisition of Stratos is seen as a strategic move to enhance SEI's advisory capabilities. Early feedback from advisors has been positive, indicating interest in SEI's offerings. The integration aims to leverage Stratos' existing relationships without forcing advisors onto SEI's platform [40][42][43]. Technology and AI Initiatives - SEI is investing in AI and automation to improve operational efficiency and reduce labor intensity. The company has partnered with AI-focused firms to enhance its technology offerings and is exploring automation to streamline processes [51][54]. - The company acknowledges the potential risks posed by AI disruption but believes its established market position and regulatory barriers provide a strong defense [50][53]. Financial Performance and Capital Allocation - SEI has improved its margins by approximately 140 basis points in the past year, with a goal of continuing to enhance margins by 25-50 basis points annually. The focus is on scaling revenue without proportionately increasing headcount [65][66]. - The company has been active in stock buybacks and is open to leveraging debt for future investments, particularly to support the Stratos acquisition. However, it remains conservative regarding overall leverage [68][71][73]. Conclusion - SEI Investments is undergoing a significant transformation under new leadership, focusing on enhancing its service offerings, improving operational efficiency, and strategically positioning itself in the financial services market. The company is optimistic about future growth opportunities across its various business segments.

Core Viewpoint - SEI Investments Company is hosting one-on-one or small group meetings for investors, indicating a proactive approach to investor relations and engagement [1] Group 1 - Denham and Brad Burke, Head of Investor Relations, will lead the meetings throughout the day, highlighting the company's commitment to direct communication with investors [1] - Investors interested in attending or requesting a meeting are encouraged to contact UBS, suggesting a structured process for engagement [1] - A replay of the webcast will be available in the Investor Relations section of SEI's website, providing additional resources for investors to access information post-conference [1]

Company Participation - SEI will participate in the UBS Financial Services Conference in Key Biscayne, FL on February 10, 2026, with CFO Sean Denham speaking at 1 p.m. Eastern time [1] - Denham and Brad Burke, Head of Investor Relations, will conduct one-on-one or small group meetings throughout the day for investors [2] Company Overview - SEI is a leading global provider of financial technology, operations, and asset management services within the financial services industry [3] - As of December 31, 2025, SEI manages, advises, or administers approximately $1.9 trillion in assets [3]

Core Insights - SEI Investments Company (NASDAQ:SEIC) is recognized as one of the largest publicly traded asset managers, with a recent price target increase from Piper Sandler to $109 from $102, maintaining an Overweight rating [1] - The company's quarterly results showed core earnings per share significantly surpassing both market expectations and Piper Sandler's projections, with revenue reported at $607.93 million, exceeding the anticipated $596.9 million [1] - Piper Sandler noted a continued upward trend in sales momentum, consistent with previous quarters, and hinted at potential high-profile client acquisitions in Q1 2026 [2] Financial Projections - Following the positive quarterly results, Piper Sandler raised its earnings per share estimates for SEI Investments Company to $6.06 for 2026 and $6.87 for 2027, up from previous estimates of $5.67 and $6.34 respectively [2] Company Overview - SEI Investments Company provides technology and investment solutions to financial institutions, advisors, and families, offering services that include investment processing, management, and operations outsourcing [3]

Core Insights - SEI Investments Co. (SEIC) reported fourth-quarter 2025 earnings of $1.38 per share, exceeding the Zacks Consensus Estimate of $1.34, reflecting a 16% increase from the prior-year quarter [1][10] - The company's net income attributable to SEI Investments was $172.5 million, up 11% year-over-year, supported by higher revenues and a rise in assets under management (AUM) [3][10] - Total quarterly revenues reached $607.9 million, a 9% year-over-year increase, driven by higher asset management and administration fees, surpassing the Zacks Consensus Estimate of $595.8 million [5][10] Financial Performance - For the full year 2025, SEIC's earnings were $5.63 per share, exceeding the Zacks Consensus Estimate of $4.99, with net income attributable to SEI Investments at $715.3 million, up 23% from the previous year [4] - Total quarterly expenses were $446.3 million, an 8% increase year-over-year, influenced by various cost components, while operating income rose 11% to $161.6 million [6] - As of December 31, 2025, AUM was $554.6 billion, reflecting a 16% increase from the prior-year quarter, with client assets under administration (AUA) at $1.25 trillion, up 18% year-over-year [7] Strategic Developments - SEIC completed the first stage of its strategic collaboration with Stratos Wealth Holdings, investing approximately $527 million for a 57.5% stake [2] - The reported quarter included $20.1 million in elevated corporate overhead due to severance expenses and third-party M&A fees related to Stratos, alongside a $3 million tax benefit from purchased energy credits [3] Shareholder Actions - In the reported quarter, SEIC repurchased 1.2 million shares for $101 million at an average price of $82.61 per share [8] Industry Context - SEI Investments' global presence, diverse product offerings, and robust AUM balance are expected to support revenue growth, despite concerns over elevated operating expenses and concentrated fee-based revenues [9]

Core Viewpoint - SEI Investments (SEIC) has shown a 5% gain over the past four weeks, with a mean price target of $109.5 indicating a potential upside of 27.2% from its current price of $86.1 [1] Price Targets and Analyst Estimates - The mean estimate consists of four short-term price targets with a standard deviation of $8.66, where the lowest estimate is $102.00 (an 18.5% increase) and the highest is $117.00 (a 35.9% increase) [2] - A low standard deviation suggests a high degree of agreement among analysts regarding the stock's price movement, which can serve as a starting point for further research [9] Earnings Estimates and Analyst Sentiment - Analysts are optimistic about SEIC's earnings prospects, as indicated by a positive trend in earnings estimate revisions, which has shown a 0.5% increase in the Zacks Consensus Estimate over the past month [11][12] - SEIC holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimates, indicating strong potential for upside [13] Caution on Price Targets - While price targets are a commonly referenced metric, they should be approached with skepticism as they may not reliably indicate actual stock price movements [3][10] - Analysts may set overly optimistic price targets due to business incentives, which can lead to inflated estimates [8]