Affiliated Managers (US:AMG)2022-05-02 16:49Financial Data and Key Metrics Changes - AMG reported economic earnings per share of $4.65, reflecting a 9% year-over-year increase driven by growth in management fee earnings and capital deployment [4][18] - Adjusted EBITDA for the first quarter was $255 million, a 3% increase year-over-year [16][18] - Net client cash inflows, excluding certain quantitative strategies, were $2.7 billion for the quarter [18] Business Line Data and Key Metrics Changes - In alternatives, AMG reported net inflows of $6 billion, with $4 billion coming from private market flows [18] - Liquid alternatives generated $2 billion of inflows as clients sought uncorrelated return streams [19] - Global equities experienced net outflows of $3 billion, with strong sales activity but offset by redemptions in growth strategies [20] Market Data and Key Metrics Changes - The market environment for asset management has shifted, with a pronounced resurgence in value performance benefiting affiliates like Yacktman and EIG [6][7] - ESG strategies are being tested, but demand remains strong for established managers like Boston Common and Parnassus [8] - The company noted a fundamental shift in client behavior towards active management in response to geopolitical tensions and inflation [6][30] Company Strategy and Development Direction - AMG's strategy focuses on diversifying its business and enhancing its position through strategic transactions, such as the merger of Baring with EQT [9][10] - The company aims to capitalize on opportunities in high-demand areas, including private markets and liquid alternatives [12][15] - AMG's partnership model is designed to align with the long-term strategic goals of its affiliates, enhancing their growth potential [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to navigate the changing market environment and capitalize on opportunities for growth [15][27] - The company anticipates that the ongoing rotation within the industry will present new opportunities for high-quality active managers [5][6] - Management highlighted the importance of maintaining a strong balance sheet to support growth investments and return capital to shareholders [25][26] Other Important Information - AMG plans to allocate approximately 60% of the proceeds from the Baring transaction towards growth investments and share repurchases [25][70] - The company has repurchased $185 million of shares in the first quarter and targets $400 million for the full year, subject to market conditions [26][70] Q&A Session Summary Question: Changes in Investor Behavior - Management noted that the market environment is favorable for active management, with clients increasingly taking an active approach to managing exposures [30][31] Question: Deferred Payments and Cash Flow - Management indicated that deferred payments from transactions are relatively modest and structured to align with performance [42][44] Question: Decline in EBITDA and Future Investments - Management explained that the expected decline in EBITDA for the second quarter is primarily due to market conditions, with strong performance in absolute return strategies expected to drive future growth [46][51] Question: Non-U.S. Strategies and Currency Impact - Management acknowledged modest headwinds from currency impacts but emphasized strong long-term performance in non-U.S. strategies [58][60] Question: Accretion Timeline and Capital Allocation - Management detailed plans for capital allocation post-Baring transaction, focusing on growth initiatives and share repurchases while maintaining a disciplined approach [69][71]