Cohen & Steers(US:CNS)2022-10-20 17:25Financial Data and Key Metrics Changes - Earnings per share for Q3 2022 were $0.92, down from $1.06 in the prior year's quarter and $0.96 sequentially [7] - Revenue decreased to $140.2 million from $154.3 million year-over-year and $147.7 million sequentially [8] - Operating income was $60.1 million, down from $70.4 million in the prior year's quarter and $64 million sequentially [9] - Assets under management (AUM) decreased to $79.2 billion, down $8.7 billion or 9.9% from June 30 [12] Business Line Data and Key Metrics Changes - Advisory accounts had net outflows of $220 million, an improvement from $408 million in the previous quarter [13] - Japan sub-advisory saw net inflows of $132 million, compared to $23 million in the second quarter [13] - Open-end funds experienced net outflows of $732 million, worsening from $244 million in the previous quarter [14] Market Data and Key Metrics Changes - The firm experienced a total of $598 million in net outflows firmwide for the quarter, bringing year-to-date outflows to $559 million [47] - The outflows were primarily driven by U.S. REITs, with one allocator accounting for $1 billion of the outflows [49] - Preferred securities had inflows in the first part of the quarter but faced redemptions in September [50] Company Strategy and Development Direction - The company plans to prioritize initiatives more stringently and defer discretionary spending until the recession's magnitude becomes clearer [40] - There is a focus on increasing allocations to global listed infrastructure and multi-strategy real assets due to accelerating demand [57] - The company believes that corrections in REIT and preferred security prices will present compelling entry points over the next year [59] Management's Comments on Operating Environment and Future Outlook - Management noted that the current environment is one of the biggest regime shifts in the macroeconomic landscape [40] - There is an expectation that the Fed's tightening process will create investment opportunities, particularly in preferred securities [71] - The company anticipates that REITs will provide better returns than core real estate over the next three years [30] Other Important Information - The firm’s liquidity totaled $269.9 million at quarter end, an increase from $227.7 million last quarter [12] - The effective tax rate remained consistent at 25.25% [11] - The company is continuing investments in technology to improve operational efficiencies despite the current market challenges [18] Q&A Session Summary Question: Update on private real estate efforts and tactical opportunities - The company is in the market for strategies to raise assets and is being patient in deploying capital due to macroeconomic conditions [66][67] Question: Potential for inflows in REITs and preferreds - Management indicated that investors are waiting for the Fed's tightening process to play out before making moves into preferreds, while real estate interest is currently low [71][72] Question: Outlook for U.S. real estate portfolio - The portfolio is balanced with little exposure to office space, focusing on residential and self-storage sectors due to their pricing power [91] Question: Investments in non-U.S. advisory and Asia - The company has made significant investments in U.S. advisory and is seeing green shoots of interest in Asia Pacific, planning to allocate more resources there [79][82] Question: Cost structure and organic growth - The company is balancing near-term market challenges with long-term investments in talent and seeding new strategies [84][86]