Hamilton Lane(US:HLNE)2022-11-01 20:53Financial Data and Key Metrics Changes - Year-to-date management and advisory fee revenue grew by 19%, while fee-related earnings increased by 10% compared to the prior year period [7] - GAAP EPS for the year-to-date was $1.88 based on $68.4 million of GAAP net income, and non-GAAP EPS was $1.95 based on $104.7 million of adjusted net income [7] - A dividend of $0.40 per share was declared, representing a 14% increase over the previous fiscal year, targeting $1.60 per share for fiscal year 2023 [8] Business Line Data and Key Metrics Changes - Total asset footprint, defined as the sum of AUM and AUA, stood at approximately $824 billion, reflecting a 2% year-over-year increase [20] - AUM grew by over $11 billion or 12% year-over-year, with fee-earning AUM at $52.7 billion, an increase of $8.1 billion or 18% relative to the prior year [21][23] - Fee-earning AUM from customized separate accounts was $32.3 billion, growing 18% over the past 12 months, while specialized funds reached $20.4 billion with a similar growth rate [25][26] Market Data and Key Metrics Changes - Public market volatility has created both opportunities and challenges, with some investors pivoting towards private markets for higher returns due to uncertainty [13] - Consumer spending remains strong in certain sectors, while technology valuations have declined, impacting the overall market landscape [14] Company Strategy and Development Direction - The company is expanding its global footprint with new offices in Europe and enhancing its distribution capabilities [16] - A new equity program was instituted to retain key talent and align employee interests with shareholders, with performance thresholds set for stock awards [17][18] - The company is focused on growing its presence in the retail channel and broadening its product offerings, including the launch of the Strategic Credit Opportunities Fund (SCOPE) [40] Management's Comments on Operating Environment and Future Outlook - The macroeconomic environment remains challenging with high inflation and rising interest rates, leading to a slowdown in economic growth [12] - Management believes that private markets are a long-term asset class and remains committed to maintaining growth despite current market conditions [15] - The company has experienced net positive inflows in all but one month year-to-date, averaging over $80 million of monthly net inflow for 2022 [43] Other Important Information - The acquisition of 361 Capital has enhanced the company's distribution capabilities, and a transaction agreement is in place to transfer management of certain funds to a third party [38] - The company has successfully exited its investment in the Private Market Connect joint venture, generating over a 20 times multiple on the initial investment [54] Q&A Session Summary Question: Discussion on tokenization and blockchain technology - Management discussed how tokenization can streamline legal processes and reduce costs, making access to private market investments easier [72][74] Question: Concerns about Evergreen fund inflows - Management views the outflow in September as a one-off and not indicative of a trend [80] Question: Product suitability for blockchain environment - Management believes that over time, private market investments will migrate to a tokenized environment, reducing friction and costs for customers [86] Question: Credit opportunities product strategy - The focus is on investing in small- to mid-sized companies that are cash flow positive, providing attractive risk and reward characteristics [90] Question: Outlook for 2023 commitments to private equity - Management anticipates a challenging environment for 2023 due to reduced capital availability and a slow market [110]