Virtus Investment Partners(US:VRTS)2021-02-02 20:01Financial Data and Key Metrics Changes - The company reported record earnings for 2020, with positive net flows and an organic growth rate of nearly 5% [8] - Operating income as adjusted for Q4 was $61.9 million, with a margin of 40.3%, up from $54.1 million and 39.3% in Q3 [15][45] - Earnings per share as adjusted reached $5.15, a 15% sequential increase [15][47] - The cash balance exceeded gross debt by $41 million at year-end [9][49] Business Line Data and Key Metrics Changes - Long-term assets under management (AUM) increased by nearly $16 billion or 14% to $130.7 billion, driven by market appreciation and positive net flows [10][21] - Positive net flows for the quarter were $2.6 billion, with significant contributions from open-end funds, retail separate accounts, and institutional [11][30] - Open-ended inflows were $0.7 billion, with retail separate accounts reaching a high of $1.3 billion [12][30] Market Data and Key Metrics Changes - The company experienced a 9.2% annualized organic growth rate in net inflows for Q4 [30] - Institutional net flows improved to $0.6 billion, recovering from prior outflows [13] - The partnership with AllianzGI added $29.3 billion in AUM, bringing pro forma AUM to $161.4 billion [17] Company Strategy and Development Direction - The company aims to diversify its investment strategies and enhance its distribution capabilities through partnerships, such as with AllianzGI and Westchester Capital [18][58] - The addition of Westchester Capital is expected to nearly double the assets under management in alternative strategies [54] - The company emphasizes a flexible approach to partnerships, allowing for various transaction structures to align interests effectively [93] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to generate organic growth despite market volatility, highlighting the importance of a diversified strategy [78][81] - The company anticipates continued strong demand for fixed-income strategies, reflecting a shift in market conditions [80][104] - Management believes the multifaceted approach to growth positions the company well for long-term success [62] Other Important Information - The company repurchased approximately 40,000 shares, reducing common shares outstanding by 0.5% [16][50] - The effective tax rate for the quarter was 27%, consistent with prior periods [46] - The company plans to present a new asset class category, multi-asset, starting in Q1 [25] Q&A Session Summary Question: Clarification on AGI accretion comment - Management confirmed that the expected accretion is based on the current quarterly EPS run rate [64] Question: Underlying flow trends with AGI - Management highlighted the complementary nature of AGI's products and expressed excitement about integrating their strategies into the sales force [66][68] Question: Organic growth outlook for the year - Management indicated a diversified strategy to adapt to changing market conditions, positioning the company for continued organic growth [78][81] Question: Technology leverage at the firm - Management discussed the importance of data and technology in enhancing distribution and supporting affiliates [82][86] Question: Rationale behind Westchester deal structure - Management explained the flexibility in partnership structures and emphasized alignment of interests through profit-sharing [92][94] Question: Demand in CLO business - Management noted no current activity in the CLO market but acknowledged increased interest in the space [101] Question: Fixed-income strategy interest - Management observed a growing interest in fixed-income strategies, particularly in high-yield and credit-sensitive products [104]