Cohen & Steers(US:CNS)2025-10-17 15:00Financial Data and Key Metrics Changes - Earnings per share for Q3 increased to $0.81, up 11.6% from $0.73 in Q2 [6][7] - Revenue for Q3 rose 4.2% to $141 million, driven by higher average AUM and an additional day in the period [7] - Operating margin improved to 36.1% from 33.6% in Q2 [7] - Ending AUM increased to $90.9 billion as of Q3 [7][10] - Liquidity at the end of Q3 was $364 million, up from $323 million in the prior quarter [10] Business Line Data and Key Metrics Changes - Open-end funds experienced positive net inflows for five consecutive quarters, although institutional net outflows partially offset this [8] - Total expenses remained flat compared to the prior quarter, with G&A expenses decreasing significantly [9] - Compensation ratio for the quarter decreased, leading to a year-to-date compensation ratio of 40.25% [9][11] Market Data and Key Metrics Changes - Net inflows for the year reached $325 million, with $233 million in Q3 alone [26] - The institutional pipeline grew to $1.75 billion, the largest since 2021, with $972 million in new mandates awarded during the quarter [27][28] - The largest percentage of the pipeline (66%) is in U.S. REIT strategies [28] Company Strategy and Development Direction - The company is focused on expense management while pursuing growth opportunities in active ETFs and private real estate [11][30] - There is a strategic emphasis on diversifying into real assets, including infrastructure and natural resources, to enhance portfolio resilience [21][23] - The company plans to launch two more ETFs in Q4, expanding its active ETF strategy [30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about economic growth and corporate profits remaining resilient, with expectations for earnings growth in sectors that have been sluggish [16] - The current economic environment, characterized by slightly elevated inflation and lower rates, is seen as favorable for real assets [19][21] - The company anticipates continued allocations to its asset classes due to strong investment performance [23] Other Important Information - The company raised $353 million in an equity rights offering for its closed-end fund, providing over $500 million for global infrastructure opportunities [29] - The company is targeting the RIA channel for additional strategic seed capital and traditional allocations [32] Q&A Session Summary Question: Demand for U.S. REITs in wealth management - Management noted that historically, returns have been stimulated by interest rate cuts, but the current cycle has created a different dynamic due to prior real estate pricing adjustments [39][40] - They expect continued strong performance for REITs as rates decline, with good results in wealth management and institutional markets [41] Question: Cash allocation as rates decline - Management expects cash sitting on the sidelines to flow into real asset strategies, particularly real estate and infrastructure [50] - Preferred stocks are also anticipated to attract investment as cash yields become less favorable [51] Question: Compensation ratio outlook - The company expects the compensation ratio to remain stable, with revenue growth helping to manage costs [53] - New initiatives are beginning to generate revenue, which should positively impact the compensation ratio moving forward [55]