Artisan Partners(US:APAM)2026-02-04 19:02Financial Data and Key Metrics Changes - The company reported a 12% increase in assets under management (AUM) to $180 billion as of December 31, 2025, compared to year-end 2024 [12] - Revenues reached an all-time high of $336 million in the December quarter, up 11% from the previous quarter and up 13% year-over-year [12] - Adjusted operating income increased by 23% compared to both the prior quarter and the same quarter last year, with an adjusted operating margin of 40.2%, improving by 400 basis points from the prior quarter [15] Business Line Data and Key Metrics Changes - The credit platform's AUM grew by 29% year-over-year to $17.9 billion, with net inflows totaling $2.8 billion [8] - The alternatives platform's AUM increased by 20% to $4 billion, driven by strong organic growth [8] - The equity platform experienced outflows of $15.6 billion, primarily from Global Opportunities, U.S. Mid-Cap Growth, and Non-U.S. Small-Mid Growth strategies due to challenging short-term performance [8] Market Data and Key Metrics Changes - The company reported that 79% of AUM outperformed benchmarks over a 3-year period, 74% over 5 years, and 92% over 10 years, gross of fees [5] - The Emerging Markets Local Opportunities Strategy generated a calendar year return of over 24%, outperforming its benchmark by 527 basis points net of fees [6] Company Strategy and Development Direction - The company aims to expand its multi-asset class platform while maintaining a focus on high value-added investing and thoughtful growth [4] - The acquisition of Grandview Property Partners is part of the strategic expansion into alternative investments, establishing a foundation in private real estate [10] - The company plans to leverage its institutional and intermediated wealth relationships to further develop Grandview's business [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining and growing equity businesses despite recent outflows, emphasizing the need for differentiated investment performance [9] - The company anticipates continued growth in credit and alternatives, with a focus on expanding capabilities across its platform [10] - Management noted that the acquisition of Grandview is expected to have an immaterial impact on 2026 earnings but will be mildly accretive to earnings per share after the closing of Grandview's next flagship fund [19] Other Important Information - The board declared a quarterly dividend of $1.01 per share and a year-end special dividend of 57 cents, resulting in a total dividend of $3.87 per share for 2025, representing a 98% payout ratio relative to adjusted earnings [18] - The company ended the year with approximately $214 million in cash and a conservatively leveraged capital structure at approximately 0.4x leverage [17] Q&A Session Summary Question: Regarding Grandview's AUM and accretion guidance - Management explained that the AUM was lower due to realizations on properties in the Grandview Fund I, which is in the harvesting phase [24] - Fund III had about $150 million in committed assets, and management expects Fund IV to be significantly larger, with a first close anticipated in early to mid-summer [25][26] Question: On the International Value Strategy and recent outflows - Management indicated that outflows were primarily due to institutional reductions and not indicative of underlying issues, as the strategy continues to deliver strong absolute returns [37][38] Question: Interest in non-U.S. strategies - Management highlighted a reemergence of emerging markets allocations and strong performance in global strategies, with expectations for continued engagement in international markets [41][42][43] Question: Institutional demand by region - Management noted challenges in Europe due to regulatory changes and short-term performance but sees favorable opportunities in the U.S. marketplace, particularly in emerging markets and credit franchises [49][50]