Affiliated Managers (US:AMG)2024-05-06 15:36Financial Data and Key Metrics Changes - AMG reported adjusted EBITDA of $260 million for Q1 2024, representing a 20% year-over-year growth, with economic earnings per share of $5.37, reflecting a 28% increase year-over-year [4][18][22] - The company experienced net client cash outflows of $4 billion, primarily due to strong fundraising in private markets, offset by outflows in fundamental equities [19][21] Business Line Data and Key Metrics Changes - In private markets, AMG's affiliates managed approximately $120 billion in client assets, with strong fundraising driven by strategies in infrastructure, private credit, and private equity [20][21] - Liquid alternatives saw nearly $5 billion in net inflows, supported by outstanding investment performance and demand for strategies including private credit and infrastructure [19][21] - Differentiated long-only strategies faced net outflows of approximately $10 billion in equities but generated inflows of $2 billion in multi-asset strategies [21] Market Data and Key Metrics Changes - AMG's business profile has evolved, with over half of earnings now coming from alternative strategies, a significant shift from a focus on long-only strategies [12][59] - The company has diversified its portfolio, with a majority contribution from alternatives, enhancing earning stability and growth potential [12][14] Company Strategy and Development Direction - AMG's strategy focuses on investing in high-growth areas, particularly alternatives, while maintaining the independence of its affiliates [14][39] - The company aims to increase its level of new investment activity, particularly in alternatives, while also returning excess capital to shareholders [14][23] - AMG's vertically integrated U.S. wealth platform is designed to help affiliates access the growing wealth market, enhancing their distribution capabilities [25][70] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the continued strength of private markets and the potential for organic growth driven by the evolving business mix towards alternatives [30][34] - The company anticipates a strong demand for liquid alternatives, with expectations for performance fees to increase as a significant portion of assets under management is above high watermarks [44][49] Other Important Information - AMG's balance sheet remains strong, with significant liquidity to support growth investments and share repurchases, expecting to repurchase at least $450 million in shares for the full year 2024 [23][24] - The company plans to invest up to $100 million in seed capital for new alternative products in 2024 [24] Q&A Session Summary Question: Insights on institutional channel net flows - Management noted strong fundraising in private markets and stability in liquid alternatives, contributing to positive flows in the institutional channel [30][32] Question: Capital allocation strategy for 2024 and 2025 - AMG's strategy is to prioritize investments in high-growth areas while returning excess capital to shareholders when suitable investment opportunities are not available [36][38] Question: Trends in liquid alternatives and performance fees - Management highlighted excellent investment performance in liquid alternatives, with expectations for increased performance fee earnings due to strong client demand [44][46] Question: Confidence in private markets fundraising - Management expressed confidence in the sales pipeline for private markets, driven by the success of existing affiliates and the addition of new affiliates [52][54] Question: Competitive dynamics in the wealth channel - AMG's vertically integrated approach and established relationships in the wealth market position the company well to capitalize on demand for independent partner-owned firms [70][73]