AMG first-quarter profit rises; acquires global equity manager

The company that owns stakes in more than two dozen money managers said profit rose 11% as the rally in global stocks boosted assets under management.

Apr 29, 2014 @ 8:52 am

Affiliated Managers Group Inc., the company that owns stakes in more than two dozen money managers, said first-quarter profit rose 11% as the rally in global stocks boosted assets under management.

Economic net income, which excludes some taxes and expenses, climbed to $137.9 million, or $2.48 a share, in the three-month period ended March 31, compared with $124.2 million, or $2.27, a year earlier, firm said Tuesday. AMG's adjusted earnings beat the $2.38-a-share estimate of nine analysts in a Bloomberg survey.

(See also: AMG takes minority stake in wealth management firm)

AMG announced Tuesday that it agreed to acquire a majority stake in Veritas Asset Management, a global equity manager with $17 billion in assets, adding to its collection of boutique managers specializing in stocks, hedge funds and private equity. Led by chief executive Sean Healey, AMG is benefiting from a growing investor preference for such assets at a time when low- yielding bonds offer modest returns.

“I think this type of environment sets up well for the kind of products AMG sells,” Michael Kim, an analyst with Sandler O'Neill & Partners, said before results were released. He rates the shares a buy.

The MSCI All-Country World Index climbed 17%, including reinvested dividends, in the 12 month-period ended March 31. Investors deposited $70 billion into equity mutual funds in the first quarter, according to data from Morningstar Inc. Hedge funds attracted $55 billion in the first three months of 2014, the most since the second quarter of 2007, according to eVestment.

One of AMG's boutiques, Yacktman Asset Management, has suffered redemptions at its mutual funds this year after several strong years of deposits. The Yacktman Fund and Yacktman Focused Fund saw withdrawals of $625 million in the first quarter, Morningstar data show. In the three-year period ended Dec. 31, the two funds attracted almost $14 billion. Both funds have trailed at least 84% of peers over the past 12-month period, according to data compiled by Bloomberg.

AMG's economic net income is a measure that doesn't conform to generally accepted accounting principles, or GAAP. Under those rules, net income for the quarter was $77.2 million or $1.40 a share, compared with $62.4 million or $1.15 a share, a year earlier.

AMG buys stakes in money management firms and provides them with distribution and back-office help. The owners of the firms retain a stake in the business and autonomy in managing money.

AMG in March said it was acquiring a minority stake in EIG Global Energy Partners, the asset manager spun off from TCW Group Inc. The same day AMG said it was buying a stake in value- oriented investor River Road Asset Management. The two deals added about $27 million to the assets AMG oversees.

(Bloomberg News)

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