AMG Fourth-Quarter Profit Rises 49% as Rally Boost Assets

Feb 04, 2014 4:12 pm ET

(Updates with closing stock price in fifth paragraph)

Feb. 4 (Bloomberg) -- Affiliated Managers Group Inc., the company that owns stakes in more than two dozen money managers, said fourth-quarter profit rose 49 percent as last year’s stock- market rally boosted assets.

Economic net income, which excludes some taxes and expenses, climbed to $202.9 million, or $3.66 a share, in the three months ended Dec. 31, compared with $136.5 million or $2.55 per share, a year earlier, the Beverly, Massachusetts- based firm said today in a statement. Analysts had expected adjusted earnings of $3.10 a share, according to the average of nine estimates in a Bloomberg survey.

AMG, led by Chief Executive Officer Sean Healey, owns a collection of boutique money managers specializing in stocks, hedge funds and private equity. The firm, whose affiliates managed $544 billion as of Dec. 31, is benefiting from an investor shift into equities and alternative-investment products. AMG attracted $5.5 billion in client money during the fourth quarter, compared with $10.1 billion in the prior three months.

Investor deposits reflect “positive flows in both the mutual fund and institutional channel and while lumpy in nature, down from recent levels,” Daniel Fannon, a San Francisco-based analyst at Jefferies & Co., wrote in a note to clients today.

AMG gained 3.1 percent to close at $193.58 in New York. The shares fell 11 percent this year, compared with a decline of 9.3 percent for the 20-member Standard & Poor’s index of asset managers and custody banks.

GAAP Results

Investors added $161 billion to stock funds last year, while withdrawing $83.4 billion from bond funds, according to the Investment Co. Institute, a Washington-based trade group. Hedge funds won deposits of $71.9 billion, according to eVestment, a data firm based in Atlanta.

The MSCI All Country World Index rose 24 percent last year, including reinvested dividends.

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 $158.2 million, or $2.79 a share, compared with $75 million, or $1.40 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 December agreed to buy a majority interest in SouthernSun Asset Management LLC, a Memphis, Tennessee-based firm that runs the $$779 million SouthernSun Small Cap Fund. The fund beat 98 percent of peers, over the past five years, according to data compiled by Bloomberg.

--Editors: Sree Vidya Bhaktavatsalam, Christian Baumgaertel