Yahoo Finance Artisan Partners Asset Management Inc (APAM) Q1 2024 Earnings Call Transcript Highlights: ...
Assets Under Management (AUM): Ended the March quarter at $160 billion, up 7% from the last quarter and 16% from March 2023.
Investment Returns: Contributed $10.8 billion to AUM in the quarter, with $1.4 billion in returns exceeding benchmarks.
Net Client Cash Flows: Outflows of just over $500 million during the quarter.
Organic Outflow Rate: Annualized rate was 1%, an improvement from 3% in 2023.
Average AUM: Up 10% sequentially and 14% year-over-year.
Revenues: Increased 6% from last quarter and 13% from March 2023 quarter.
Average Recurring Fee Rate: 69 basis points, consistent with the previous quarter.
Adjusted Operating Expenses: Increased 8% sequentially, primarily due to front-loaded expenses in Q1.
Adjusted Operating Income: Increased 2% sequentially and 17% compared to last year's March quarter.
Adjusted Net Income Per Adjusted Share: Declined 3% compared to last quarter and increased 19% compared to the March 2023 quarter.
Dividend: Quarterly dividend declared at $0.61 per share for March 2024 quarter.
Release Date: April 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you discuss the future direction for Artisan Partners' fixed income business over the next five years, particularly in terms of inflow speed and distribution platforms? A: Eric Colson, CEO, highlighted leveraging the success and brand of Bryan Krug and the high income strategy to penetrate deeper into the institutional marketplace. He emphasized the potential for growth in alternative spaces and wealth management through the high-net-worth channel, expecting strong flow opportunities from the credit franchise. Additionally, he mentioned expanding into non-U.S. markets, particularly with higher allocations in emerging market debt.
Q: How is the shift in distribution strategy progressing, particularly from product being bought to sold, and what are the specific actions being taken to enhance this transition? A: Eric Colson, CEO, described the transition to a hybrid distribution model, which includes dedicated distribution personnel within autonomous investment teams and central teams focusing on various channels. He noted an increase in meeting rates and engagements, indicating early positive outcomes from this strategic shift. The aim is to better accommodate the growing number of complex strategies offered by Artisan.
Q: What are the current trends and expectations for the institutional channel in the upcoming quarters? A: Eric Colson, CEO, reported strong performance in the institutional channel, particularly in fixed income and alternatives, with significant dialogues ongoing in both U.S. and non-U.S. markets. He also noted potential disruptions in emerging markets equity, which could lead to new funding opportunities.
Q: Can you provide insights into the demand and traction for new alternative credit strategies, and how dependent are they on the macroeconomic and rate environments? A: Jason Gottlieb, President, explained that the demand for new alternative credit strategies does not heavily depend on macroeconomic factors. Instead, it's about fitting unique and differentiated strategies into clients' allocations. He emphasized the importance of engagement and education about these strategies' fit in investment portfolios, expressing optimism about their positioning irrespective of broader economic conditions.
Q: Looking at the broader opportunities in the asset management space, how is Artisan Partners planning to expand its platform, particularly in areas like real assets, infrastructure, or retail democratization? A: Eric Colson, CEO, discussed ongoing evaluations of long-term asset allocations and market trends, noting a significant interest in alternative investments and fixed income. He highlighted the successful expansion of the credit team as a model for entering new asset classes like real assets and infrastructure, aligning distribution strategies to support this growth.
Q: With equity markets showing some signs of recovery, do you anticipate a shift in allocations towards equities, particularly emerging markets or value equities? A: Eric Colson, CEO, pointed out potential inflection points in emerging markets and value equities, suggesting that disruptions in these areas might lead to increased allocations. He emphasized the opportunity for Artisan to leverage its high-quality products to capture shifts in market allocations.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
