AMG - Earnings call transcript Q3 2019 | Affiliated Managers Group, Inc.

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Operator

Greetings and welcome to the AMG Third Quarter 2019 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions].

As a reminder, this conference is being recorded. to Vice conference AMG. President, like host, to now Aggarwal, Anjali Investor would turn over the your I Relations for you. Thank

You may begin.

Anjali Aggarwal

the time-to-time. from discussed will Thank our XX-K with forward-looking statements. In limited AMG joining call. could constitute due including those conference referenced made third from differ to results for Form number materially this but matters you the XXXX. projected company's quarter make certain we not statements to to, assume call, Actual of to those for and results discuss factors, obligation filings of the other forward-looking no update We SEC in any this during a

a for non-GAAP financial AMG a GAAP Investor website, on financial measures. section will any ir.amg.com, its the reconciliation on to announcement of are that comparable of Relations this the most of our of call, quarter, copy the the the and results a announced not provide call, measures at replay of directly

As of our also a section the encourages updated to investors its regularly on AMG Investor for included investor consult presentation website reminder, information. an section website. this of updated we Relations have

for the and Chief on us Financial company's are the Tom results to President discuss Jay Horgen, With Chief quarter and the Officer; Executive line Wojcik, Officer.

will to With Jay. turn over I the call that,

Jay Horgen

Anjali, and Thanks, good morning everyone.

continue we outperform and diversification As a demand macro to factors our meet partnership their ability volatile proven in evolve unique and AMG's risk returns provides Boutique more markets, volatility advantages shareholder broadly, fuel structure, AMG's and benefit trends. uncertainty markets, continue have long-term managers only us to long-term to and business will in our managers as stability enable that to years, given and client to the record, are affiliates competitive positioned can track are confident that provide. client business deep growth generate over unique our Xfive to long-term differentiated value. adjusted last performance More built with active well

the alternatives across for redemption single cash third billion, $X.XX and primarily strategies a equities, of of of $XX.X global share driven per earnings were billion. liquid outflows client and quarter. fee $X quantitative economic reported AMG low included Net certain by

As Tom outflows, disproportionate more a to note a as impact to and in reported impact last we will important their it's these had AUM, detail, on on that modest said more our earnings. quarter, relative discuss

are near we While by anticipate some the that these year of and in net to fund aggregate end. quarter, number a which institutional will in term, fourth level AMG’s expect to strategies moderate in continue large outflows expected quantitative outflows, the of given wins, advisory we

want we I are strategies Notwithstanding across trends. our and moment of to take benefiting broad AMG term near a including areas fixed secular client array and significant position in diversified time. management, growth alternatives, organic these multi-asset categories. product flow discuss strong currently growth areas results, active our a demand a from well for is income positioned over to within

private run market. benefiting to our managers, combined, are levels is which for EIG Asia, Baring EBITDA, nearly and first The and client of record XX% our of from Pantheon, illiquid rate account outpatient

earnings private of nearly continues stream business debt and committed tied of revenue equity, clients that is offering capital. contribution grow based is most a and all highly and basis. EBITDA liquid. market private to infrastructure, these, real This thirds class primaries, from Pantheon co-investment given assets, secondaries, to Of generating solutions diverse the a two is of largest global a array its diversified, stable, provider, Pantheon on the across private world and fee is its our and

private and markets. leader EIG globally. In growing in exposure addition, EIG fast unique renewables a energy, and Baring to Asia investing within infrastructure offer is segments

markets. largest estate firms, While focused the and equity private of Asia Asian independent Baring is on real one

potential last net upside related markets and fee over more to clients private in significant performance over globally. generated fee structures accessible of a to inflows markets These and from affiliate private Asia and have billion nearly Collectively, in to billion $XX addition assets, the manage In $XXX years. two growing businesses earnings, opportunity. our EIG continue making innovation solutions, have drive Baring new

Second, within and and & nearly from multi-asset Baker benefiting income in assets. categories, net tailwinds AMG $XX our is that through worth Veritable, Street, ultra-high wealth four manage in Welch strong management space billion fixed Forbes, secular affiliates, MyCIO

wealth transitioning holistic portfolio area, addition and selection concentration from investable manager In in growing to actively advice legacy assets model, the of construction. clients towards this are

driving Our affiliate stability. and strong consistent client relationships, solution earnings focus are on inflow innovation, orientation and

affiliates billion meaningful client a both demand. $XX attractive approximately have as such aggregate, specialists of in strong through value income, area In provides at income. AQR, as we fixed and assets, as relative initiatives well in as income and fixed Garda, leading GW&K alternative growth in and traditional addition, and in investments another a to such across growth existing areas number traditional opportunity of exposure market new accounts In for both alternative Capula fixed affiliates and

opportunities expect for These play XX% income, areas and AMG’s management these growth approximately in of wealth to EBITDA even more over an across our markets, role fixed today, account in time. significant private aggregate business and we

we alternative to emerging Genesis, distinguished continue manager. in global across equities our of Tweedy have and track strategies cap, our and long-term against represent Our are a EBITDA. fundamental Veritas, liquid markets, Harding approximately markets, capacity volatile on managers dispersion performance across XX% equities small Yacktman, particularly further such long-term backdrop less of has strong given And liquid confident fundamental asset prospects Browne, of active Loevner, in as our and build as growth efficient their markets increased, and the These improving in including reopening alongside organic themselves record, and equity. alternatives, ValueAct, number strategies,

strategies in strategies products And ownership play alternatives, they role we portfolios, rates only contributors to across contribute for finally, these important And our meaningful over strongly quantitative long-only to to and and we our XX% expect approximately while equity that continue XX% EBITDA. an believe client liquid these today, fee AUM time. our account to levels, organic and of profile given be growth

record. against independent long-term proven resources consistent, This affiliates generate partnership of the with executing offering in in activities AMG’s strategy strategy has the manager, by relative new our plans. exceptional to in we are active in-demand areas And our broad returns. income across core in investment of Early products. remained performance our investment the we progress our strategic Garda, highest across range allocating specialist leading a building value a completed momentum prospective set in value investing fixed a to and in an we growth good track unique quarter, and approach, and opportunity through back, is made managers, quarter, Stepping

transaction we competitive firms our pipeline growing structure of Our well to new attracted includes through and model, risk align a and to of high advantage. investments, range integration, that independent evolve or partnerships affiliates a to ability clients scale positioned without cost our are are the and business to Unique diverse quality distinctive shareholder. that is

significant this to to in time. through I'm further dedicating our over generate business accretive confident to are earnings and continue ability effort, additional partnerships We resources and diversify growth our

work firms demand affiliates individual growth position in with to their execution continue to as we their our trends. them addition, strategies, they supporting of by on In closely capitalize the client

outs facing clients, together that with their launch we seed have opportunities. to best In on their products, with outcomes help affiliates them to other our collaborating potential and cases, and to affiliates are the was are achieve lift businesses case position the headwinds, for as BlueMountain. acquisition regions with channels. and execute And new enter new evaluate and and to worked have partnered We we

were of to able have expertise their are are our strongly broadly, and to employees, We talent a positioning with good find and areas the with pleased scale align on the can strategic to we affiliates where many that with in have doing to diversify and we quarter, the work partnership help end, growth. we our that our to to grow future shareholders. initiatives together consistent work the BlueMountain we resources and AMG are AMG in forward businesses. and best their path And and base had those deliver over we for engaged for with affiliates, focused a years, number More clients for

platform, on For efficient focus our relationships their adjusted access that our areas, for scale growth resources certain including like represent AMG. players outcomes, are resources building and intermediaries Leveraging and partnerships can delivering strategic service more largest can consolidating providers the additional reallocated our institutions example, opportunities pricing, certain and business, with distribution leading forms. different affiliates, regions, skilled deploying improve better that we global client particularly towards to AMG’s scale provide be also can In industry have and through relationships leading in service. the our within with where coverage with take

seeking their affiliates we Group breadth recently with costs greater to Compliance services. of partnered support a and example, to ACA compliance For access lower

steps have we optimize our certain we Finally, business. redeploy $XX quarter, business, growth million in and reduced elements which approximately higher These our in operational will taken annually, simplified to of up initiatives free capital our the opportunities towards will in footprint. costs,

critical of culture entrepreneurial dynamics. our to to and success changing remains industry our Finally, ability ahead our adapt

While on consistently difficult and of partnership affiliate quality remain and AMG's for strategy, provides diversification future capital confident execute existing unique the yield structure, our returning challenging, flexibility the profile in resources opportunities, markets environment are while growth the growth. shareholders. to positioning base, has actively to been and business compelling business our we and and our

to over it to the the Tom details turn quarter. I'll review that, with And of

Tom Wojcik

outflows, positioned and free unique quarter. term billion, across of good business equities. we've in volatility net in Net for and Jay, client were concentrated demonstrate resiliency, alternatives growth. economic strong AMG earnings and the stable strategies outflows quantitative per morning certain and cash global Despite Thanks, industry share, flow model as future generated everyone. liquid third near our continues to reported cash $XX.X

performance sub-advisory will said, see year net aggregate notwithstanding these while institutional outflows moderating, until seasonality, strategies the likely of expected fourth end funding. Jay outflows number we stabilizes, in and continue quarter As given

difference outflows we more important were related flows our between mentioned financial last their quarter, it current of to quarter, XX% the is In on to impact and products the than results. have understand have make in future growth. a more up and earnings modest affiliates where EBITDA, therefore XX% low we current only a interest, and or fee impact collectively minority of on that As

Turning X certain by illiquid and products. by net alternative alternatives, outflows from In to billion, contributions positive driven reported class. of by offset partially flows liquid we strategies, asset

that a low $X included overlay billion to these As redemption fee unrelated outflows currency was noted, performance.

performance are and remained impacted XX% generating a benchmarks recent been more been strong others, mixed. management long-term value by factor our of in assets alternatives area has this in example over period, at Winton liquid performance for results. year quantitative strong, Systematica, term with of while outperforming have under exposures, investment strategies near five While Certain

generating these are portfolios. in including fundamental an which alternatives by see continue positive at strategies and unique solid our income growth, role outperformance expect streams. to supported alternatives liquid organic growth both demand fixed alpha we continue be liquid to Garda, profile book, We client value over relative Capula to time, important these in Overall, client play for a our to contributor strategies as of

affiliates performance in is see the quarter. our opportunity product and outperforming an vintages As Pantheon, recent AUM Jay the in asset category industry period. headwinds fundamental In where ahead increase illiquid this generate evidenced base. in fundraising strong equity in steadily outflows build as Asia also our affiliates in X billion benchmark with is strong, And XX% as very mentioned, fundamental the equities, IRR net a our in of class benchmark third strategies. across AMG’s in on consistent alternatives, on to Overall, with AUM, quarter, global reported with and facing ongoing over particularly, quantitative five global global at existing we Baring three of five and year growing and a EIG benchmarks. of capabilities, the new area XX% this equities, outperforming long-term year by performance, we continue of saw

equity Additionally, outflows in capacity affiliates, driven have US new market were insourcing expect by party reopened a institution a mandates. number to billion, part equities, future meaningful or contributor launched we of strategies, recently X net our to and be these categories third emerging In growth.

US quarter, impacted equities overall we continues by to saw be value buy. While performance the in improvement our

previously. abilities This affiliate’s In management were in nearly in flow affiliates, differentiated fixed momentum. product, as XXth from posted positive primarily and growth we consecutive municipal outflows. remain quarter good AQR’s multi-asset durable income, generate wealth GW&K's confident well are client billion fixed strategy, positioned by continued referenced secular as benefiting which positive income inflows, category which innovative by areas, in to Flows generate our supported we also of flows driven high supported AMG our is demand trends includes by the trends, aggregate, to long-term bond marking well that In and systematic net category. in the X this

turning our Now financials. to

lower results, continued position For $X.XX, the per discussed reflects decline as and XX% initiatives business impact a including Adjusted X%, in declined a the in billion, our million. which performance to a year several for to per X% on declined count by XXX.X year of net that $X.XX share over share the X.X quarter, share taking share average declined touch on of fourth our AUM. are Jay I'll repurchases. have Aggregate earnings XX% future BlueMountain transaction, will result EBITDA, primarily in third to quarter lower financial an economic adjusted we earnings Relative economic fees combination EBITDA of with growth, fees. to to moment. driven

to assets quarter, ratio the management, for items, under of EBITDA average points. basis adjusted modeling specific to third Turning XX.X was the

performance expect and BlueMountain, a EBITDA to performance of for to be XX.X forma the and the AUM, we share, have per $X.XX quarter, ratio with basis this range impact. quarter, of basis is to to points. $X.XX adjusted removal Excluding related includes pro XX.X $X.XX initiatives well between points. In fees, as costs average to we onetime share which the as to $X.XX This in fourth repositioning the fees expect XX.X per

million interest we third quarter. expense share the million. Our XX.X fourth XX be of shared approximately expense quarter, the for expect to interest was In our

from by affiliates and XX.X levels, under share recent the the Our million included was was for for and reported XX amortization method. third of accounted outflow elevated million driven equity quarter,

expect of quarter. similar amortization level We the fourth in a

was rate was quarter. rate third and tax GAAP for XX.X% effective cash XX.X%, Our our tax the

be a transaction. related of BlueMountain we expect million For XX cash XX%, quarter, to modeling the purposes, benefit approximately expect we by in onetime the GAAP impacted rate fourth our rate and to our tax tax to approximately be

And expected XX rate just that I be to related consistent fourth this be intangible for economic third benefit benefit, the Excluding in taxes deferred is the Intangible in mentioned. tax from third resulting XX%. cash we million related million we tax and the quarter. million, to taxes quarter. X.X quarter, one-time our deferred normalized approximately X.X were quarter, expect were fourth to the Other approximately for be the items expect

adjusted count below count quarter. the average shares we to be million quarter XX.X at for or expect Our share third weighted was fourth share for XX million, and the

turning finally, And to our balance sheet.

$X.XX shares, a reflecting share paid in repurchased to consistent we return. commitment million dividend, quarter, the and During our capital per $XXX

Additionally, proceeds in we completed received and our the investment to Garda, transaction. relating approximately in XX BlueMountain million

repurchases fourth of We million or share and in to are more market conditions. targeting subject XXX quarter, the activity transaction

generates and and fluctuations. the sheet duration, Our base, have business together AMG’s affiliate revenue over allocate the return of leverage, of share maintaining areas to a opportunities, affiliate margin of flow, several our extending maintain and and level exposure in free capital to level to capacity, stable significant by will markets. on unique diversity even which our growth our while structure, our continue cash highest quality challenging And continue the model and we repositioned flexibility to quarters, driven growth limits capitalize time, the last At we to in prudent business. same balance with

our balance stable investments Given trends, AMG’s flow of new free organic sheet, our distinctive, our well are that create unique future value make independent growth earnings profile, our to against well positioned for combination both shareholders. ability and and deliver affiliates accretion, demand that client aligned long-term cash to flexible are we

that, for with we'd it your be up open happy questions. And to

Operator

Instructions]. [Operator you. Thank

proceed question first William Chris Shutler with comes question. from of Please your line with Our the Blair.

Chris Shutler

investment term do of talk classes part for that classify guess, or pipeline in guess opportunities just et cetera? they small processes, morning. more Are the good guys, formal the new near you, about asset versus Could those opportunities actionable? how the more I - proprietary more Hey feel the you would large I

Jay Horgen

Thank Jay. Great. It’s you, Chris. Yes.

today. some of we attributes look a forward and Let about always and true our excellent give has grow still Stepping that's investments. business you Obviously talk strategy growth will new me through our making firms, strategy. our of broadly our and of to today, cornerstone back, partnering it to be then just continuing with pipeline

say including me, obviously this and investments. thing our extra is The just we more about continue other of is, excited time. spending to will think it’s M&A. My background time would drive I new management I'm transactions are team, on resources something over the effort and in effort, the that additional to

businesses, just What's as as it diversity types obviously the significant it's a but is, see demand these of the also our would out in entrepreneurial high characterize nature. growth transaction. can in sizes. because put to the these good firms in not that to in they're add momentum businesses, all trends I building of quality, We’re also investing single extent attracted see upside front capital all interesting of the growing businesses. are characterize both that it you would pipeline. to client We you model. global can that our business, all about It’s from in I significant

model earnings Our continued to competitive our allowing growth both we advantage to long-term capital through their can where We profile autonomous invest little AMG. invest individual in position investments. us can, risk, unique but to enhance can puts successful also our affiliates, and through allocating through new in opportunities alongside also no grow remain scale distribution that simultaneously We our of affiliates. growth our in or capabilities, of execution, unique business affiliates integration enviable our an business with

longer that when started I term started coming successful relationships when our we from the pipeline most that strategy. - see relationships in pipeline. with investment at in - are And momentum what proprietary, that do we Most Sean years ago, is today, near of and those I through things long-term with a many is in whether what So or new or all was new we it look of investments, was of both intermediate Nate. come today

of All now. those relationships been have transitioned

the to also we to we are to understand better. that process conversation And and we the is and get model important diligence, itself we through are they these businesses that evolve, our see relationships, sorting proprietary business sorting we're our because see have long-term partnership as really having, due through get

alignment the structure comes It's through it when this of think So we've offer autonomy attracts really that said to long-term before, and model is firms and these only really us that the interest pricing time, we part our I partnership. and of

Operator

you. Thank

the next Please proceed Credit Our Craig question your comes Siegenthaler from Suisse. line of question. with with

Craig Siegenthaler

everyone. Thanks. Good morning

Jay Horgen

Morning.

Tom Wojcik

Morning.

Craig Siegenthaler

those So the I on we tends flows, have backing first core meant wasn't cyclical several I this given AMG moderate to or heard outflows commentary prepared after and remarks cyclical or improved. factors. factors. XQ, if some this just seasonal in sort of the know flows, meant total seasonal if showed net and tougher sure that out flows just And of

Jay Horgen

So Tom a good I’ll let one. take clarify. question, Craig, that and we’ll

Tom Wojcik

Thanks, Craig.

maybe overall of give horizon, seasonality question. a I'll kind and just you the try the So your quarter, bit what of little color address and and on see we in flows on recap then

you a in return absolute flat from flows only our And fee that certain the last excluding were outflows about one coming contributing quarter. in large overall our recall, call, the is XX% we Again, notably And for flows low XX% currency we that As that base today most overlay outflows really talked referenced, came liquid into mandates more quarter. quarter the that third products, landing strategies. we against pretty quant alt were quarter saw on saw EBITDA. of than I on July where of the these

levels, contributed and that flows earnings So the what than going of impact less raise the to headline suggest. affiliates fee much our given the combination be is outflows, the generally products the ownership from on and

strategies future believe Systematica. to Winton continue that important certain at of we're seeing going in growth, their terms in and that in also to and already are strong to area, performance We be quantitative including affiliates contribution very

more five of trends. incremental seen the equities, active and now come some also fundamental equities high areas continued online outperforming active the some But EM these we in year than We recently XX% overall, also period. off by strengthen, importantly our see products some of we've in quarter have in global outflows benchmarks managers. And risk our primarily in over did to capacity performance driven performing

a So lot that's where see overall of an future potential. area we upside

also current think And in combination the strong headwinds, think quarter. XX term, in forward, the demand, the upside, fundraising inflows expect we that continue hit area. we future terms that toward point and of Jay illiquid tax to loss Baring we near fourth the Pantheon, certain in high these about end notwithstanding where as that performance alternative In picture Asia. seasonal to and EIG, color income have multi-asset seeing mandates To will our We saw offset some of and sizable that to client see do talked we around that selling, of institutional alternatives, normal quant fund year. and their illiquid go the levels of around consecutive headwinds give on about growth some lockup more quarter than you area. fixed flow the periods of and sub-advisory And we we're the in

how but Obviously out, have clarity broadly perfect play will feel we about those good pretty we don't speaking, trends that. on

the last momentum forward, outflows a couple we of very seeing areas long-term we and quarter offerings. moderate quarters. in we're to product together, affiliates secular the in growth strong levels versus to taken our believe the fourth performance seen our alignment of in see diverse organic So importantly, the continue between and the number and we've business, going trends in client that expect see long-term we platform, profile demand of our And

Jay Horgen

said next this add, as income, management wealth remarks. just growth me we've we that by prepared alternative markets, let And summarize in look, was just I'll private even and in traditional and saying, our detail continued quarter, and see from good Yes. beyond Tom. fixed

increased. affiliates, equity underscore and to addition, as that our want has fundamental want I do across underscore volatility - don't to In affiliates - alternative performance our liquid improving market I equity is

In view these opportunities look growth managers, we of at between EBITDA. our as we AMG’s XX% that a fundamental we XXXX. forward performance and this improving to represents as see that So about aggregate positive

the the quantitative is, you then products. wins those fourth thing about wins, some sub-advisory when and talked at quarter, we last And are look institutional in I and would say of

that's portfolios, seeing to important to would come very we we're in so client these fourth thing an and quarter. as say important that more are And through note broadly, the products

Operator

Thank you.

next question line Goldman Blostein Our Sachs. comes of from proceed Please your Alex the with question. with

Alex Blostein

both Hey to. for and performance quarter XX.X everyone. to think morning Good and the on the assets, that yield XX.X, question included around in some A EBITDA in guys about Tom, the fourth guys you over talked fees time. And I you reposition but guidance, expenses. of

I base, to the the long kind fairly EBITDA fee yield. the the - that will be management of think close just of

So evolving XX.X part kind point years sound couple one, between XX, the guys affiliates ownership that, it and think in does I given you stakes of shift of yield two, the products, mix and about basis guess, and different, the the obviously over how call that right? business do next are

Tom Wojcik

Sure.

don't and forward of then I So end the sort address of the just maybe trajectory. question terms your why start, of in Jay can

there talked XX.X basis of were that to that your terms XX.X guidance off, range, just numbers. when make couple you point a First we have in to about of things sure in

through. our - Jay of to of as expectations around gave that also the little strategic some per related XX The fee to a range to basis per walked you we some share. That expenses share. color will bit performance first, But points initiatives on $X.XX you $X.XX of of be $X.XX about $X.XX mentioned, was a

embedded that So into that’s guidance.

to you you some those So one-time think out kind backed run can about we a more color expenses of of rate that getting of if gave core you on.

look in you are at going stability rates sort fee overall on. if in of broadly, of our ratio, of that you handful stability that things and a actually More kind have

talked our have ownership we've fee products, about fact by influenced lower or minority flows that either been have First, positions. areas where really overall the we

less, headline EBITDA, course been flow much couple last numbers the seeing on the while actual been we've of impact sizable, rather have the that particularly over quarters. has So of been

areas talked terms And strong a of in then that go EBITDA, we very now either of we illiquid very the and fixed areas management are that wealth contributors about, that and as for the business area, are about we positioned our forward, fundamental to spoke lot Jay that growing area, strong are client believe the trends equity have against performance, space. or in the future income well growth our

Jay Horgen

part a stability And number. you But look that level duration, past, there, also that look if does we're not and income kinds the only areas. up from assets or I'll see of of Tom fixed management, our on, as Yes. growing multi-asset put very and the that businesses of on which coming Those your contribution raising state we forward, sticky market, is question more are the you growing. the into a that one flatly, picked private just long look of wealth very business asset is, levels.

that do And so a see as we positive.

in you're to a just So quality up. go of capture seeing hard but it’s the number number, that it

Operator

Thank you.

with Please comes question next with proceed Katz Bill from Our your line the Citi. of question.

Ben Herbert

Herbert Ben for taking Hi. Good Bill. It's on morning. the question. Thanks for

equities, to we Just term there, horizon? the the of ring-fence and contribution. outflow on timeline and saw commentary alt the you could near kind and can sort global you But definitely on expectations over liquid AUM just back was maybe us kind appreciate remaining hoping of at go there some deposit risk help of

Jay Horgen

Yes.

thanks, use Maybe answer lot that of Ben. to a I'll in So many levels. different it question

large and just especially quantitative mentioned our a those strategies. with equity institutional say, quantitative did only we seeing products alternatives, clients. minute I the have are and long certain been localized So And that liquid efforts areas, ago, in inflows in

that. those are and of we to quarter, show mentioned our fourth wins going Some in up

apparent pipeline. So the attractiveness of even our these products are term much in near very

of is manager address that to just types AQR, I'd of largest course maybe of and broadly. more Our like these strategies

will it again I future in diversified it As and AUM. much very AQR last quarters, I again, say XXX have billion is to say quarter, highly did and with probably in a business

systematic across that XX grown business including different several its the AQR to and only remind absolute client line, tolerances. lines, alternative return products has investment business fixed total a business each that and quantitative within risk have And billion, needs with we returns made and they and equities, that range Just with long business of initial multiple everyone strategies. income, distinctive diversified address

period today here. stronger XX you we not periods number from straight of to and when as other we of had the a after to know, many made Growing back of of that number line, have history only that where the a of come a billion are softness was softness. you We’ve investment,

long-term proven of We the generate business continue investment and record their culture multi-decade to leadership their believe given returns, in and team, strength their track of excellent ability success. process, their to

a lot very believe here, that. to positive So and in much be we there's are

And you I because strategies. and opportunities scalable, tax have said, at I scale, continue when income. beyond of and significant a applying that aware performing their and market managed, growth They opportunities, mentioned outflows business all and risk to are number technology the they great have products, earlier, also in fixed parity, process but fixed opportunity tax have certain emerging those their the some including equities, growth these really are These markets. strategy income but opportunities defensive invest products, localized including in get you as future. the They see to products, been the very that ESG is run

value So that option opportunity there. the we feel the significant, high is very is

focused David, firm. majority firm. senior business. of very entrepreneurial in Cliff, and It’s a of they're support aligned are much very doing partners, rest John, fully the the in holders what and We're the of their as

aligned We’re these to be with proud partners.

growth. profitability would I manage aligned with is, as we're So we're ability long-term and said, And in their them. very say very the last their I to to business, sustain confident thing generate

AQR returning the in growth long-term but near see we over term the term, to longer especially. even, So

Operator

Thank you.

comes with proceed Dan Please line of Our with question. next Jefferies. from Fannon question the our

Dan Fannon

Good Thanks. morning.

Just XX on a or you walked that’s you that you that again of But Is then I and kind the specifically number priorities? you where of Jay, into of and resources, capital million estate your to? terms - new have compliance, those to what some just of freed up the said in walk combine this It reallocation things I real kind you this consolidation, guess. going through resources reallocating like through affiliates. I - that changed, services of terms you're sounds for of think areas from things. can capital in investments you - want of

Jay Horgen

Yes. Thanks, question. Good Dan.

you here. stepping tell we're do Let trying to start by and me just back what

the from investing On generate of we this. resources value of managers, active then a stated are partnership highest a to a our There to set, know, of that allocating return. you areas approach, points our follow and There’s the to sort flatly couple by growth this. long-term our from of through is couple strategy to follow call, proven leading areas in as and opportunity

capital. to we're and First, going focus investment. on of use primary strengths position, include new does competitive our our It’s which

continue to more our delivering our affiliates, of capital our we're Second, the new investments means build distribution in position areas. other strategy to and scale resources, to for either or growth through really going business resources and which growth, offering and other service

culture growth entrepreneurial our opportunities, existing new our our include opportunities we're growth resources, what really for base, pivoting using talent doing affiliates. affiliates, that in and growth with aligning opportunities could which is So

disciplined on our we while strategy. thing just be say bit might in of point that the capital have where excess capital, turn I The maybe and to capital would periods All Tom one we’ll returning to of talk it is, in just other we're shareholders. capital, a said, I about

Tom Wojcik

Sure.

And as think lot as to flow. if our AMG, partnership management diversification for know, of the unencumbered of about capital free overall we and capital unique we agreement, predictable in how a cash enables have structure significant that result. a you and us generate flexibility So allocate I

couple to believe our with through about As us new cost where long-term, model investments, to over capital the highest talked or of best use enables partner or the affiliates times, our and of integration unique little continue is that we Jay a risk. no with

These investments products enhance through and accretion, earnings adding out past. of continue capital our the by immediately diversification client also growth XXXX, nearly in including cumulative excess and our in profile, dividends. areas diluted share future deliver return And We’ll reduced than saleable XX%, demand. and XXX immediate organic in simultaneously paying million repurchases we've we've as to since share more count in addition dividends, done to

noted quarter, the slightly in we factors. we on pace of of fourth of we in expect also that gave shares mentioned, repurchase quarter, or shares ahead more a XXX amount that in I July. the repurchased $XXX based I and the the And in could As to third in variety guidance that you vary million million

future know, BlueMountain As we trajectory. the XX business have in we approximately growth month, completed you a of confidence and our received transaction proceeds. earlier this and million in lot our And

current forward. to we'll and buying deal execute levels, good our our going leverage So market on as monitor conditions levels, and we we at activity, capital back continue stock plans feel about

Operator

Thank you.

comes Please question. from with question Carrier Mike Bank Lynch. Merrill line of America with of next Our the proceed your

Mike Carrier

given guess guess then just equity Good And I on guys bit wealth hasn’t your management as years more more of you in side asset balance question. of Thanks. the just given being just with thanks past morning, capacity, an of management terms for over versus some the in one few also on things challenged. more the the just And and the the have deal a can provide debt Maybe active? I industry on the you particularly side in transactions. just M&A. sheet side, priorities update, us little activity taking types that been evaluations done the on

Tom Wojcik

the question. the answer capacity So and maybe can I your can start then of part side second on Jay

unencumbered our So a from a capacity just cash substantial perspective, flow. as of business I generates free mentioned, amount

as obviously flow. free we investment we're have of and that to new fund a foremost, and first resource cash looking looking out as at opportunities, So

balance over several In addition, of we our the as over of course quarters you the to optimize have time, past shape actions and sheet. really mentioned, the taken

We are company. an A rated

ability to capacity, We as aftermarket in in well transactions well. have for issue billion stock $X.XX revolver as as

perspective, flexibility to a execute So in us. able from to a flexibility amount be have see financially opportunities tremendous of we we that front of the against

Jay Horgen

part do my on and Yes. - to I talk you in a could bit more investment that and answer. about businesses bit fill from prior question, appreciate pricing a want the color then in market new your asking question, I because another the the of other the types of

only the and really we the are initial because the takes longer, equity with So to be I some is pricing which purchasing is, periods of a equity the model the worth just and affiliates, of than of time transaction, of equity that that the everyone off more portion on over think this time, we our expected knows at about partner of we is weight retained over initially pricing, purchased.

value to economics consistent across the is concept shares. try is cost that including a over also so repurchasing AMG an find and with capital that see opportunity therefore other to opportunity structure We of transactions time, our our to ways really we set,

of of So that better, cost we really you consistent shares. are partnership or investing in will, than own repurchase businesses our model, capital our through if

of we As moving at of our we're them that we're market, would similar pipeline today, private fixed have in along. in our of are businesses it relates looking and number types the business, alternatives. mention, our I pipeline Those in to growth the have to transactions number a in opportunities opportunities that we in the the are opportunities income today,

investing, as emerging again to an continue ESG look markets also us. another opportunity and We at area thematic, for growth impact

size seeing so we range. those again the opportunities types And of across are

Operator

that floor for I’ll Mr. gentlemen, our question-and-answer any to and comments. Ladies the you. turn back session. concludes final Horgen Thank

Jay Horgen

this sustainable And create to We generate our Thank model, business growth our forward strategy, look are our speaking with you against next long-term time. as along morning. you quarter. you us to to shareholder we and joining all our unique execute over in with ability again value for ability heard, through confident

Operator

concludes This you. today's teleconference. Thank

may a day. at Have this disconnect lines You wonderful time. your

Affiliated Managers (MGR) 28 Oct 192019 Q3 Earnings call transcript