APAM - Earnings call transcript Q4 2017 | Artisan Partners Asset Management Inc.

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Operator

Hello, and thank you for standing by. My name is Chad and I will be your conference operator today. At this time, all participants are in a listen-only-mode. [Operator Instructions] After the prepared remarks, management will conduct a question-and-answer Session and conference participants will be given instructions at that time.

As a reminder, this conference call is being recorded. will Management call Reporting I Taphorn, to time, of Director at this turn over the Makela At Artisan Partners. ahead. go Please

Makela Taphorn

Thank Chairman and Partners Artisan and C. earnings will to CFO. business CEO; remarks Welcome Daley, include Colson, and call call. Asset Eric from J. update Today's you. Management the

will the for questions. these Following open remarks, we line

website. and uncertainties. results with are filings to that Also, detailed of section SEC. are and conference to expectations the release Before I Eric earnings the Relations on made in We in from the would begins, which to comments may obligation this undertake of our Investor following presentation the like with available may call. release materials cause today's our of presented some the statements to Factors statements forward-looking to our your risks remind revise are you differ and date our deal on these actual and related our are call subject questions no earnings that responses the

addition, made include financial to non-GAAP today of remarks In references measures. will our some

turn can call Colson. of those measures now measures in to to over You the earnings find I will most comparable Eric release. the reconciliations GAAP the

Eric Colson

for Thank Makela, joining thank you, you and everyone call. the

will month IPO. the our be Next fifth of anniversary

evolve structure to Our while us establishing culture and important transition equity our to that a retained public allows our independence was our business. an to grow company the We've business. evolution of structure and employee

we Risk and at allocations to investment value focused And are. the the investment IPO, have investment Over grown. creating evolving the demand same returns The to stayed box investment as the time ownership has best navigating generating to are changes and our the efficient seen needs expense active high in based for the environment added these on we continue the style We've management to to our dramatic In remained five industry. structure, proud asset have for years ETS vehicles approach. client we popularity of faithful that changes other accelerated. rotation gain we since meet our has passive who by talent.

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Moving to X. Slide

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clients, investment the ago. a our global strategies The global very strategies attracted assets the well five are nicely when over Equity. our years. with strategies we decade launching align firm. in talent global a have ago last strategies teams' similar Global our investment decade has outcome strategies for Today, the Second, We client worked our global the saw and began our the to for demand global oriented research

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the and have Outside global far, this Thematic value in net deliver outflows and will the a with strategy So future. Turing for any attracted over Midcap added strategies people, faster U.S. And a secular culture track demand other assets significant domestic distribution for World returns. space, client World term periods the outcome high in and have approach terms Two, of confluence strong history. both income the our and track process, several allocation Team have the franchise strong a we performance the and records. that to area clients. long our the is relative strategies changes by strategies term primarily corporate our strategies foundation we last in for our X, a worked We the are marketplace. and asset result demand and investment oriented we remain client value offset high believe for up, The Midcap growth. believe underperformance fine U.S. years facing line industry factors. strategies Team outflows sustainable active of confident Growth seen Slide years. contribution has Just And profit at compelling issues. U.S. from only due both of of how have absolute rate The are the the three, Midcap Value flows performance, five Team improved these investment The development capabilities taking have the like and past. to Developing our into we early to business demand and in With Both the laying we our as outstanding through of of strategies demand, seen reflects than Midcap long Developing last Credit, performance over growth. in been records. One, in cyclical areas, into results to the there

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client Global UCITs, a to and the open strategies of ongoing for precise use makes What's is vehicles for investment XX existing and funds, XX evolve, there AUM minded at worldwide and CITs, world. With Slide to important. the are is vehicles. marketplace overall is management have financial and trillion our and percentages investment now on strategy total demand not private it about our investment is around shares the and willingness sense approximately that verity when about of The some an numbers As representing advisor important provide estimated trillion we flexible demonstrated assets. demand XX% experiencing opportunities. perspective disruption. we continue X the remained ability a client. massive investment only The that

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our business teams confident and that have investment success. model continue are We to

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C. J. Daley

The quarter Financial as eighth our presented was new the evaluate four everyone. firm operations. the results X and management strong launched GAAP year for focus morning, year our Good XXXX which to comments investment my most of Slide and both on Eric. added and Thanks utilize we results. results a team Artisan. include investment I'll and strategies. adjusted business adjusted for on

strong management rose ending as the Alpha and a XXX.X under higher operating XX% margin realize adjusted scale with the levels XX.X%. a year AUM Revenues operating Assets from billion, result XX% to of for and as income increased adjusted the year higher positive we returns included XX% end generation. rose year of market

of impacts the fourth exclude results the adjusted of Our in Reform XXXX. enacted Tax quarter

of million liabilities. result Company The differed the tax amount $XX XX estimate of receivable XXXX. Quarter net charge non-cash of and is a XX.X% We in the assets XXX rat of assets, end As reported the effective reform, December a in the quarter be under by X. end. the $XXX amounts XXX.X GAAP a will related the client assets quarter adjusted outflows. currently corresponding X.X impart were of revaluation The tax million last million of agreements. net by rate lower billion the from comprised impart benefits million up non-cash reduction tax from primarily increase compared non-cash payable cash of reflected offset current AUM that market tax tax A is TRA benefit tax a on X% to in offset expense to quarter X.X related differed of our our summary billion, appreciation billion in from Slide

were value outflows outflows of of traditional primarily market For loan non-U.S. $XX billion. billion offset global client headwinds a cash growth, high by of and and contribution client World opportunities Midcap cash due outflows U.S. net Developing U.S. Partially in Net Midcap impart term the short and year, as defined cash client X.X strategies. offsetting growth and structural AUM inflows appreciation, to and only increased markets. strategies result underperformance were XX% and income

impact quarter's the million growth included reinvested in were which income outflows capital gains and Funds reminder, current annual Funds. the a Artisan distributions cash XXX amounts of As approximately client of net the

revenues for same begin with average quarter results quarter current from grew line generally X. the increase quarter, were in year. the on Both from previous the financial periods. the Our last and AUM In is those Page X% XX%

are of our increased lower management a average XX% AUM of average proportion of as to of technology this XX. X% slightly summarized increases result declined expense level assets were compared are revenues, the Operating higher Adjusted the reflecting revenues operating quarter fourth compensation The expenses. associated Adjusted of in XXXX also are expenses separate in as XX. of addition revenue our on year, due fee based investment launch expenses lower based mix These quarter. four and on which our as eighth business XX% last expenses to up team compensation cost increased X% year a to broken related and compensation management a AUM by increased increase distribution with expenses under travel out higher details of of party equity compensation the in on the strategies. For result an expense employees incentive reflective Page new third the the and The and impart for grants increased incentive as well higher quarter to offset the intermediary benefits activity operating as are were increased Slide expense. a equity accounts. expense

rose same of to XX% result compensation the in XX.X% was from increase expense our a from in down in current the incentive year. the the quarter in previous As ratio slightly quarter compensation last quarter, and XX.X%

year. XX% XX.X% Our year last in annual to declined compensation ratio to slightly the compared current

shares restricted X fall to in was approximately $XX March on quarter X expense the based week, equity grant compensation grants Directors and of increased quarters year As million of a compensation compensation Last non-cash quarter compensation XXXX. reminder, the in million higher which our from our the equity expense approved of cost. and this million Board will employees each million expense X.X equity seasonal runs of based to other approximately of of each XXXX. March of ratio due in our January the

XX layered decline expense the on We its typically XXXX that XX the grants expect gradually then we increased million in expense reach to in equity equity million peak has quarter June will as which based compensation annual and competition of have employer The of first which September for X year. in related million plans XX include quarter. by retirement payroll million health quarter increase and each contributions to about expense quarter the and in and taxes costs benefits December seasonal the

in million related to Another recorded director expenses of X non-employee seasonal is compensation G&A.

Moving in slightly and higher result margin The operating was of Page decrease XX.X% current expenses from Adjusted on business last in quarter to the increased XX. XX.X% quarter activity. the primarily is the quarter.

year, to operating improved year. margin XX.X% XX.X% For adjusted from the last

our of to support we which to and million In of number incremental reinvestments of initiatives $X identified the business area in future expect we forward further onetime cost management in of current initiatives of rate XXXX, expanding the XXXX in consider degrees of million regulatory approximately cost, Looking we to a extra technology, upfront run mostly have $X support the expenses freedom. additional implementation risk strategic growth. and and related an to investment

enhance to the client We implement also plan will which reporting client new system experience. a

teams our to new three we office In expect space to of investment this relocate year. addition,

each own for its culture. As develop its model cultivate to own team you with know walls our team part and autonomous four derived is the of unique investment

the run $X related approximately we approximately XXXX. by cost to occupancy and per depreciation expect moves costs the accelerated year rate $X expect We million million nonrecurring of and to lease relocations increase in incur breakage to

as and rate earnings our benefits $X.XX do the week, Directors earlier declared represents Finally, per to dividend as of $X.XX regular XX.X% the dividend investment share to in current has of non-cash and retained The a tax previously, corporate in annual agreements. taxes, generate The cash business dividend XXXX. February adjusted a annual quarterly earnings adjusted our and positive of will in to of we rate of special distribute XXXX impact realize we Reform distributed $X.XX dividends a a of payments increase the will further in expect receivable and reduction provide prior only and February invest from portion a $X.XX XXXX consistent on dividends anticipate announced special will Based us cash special shareholders both tax and corporate on generate dividend deferred tax offset realized per with we of plus practice majority we of initiatives XX our dividends. term plus form share $X.XX the Tax estimates, to cash the expect our the our to of small outlined Reform of long are record annual to that quarterly mentioned Reform. priorities tax result not Last The It Board effective with of and to additional an year bill. been contemplate passage of from The savings Tax earnings. share adjusted with on of opportunity to the per special decline shareholders. payable under savings we approximately Tax $X.XX quarterly the and XXXX XX. tax respect expenses after our of

impact the Tax Reform the become the As our plan policy we over course including annual levels current reassess quarterly capital clear of to of our the dividend. special of and year, management

to greater variable the dividend variable reflection how quarterly a and cash earnings directly quarterly of shareholders quarterly also our consider more align our policy each more our be capitals We a allow we in with us provide return business. of would we to appreciation transitioning operate generate We a we shareholders generation that who are and general dividend timely believe to with quarter. plan a will dividend cash better

Of dividend may any course, to or we quarterly determine not our to policies. make changes rate

XX balance Page on remained highlights Our sheet strong.

Our and leverage is cash remains healthy modest. position

pre-IPO The of eligible more are our one shares partners in for in quarter eligible anyone in aware the that together shares employee and restrictive the year quarter. million shares employee equity in year became each you're approximately for period resets eligible of from As year. than sale, period. sale retiring In generally sale first selling their are total, X.X for previously partners XX% first with

below voting portfolio Existing XX% to sell. managers their they pre-IPO partners the sell to to not shares greater from believed the super and date standard Partner that committee that liquidity, our will voting liquidity, intentionally required voting stockholders to opposed and at As part transitioning designed shares choose the look good per ease to our to to approximately the and revert end means share. retired are and partner sell all XX% have ownership our designed APAM super will don't per at economic rights rights share ownership several of will Class future power of senior is rights IPO to partners expect back the The a disruption XX% I governance. go first of Related which now company our will was employee into year. voting how first three point, minimize of shares the from as We and to any the remaining we the still power. quarter our will B ability are overtime, transition prorate the than vote of structure commensurate clients to questions the and employee corporate when vote will a fall shares with person votes B fell many before the to your pre-IPO employee vote talent. know we current equity have call the Class so expire XX%. our We to public turn quarter time forward to that today per X of believe X We below and operator. XX% At XX%

Operator

you. Thank

will session. Merrill question now Please question-and-answer Michael comes go of begin Lynch. ahead. America first the Carrier The Instructions] from [Operator Bank with We

Michael Carrier

Thanks guys.

just outflows update guess the capped question a wanted just, First see the need strategies closed on headwind are you Midcap of the an strategies, went how side, when for much on money. opportunities, growth, you where to seeing probably you and opportunities the aisle the some you're or through growth get can when there are the versus look where a which at strategies Eric, in opposite I new of but the we seeing you

that headwinds when get growth noticed? to of some inflection of that happen, maybe Just where to a sense going to you starts offset the the trying

Eric Colson

there, and There's levers and Midcap outflow Yeah, we sure, the inflow addressed and. obviously outflow two the Mike.

slight XX% absolute that mean classes given in our preference few on has allocation just last just I there. growth. generated or that date Midcap the over the that class for in Any Now asset proprietary put asset the and at Midcap change look top flows value performance years, of and exacerbated success a the of year period producing target you five asset of combination they time

a that we the Midcap the offset to and specifically launch BC we in have good that as there to that in think has some the the in of degree broader a still as of degrees by in fairly global But subsided space other Midcaps been we freedom of view that of with some limited Midcap strategies. that space. asset Midcap of and more have So - Midcap well growth, space value have size discovery version headwinds. growth creating rigid increases a degrees and category more global for Midcap have are freedom than our

the like launch we So grow. fact offset global we Midcap help to that the the discovery

the market of right the and lies hit marks it's strategies. integrity. at record marketplace. have inflection where track some the see Developing really nice World is year we're and And that's those the process And And and and towards. strategy volatility move. we've there active at so Team, out record a Team we in of we flows that to given Credit mitigate into those success authentic of that management with good some year and points three or nice so track are global positioned institutional well three And Volatility given for also opportunities the marketplace given to to of inflection close left one to those those and - Growth we're area is Team Midcap moving we're the three friend and think think where the points the back World their Developing an we

Michael Carrier

And gave J. then lot thanks. expense of Okay, you a C. guidance.

versus you you you wanted on go able tax front you Just a are can the of when that you to of the capital distribution, know XXX%? see and just the the of capital to are maybe and given that distribution the that the how you you how that, close know that's sense if already need did much when at terms have mentioned to is could payout potentially opportunities enough rate, growth that about in recycled if you distribution that look be Artisan reviewing - much you side, policy type just the of or you payout to you think just variable get in of

C. J. Daley

Yeah, down Tax notice where operate so to then compared and we about, are you know From business. seeding our of to and we really last advantage fundamentally year, that way four define cash stated still know cash addition, perspective back business are make That some we that's $XX its the change payments And going eventually for we of launched a you left year we strategies there million. is tax about because money this our this the take how doesn't period in XX reflective so how accelerated time cash back you'll you bonus invest in to know a additional XX into Reform the months. of the think levels money of some to will higher really normally we deduction strategies year.

always depressed we typically a of end XXX% the and the The level the as the those it out quarter is dividend end variable we So dividend private of we way was quarterly for after about this of think paid out our the reasons. year cash earnings. at paid two company,

we a know capital As low you business. are intensive

about to variable of return to shareholders think moving get a it's we how would appreciation reflection more and generation a are of capital and really about we greater that dividend, business. So actual the it we And provide timely fashion. our thinking you think a in cash know how

changed all. It just more shareholders think on to don't returning a timing. be would has capital our I philosophy So at

Michael Carrier

Okay, lot. a thanks

Operator

question ahead. comes Goldman with Alex The Sachs. next go from Please Blostein

Alex Blostein

Great. Good morning, guys.

on the like the at But sort next Just of guys thinking kind you it's the gave guess some cleaner non-com of add bucket? and the and there details growth bucket, give a a restructured a quick as you to couple XXXX what year in follow-up it of of total look whole for what you of non-com whole much kind of going to your just run there expense, is as things see our a expect guys specifics guys if transitory so about on of to sounds distribution trajectory kind rate rate just be on, again lot around just excluding of occupancy they more there. expense side. I sounds a should growth How in

C. J. Daley

mean the occupancy I I cost incremental which XXXX in sort sort for I are significant the Yeah, type two did I quite thought areas breakout to that and of and us. highlighted tried were of technology

would with. then X back communications. highlighted we expenses So I those I trajectory after levels. mid-single-digits you to think of They you each back know about would sort thereafter back out to to and were be onetime - occupancy But normal normal the you expect in which million

Alex Blostein

Got is level XXXX it. some that teams? But you your build built a guess of normal the like incremental out, have I being part XXXX also guys or in this

C. J. Daley

mean we a with first team XXXX commercial fund our two of in and strategies, hedge new products. lot new did four I

there were having up depends think It elevation some as well. well. in as elevated another some expenses So wind like XXXX know you I all we would XXXX you if

Eric Colson

Yeah, Alex, it's Eric.

positioned where We a and over C. our with given having now. growth are what the performance experiencing past years some mindset growth right J. strategies our new a few are mentioned teams and

performance be to to he the Looking regards position growth and me with Brian the is for durable Credit his that said to there extremely the really forward, and that left. foundation ample to franchise ready Team. given came wanted examples in And is and

for for move good feel a he more to requested one greater new talent just to that. get access to investment team, he location talent, So his it's to Denver

fact Well that a and prospects orientation, and - City you'll we they mindset had the space housing or great these see central And and traffic definitely, continue culture. good their it would C. we've reinvest exposure firm and from the are up. a walls and that for getting country built not one is it we who happy out expense that consultants with now have the that. to in for location and think Kansas spot clients and we're also and In think to we mentioned, floors that. way if pick we central moving that we're in as we'll It's good temporary we are four York part there their that of And a a our get And that New with growth Thematic. and in move our And we to growth spend. to and are management, research. to in growth initiatives J. meetings happy we was company matches And same self-side invest really and more thought are

Alex Blostein

That guess are makes of in my sense. of from Certainly terms kind heard here. what space tails the to in of theme we've weeks the second the I build lot a totally of the our guys, few out. you saying Eric last you duff peers in question

know little critical start sort dynamic could reaching they more as I expense in the bit those before mass three what's just about or put the products of think could As that you fund raising will sort scaling to this think we be, will of process need you know you funds, the year to a take do process you one beyond you guys is now of private year this do a it think some the a needle? is longer but on - it move

C. J. Daley

as off funds strategies and constrained, shorter a record strategies don't tend buyers same their at can private to tend where three private year level buy fund take be for need liquid timeframe that a and capacity assets of The criteria. oriented certain than you the to have Yeah, so other least consultant that. lift the the traditional

needed would strategies. But we we so three full to years we with into the move how do we And other want on space. thoughtful the as be wouldn't expect

mentioned my and of on franchise to where not which right take where with as we strategies. to opening are Team as that looking have thoughtful our foundation the comes very product remarks Developing for for terms right Team us. Credit real getting regards And the critically horizon the important that to to one the Thematic think and it's we to the World that that clients outlook asset in I we're time So to lay want getting a the We foundation the about for strong we opposed lay think act. in right

[Technical have to going Difficult] we're So

Alex Blostein

sense, guys. Yeah, Thanks great. that makes

Operator

comes Bill ahead. next question Our Please of from Citigroup. Katz go

Bill Katz

very Thank everyone. for Okay. the you much taking question

let's the bit. capital J. come of things, management a couple back So discussion C. to little

else potential of other elevated lower is sort not anything of as the of of little backs there changes taxes, sort earnings is the count? think the kind relative be how share variable could drift do about variable a the paying And that now You the a in nature than what the there ongoing get to repurchase for dividend? to you quarterly then the taxes, result talked add dividend in of about separately, bit the impact given

C. J. Daley

the basically then that back incremental dividend look calculating. the in Yeah, there expenses, include that is the change business equity our last we the Reform. more so, didn't that think Tax in a impacts tax year think the contemplate earnings at that our announced. running cash dividend primarily just which high there of no of how Reform adjusted we deferred result Obviously non-cash forward, be And comp. And the we'll will And about generate think I more we moving spending add levels Tax available. some the reason answer somewhat dividend We same I impacts I of cash is we as did just of on will immaterial. as the highlighted is based stated about and we'll the the will there's which level first

Bill Katz

had $X.XX that have used year sand reserve. you this that reserve of some Where's today? that You as mentioned

C. J. Daley

our same earnings Obviously a our we a if the out flushed our sustain the expenses held, level. ago basically where was quarterly cash which we to weren't generated in getting earnings you had because dividend recall we're adjusted questions which probably non-cash of So, reserve lot that the were around the around year our quarter. we for had abilities

flow for that question. that's And generating as cash So quarterly. we policy an excess XXXX and now back obviously of that not insurance and we're had a held and XXXX in cash

larger a just philosophy question same again, there. So

Bill Katz

has picture of Midcap you Eric, - I all high What of Okay. of then Is last growth box, you sort the That's some there industry the from well. dynamic helpful. side to year the this sort legacy a so scaling so. box, style got look gross evolution amount Then that when makes for the you as and the big the changes small sales catalyze sort because or anything fair down high style come I but on that just can you, appreciate APAM at else of the of pressure in the big a that yield company over see Thematic? and it transforming do helps the for

is, And now if when, the see then not so bit a sales the question you start of to bump overall? net in a sort

Eric Colson

is Yeah, feed really we're regards with area held the is those on. account we're the get scale for accounts. competition seeing large that's an we've to really discounts And line you large seeing to delta more that when just

And we not the mean steep and we've we everything constraint do. over to Alpha on negotiating if so we held that that have in of I to we're absolute have going to mandates manage the long strategy deliver philosophy of, capacity run, we assets, to discounts manage and unwilling strategies manage we're line our mix, minds take those the to every rate. the AUM have today's large and

And quite starting outside to other go we see pass abroad. in to that the intermediary the both the mandates on. to frankly, offset large progress offset deeper So thing we're doing to the and to some space U.S. that we're and U.S. is the

level, to at you we rate patient. You a and be rather get and certain a negotiation get some just pass take and into a

long the So And manage to year play that that rate, the preserving that long patient distribution deliver, the would after through bit the we two. continue having for over now delivering that run and that or the returns delivered a it we run. in fee to if next and broadly be more to fee takes think we've especially we're rather

Bill Katz

Okay. Thank you.

Operator

ahead. next The Blair. William Please from Shutler comes go question Chris with

Chris Shutler

Hey, guys.

on the First, couple of quick up clean model. questions

million both timing about occupancy, tech those hitting onetime should in we expenses how of the of $X and So think expenses the the P&L?

C. J. Daley

mid-year going the typically ramps occupancy be the probably up think So, year. through to technology and I is

the So up. year the of typically the ramp projects end near

So the are admittedly level don't we I end. But little high those so the mid budget think month, of heavier to sort Chris, in a to expectations. just

Chris Shutler

significant Okay. factor think to the your factor as so factor land do the at land recently, want the something opposed Fair enough. of new here is thoughts you I framing actually box And channel? then in and system idea that's that least is Blackrock gain performance traction is on good is marketed to that being by that get intermediary to industry, Thank MSCI you you. for see, let's box using the style think something investment going classification

Eric Colson

created style style followed compare file boxes were and I nice marketplace a think and that when boxes in people indexes then that suit and product got then managers these structured various and contrast style strategies way Chris, came created Sure. the and tracked the that to indexes. categorize quite and

But my marketplace take categorization and that regards factors. the today view in said think and for factors being even think though And style those I asset factors taking causes client or of our the And way that the view to the us factors lever clients are don't side teams right come is our intermediaries. or to seeing factors portfolio and some philosophy those given are I factors are in that we with the allocation these I the industry you we're understand how hold consultants, we'll we going especially products So ETF end if is positioning, how will how the those further. influencing analyze, some process. volatility of trading where and level. a micro-managing that even manager to on structure the the that With and markets through look opposite factors of at consultant

Chris Shutler

lot. a Thanks Okay.

Operator

Please Thind The question of next from Surinder ahead. comes Jefferies. go

Surinder Thind

Good morning, guys.

or that? on in assets. meeting any like the perhaps like asking around discussion them part that been of performance a hey like outperform if to in or go model amount then something fee you by the say were get Has give perhaps X X way maybe you recapture Just discount there discussion terms something for but maybe the that larger new some get trying following-up the to them we around we to of in clients discounts sense fees a

Eric Colson

strategies Really to the having always those are those baby fees fulcrum. that Yes, look would solution. that to around forward discussions Eric. a traditional will base had go you and that that We've fulcrum And we of performance been And more I about. that talk out symmetry a open more account and variable be the expect what's the rate, that of Surinder, of at comes what's the around, performance if and level. and it's what's based forward of fees our that the on see new the based always are part we

Surinder Thind

Understood.

gross looking I a obviously past quarters of so and the in two quite the kind there a kind quite SME activity, guess at lowest sales just of little quarter is time. And been some this

of kind that's kind that of on going we hold is this that for the point ebb lot around flow should or the about and or of part what's kind fees So of sense discussion a SME normal causing the just is of at there's in how more channel? to that just think clients off

C. J. Daley

creates how it's there's account We've something own going the the normal outcome. funding that if an exact not I'm the into a time to actually and ebb report out. to lumpy, when any frame out sure SMA. normalize really it's when look to longer is and for And flow you And and win it then said future, get and come it funded lumpy you never know going settle. takes

haven't to years wouldn't seen an that experience. or pattern. a quarter try in create my SMA the over read I I into just So

Surinder Thind

not it struggled on just Understood. earlier just And but discussion maybe their maybe about investment teams kind current stretched tended quite through approach literally is environment Midcap bit and then if other have has your teams then of comments point? for periods it the I mean products of we're the the based and philosophy focus there's a is but right just underperformance, been Value more to PM, little been bounce new or of as the maybe They've Is if the maybe on U.S. what your teams was the we on you of than color that perhaps summer it can any maybe fit touching the stuff, bounced at a lot investment delta goes that they've well with obviously other this any everybody but provide last addition I back then and the in quicker. some there and think on Team.

C. J. Daley

it's nice strategy We extended this talent that leader cycles. in think think the and the conditions think value XXXX, we new and horizon way navigate, a the it's and the process and had talk And those one bring impact philosophy to bit same to very new this as within been to these early, will and since and I the bring trade, or with occurred Alpha who strategy nine it's change of same had we Midcap philosophy the impact that clearly take time both they've produced and fresh in that process. a market brought philosophy has do that's primary team is And in this is past narrow team, well. Tom a market it over but the basis than a investment in mean I Reynolds, it longer on time. big had yet I I to individual the bull been how integrity think and but still more and discussion And that on about have and the ideas. things quite it's always it's not around close a XXX points year timeframe,

performance buying, consultants back can for for to so position to this they We and But that's important. ensured and it. a a all lot be to us and clients positive that evaluate it really won't high group. is think when a in take at they in performance coming look team So be with that at want integrity place, place some there's process and whole quality start

Surinder Thind

me. for Thank That's you. helpful. That's Understood. it

Operator

question next go Please of KBW. ahead. Lee Robert from be will The

Robert Lee

morning, guys. Good thanks. Hi,

be to a a be access of your about U.S. fee place both particularly to intermediary a expense intermediary maybe been maybe it. so has distribution Eric, looking structure, for let's channels the U.S. better place back more tends the where outside that lot and curious, U.S. emphasis around challenge fees see the it pretty to expensive at Just going comments to high, outside tend given while and

a on of how outside as, intermediary channels where how spend spending may the have an more like trying that kind feel much what specific U.S. a you not you only and other should be has intermediary as focused non-U.S. you So just of incremental feel expanding from where mentioned? to in better that think you're get C.J. we shower beyond

Eric Colson

the expense number vehicles, the in The historical Rob. market more of and classes distributed intermediary fear share a with Europe primarily goes of is that marketplace. in Certainly, fragmented

that's the that that a the we is our which that's a environment U.S. in see And to moving happening Europe. quite favorable belief bit extremely model. structure class we clean think and is regulatory Our more share consolidating is to in

to. platforms just expense what so fit mindset. with countries languages have in But our picking we be and deal some number translate to choosing the that and do And you those additional you of the will we're there institutional that above and partners given U.S.

be is that space real some I coming on of all down reasons but top we're the getting think are coming minor it of one excited they'll that the those is So and expense that's about down in expenses.

Robert Lee

are alternative or people at strategies some some seems you more optimism given the kind re-bouncing be with good you the maybe of gave last to you to more outlook in saying year there strategies or so? around there's of could had good liquid you next was But while, still back of And come couple some kind for active pretty out, Global I Thanks. seeing mean little from level, that run or at challenges re-bouncing even for and level, more what market RFP see speaking or to a about bit expecting broadly some not. you Okay. maybe a expecting in so about seeing the are strategies of week I high faced that high a a activity you're talk maybe color Midcap

Eric Colson

any we've the that the And a than and imposition of the that at I change can today staring passive active material better seen identify. was I us have volatility don't major written do flow that into dynamic cycles. it creeping change obviously active is think That's if there's market think to that going before. and I lot

don't the catalyst years, right And see I in next would I are term. optimistic define any And so to front near but today. five that us of we three years about over the

Robert Lee

technical Hey, last thanks. question. Maybe just one

convert seems B With to so that the it's fund is of from that shares perspective, guess contract any one Is some going to proxies poised I anything? all, Class the vote. require control in kind or change

Eric Colson

about clients about for to We've outcome. going create the this not thought proxy it's a very vote for need to prior minimize validating a control. been No. to of this IPO. design have to obviously disruption of the thoughtful outcome We've change the And

to we've be to in areas just and transition everything that is at the most to gradual that won't we complete. from place and be So looked the create we've all part think the for outcome going and public, that And just thoughtful. smooth private tried

Robert Lee

Thanks question. Great. my for taking

Operator

will The Markets. next be of Capital Lee Kenneth RBC from question

Kenneth Lee

And for can on is my question. on question a the just get I want sense. Thanks sounds client particular getting institutional nice it mean relatedly I Hi. for you it's the non-U.S. mix attraction give these us growth. also taking intermediary a AUM follow-up that clients? if non-U.S. to better what are I sense the of products which - particular one towards the the strategies intermediaries Thanks. just but wonder a going between had or

C. J. Daley

institutional distribute design really of going through into and was consultant marketplace The our the Sure, presence. the Ken. non-U.S. institutional

immerging few global will of So our strategies first we in provided if be markets the with. well back strategies have well to the investors. time quite that for non-U.S. look that positioned you launch for a And were quite consultants our positioned that global

early access our through of non-U.S. continued marketplace. the foundation the so And institutional is and

but intermediary and future. the we're in outside we apply for out the our and to applied to the in the some We have intermediaries resources uptick Europe been with haven't we successful going same U.S. the space resources broaden towards that that U.S.

Kenneth Lee

Gotcha, thanks.

Operator

much today's and thank concludes and thus gentlemen, concludes this session call. our attending Ladies you very We for question-and-answer today's presentation.

may your lines. disconnect You now

Artisan Partners Asset Management (APAM) 7 Feb 182017 Q4 Earnings call transcript