BOSTON -- The drive to buy back stock and keep dividends flat is under way by several public holding companies of investment management firms, which saw their stock prices drop in the recent market volatility.
Affiliated Managers Group Inc. announced plans to repurchase up to 5% of its outstanding shares of common stock. The Boston-based firm will use its credit facility and cash on hand to buy back the shares, and will have enough money left to invest in midsize investment management firms if the opportunity arises, according to William Nutt, AMG president and chief executive officer.
AMG stock closed at 189/16 per share Sept. 25, down 50% from its 52-week high of 391/2. AMG has 11 affiliates with $54.9 billion in total combined assets under management.
Boston-based Nvest LP intends to repurchase up to 1 million limited partnership units of Nvest LP and of its operating partnership, Nvest Companies LP. Cash balances and flow from operations will provide money for the repurchase, said Peter Voss, chairman and chief executive.
Nvest's stock closed at 281/2 Sept. 25; its 52-week high was 367/8. Nvest has 16 affiliates, with $136 billion in total combined assets under management, as of June 30.
Competing Boston holding company United Asset Management Corp. is more than halfway through an aggressive stock repurchase program launched in January. The company has bought back 7.8 million shares out of the 10 million shares available, using operating cash flow. UAM's stock closed at 227/16 Sept. 25; the 52-week high was 301/4. UAM has 45 affiliates with $210 billion in total combined assets under management.
The companies can buy back the stock at today's low price and offer the shares when the market is stronger. Also, the fewer shares outstanding, the higher the earnings per share.
Despite the turbulent condition of the financial markets, UAM and Nvest have announced there will be third-quarter distributions.
UAM's dividend is 20 cents per share, payable Oct. 15 to shareholders of record Sept. 30. UAM increased the dividend from the 18.5 cents per share offered a year ago; another increase had been anticipated in March, but the board voted to delay it until UAM recovered from charges against earnings paid in recent quarters. The delay in dividend increase continued through the third quarter, with money that could have been applied to an increase going instead to UAM's stock buyback, said UAM spokesman Jonathan Hubbard.
Nvest is distributing 63 cents per unit to investors, payable Nov. 16 to unitholders of record Sept. 30. It's the same quarterly distribution as the second quarter.
"At its present price, it represents an annual yield of more than twice the 30-year Treasury bond."
Liberty Financial Cos., Boston, has registered to issue up to $800 million in senior or subordinated debt securities, trust-preferred, common and preferred stock and other securities.
Proceeds will be used for general purposes including acquisitions and refinancing debt, Liberty executives said.
The holding company has seven affiliates with a collective $54 billion in total assets under management.