AMG to acquire stake in Garda Capital Partners
Affiliated Managers Group on Monday reported $774.2 billion in assets under management as of March 31, up 5.2% from Dec. 31 but down 6.8% from March 31, 2018.
Institutional AUM totaled $451.8 billion as of March 31, up 4.4% from Dec. 31 but down 6.1% year-over-year.
First-quarter net outflows were $7.4 billion, according to AMG's quarterly earnings statement, vs. net outflows of $15.8 billion in the fourth quarter and net outflows of $1.9 billion in the first quarter of 2018.
Institutional net outflows during the first quarter were $4.9 billion, while net outflows from mutual funds were $3.6 billion. High-net-worth strategies saw $1.1 billion in net inflows.
Also on Monday, AMG promoted its president, Jay C. Horgen, to CEO, replacing Nathaniel Dalton. Mr. Horgen's appointment will be effective after AMG's annual stockholders meeting on May 29, at which point Mr. Dalton will become senior adviser and remain on the board of directors. Mr. Horgen will remain president in addition to his new role and join the board of directors, according to a news release.
In March, AMG also announced the appointment of Thomas M. Wojcik as chief financial officer and that he would assume the role from Mr. Horgen, who was previously CFO. Mr. Wojcik was managing director and CFO for Europe, Middle East, and Africa, head of EMEA strategy and global head of investor relations at BlackRock (BLK), the company announced in a news release at the time.
AMG also announced Monday that it has entered into an agreement to acquire an equity interest in Garda Capital Partners, a hedge fund manager with $4 billion in assets under management that specializes in fixed-income relative-value strategies and serves institutional investors. The transaction is expected to close in the third quarter, the news release said.
On Monday, an AMG spokesman declined in an email to provide further details on the size of the company's minority investment in Garda Capital. The senior partners of Garda will continue to hold a majority of the equity of the business and direct the firm's day-to-day operations, according to AMG's news release.
"With its distinctive strategy and outstanding investment track record across market cycles, Garda is a premier fixed-income relative-value manager," Mr. Dalton said in a separate statement. "Given the firm's disciplined approach in a highly attractive area, and cohesive and long-tenured senior investment team, we believe Garda has excellent growth prospects, and we are pleased to enter into this partnership."
Regarding the firm's first-quarter earnings, Mr. Dalton commented in the earnings statement: "AMG generated economic earnings per share of $3.26 in the first quarter of 2019, reflecting the effect of significant market declines in the fourth quarter of 2018, which impacted average AUM and performance fee generation in the first quarter. Looking ahead, in addition to the positive earnings impact of the year-to-date market rebound, we believe that our long-term organic growth profile will be enhanced by our affiliates' improving investment performance across multiple product areas, including global and emerging markets equities, and U.S. growth equities."
Overall, alternatives saw net outflows of $2.9 billion in the first quarter, compared with net outflows of $9.5 billion in the previous quarter, and net inflows of $5.6 billion during the year-earlier quarter.
Global and U.S. equities saw net outflows of $3.4 billion and $1.4 billion, respectively, in the first quarter. In comparison, global equities net outflows in the fourth quarter were $3 billion vs. net outflows of $4.8 billion in the first quarter of 2018. Within U.S. equities, net outflows were $3.9 billion in the fourth quarter and $3 billion in net outflows in the year-earlier quarter.
Multiasset and fixed-income strategies, which AMG reports combined, saw net inflows during the first quarter to the tune of $300 million in assets. In comparison, multiasset and fixed-income strategies saw net inflows of $600 million during the fourth quarter vs. net inflows of $300 million in the first quarter of 2018. For total AUM broken out by asset class, alternatives had $295.7 billion in AUM; global equities, $267.9 billion; U.S. equities, $108.5 billion; and multiasset and fixed-income strategies, a combined $102.1 billion.
Revenue during the first quarter was $543.1 million, down 3.8% from the previous quarter and down 11.3% from the year-earlier quarter.
AMG reported a net loss of $201 million during the first quarter. The company also reported a net loss in the fourth quarter of $151 million, in comparison with net income of $153 million during the first quarter of 2018.