01—Abstract
Summary
Summary of the 10-K filed March 1, 2010. Cited figures are marked; the original filing is the authoritative source.
Affiliated Managers Group, Inc. (AMG) reported its 2009 annual results, reflecting a challenging market environment.
Total assets under management stood at $208.0 billiona, a decrease from the previous year, primarily due to market declines and net client outflows. Revenue also saw a significant decrease, falling to $841.8 million. Despite these headwinds, the company demonstrated resilience, with Net Income (controlling interest) recovering to $59.5 million after a net loss in 2008.
AMG's strategy continues to focus on internal growth, strategic investments in boutique investment management firms, and enhancing its Affiliates' businesses. The company is actively pursuing new acquisitions, with several pending investments expected to close in the second quarter of 2010, indicating confidence in future growth.
Management highlights the importance of Affiliate management equity ownership in aligning interests and incentivizing growth. Despite market volatility and regulatory scrutiny, AMG remains committed to its partnership approach and operational autonomy for its Affiliates, positioning itself for long-term value creation.
02—Key points
Key Highlights
- Total Assets Under Management (AUM) reached $208.0 billion as of December 31, 2009.
- Revenue for the year ended December 31, 2009, was $841.8 million, a decrease of 27% from 2008.
- Net Income (controlling interest) for 2009 was $59.5 million, a significant improvement from a net loss of $1.3 million in 2008.
- EBITDA decreased to $242.8 million in 2009 from $309.0 million in 2008.
- The company made a significant investment in Harding Loevner LLC in August 2009 and announced agreements for pending investments in Aston Asset Management LLC, Artemis Investment Management Ltd, and Pantheon.
- Operating expenses decreased by 24% in 2009, driven by lower compensation and SG&A costs.
- The company has a diversified revenue base across Mutual Fund, Institutional, and High Net Worth distribution channels.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2009filed March 1, 2010Financial Statements
FY2009 against FY2008
| Line item | FY2009FY2008 | Change |
|---|---|---|
| SG&A Expenses | $126.80M$201.47M | −37.1% |
| Operating Expenses | $601.90M$791.50M | −24.0% |
| Operating Income | $239.90M$366.72M | −34.6% |
| Interest Expense | $64.60M$73.36M | −11.9% |
| Net Income | $59.50M-$1.32M | +4590.6% |
| EPS (Basic) | $1.44$-0.03 | +4900.0% |
| EPS (Diluted) | $1.38$-0.03 | +4700.0% |
| Shares Outstanding (Basic) | 41.40M38.21M | +8.3% |
| Shares Outstanding (Diluted) | 43.30M38.21M | +13.3% |
05—Questions
Frequently Asked Questions
How did AMG's assets under management perform in 2009?
As of December 31, 2009, AMG's assets under management were $208.0 billion. This represents a decrease from $170.1 billion at the end of 2008, but the filing text states $208.0 billion as of Dec 31, 2009, and $170.1 billion as of Dec 31, 2008 in the selected financial data, and $208.0 billion and $170.1 billion in the 'Assets Under Management' table. The revenue discussion indicates a 21% decrease in average assets under management in 2009 compared to 2008, leading to a 27% decrease in revenue.
What was AMG's profitability in 2009, and what factors influenced it?
AMG reported Net Income (controlling interest) of $59.5 million for 2009, a substantial improvement from a net loss of $1.3 million in 2008. This recovery was driven by a decrease in operating expenses (down 24% to $606.8 million), particularly in compensation and selling, general, and administrative costs. While revenue decreased by 27% to $841.8 million due to lower average assets under management and reduced performance fees, the cost reductions contributed significantly to the improved net income.
What is AMG's growth strategy, and what new investments were announced or completed?
AMG's growth strategy involves internal growth of its existing business, additional investments in boutique investment management firms (Affiliates), and strategic transactions. In 2009, AMG acquired a majority interest in Harding Loevner LLC. Looking ahead, the company announced agreements for significant pending investments in Aston Asset Management LLC, Artemis Investment Management Ltd, and Pantheon, expected to close in the second quarter of 2010. These acquisitions are part of AMG's ongoing effort to expand its diversification and enhance its Affiliates' growth prospects.
What are the key risks facing AMG, according to the filing?
AMG faces several key risks. Its financial results are heavily dependent on equity market returns and the investment performance of its Affiliates, as fees are largely asset-based. The company's growth strategy relies on its ability to successfully identify and acquire new investment management firms on favorable terms. Additionally, regulatory changes in the highly regulated financial services industry could adversely affect its business. The performance of other financial institutions and systemic market failures also pose a risk. Key personnel retention at both AMG and its Affiliates is critical, as is the potential for termination of investment management contracts by clients.
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