Q4 2021 Westwood Holdings Group Inc Earnings Call

February 9, 2022

Thank you for standing by and welcome to the Westwood Holdings Group, Inc.

Speaker 1: Thank you for standing by and welcome to the Westwood Holdings Group Inc. Incorporated's fourth quarter 2020 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star 1 on your telephone. As a reminder, today's program is being recorded. I would now like to introduce your host for today's program, Julie Garron, General Counsel and Chief Compliance Officer. Please go ahead.

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2020 earnings conference call at this time, all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session you will need to press star one on your telephone as a reminder, today's program is being recorded I would now like to introduce your host for today's program Julie Gerron.

General Counsel and Chief compliance Officer. Please go ahead.

Speaker 2: Thank you and welcome to our fourth quarter 2021 earnings conference call. The following discussion will include forward-looking statements that are subject to known and unknown risks, uncertainties, and other factors which may cause actual results to be materially different from those contemplated by the forward-looking statement.

Thank you and welcome to our fourth quarter 2021 earnings Conference call. The following discussion will include forward looking statements that are subject to known and unknown risks uncertainties and other factors, which may cause actual results to be materially.

Different from those contemplated by the forward looking statements additional information concerning the factors that could cause such a difference is included in our press release issued earlier today as well as in our Form 10-K for the year ended December 31, 2021 that is filed with the Securities and Exchange Commission.

Speaker 2: Additional information concerning the factors that could cause such a difference is included in our press release issued earlier today, as well as in our Form 10-K for the year ended December 31, 2021 that is filed with the Securities and Exchange Commission.

Speaker 2: We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. We are cautioned not to place undue reliance on forward-looking statements.

We undertake no obligation to publicly update or revise any forward looking statements whether as a result of new information future events or otherwise you are cautioned not to place undue reliance on forward looking statements.

Speaker 2: In addition, in accordance with SEC rules concerning non-GAAP financial measures, the reconciliation of our economic earnings and economic earnings per share to the most comparable GAAP measures is included at the end of our press release issued earlier today.

In addition in accordance with SEC rules concerning non-GAAP financial measures. The reconciliation of our economic earnings and economic earnings per share to the most comparable GAAP measures is included at the end of our press release issued earlier today.

Speaker 2: On the call today, we have Brian Casey, our President and Chief Executive Officer, and Terry Forbes, our Chief Financial Officer. I will now turn the call over.

On the call today, we have Brian Casey, our President and Chief Executive Officer, and Terry Forbes, Our Chief Financial Officer.

I will now turn the call over to Brian Casey.

Good afternoon, Thanks for taking the time to listen to our quarterly earnings call last October I highlighted the progress we were making including new mandates won and funded in the first half of last year performance improvements the launch of new mutual funds and an improving new business pipeline for Westwood well.

Speaker 3: Good afternoon. Thanks for taking the time to listen to our quarterly earnings call. Last October , I highlighted the progress we were making, including new mandates won and funded in the first half of last year, performance improvements, the launch of new mutual funds, and an improving new business pipeline for Westwood Well.

Speaker 3: Throughout the last couple of years, Westwood has taken decisive steps to strengthen our foundation and position ourselves to capitalize on future opportunities.

Throughout the last couple of years Westwood has taken decisive steps to strengthen our foundation and position ourselves to capitalize on future opportunities.

Speaker 3: In 2021, we finished the year ahead of their benchmarks in most of our multi-asset and retained their strong multi-year rankings in several US value and multi-asset strategy.

In 2021, we finished the year ahead of their benchmarks and most of our multi asset and retained their strong multiyear rankings in several U S value and multi asset strategies.

Speaker 3: We delivered sales results, posting the best new business quarter and five years in the second quarter, and overall net flows came in at approximately a billion dollars for the full year, excluding the transition of the global convertible securities assets back to Aviva.

We delivered sales results posting the best new business quarter in five years in the second quarter and overall net flows came in at approximately $1 billion for the full year, excluding the transition of the global convertible securities assets back to Aviva.

Speaker 3: Our new mandates, one primarily in small cap, have now funded and the team has delivered good results for our new clients since they came on board.

Our new mandates won primarily in small cap have now funded and the team has delivered good results for our new clients since they came on board we.

Speaker 3: We experienced positive fun flows and nearly all of our key products.

We experienced positive fund flows and nearly all of our key products took several actions to optimize our range of investment strategies by opening three mutual funds small cap growth quality, all cap and quality mid cap and we initiated a soft close in our small cap strategy as it neared capacity.

Speaker 3: Took several actions to optimize our range of investment strategies by opening three mutual funds, small cap growth, quality all cap and quality mid cap. And we initiated a soft close in our small cap strategy as it neared capacity.

Speaker 3: We expanded our wealth management business by adding new accounts and introduced our new client portal to enhance our high net worth investor experience. On the financial front, I'm very pleased to report that we have returned to profitability, we've reduced expenses, we bought back stock, and we reinstated our dividends.

We expanded our wealth management business by adding new accounts and introduced our new client portal to enhance our high net worth investor experience on the financial front I'm very pleased to report that we have returned to profitability. We've reduced expenses, we bought back stock and we reinstated our dividend.

Speaker 3: Let's turn to our investment and asset flow performance for the last quarter of 2021.

Let's turn to our investment in asset flow performance for the last quarter of 2021.

Speaker 3: Markets prove resilient despite the emergence of Omicron, which led to increased market volatility at mid-quarter. Stocks quickly recovered as strong corporate earnings growth helped keep equities moving upwards.

Markets proved resilient despite the emergence of micron, which led to increased market volatility at mid quarter stocks quickly recovered as strong corporate earnings growth helped keep equities moving upwards the.

Speaker 3: The uncertainty created by rising inflation and anticipated rate hikes weighed heavily on investment grade fixed income returns, however high yield securities perform well.

The uncertainty created by rising inflation and anticipated rate hikes weighed heavily on investment grade fixed income returns, however high yield securities performed well.

Speaker 3: Looking ahead, we remain positive on the U.S. economic outlook for the year. Corporate balance sheets remain solid, and S&P 500 earnings growth should support risk assets.

Looking ahead, we remain positive on the U S economic outlook for the year.

Balance sheets remain solid and S&P 500 earnings growth should support risk assets.

Speaker 3: In addition, the American consumer remains in good financial shape and spending continues at a robust cliff. However, interest rate hikes, inflation, and geopolitical concerns are creating near-term headwinds, which will undoubtedly add to volatility throughout the year.

In addition, the American consumer remains in good financial shape and spending continues at a robust clip. However interest rate hikes inflation and geopolitical concerns are creating near term headwinds, which will undoubtedly add to volatility throughout the year.

Then our U S value team, our large cap strategy outperformed the Russell 1000 value index for the quarter, while our mutual fund W. <unk> landed in the top 25% of large cap value funds and remains a four star rated Morningstar funds.

Speaker 3: Then our US Value Team, our large cap strategy outperform the Russell 1000 Value Index for the quarter, while our mutual son, WHGLX, landed in the top 25% of large cap value funds and remains a four star rated Morningstar Fuzz.

Speaker 3: Its longer-term morning star rankings remain competitive, and relative to institutional peers in the e-Vesment database, it's in the top 30% of the investment universe for the quarter.

It's longer term Morningstar rankings remain competitive and relative to institutional peers and the investment database. It's in the top 30% of the investment universe for the quarter.

Speaker 3: Several large cap clients rebalance their internal allocations, which reverse the outflows in the third quarter, and large cap finished the year with net inflows close to 90 million for the quarter.

Several large cap clients rebalanced their internal allocations, which reversed the outflows in the third quarter and large cap finished the year with net inflows close to $90 million for the quarter.

Speaker 3: Relative performance dispersion between large capitalization securities and small market caps negatively impacted our smid cap strategy which caused it to underperform the Russell 2500 value index.

Relative performance dispersion between large capitalization securities and small market caps negatively impacted our smid cap strategy, which caused it to underperform the Russell 2500 value index.

Speaker 3: After a slow start last year, Smith performed much better in the remaining three quarters, and its position to deliver good results in the coming year.

After a slow start last year smid perform much better in the remaining three quarters and it is positioned to deliver good results in the coming year.

Speaker 3: In SmallCAP, beating the Russell 2000 value index by 370 basis points last quarter, helped it recover from a tough start and it finished ahead of the index for the year. For the quarter, Armicheal Fund, WHG-SX, achieved an 11th percentile morning star ranking for small blend funds, and our institutional strategy is at the 21st percentile for small value strategies and the EVESMENT peer ranking universe.

And small cap, beating the Russell 2000 value index by 370 basis points last quarter helped it recover from a tough start and it finished ahead of the index for the year.

For the quarter, our mutual fund <unk> Sx achieved in the 11th percentile Morningstar ranking for small blend funds and our institutional strategy is that the 20 <unk> percentile for small value strategies in the investment peer ranking universe.

Speaker 3: The funding of small cat mandates one earlier last year is now beginning to drive revenues, cash flow, and profitability.

Funding of small cap mandates one earlier last year is now beginning to drive revenues cash flow and profitability.

Speaker 3: Through small-cap clients, tweet their internal allocations during the last quarter, which generated net out.

Small cap clients tweak their internal allocations during the last quarter, which generated net outflows.

Speaker 3: Lastly, our newly launched mid cap value strategy came in 170 basis points ahead of the Russell mid cap value for the quarter.

Lastly, our newly launched mid cap value strategy came in 170 basis points ahead of the Russell midcap value for the quarter.

Speaker 3: Our new mutual fund, Westwood Quality Midcap, WWMCX is also off to a strong start, which is great to see.

Our new mutual fund Westwood quality mid cap WWF MMC X is also off to a strong start which is great to see.

All in all we continue to assess the market environment is one that favors stock picking.

Speaker 3: All in all, we continue to assess the market environment as one of the favorite stockpicks.

Speaker 3: With SACTER returns compressing, we expect quality to reemerge as a key contributor to perform.

With factor returns compressing, we expect quality to reemerge as a key contributor to performance.

Speaker 3: I you had an impressive run last year and it may take a breather, but as economic developments unfold the environment should remain favorable for this style of investment.

<unk> had an impressive run last year and it may take a breather, but as economic developments unfold the environment should remain favorable for this style of investing.

Speaker 3: The junk rally that propelled low-quality securities in previous years has ended. And our strategies are positioned to capture alpha as we move through the economic cycle.

The junk rally that propelled low quality securities in previous years has ended and our strategies are positioned to capture alpha as we move through the economic cycle.

Speaker 3: This should produce differentiated performance versus other value managers, and also against the benchmark as better and higher quality businesses outperform.

This should produce differentiated performance versus other value managers and also against the benchmark is better and higher quality businesses outperformed.

Speaker 3: In our multi-ASC group, income opportunity finished last year behind its benchmark of 40% S&P 500, 60% Bloomberg Barclays aggregate bond index.

And our multi asset group income opportunity finished last year behind its benchmark of 40% S&P, 560% Bloomberg Barclays aggregate Bond index.

Speaker 3: R&C Opportunity Mutual Fund, WHG-IX, retained its strong four-star peer rankings in the 30-50% equity universe over trailing year periods, including a 20th percentile ranking for the trailing three years ending December 31, 2021.

For income opportunity mutual fund Debbie HG IX retained its strong four-star peer rankings in the 30% to 50% equity universe over trailing year periods, including a 20th percentile ranking for the trailing three years ending December 31 2021.

Speaker 3: Our total return mutual fund, ticker WLVIX, trailed for the last quarter but retained at the top five star rating in the Morningstar universe.

Our total return mutual fund ticker W. Lv IX trailed for the last quarter, but retained its top five star rating in the Morningstar universe.

Speaker 3: For Star High Income Mutual Fund, WHG-HX, beat its benchmark, 20% S&P 500, 80% Bloomberg Barclays Aggregate Bond Index, and muscle this way into the top 10% of peer funds for the year.

Four-star high income mutual fund W. HG H X beat its benchmark, 20% S&P, 580% Bloomberg Barclays aggregate Bond index and muscled its way into the top 10% of peer funds for the year.

Speaker 3: Our alternative income mutual fund, ticker WMNIX, improved its solid track record with positive absolute performance for both the fourth quarter and the full year.

Our alternative income mutual fund ticker W. M and IX improved its solid track record with positive absolute performance for both the fourth quarter and the full year.

Speaker 3: Credit Opportunities beat its benchmark, the ICE-BVA High-Eield Index by approximately 50 basis points for the quarter and by over 300 basis points for the year.

Credit opportunities beat its benchmark the Ice's Bofa high yield index by approximately 50 basis points for the quarter and by over 300 basis points for the year.

Speaker 3: Lastly, our systematic small cap growth strategy continues to outperform. Beating the Russell 2000 growth index by over 300 basis points last quarter, and by an incredible 1,250 basis points for the year.

Lastly, our systematic small cap growth strategy continues to outperform.

The Russell 2000 growth index by over 300 basis points last quarter and by an incredible 250 basis points for the year.

Speaker 3: The heels of this successful start, we added it to our mutual fund lineup by launching the Westwood Small Cap growth fund. WS

On the heels of this successful start we added it to our mutual fund lineup by launching the Westwood small cap growth Fund W. S. C IX.

Speaker 3: The assets chief investment officer, Adrian Helford, has spent years developing an investment process capable of delivering out performance through market cycles, and we're evaluating other strategies that could benefit from.

The assets Chief investment Officer, Adrian Helford has spent years developing an investment process capable of delivering outperformance through market cycles, and we are evaluating other strategies that could benefit from it.

As the market evolves allocators are seeking ways to overcome the challenges of low rates and tight spreads and the reduced benefits and asset allocation risk reduction.

Speaker 3: As the market evolves, allocators are seeking ways to overcome the challenges of low rates and tight spreads and to reduce benefits in asset allocation risk reduction. We've developed an array of multi-asset solutions with various outcomes that can fit into asset allocation models in a variety of ways.

We've developed an array of multi asset solutions with various outcomes that can fit into asset allocation models and a variety of ways.

Speaker 3: We look forward to targeted reintroductions on the institutional side in the coming year and gaining additional traction in the intermediary space.

We look forward to targeted reintroductions on the institutional side in the coming year and gaining additional traction in the intermediary space.

Speaker 3: Our performance for high-net-worth investors was mixed this past quarter. Dividend Select, which concentrates on the domestic, higher dividend-paying investors.

Our performance for high net worth investors was mixed this past quarter dividends select which concentrates on the domestic higher dividend paying investments underperformed. The Russell 1000 value index for the quarter dividends select lost ground in last year's first quarter as low quality highly leveraged securities outperformed however, strong secure.

Speaker 3: Underperform the Russell 1000 value index for the quarter. Dividend select lost ground in last year's first quarter as low quality highly leveraged securities outperformed. However, strong security selection helped it recover throughout the year and we feel good about its current positioning. It's yield of about 2.8% is attractive in a low interest rate environment, especially for high net worth clients who prefer dividend paying blue chip stocks.

<unk> selection helped it recover throughout the year and we feel good about its current positioning its yield of about two 8% is attractive in a low interest rate environment, especially for high net worth clients, who preferred dividend paying blue chip stocks.

Speaker 3: Select equity beat the Russell 3000 index while it's more tax sensitive counterpart match the benchmark.

Select equity beat the Russell 3000 index, while it's more tax sensitive counterpart matched the benchmark.

Speaker 3: We position select equity to benefit from economic recovery, pen of demand, and a gradual return to normalcy in a post-COVID world.

We positioned select equity to benefit from economic recovery pent up demand and a gradual return to normalcy in a post COVID-19 world.

Speaker 3: It performed well early last year as COVID began to stabilize vaccination rates increased and the economic outlook improved. However, at loss ground as the Delta variant emerged, select equity posted good performance in many sectors last year, including strong downside protection, with an 81% capture rate on those days when markets spell more than 1%.

It performed well early last year as Covid began to stabilize vaccination rates increased and the economic outlook improved however, it lost ground as the Delta variant emerged.

Select equity posted good performance in many sectors last year, including strong downside protection with an 81% capture rate on those days when markets fell more than 1%.

Speaker 3: We believe that strong risk management is more important than ever, and as risks in equity markets grow, controls like sector and sub-sector limits and low correlations among portfolio holdings should continue to appeal to our wealth clients who are focused on wealth preservation.

We believe that strong risk management is more important than ever and has risks and equity markets grow.

Trolls like sector and sub sector limits and low correlations among portfolio holdings should continue to appeal to our wealth clients, who are focused on wealth preservation.

Speaker 3: I also took a breather in this past quarter amid Delta and Omicron variant concerns, and it lagged the Russell 3000 index for the year, but remained ahead since its inception in March of 2020.

Hi, Alpha took a breather in this past quarter amid delta and omicron variant concerns and it lagged the Russell 3000 index for the year, but remained ahead since its inception in March of 2020.

Speaker 3: High alpha will continue to emphasize the themes of companies transformed by COVID, clean energy, healthcare innovation, and radical improvements in supply chain technology.

Hi, Alto will continue to emphasize the themes of companies transform by Covid clean energy health care innovation and radical improvements in supply chain technologies.

Speaker 3: Difting to institutional and intermediary sales, our teams generated 337 million of inflows, offset by just over 500 million and outflows, as clients made asset allocation decisions along with two loft accounts, resulting in negative flows for the quarter. In large cap, two existing clients rebalanced and shifted additional assets into the strategy.

Shifting to institutional and intermediary sales our teams generated $337 million of inflows offset by just over $500 million in outflows as clients made asset allocation decisions along with the two lost accounts, resulting in negative flows for the quarter and large cap to existing clients rebalanced and shifted.

Additional assets into the strategy.

Speaker 3: Our key products all experience net positive flows for the year, except for income opportunity with modest net outflows of 21 million.

Our key products all experienced net positive flows for the year, except for income opportunity with modest net outflows of $21 million.

Speaker 3: In 2021, we collectively turned in our first net positive sales year since 2017, and it was our best net sales year since 2013.

In 2021, we collectively turned in our first net positive sales year since 2017.

And it was our best net sales year since 2013.

Speaker 3: Institutional team generated gross sales of 2.17 billion for the year, beating our internal sales goal, and 16 new clients were added along the way, which boathed well for the future.

Institutional team generated gross sales of $2 $1 7 billion for the year, beating our internal sales goal and 16, new clients were added along the way, which bodes well for the future.

Speaker 3: Client losses were much lower with only six terminations all year.

Client losses were much lower with only six terminations all year.

Speaker 3: The intermediary team delivered gross sales of $543 million while achieving net positive flows for each quarter last year.

The intermediary team delivered gross sales of $543 million, while achieving net positive flows for each quarter last year.

Speaker 3: For 2022, our institutional team will continue to focus its sales activities across our value strategies, leveraging consultant recommendations for Smincapp and SmallCat value, where our mutual fund, WHGSX, remains open to accept new funds.

For 2022, our institutional team will continue to focus its sales activities across our value strategies, leveraging consultant recommendations for smid cap and small cap value, where our mutual fund <unk> remains open to accept new fundings.

Speaker 3: newly launched vehicles, including the SMIDCAP's CIT and quality all-cap ultra-share mutual funds, will provide clients with broader access to these strategies.

Newly launched vehicles, including the smid cap CIP and quality all cap ultra share mutual funds will provide clients with broader access to these strategies.

Speaker 3: Marketing new multi-asset products under Adrian Helford's leadership will be an exciting initiative, including strategies like Systematic Small Cap Growth and Credit Opportunities, which have delivered strong performance since being launched in 2020.

Marketing, new multi asset products under Adrian held for its leadership will be an exciting initiative, including strategies like systematic small cap growth and credit opportunities, which have delivered strong performance since being launched in 2020.

Speaker 3: Growth sales may moderate with small cap value soft clothes, but stronger demand for our value products, relative performance improvements across the board, and muted client and outflows will enable us to build on last year's net sales game.

Gross sales may moderate with small cap value soft close, but stronger demand for our value products relative performance improvements across the board and muted client outflows will enable us to build on last year's net sales gains.

Speaker 3: Summing up the institutional and intermediary sales story in 2021, we reversed outflows, stabilized at-risk products, and delivered strong net sales gains by executing on our distribution and product alignment strategy.

Summing up the institutional and intermediary sales story in 2021, we reversed outflows stabilized at risk products and delivered strong net sales gains by executing on our distribution and product alignment strategy.

Speaker 3: We'll continue to leverage our strong client relationships and focus new business activities on strategies with approved consultant and platform relationships.

We will continue to leverage our strong client relationships and focus new business activities on strategies with approved consultant and platform relationships.

Speaker 3: We are poised to accelerate sales growth as higher demand and continued performance improvement across value products encouraged by our interests.

We are poised to accelerate sales growth as higher demand and continued performance improvement across value products encourage by our interests.

Speaker 3: Roastfails may moderate from 2021's high levels, but we are ready to take advantage or our successful US value franchise institutionally and expand our multi-asset footprint in intermediary.

Gross sales may moderate from 2020 one's high levels, but we are ready to take advantage of our successful U S value franchise, institutionally and expand our multi asset footprint and intermediary.

Speaker 3: Tarny to Wealth Management, our teams produced inflows totaling 386 million last year, including 151 million during the fourth quarter.

Turning to wealth management, our teams produced inflows totaling $386 million last year, including $151 million during the fourth quarter.

Speaker 3: Often flows benefited from additions to existing accounts and employer pension contributions, while Houston and flows were primarily driven by new account relationships.

<unk> benefited from additions to existing accounts and employer pension contributions while Houston inflows were primarily driven by new account relationships total outflows totaled $805 million for the year of which $211 million came in the fourth quarter.

Speaker 3: Total outflows total $805 million for the year of which $211 million came in the fourth quarter. House outflows refactored scheduled pension and client distributions, count closures, external private equity commitments, and transfers to westward management.

Also outflows reflected scheduled pension and client distributions account closures external private equity commitments in transfers to Westwood management.

Speaker 3: Houston outflows them from account closures, client gifting distributions, and external private equity commitment.

Houston outflows stemmed from account closures client gifting distributions and external private equity commitments.

Speaker 3: Our wealth teams finished last year strongly and are optimistic about the outlook for this year. We improved our employee retention efforts and made solid hires to enhance our Dallas and Houston.

Our wealth teams finished last year strongly and are optimistic about the outlook for this year.

Improved our employee retention efforts and made solid hires to enhance our Dallas and Houston teams.

Speaker 3: New asset reached 100 million in the fourth quarter, and this momentum has carried into the new year. Our advisors plan to expand and deepen relationships with centers of influence partners, with each advisor targeting at least two centers of influence engagements per quarter.

New assets reached a $100 million in the fourth quarter and this momentum has carried into the new year.

Our advisors planned to expand and deepen relationships with centers of influence partners with each advisor targeting at least two centers of influence engagements per quarter.

Speaker 3: Our efforts this year should result in meaningful flows, new estate planning opportunities, and higher levels of client retention.

Our efforts this year should result in meaningful flows newest state planning opportunities and higher levels of client retention.

Speaker 3: Exit Center Management and Select Equity Taxable, High Alpha and Dividend Select, exceeded 950 million in 2021, and these wealth strategies are an important part of our wealth system.

Assets under management, and select equity taxable high Alpha and dividends select exceeded $950 million in 2021, and these wealth strategies are an important part of our wealth business.

Speaker 3: Tartative investment opportunities continue to resonate with existing and prospective clients.

Turning to the investment opportunities continue to resonate with existing and prospective clients.

Speaker 3: We provide several alternative investment options, ranging from well-known global managers to lesser known niche managers and locally focused opportunities.

We provide several alternative investment options ranging from well known global managers to lesser known niche managers and locally focused opportunities. We completed several capital raises for external private offerings and have had good demand for our latest offerings.

Speaker 3: We completed several capital raises for external private offerings and have had good demand for our latest offering.

Speaker 3: Continue to leverage Westwood private banks' capabilities to meet our clients' needs.

Continue to leverage Westwood private banks capabilities to meet our clients' needs.

Speaker 3: The bank's rapid approval and funding of lines of credit encourages new business opportunities for Westwood well.

<unk> rapid approval and funding of lines of credit encourages new business opportunities for Westwood wealth.

As many of you know a key westwood's strategic initiative has been to improve our cost structure and maximize efficiencies in 2020, we appointed Northern trust as our outsource trading partner, resulting in improved execution and transaction cost analysis for our clients and cost savings and internal efficiencies for Westwood.

Speaker 3: As many of you know, a key Westwood strategic initiative has been to improve our cost structure and maximize efficiency.

Speaker 3: In 2020, we appointed Northern Trust as our outsourced trading partner, resulting in improved execution and transaction cost analysis for our clients, and cost savings and internal efficiencies for West.

Speaker 3: In 2021, we identified our mutual fund administration relationship as another opportunity to realize cost savings and efficiency.

In 2021, we identified our mutual fund administration relationship as another opportunity to realize cost savings and efficiencies.

Speaker 3: We selected Ultimus Fun Solutions as our new mutual fund administrator based on their attractive cost structure, integrated service model, and enhanced distribution tools and services.

We selected Ultimate fund solutions as our new mutual fund administrator based on their attractive cost structure integrated service model and enhanced distribution tools and services.

Speaker 3: The move to Altimus was a significant undertaking that required a proxy vote for all seven funds.

The move to ultimate was a significant undertaking that required a proxy vote for all seven funds.

Speaker 3: successfully completed the transition last November . Westwood committed to cover all reorganization costs, which amounted to approximately $750,000, which were all expense in 2021.

We successfully completed the transition last November .

Westwood committed to cover all reorganization costs, which amounted to approximately $750000, which were all expense in 2021.

Speaker 3: The estimated financial benefit over the first three years is just over a million dollars per year, with approximately 70 percent initially accruing to Westwood with the balance flowing to fund shareholders through reduced fund expense ratios.

Estimated financial benefit over the first three years is just over $1 million per year with approximately 70% initially accruing to Westwood with the balance flowing to fund shareholders through reduced fund expense ratios.

Speaker 3: Summing up, as we look back over the last year, we recognize the long road we have traveled and celebrate the progress we have made.

Summing up as we look back over the last year, we recognized the long road, we have travel and celebrate the progress we have made.

Speaker 3: We are moving forward with conviction knowing that we've built resilience into our business and accordingly stand ready to surmount the challenges that come our way while taking full advantage of an exciting array of opportunities.

We are moving forward with conviction knowing that we've built resilience into our business and accordingly stand ready to surmount the challenges that come our way, while taking full advantage of an exciting array of opportunities I.

Speaker 3: I will now turn the call over to Terry Forbes, our CFF.

I will now turn the call over to Terry Forbes our CFO .

Speaker 4: Thanks Brian and good afternoon everyone. Today we reported total revenues of 19.4 million for the fourth quarter of 2021 compared to 17.1 million in the prior years fourth quarter and 17.9 million in the third quarter of 2021. The increase from the prior year was principally due to higher average asset under management. The increase from the prior quarter was the result of higher average asset under management and higher performance based fees.

Thanks, Brian and good afternoon, everyone.

Today, we reported total revenues of $19 4 million for the fourth quarter of 2021 compared to $17 1 million in the prior year's fourth quarter and $17 9 million in the third quarter of 2021 the.

The increase from the prior year was principally due to higher average assets under management the increase in the prior quarter was the result of higher average assets under management and higher performance based fees.

Speaker 4: Fourth quarter net income of 2.8 million exceeded the third quarter's net income of 1.9 million due to higher revenues and unreliable depreciation on private investments partially offset by one time expenses related to administrative reorganization of our mutual funds.

Fourth quarter net income of $2 8 million exceeded the third quarter's net income of $1 9 million due to higher revenues and unrealized depreciation on private investments, partially offset by onetime expenses related to administrative reorganization of our mutual funds.

Speaker 4: Economic earnings and non-gap metric were 4.7 million and 59 cents per share compared to the third quarter's economic earnings of 3.7 million and 47 cents per share.

Economic earnings a non-GAAP metric were $4 7 million <unk> 59 per share compared to the third quarter as economic earnings of $3 7 million and <unk> 47 per share.

Speaker 4: Fourth quarter net income of 2.8 million or 36 cents per share was consistent with the prior years fourth quarter net income of 2.8 million or 36 cents per share, as revenues and expensive increased at the same pace. Economic earnings were 4.7 million for the current quarter or 59 cents per share up from 4.6 million or 58 cents per share in the fourth quarter of 2020.

Fourth quarter net income of $2 8 million or <unk> 36 per share was consistent with the prior year's fourth quarter net income of $2 8 million or <unk> 36 per share as revenues and expenses increased at the same pace.

Economic earnings were $4 7 million for the current quarter or <unk> 59 per share up from $4 6 million or <unk> 58 per share in the fourth quarter of 2020.

Speaker 4: For fiscal 2021, total revenues of 73.1 million compared to 65.1 million 2020. The increase was attributable to an increase in asset-based advisory fees and in trust fees, both primarily due to higher average assets under management and an increase in performance-based advisory fees primarily due to higher realization of performance fees in 2021.

For fiscal 2021 total revenues of $73 1 million compared to $65 1 million in 2020. The increase was attributable to an increase in asset based advisory fees and trust fees, both primarily due to higher average assets under management and an increase in performance based advisory fees.

Primarily due to higher realization of performance fees in 2021.

Speaker 4: 2021 that income of 9.8 million compared to 2020's net loss of 8.9 million on higher revenues, higher realized gains on private investments, and the impact of non-recurring items during 2020, partially offset by higher income taxes and mutual fund expense.

2021, net income of $9 8 million compared to 2000, Twenty's net loss of $8 9 million.

On higher revenues higher realized gains on private investments and the impact of nonrecurring items. During 2020, partially offset by higher income taxes and mutual fund expenses.

Speaker 4: Deluted earnings per share was $1.23 compared with a loss of $1.12 per share for 2020. Economic earnings per share of $2.20 compared with $0.91 in 2020.

Diluted earnings per share was $1 23.

Compared with a loss of $1 12 per share for 2020.

Economic earnings per share of $2 20, compared with 91.

In 2020.

Speaker 4: Firmwide assets under management told 14.5 billion a quarter end and consisted of institutional assets of 7 billion or 49% of the total. Private wealth assets of 4.4 billion were 30% of the total. And mutual fund assets of 3 billion were 21% of the total.

Firm wide assets under management totaled $14 5 billion at quarter end and consisted of institutional assets of $7 billion or 49% of the total private wealth assets of $4 4 billion or 30% of the total and mutual fund assets of $3 billion or 21% of the total.

Speaker 4: Over the year, we experienced net outflows of 0.8 billion and market appreciation of 2.2 billion. Our financial position continues to be very solid with cash and short-term investments at quarter end totaling 80.2 million and a debt free balance sheet.

Over the year, we experienced net outflows of <unk> 8 billion and market appreciation of $2 2 billion our.

Our financial position continues to be very solid with cash and short term investments at quarter end totaling $80 2 million and a debt free balance sheet.

Speaker 4: I'm happy to announce that our Board of Directors approved a quarterly cash dividend of $0.15 per share, payable on April 1st, 2022 to stockholders of record on March 4th, 2022. This represents an annualized dividend yield of 3.4% as of yesterday's close.

I'm happy to announce that our board of directors approved a quarterly cash dividend of <unk> 15 per share payable on April one 2022 to stockholders of record on March 4th 2022.

This represents an annualized dividend yield of three 4% as of yesterday's closing.

Speaker 4: That brings our prepared comments to a close. As some of you may have noticed our investor relations presentation was inadvertently posted to our website ahead of schedule earlier today. As a result, we released earnings during the day.

That brings our prepared comments to a close as some of you may have noticed our investor relations presentation was inadvertently posted to our website ahead of schedule earlier today as a result, we released earnings during the day.

Speaker 4: We encourage you to review our investor presentation, reflecting fourth quarter and fiscal 2021 highlights, as well as a discussion of our business, product development, and longer term trends and revenues, earnings and dividends. We thank you for your interest in our company, and we're-

We encourage you to review, our investor presentation, reflecting fourth quarter and fiscal 2021 highlights as well as a discussion of our business product development and longer term trends in revenues earnings and dividends.

We thank you for your interest in our company and we will open the line to questions.

Speaker 1: Certainly, ladies and gentlemen, if you have a question at this time, please press star then one. If your question has been answered and you'd like to remove yourself from the queue, please press the bound key. Our first question comes from one end of Mac. Thanks from GABCO. Your question, please.

Certainly ladies and gentlemen, if you have a question at this time. Please press Star then one if your question has been answered and you'd like to remove yourself from the queue. Please press the pound key our first question comes from the line of Matt <unk> from <unk>.

<unk> your question please.

Good afternoon, everyone. Thanks for taking my questions.

Speaker 5: I'll ask both of them to associate with costs. The first one, I'll just ask them both together, but you would have achieved some nice progress.

I'll ask both of them associated with cost.

The first one.

I'll just ask them both together.

Achieve some nice progress on margins last year.

Speaker 5: How are you thinking about more progress in 2022 and beyond?

How are you thinking about more progress in 2022 and beyond.

Speaker 5: Against the backdrop of what we're seeing is a little bit higher volatility in the market.

Against the backdrop of what we're seeing is a little bit higher volatility in the market and then secondly, maybe you could talk a little bit about.

Speaker 5: Secondly, maybe you could talk a little bit about, as we come out of the pandemic in supporting this acceleration.

As we come out of the pandemic and supporting this.

Accelerated sales productivity that you're that you've achieved in terms of higher spend travel et cetera. So just a little more color on how you see the sales process evolving as we get to a more personal world.

Speaker 5: achieved in terms of higher-spend travel, et cetera.

Speaker 5: a little more color on how you see the sales price and see evolving as we get to a more personal world. Thanks.

Yes.

Thanks, Mike I appreciate your question.

So we've done a lot to improve our margins.

Speaker 3: So we've done a lot to improve our margins. You know, you do that two ways. When you have higher revenues than two, you have lower expenses and we've done both of those. So we really feel good about where we're headed in 22. And we still think there's a few things that we can do on the expense side to reduce our expenses.

You do that two ways. One you have higher revenues until you have lower expenses and we've done both of those so we really feel good about.

Where we are headed in 'twenty, two and we still think there's a few things that we can do on the expense side two to reduce our expenses.

Speaker 3: As far as the pandemic goes and the accelerated sales and the productivity we've had, I think it's particularly acute on the retail side where most of the wirehouses are still closed. You still can't go in to see advisors.

As far as the pandemic goes and the accelerated sales and the productivity we've had.

I think its particularly acute on the retail side, where most of the wire houses are still closed you still can't go in to see advisors. So that creates a challenge our guys have.

Speaker 3: So that creates a challenge. Our guys have pre, just to give you some stats, pre-COVID. Our guys were doing about a thousand meetings a month. And after COVID hit, that went to about 200 meetings a month. We're back up to over 600 a month.

Just to give you some stats pre COVID-19 , our guys were doing about $1000 a thousand meetings a month.

And after Covid hit that went to about 200 meetings a month, we're back up to over 600 a month.

Speaker 3: And I think that will steadily rise as the world begins to open up and that creates opportunities for us. We have a lot of highly rated funds. We have 10 funds now that are available. Several of them have been around for a long time and are four and five star rated. So we feel really good about those two things coming together, more availability of meetings and good funds to get out there and sell.

And I think that will steadily rise as the world begins to open up and that creates opportunities for us we have a lot of highly rated funds. We have 10 funds now that are available.

Several of them have been around for a long time and our four and five star rated so we feel really good about those two things coming together more availability of meetings and and good funds to get out there and sell.

If you have any further questions.

Thank you I appreciate it.

Speaker 1: Thank you. Once again, if you have a question at this time, please press star then one.

Thank you once again, if you have a question at this time. Please press Star then one.

Speaker 1: Our next question comes in line of Subhash Kapani from SK Group. Inc, your question please.

Our next question comes from the line of Subhash.

From SK group your question please.

Speaker 6: I was wondering about that takeover offer you got earlier and the price was about 25.

Yes.

Wondering about the takeover offer you got earlier enterprise was about 25.

Speaker 6: And are you guys doing anything to bring the price up to close to that tech over price? If you know somebody must have seen

How are you guys doing anything to bring the price up to close to the takeover price.

If somebody must have seen the value at $25.

Speaker 3: I'm not sure what your question is, but clearly what we're trying to do is enhance shareholder value every day that we come to work. And I think we've done a really good job of improving our profile over the last year.

I'm not sure what your question is but clearly what we're trying to do is enhance shareholder value every day that we come to work and I think we've done a really good job of improving our profile over the last year.

Okay.

Speaker 6: Are you doing anything about the stop by by or something?

How are you doing anything about the stock buyback or something.

Special dividend.

Speaker 3: We've done both of those things. We've paid a special dividend last year, and we bought the stock back last year.

We've done both of those things so we paid a special dividend last year, and we bought stock back last year.

Okay. Thank you.

Thank you.

Speaker 1: This does conclude the question and answer session of today's program. I'd like to hand the program back to Brian Casey for any further remarks.

This does conclude the question and answer session of today's program I'd like to hand, the program back to Brian Casey for any further remarks.

Speaker 3: Thank you, Jonathan. And thanks everybody for taking time to listen to our call today. If you have any further questions, please reach out to myself, or to Terry, or visit our website at westwoodgroup.com. Have a great afternoon.

Thank you Jonathan and thanks, everybody for taking time to listen to our call. Today. If you have any further questions. Please reach out to myself or Terry or visit our website at Westwood group Dot com have a great afternoon.

Speaker 1: But you ladies and gentlemen, feel free to participate in today's conference. This does conclude the program. You may now disconnect. Good day.

Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program you may now disconnect good day.

Speaker 7: son

Okay.

[music].

Sure.

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Speaker 7: St.

Speaker 1: Thank you for standing by and welcome to the Westwood Holdings Group Inc. Incorporated Fourth Quarter 2020 earnings conference call. At this time, all participants are in a list knownly mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star one on your telephone. As a reminder, today's program is being recorded. I would now like to introduce your host for today's program, Julie Garen. General Counsel and Chief Compliance Officer, please go ahead.

Thank you for standing by and welcome to the Westwood Holdings Group, Inc.

Incorporated's fourth quarter.

General Counsel and Chief compliance Officer. Please go ahead.

Speaker 2: Thank you and welcome to our fourth quarter, 2021 Earnings Conference Call. The following discussion will include forward-looking statements that are subject to known and unknown risks, uncertainties, and other factors, which may cause actual results to be materially different from those contemplated by the forward-looking state.

Different from those contemplated by the forward looking statements additional information concerning the factors that could cause such a difference is included in our press release issued earlier today as well as in our Form 10-K for the year ended December 31, 2021, but it is filed with the Securities and Exchange Commission.

Speaker 2: Additional information concerning the factors that could cause such a difference is included in our press release issued earlier today as well as in our form 10k for the year ended December 31st, 2021 that is filed with the Securities and Exchange Commission.

Speaker 2: We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. You're cautioned not to place undue reliance on forward-looking statements.

Speaker 2: In addition, and accordance with SEC rules concerning non- GAAP financial measures, the reconciliation of our economic earnings and economic earnings per share to the most comparable GAAP measures is included at the end of our press release issued earlier today.

Speaker 2: On the call today, we have Brian Casey, our president and chief executive officer, and Terry Forbes, our chief financial officer. I will now turn the call over.

On the call today, we have Brian Casey, our President and Chief Executive Officer, and Terry Forbes, Our Chief Financial Officer.

I will now turn the call over to Brian Casey.

Speaker 3: Afternoon. Thanks for taking the time to listen to our Quartle Learnings call. Last October , I highlighted the progress we were making, including new mandates one and funded in the first half of last year, performance improvements, the launch of new mutual funds, and an improving new business pipeline for Westwood well.

Speaker 3: Throughout the last couple of years, Westwood has taken decisive steps to strengthen our foundation and position ourselves to capitalize on future opportunities.

Throughout the last couple of years Westwood has taken decisive steps to strengthen our foundation and position ourselves to capitalize on future opportunities.

Speaker 3: In 2021, we finished the year ahead of their benchmarks in most of our multi-asset and retained their strong multi-year rankings in several US value and multi-asset strategy.

In 2021, we finished the year ahead of their benchmarks and most of our multi asset and retained their strong multiyear rankings in several U S value and multi asset strategies.

Speaker 3: Our new mandates, one primarily in small cap, have now funded and the team has delivered good results for our new clients since they came on board.

Our new mandates one primarily in small cap have now funded and the team has delivered good results for our new clients since they came onboard we.

Speaker 3: We experience positive fun flows in nearly all of our key products.

Speaker 3: Took several actions to optimize our range of investment strategies by opening three mutual funds, small cap growth, quality all cap and quality mid cap. And we initiated a spot close in our small cap strategy as it neared capacity.

Speaker 3: We expanded our wealth management business by adding new accounts and introduced our new client portal to enhance our high net worth investor experience. On the financial front, I'm very pleased to report that we have returned to profitability. We've reduced expenses. We bought back stock and we ran state at our dividend.

Speaker 3: Let's turn to our investment and asset flow performance for the last quarter of 2021.

Let's turn to our investment in asset flow performance for the last quarter of 2021.

Speaker 3: Markets prove resilient despite the emergence of Almacron, which led to increased market volatility at mid-quarter. Stocks quickly recovered as strong corporate earnings growth helped keep equities moving upwards.

Markets proved resilient despite the emergence of all micron, which led to increased market volatility at mid quarter stocks quickly recovered as strong corporate earnings growth helped to keep equities moving upwards the.

Speaker 3: The uncertainty created by rising inflation and anticipated rate hikes weighed heavily on investment grade fixed income returns, however high yield securities perform well.

The uncertainty created by rising inflation and anticipated rate hikes weighed heavily on investment grade fixed income returns, however high yield securities performed well.

Speaker 3: Looking ahead, we remain positive on the US economic outlook for the year. Corporate balance sheets remain solid and S&P 500 earnings growth should support risk assets.

Looking ahead, we remain positive on the U S economic outlook for the year.

Balance sheets remain solid and S&P 500 earnings growth should support risk assets.

Speaker 3: In addition, the American consumer remains in good financial shape and spending continues at a robust cliff. However, interest rate hikes, inflation, and geopolitical concerns are creating near-term headwinds which will undoubtedly add to volatility throughout the year.

Speaker 3: Then our US Value Team, our large cap strategy outperform the Russell 1000 Value Index for the quarter, while our mutual fund, WHGLX, landed in the top 25% of large cap value funds, and remains a four star rated morning star fund.

Speaker 3: Its longer-term morning star rankings remain competitive, and relative to institutional peers in the e-Vesment database, it's in the top 30% of the investment universe for the quarter.

Its longer term Morningstar rankings remain competitive and relative to institutional peers and the investment database. It's in the top 30% of the investment universe for the quarter.

Speaker 3: Several large cap clients rebalance their internal allocations, which reversed the outflows in the third quarter, and large cap finished the year with net inflows close to 90 million for the quarter.

Relative performance dispersion between large capitalization securities and small market caps negatively impacted our smid cap strategy, which caused it to underperform the Russell 2500 value index.

Speaker 3: After a slow start last year, Fmed performed much better in the remaining three quarters, and its position to deliver good results in the coming year.

After a slow start last year Smith perform much better in the remaining three quarters and it is positioned to deliver good results in the coming year.

Speaker 3: In SmallCAP, beating the Russell 2000 value index by 370 basis points last quarter helped it recover from a tough start and it finished ahead of the index for the year. For the quarter, our mutual fund, WHG-SX, achieved an 11th percentile morning star ranking for small blend funds and our institutional strategy is at the 21st percentile for small value strategies and the EVESMENT peer ranking universe.

And small cap, beating the Russell 2000 value index by 370 basis points last quarter helped it recover from a tough start and it finished ahead of the index for the year for the quarter, our mutual fund <unk> FX achieved an 11th percentile Morningstar ranking for small blend funds and our <unk>.

Institutional strategy is that the 20 <unk> percentile for small value strategies in the investment peer ranking universe.

Speaker 3: The funding of small cat mandates one earlier last year is now beginning to drive revenues, cash flow and profitability.

Funding a small cap mandates won earlier last year is now beginning to drive revenues cash flow and profitability.

Speaker 3: Due small-cap clients, tweet their internal allocations during the last quarter, which generated net out.

Two small cap clients tweak their internal allocations during the last quarter, which generated net outflows.

Speaker 3: Lastly, our newly launched mid cap value strategy came in 170 basis points ahead of the Russell mid cap value for the quarter.

Lastly, our newly launched mid cap value strategy came in 170 basis points ahead of the Russell midcap value for the quarter.

Speaker 3: Our new mutual fund, Westwood Quality Midcap, WWM-CX is also off to a strong start, which is great to see.

Our new mutual fund Westwood quality Midcap WWF MMC X is also off to a strong start which is great to see.

Speaker 3: All in all, we continue to assess the market environment as one that favors stockpicking.

All in all we continue to assess the market environment is one that favors stock picking.

Speaker 3: With factor returns compressing, we expect quality to reemerge as a key contributor to performance.

With factor returns compressing, we expect quality to reemerge as a key contributor to performance.

Speaker 3: I you had an impressive run last year and it may take a breather, but as economic development unfold the environment should remain favorable for this style of investment.

<unk> had an impressive run last year and it may take a breather, but as economic developments unfold the environment should remain favorable for this style of investing.

Speaker 3: The junk rally that propelled low-quality securities in previous years has ended. And our strategies are positioned to capture alpha as we move through the economics.

The junk rally that propelled low quality securities in previous years has ended and our strategies are positioned to capture alpha as we move through the economic cycle.

Speaker 3: This should produce differentiated performance versus other value managers, and also against the benchmark as better and higher quality businesses outperform.

This should produce differentiated performance versus other value managers and also against the benchmark is better and higher quality businesses outperformed.

And our multi asset group income opportunity finished last year behind its benchmark of 40% S&P, 560% Bloomberg Barclays aggregate Bond index.

Speaker 3: In our multi-ASC group, income opportunity finished last year behind its benchmark of 40% S&P 500, 60% Bloomberg Barclays aggregate bond index.

Speaker 3: For income opportunity mutual fund, WHG IX retained its strong four-star peer rankings in the 30 to 50% equity universe over trailing year periods, including a 20th percentile ranking for the trailing three years ending December 31st, 2021.

For income opportunity mutual fund W. HG IX retained its strong four-star peer rankings in the 30% to 50% equity universe over trailing year periods, including a 20th percentile ranking for the trailing three years ending December 31 2021.

Speaker 3: Our total return mutual fund, ticker WLVIX, trailed for the last quarter, but retained its top five star rating in the Morning Star universe.

Our total return mutual fund ticker W. Lv IX trailed for the last quarter, but retained its top five star rating in the Morningstar universe.

Speaker 3: For Star High Income Mutual Fund, WHG-HX, beat its benchmark, 20% S&P 500, 80% Bloomberg Barclays Vagogit Bond Index, and muscled its way into the top 10% of peer funds for the year.

Four star High income mutual fund W. HG H X beat its benchmark, 20% S&P, 580% Bloomberg Barclays aggregate Bond index and muscled its way into the top 10% of peer funds for the year.

Speaker 3: Our alternative income mutual fund, ticker WMNIX, improved its solid track record with positive absolute performance for both the fourth quarter and the full year.

Our alternative income mutual fund ticker W. M and IX improved its solid track record with positive absolute performance for both the fourth quarter and the full year.

Speaker 3: Credit Opportunities beat its benchmark, the ICE B of A high yield index by approximately 50 basis points for the quarter and by over 300 basis points for the year.

Credit opportunities beat its benchmark the Ice's Bofa high yield index by approximately 50 basis points for the quarter and by over 300 basis points for the year.

Lastly, our systematic small cap growth strategy continues to outperform.

Speaker 3: Lastly, our systematic small cap growth strategy continues to outperform. Feeding the Russell 2000 growth index by over 300 basis points last quarter, and by an incredible 1,250 basis points for the year.

The Russell 2000 growth index by over 300 basis points last quarter and by an incredible 250 basis points for the year.

Speaker 3: The heels of this successful start, we added it to our mutual fund lineup by launching the Westwood Small Cap Growth Fund. W-S

On the heels of this successful start we added it to our mutual fund lineup by launching the Westwood small cap growth Fund W. S. C IX.

Speaker 3: If the market evolves, allocators are seeking ways to overcome the challenges of low rates and tight spreads, and they reduce benefits in asset allocation risk reduction.

As the market evolves allocators are seeking ways to overcome the challenges of low rates and tight spreads and the reduced benefits and asset allocation risk reduction.

Speaker 3: We've developed an array of multi-asset solutions with various outcomes that can fit into asset allocation models in a variety of ways.

We have developed an array of multi asset solutions with various outcomes that can fit into asset allocation models and a variety of ways.

Speaker 3: We look forward to targeted reintroductions on the institutional side in the coming year and gaining additional traction in the intermediary space.

We look forward to targeted reintroductions on the institutional side in the coming year and gaining additional traction in the intermediary space.

Speaker 3: Our performance for high net worth investors was mixed this past quarter. Dividend select, which concentrates on the domestic higher dividend paying investors.

Speaker 3: Underperform the Russell 1000 value index for the quarter. Dividend select lost ground in last year's first quarter as low quality highly leveraged securities outperformed. However, strong security selection helped it recover throughout the year, and we feel good about its current positioning. It's yield of about 2.8% is attractive in a low interest rate environment, especially for high net worth clients who prefer dividend paying blue chip stocks.

Speaker 3: Select equity beats a Russell 3000 index while it's more tax sensitive counterpart match the bench

Select equity beat the Russell 3000 index, while it's more tax sensitive counterpart match the benchmark.

Speaker 3: We position select equity to benefit from economic recovery, pen of demand, and a gradual return to normalcy in a post-COVID world.

We positioned select equity to benefit from economic recovery pent up demand and a gradual return to normalcy in a post COVID-19 world.

Speaker 3: It performed well early last year as COVID began to stabilize vaccination rates increased and the economic outlook improved. However, at lost ground as the Delta variant emerged. Select equity posted good performance in many sectors last year, including strong downside protection, with an 81% capture rate on those days when markets fell more than 1%.

It performed well early last year as Covid began to stabilize vaccination rates increased and the economic outlook improved however, it lost ground as the Delta Varian emerged.

Select equity posted good performance in many sectors last year, including strong downside protection with an 81% capture rate on those days when markets fell more than 1%.

Speaker 3: We believe that strong risk management is more important than ever, and as risks and equity markets grow, controls like sector and sub-sector limits and low correlations among portfolio holdings should continue to appeal to our wealth clients who are focused on wealth preservation.

We believe that strong risk management is more important than ever and has risks and equity markets grow controls like sector and sub sector limits and low correlations among portfolio holdings should continue to appeal to our wealth clients, who are focused on wealth preservation.

Hi, Alpha took a breather in this past quarter amid delta and omicron variant concerns and it lagged the Russell 3000 index for the year, but remained ahead since its inception in March of 2020.

Speaker 3: High alpha will continue to emphasize the themes of companies transformed by COVID, clean energy, healthcare innovation, and radical improvements in supply chain technology.

Hi, Alpha will continue to emphasize the themes of companies transform by Covid clean energy health care innovation and radical improvements in supply chain technologies.

Speaker 3: Gifting to institutional and intermediary sales, our teams generated 337 million of inflows, offset by just over 500 million and outflows, as clients made asset allocation decisions along with two lost accounts, resulting in negative flows for the quarter. In large cap, two existing clients rebalanced and shifted additional assets into the strategy.

Shifting to institutional and intermediary sales our teams generated $337 million of inflows offset by just over $500 million in outflows as clients made asset allocation decisions along with two lost accounts, resulting in negative flows for the quarter and large cap to existing clients rebalanced and shifted.

Additional assets into the strategy.

Speaker 3: Our key products all experience net positive flows for the year, except for income opportunity with modest net outflows of 21 million.

Our key products all experienced net positive flows for the year, except for income opportunity with modest net outflows of $21 million in.

Speaker 3: In 2021, we collectively turned in our first net positive sales year since 2017, and it was our best net sales year since 2013.

In 2021, we collectively turned in our first net positive sales year since 2017.

And it was our best net sales year since 2013.

Speaker 3: Institutional team generated gross sales of 2.17 billion for the year, beating our internal sales goal, and 16 new clients were added along the way, which boasts well for the future.

Institutional team generated gross sales of $2 $1 7 billion for the year, beating our internal sales goal and 16, new clients were added along the way, which bodes well for the future climb.

Speaker 3: Client losses were much lower with only fixed terminations all year.

Client losses were much lower with only six terminations all year.

Speaker 3: The intermediary team delivered gross sales of $543 million while achieving net positive flows for each quarter last year.

The intermediary team delivered gross sales of $543 million, while achieving net positive flows for each quarter last year.

Speaker 3: For 2022, our institutional team will continue to focus its sales activities across our value strategies, leveraging consultant recommendations for Smedcap and Smallcap value, where our mutual fund, WHGSX, remains open to accept new funds.

Speaker 3: newly launched vehicles, including the SMIDCAPCIT and Quality All-CAP Ultra-Share Mutual Funds, will provide clients with broader access to these strategies.

Newly launched vehicles, including the smid cap sit and quality all cap ultra share mutual funds will provide clients with broader access to these strategies.

Marketing, new multi asset products under Adrian Helford leadership will be an exciting initiative, including strategies like systematic small cap growth and credit opportunities, which have delivered strong performance since being launched in 2020.

Speaker 3: Marketing new multi-asset products under Adrian Helford's leadership will be an exciting initiative, including strategies like systematic small cap growth and credit opportunities, which have delivered strong performance since being launched in 2020.

Gross sales may moderate with small cap value soft close, but stronger demand for our value products relative performance improvements across the board and muted client and outflows will enable us to build on last year's net sales gains.

Speaker 3: Summing up the institutional and intermediary sales story in 2021, we reversed outflows, stabilized that risk products, and delivered strong net sales gains by executing on our distribution and product alignment strategy.

Speaker 3: We'll continue to leverage our strong client relationships and focus new business activities on strategies with approved consultant and platform relationships.

We will continue to leverage our strong client relationships and focus new business activities on strategies with approved consultant and platform relationships.

Speaker 3: We are poised to accelerate sales growth as higher demand and continued performance improvement across value products encouraged by our interest.

We are poised to accelerate sales growth as higher demand and continued performance improvement across value products encouraged by our interests.

Speaker 3: Rose Fails may moderate from 2021's high levels, but we are ready to take advantage or our successful US value franchise institutionally and expand our multi-asset footprint in either intermediary.

Gross sales may moderate from 2021 high levels, but we are ready to take advantage of our successful U S value franchise, institutionally and expand our multi asset footprint and intermediary.

Speaker 3: Tarny to Wealth Management, our teams produced inflows totaling 386 million last year, including 151 million during the fourth quarter.

Turning to wealth management, our teams produced inflows totaling $386 million last year, including $151 million during the fourth quarter.

Speaker 3: All sin flows benefited from additions to existing accounts and employer pension contributions while Houston and Ploes were primarily driven by new account relationships.

Speaker 3: Total outflows totaled 805 million for the year of which 211 million came in the fourth quarter. House outflows refected scheduled pension and client distributions, account closures, external private equity commitments, and transfers to westward management.

Also outflows reflected scheduled pension and client distributions account closures external private equity commitments in transfers to Westwood management.

Speaker 3: Houston outflows them from account closures, client gifting distributions, and external private equity commitments.

Houston outflows stemmed from account closures client gifting distributions and external private equity commitments.

Speaker 3: Our wealth teams finished last year strongly and are optimistic about the outlook for this year.

Our wealth teams finished last year strongly and are optimistic about the outlook for this year.

Speaker 3: improved our employee retention efforts and made solid hires to enhance our Dallas and Houston.

Improved our employee retention efforts and made solid hires to enhance our Dallas and Houston teams.

Speaker 3: new assets reached 100 million in the fourth quarter, and this momentum has carried into the new year. Our advisors plan to expand and deepen relationships with centers of influence partners with each advisor targeting at least two centers of influence engagements per quarter.

New assets reached a $100 million in the fourth quarter and this momentum has carried into the new year.

Our advisors planned to expand and deepen relationships with centers of influence partners with each advisor targeting at least two centers of influence engagements per quarter.

Speaker 3: Our efforts this year should result in meaningful flows, newest date planning opportunities, and higher levels of client retention.

Our efforts this year should result in meaningful flows newest state planning opportunities and higher levels of client retention.

Speaker 3: That's its under management and select equity taxable, high alpha and dividend select, exceeded 950 million in 2021, and these wealth strategies are an important part of our wealth so...

Assets under management, and select equity taxable high Alpha and dividends select exceeded $950 million in 2021, and these wealth strategies are an important part of our wealth business.

Speaker 3: Tartative investment opportunities continue to resonate with the existing and prospective clients.

Turning to the investment opportunities continue to resonate with existing and prospective clients.

Speaker 3: We provide several alternative investment options, ranging from well-known global managers to lesser-known niche managers and locally focused opportunities.

Speaker 3: We completed several capital raises for external private offerings and have had good demand for our latest offering.

Speaker 3: Continue to leverage Westwood private banks' capabilities to meet our clients' needs.

Continue to leverage Westwood private banks capabilities to meet our clients' needs. The bank's rapid approval and funding of lines of credit encourages new business opportunities for Westwood wealth.

Speaker 3: The bank's rapid approval and funding of lines of credit encourages new business opportunities for Westwood well.

Speaker 3: As many of you know, a key Westwood strategic initiative has been to improve our cost structure and maximize efficiency.

Speaker 3: In 2021, we identified our mutual fund administration relationship as another opportunity to realize cost savings and efficiency.

In 2021, we identified our mutual fund administration relationship as another opportunity to realize cost savings and efficiencies.

Speaker 3: We selected Ultimate Fund Solutions as our new mutual fund administrator based on their attractive cost structure, integrated service model, and enhanced distribution tools and services.

We selected Ultimate fund solutions as our new mutual fund administrator based on their attractive cost structure integrated service model and enhance distribution tools and services.

Speaker 3: The move to Altimus was a significant undertaking that required a proxy vote for all 7 fun.

The move to ultimate was a significant undertaking that required a proxy vote for all seven funds.

Speaker 3: He successfully completed the transition last November . Westwood committed to cover all reorganization costs, which amounted to approximately $750,000, which were all expense in 2021.

We successfully completed the transition last November .

Westwood committed to cover all reorganization costs, which amounted to approximately $750000.

Which were all expense in 2021.

The estimated financial benefit over the first three years is just over $1 million per year with approximately 70% initially accruing to Westwood with the balance flowing to fund shareholders through reduced fund expense ratios.

Speaker 3: Summing up as we look back over the last year, we recognize the long road we have traveled and celebrate the progress we have made.

Summing up as we look back over the last year, we recognized the long road, we have travel and celebrate the progress we have made.

Speaker 3: Here are moving forward with conviction, knowing that we've built resilience into our business and accordingly stand ready to surmount the challenges that come our way while taking full advantage of an exciting array of opportunities.

Speaker 3: I will now turn the call over to Terry Forbes, our CFS.

I will now turn the call over to Terry Forbes our CFO .

Thanks, Brian and good afternoon, everyone.

Today, we reported total revenues of $19 4 million for the fourth quarter of 2021 compared to $17 1 million in the prior year's fourth quarter and $17 9 million in the third quarter of 2021 the.

Speaker 4: The fourth quarter net income of 2.8 million exceeded the third quarter's net income of 1.9 million due to higher revenues and unrealized appreciation on private investments partially offset by one time expenses related to administrative reorganization of our mutual funds.

Speaker 4: economic earnings and non-gap metric were 4.7 million and 59 cents per share compared to the third quarter's economic earnings of 3.7 million and 47 cents per share

Economic earnings a non-GAAP metric were $4 7 million and 59 per share compared to the third quarter as economic earnings of $3 7 million and <unk> 47 per share.

Speaker 4: Fourth quarter net income of 2.8 million or 36 cents per share was consistent with the prior years fourth quarter net income of 2.8 million or 36 cents per share. As revenues and expenses increased at the same pace, economic earnings were 4.7 million for the current quarter or 59 cents per share up from 4.6 million or 58 cents per share in the fourth quarter of 2020.

Economic earnings were $4 7 million for the current quarter or <unk> 59 per share up from $4 6 million or <unk> 58 per share in the fourth quarter of 2020.

Primarily due to higher realization of performance fees in 2021.

Speaker 4: 2021 that income of 9.8 million compared to 2020's net loss of 8.9 million higher revenues, higher realized gains on private investments, and the impact of non-recurring items during 2020, partially offset by higher income taxes and mutual fund expense.

2021, net income of $9 8 million compared to 2000, Twenty's net loss of $8 9 million.

On higher revenues higher realized gains on private investments and the impact of nonrecurring items. During 2020, partially offset by higher income taxes and mutual fund expenses.

Speaker 4: Deluted earnings per share was $1.23 compared with a loss of $1.12 per share for 2020. Economic earnings per share of $2.20 compared with $0.91 in 2020.

Diluted earnings per share was $1 23.

Compared with a loss of $1 12 per share for 2020.

Economic earnings per share of $2 20, compared with 91.

In 2020.

Speaker 4: Over the year, we experienced net outflows of 0.8 billion and market appreciation of 2.2 billion. Our financial position continues to be very solid with cash and short-term investments at quarter end, totaling 80.2 million and a debt free balance sheet.

Over the year, we experienced net outflows of <unk> 8 billion and market appreciation of $2 2 billion our.

Our financial position continues to be very solid with cash and short term investments at quarter end totaling $82 million and a debt free balance sheet.

Speaker 4: Happy to announce that our Board of Directors approved a quarterly cash dividend of $0.15 per share, payable on April 1st, 2022 to stockholders of record on March 4th, 2022. This represents an annualized dividend yield of 3.4% as of yesterday's closed.

I'm happy to announce that our board of directors approved a quarterly cash dividend of <unk> 15 per share payable on April one 2022 to stockholders of record on March 4th 2022.

This represents an annualized dividend yield of three 4% as of yesterday's closing.

Speaker 4: That brings our prepared comments to a close. As some of you may have noticed, our investor relations presentation was inadvertently posted to our website ahead of schedule earlier today. As a result, we released earnings during the day.

Speaker 4: We encourage you to review our investor presentation, reflecting fourth quarter and fiscal 2021 highlights, as well as a discussion of our business, product development, and longer term trends in revenues, earnings, and dividends. We thank you for your interest in our company, and we...

We thank you for your interest in our company and we will open the line to questions.

Speaker 1: Certainly, maybe some gentlemen, if you have a question at this time, please press star then one. If your question has been answered and you'd like to move yourself from the queue, please press the bound key. Our first question comes from one. Max, thanks from GABCO. Your question, please.

<unk> your question please.

Good afternoon, everyone. Thanks for taking my questions.

Speaker 5: I'll ask both of them associated with costs. The first one, I'll discuss them both together, but you would have achieved some nice progress in March.

I'll ask both of them associated with costs.

The first one.

I'll just ask them both together.

And achieve some nice progress on margins last year.

Speaker 5: How are you thinking about more progress in 2022 and beyond?

How are you thinking about more progress in 2022 and beyond and against.

Speaker 5: Against the backdrop of what we're seeing is a little bit higher volatility in the mark.

Against the backdrop of what we're seeing is a little bit higher volatility in the markets and then secondly, maybe you could talk a little bit about.

Speaker 5: Secondly, maybe you could talk a little bit about, as we come out of the pandemic in supporting this acceleration.

As we come out of the pandemic and supporting this.

Speaker 5: achieved in terms of higher spend travel, et cetera.

Speaker 5: It's a little more color on how you see the sales process evolving as we get to a more personal world.

Sure.

Thanks, Matt I appreciate your question.

Speaker 3: So we've done a lot to improve our margins. You know, you do that two ways. When you have higher revenues and two, you have lower expenses and we've done both of those. So we really feel good about where we're headed in 22. And we still think there's a few things that we can do on the expense side to reduce our expenses.

So we've done a lot to improve our margins.

You do that two ways. One you have higher revenues until you have lower expenses and we've done both of those so we really feel good about.

Where we are headed in 'twenty, two and we still think there's a few things that we can do on the expense side two to reduce our expenses.

As far as the pandemic goes and the accelerated sales and the productivity we've had.

I think its particularly acute on the retail side, where most of the wire houses are still closed you still can't go in to see advisors. So that creates a challenge our guys have.

Just to give you some stats pre COVID-19 , our guys were doing about $1000 a thousand meetings a month.

And after Covid hit that went to about 200 meetings a month, we're back up to over 600 a month.

And I think that will steadily rise as the world begins to open up and that creates opportunities for us we have a lot of highly rated funds. We have 10 funds now that are available.

Several of them have been around for a long time and our four and five star rated so we feel really good about those two things coming together more availability of meetings and good funds to get out there and sell.

Do you have any further questions.

Thank you I appreciate it.

Speaker 1: Thank you. Once again, if you have a question at this time, please press Star than one.

Thank you once again, if you have a question at this time. Please press Star then one.

Our next question comes from the line of Subhash.

Speaker 1: Our next question comes in line of Subhash Kapani from SK Group. Inc. your question please.

<unk> from SK group your question please.

Speaker 6: I was wondering about that takeover offer you got earlier and the price was about 25.

Yes.

The thing about that takeover offer you got earlier enterprise was about 25.

Speaker 6: And are you guys doing anything to bring the price up to close to that tech over price? If you know somebody must have seen...

How are you guys doing anything to bring the price up to close to the takeover price.

Somebody must have seen the value at $25.

Not sure what your question is but clearly what we're trying to do is enhance shareholder value every day that we come to work and I think we've done a really good job of improving our profile over the last year.

Okay.

Speaker 6: Are you doing anything about the stock buyback or something?

How are you doing anything about the stock buyback or something.

Special dividend.

We've done both of those things so we paid a special dividend last year, and we bought stock back last year.

Speaker 3: We've done both of those things. We paid a special dividend last year and we bought the stock back last year."!

Okay. Thank you.

Thank you.

Speaker 1: This does conclude the question and answer session of today's program. I'd like to hand the program back to Brian Casey for any further remarks.

This does conclude the question and answer session of today's program I'd like to hand, the program back to Brian Casey for any further remarks.

Speaker 3: Thank you, Jonathan. And thanks to everybody for taking time to listen to our call today. If you have any further questions, please reach out to myself or to Terry or visit our website at westwoodgroup.com. Have a great afternoon.

Speaker 1: that you ladies and gentlemen, should be dispassion that today's conference. This does conclude the program. You may now disconnect. Good day.

Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program you may now disconnect good day.

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