Q4 2023 Affiliated Managers Group Inc Earnings Call
Operator: Greetings and welcome to the AMG fourth quarter 2023 earnings call. At this time, all participants are in a listen only mode.
Greetings and welcome to the AMG fourth quarter 2023 earnings call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad.
Operator: A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Ms. Patricia Figueroa, Head of Investor Relations for AMG. Thank you.
A reminder, this conference is being recorded I would now like to turn the conference over to your host Ms. Patricia figure our head of Investor Relations for AMG. Thank you you may begin.
Patricia Figueroa: Good morning, and thank you for joining us today to discuss AMG's results for the fourth quarter and full year 2023. Before we begin, I'd like to remind you that during this call, we may make a number of forward-looking statements that could differ from our actual results materially, and AMG assumes no obligation to update these statements. A replay of today's call will be available on the Investor Relations section of our website along with a copy of our earnings release and the reconciliation of any non-GAAP financial measures, including any earnings guidance announced on this call. In addition, this morning, we posted an updated investor presentation to our website and encourage investors to consult our site regularly for updated information. With us today to discuss the company's results for the quarter are Jay Horgen, President and Chief Executive Officer, and Tom Wojcik, Chief Financial Officer. With that, I'll turn the call over to Jay. Thanks, Patricia. And good morning, everyone.
Patricia: Good morning, and thank you for joining us today to discuss Amg's results for the fourth quarter and full year 2023.
Patricia: Before we begin I'd like to remind you that during this call. We may make a number of forward looking statements, which could differ from our actual results materially and AMG assumes no obligation to update these statements.
A replay of today's call will be available on the Investor Relations section of our website along with a copy of our earnings release.
Patricia: A reconciliation of any non-GAAP financial measures, including any earnings guidance announced on this call.
Patricia: In addition, this morning, we posted an updated investor presentation to our website and encourage investors to consult our site regularly for updated information.
Speaker Change: With us today to discuss the company's results for the quarter R. J Horgan, President and Chief Executive Officer, and Tom Wojcik, Chief Financial Officer with that I'll turn the call over to Jay.
Jay: Thanks, Patricia and good morning, everyone.
Speaker Change: Afg's full year results reflect the positive impact of our strategy and our capital allocation discipline across both growth investments and share repurchases.
Jay C. Horgen: AMG's full year results reflect the positive impact of our strategy and our capital allocation discipline, across both growth investments and share repurchase. In 2023, we further diversified our business by investing in secular growth areas, welcoming two new affiliates operating in distinct, fast growing areas of private markets, Forbian and Aura Partners. We also collaborated with our existing affiliates in expanding their reach into new geographies and channels, including the development of several new and innovative products.
Speaker Change: In 2023, we further diversified our business by investing in secular growth areas welcoming two new affiliates operating indistinct fast growing areas of private markets Sorbian and our partners.
Speaker Change: We also collaborated with our existing affiliates and.
Speaker Change: And expanding their reach into new geographies and channels.
Speaker Change: Including the development of several new and innovative products.
Speaker Change: Finally.
Jay C. Horgen: We meaningfully enhanced our liquidity position and further strengthened our balance sheet, while also returning significant excess capital to shareholders. AMG's business composition is changing, and as we enter 2024, I wanted to reflect on this strategic evolution.
Speaker Change: We meaningfully enhanced our liquidity position.
Speaker Change: And further strengthen our balance sheet, while also returning significant excess capital to shareholders.
Speaker Change: Amg's business composition is changing.
Speaker Change: And as we enter 2024 I wanted to reflect on this strategic evolution.
Jay C. Horgen: Over the past several years, we have deliberately diversified our business by investing in high-quality, independent new affiliates operating in secular growth areas and by investing in and alongside our existing affiliates to capitalize on their growth opportunities. These growth investments have reshaped AMG's business profile, from one that was characterized largely by differentiated long-only strategies to one that has a majority contribution from alternatives. Today.
Speaker Change: Over the past several years, we have deliberately diversified our business by investing in high quality independent new affiliates operating and secular growth areas and by investing in and alongside our existing affiliates to capitalize on their growth opportunities.
Speaker Change: These growth investments have reshaped amg's business profile.
Speaker Change: From one that was characterized largely by differentiated long only strategies to one that has the majority of contribution from alternatives.
Speaker Change: Today.
Jay C. Horgen: Half of our earnings come from alternative strategies, a balance between private markets and liquid alternatives, with the other half of our earnings coming from Differentiated Long-Only Strategies. With substantial contributions from each of private markets, liquid alternatives, and long-only strategies, AMG's business profile is unique in our industry. And looking ahead, we are well-positioned for long-term success across all three areas, as I'll discuss further. In private markets, our affiliates offer differentiated return streams in sectors aligned with durable client demand trends over the course of 2023, amid a challenging fundraising environment. Our private markets affiliates raised approximately $16 billion, highlighting the appeal of their specialized strategies and providing them with additional dry powder to capitalize on forward opportunities.
Speaker Change: Half of our earnings come from alternative strategies.
Speaker Change: Between private markets and liquid alternatives.
What was the other half of our earnings coming from differentiated long only strategies.
Speaker Change: With substantial contributions from each of private markets liquid alternatives and long only strategies Amg's business profile is unique in our industry.
And looking ahead, we are well positioned for long term success across all three areas as I'll discuss further.
Speaker Change: Okay.
Speaker Change: In private markets, our affiliates offer differentiated return streams and sectors align with durable client demand trends.
Speaker Change: Over the course of 2023.
Speaker Change: Amid a challenging fundraising environment.
Speaker Change: Our private markets affiliates raised approximately 16 billion.
Speaker Change: Highlighting the appeal of their specialized strategies.
Speaker Change: Providing them with additional dry powder to capitalize on forward opportunities.
Jay C. Horgen: AMG's private markets affiliates operate in a number of fast-growing areas with long-term structural tailwinds, including infrastructure, private credit, private market secondaries, and specialty strategies within private equity, venture capital, and real estate. Looking ahead, we expect the contribution from private markets to accelerate through a combination of organic growth, new product launches, and new partnerships with independent firms. Turning to Liquid Alternatives, our affiliates delivered outstanding performance and differentiated returns for their clients in 2023. In addition to BetaSense of Strategies,
Speaker Change: Amg's private markets affiliates operate in a number of fast growing areas with long term structural tailwind, including infrastructure private credit private market secondaries and specialty strategies within private equity venture capital and real estate.
Speaker Change: Looking ahead, we expect the contribution from private markets to accelerate.
Speaker Change: Through a combination of organic growth, new product launches and new partnerships with independent firms.
Speaker Change: Turning to liquid alternatives.
Speaker Change: Our affiliates delivered outstanding performance and differentiated returns for their clients in 2023.
Speaker Change: In addition to beta sensitive strategies.
Jay C. Horgen: Our affiliates manage absolute return strategies, including global macro, relative value fixed income, and trend follows, all of which generate returns that have low or no correlation to broader markets. We believe liquid alternative strategies are underrepresented in client portfolios and expect this to change as these strategies have proven their value in choppy or down markets. As clients continue to focus on portfolio construction to address the changing market environment and more fully recognize the value of these strategies in their portfolios, we expect increasing allocations into liquid alternatives, in addition to their potential for significant organic growth.
Speaker Change: Our affiliates manage absolute return strategies, including global macro relative value fixed income and trends all of them.
Speaker Change: All of which generate returns that have low or no correlation to broader markets.
Speaker Change: We believe liquid alternative strategies are underrepresented in client portfolios and expect this to change as these strategies have proven their value and choppy or down markets.
Speaker Change: As clients continue to focus on portfolio construction to address the changing market environment.
Speaker Change: And more fully recognized the value of these strategies in their portfolios.
Speaker Change: We expect increasing allocations into liquid alternatives.
Speaker Change: In addition to their potential for significant organic growth.
Jay C. Horgen: These strategies can generate sizable performance fee earnings for AMG. In fact, over the last three years, across vastly different marketing environments, our liquid alternative strategies have delivered nearly $600 million in pre-tax performance fee earnings. Liquid alternatives are an essential feature of our unique business profile because they are complementary to both our private markets and long-only strategies. This area is often underappreciated.
Speaker Change: These strategies can generate sizable performance fee earnings for a N G.
In fact over the last three years across its vastly different market environments. Our liquid alternative strategies have delivered nearly 600 million in pretax performance fee earnings.
Speaker Change: Liquid alternatives are an essential feature.
Speaker Change: Our unique business profile.
Speaker Change: Because they are complementary to both our private markets and long only strategies.
Speaker Change: This area is often underappreciated.
Jay C. Horgen: Given that performance fee earnings have proven to be consistent and significant, especially when private markets and long only strategies are facing headwinds. Taken together, this dynamic is a great differentiator and source of stability for AMG. Turning to Differentiated Long-Life Strategies. As you know, since AMG's inception, we have partnered with a number of the highest quality independent partner-owned firms managing differentiated long-only strategies. Our affiliates represent the best of active investing and include a number of the most renowned brands in our industry, including Hardy Lubner, Parnassus, Tweedy Brown, and Yacht. Additionally, our affiliates have built enduring franchises with specialized investment expertise and long-term track records across market cycles. The current market environment, characterized by higher volatility and more asset dispersion, is generally constructive for active managers, given their entrepreneurial orientation. Investment-Centric Cultures and Alignment with Clients.
Speaker Change: Given that performance fee earnings have proven to be consistent and significant, especially when private markets and long only strategies are facing headwinds.
Speaker Change: Taken together this dynamic is a great differentiator and source of stabilization for AMG.
Speaker Change: Yeah.
Speaker Change: Turning to differentiated long only strategies.
Speaker Change: As you know since Amg's inception, we have partnered with a number of the highest quality independent partner owned firms managing differentiated long only strategies.
Our affiliates represent the best of active investing and include a number of the most renowned brands in our industry, including Hardie Lovinger Parnassus Tweedy Browne and yacktman.
Speaker Change: Our affiliates have built enduring franchises with specialized investment expertise and long term track records across market cycles.
Speaker Change: More broadly.
Speaker Change: The current market environment characterized by higher volatility and more asset dispersion is generally constructive for active managers.
Speaker Change: Given their entrepreneurial or orientation.
Speaker Change: Investment centric cultures and alignment with clients.
Jay C. Horgen: Independent partner-owned firms have competitive advantages in managing risk and offering differentiated return streams, especially during periods of heightened uncertainty. Overall, our diversified portfolio of high-quality independent partner-owned firms operating across private markets, liquid alternatives, and Differentiated Long-Life Strategies is a competitive advantage that both enhances our earnings stability and supports our capacity to continue investing in areas of the highest growth and return to benefit our shareholders. Looking ahead.
Speaker Change: Independent partner owned firms have competitive advantages in managing risk.
Speaker Change: Our friend offering differentiated return streams, especially during periods of heightened uncertainty.
Speaker Change: Overall, our diversified portfolio of high quality independent partner owned firms operating across private markets liquid alternatives.
Speaker Change: And differentiated long lease strategies is a competitive advantage it both enhances our earnings stability and supports our capacity to continue investing in areas of highest growth and return to benefit our shareholders.
Speaker Change: Looking ahead.
Jay C. Horgen: We will continue to strategically evolve AMG through growth investments in new and existing affiliates, supported by our unmatched three-decade track record of successful partnerships, our New Investment Origination Capabilities, and our significant financial flexibility. We will remain disciplined in our capital allocation decisions as we invest in new growth opportunities while also returning excess capital to shareholders. Our discipline is evidenced by our actions. In 2023, AMG invested in two new affiliates, seeded three new products, and returned a significant amount of capital to shareholders by repurchasing 10% of our shares outstanding. Before I turn the call over to Tom,
Speaker Change: We will continue to strategically evolve AMG through growth investments in new and existing affiliates supported.
Speaker Change: Supported by our unmatched three decade track record of successful partnerships.
Speaker Change: Our new investment origination capabilities.
Speaker Change: And our significant financial flexibility.
Speaker Change: We will remain disciplined in our capital allocation decisions as we invest in new growth opportunities, while also returning excess capital to shareholders.
Speaker Change: Our discipline as evidenced by our actions.
Speaker Change: In 2023, a M G invested in two new affiliates seeded three new products and returned a significant amount of capital to shareholders by repurchasing 10% of our shares outstanding.
Speaker Change: Before I turn the call over to Tom.
Jay C. Horgen: I wanted to take a moment to acknowledge an important milestone in AMG's history. Last year, we celebrated 30 years of successfully partnering with independent firms to magnify their advantages and actively preserve their independence. While the investment industry and AMG have evolved significantly over the past three decades, our steadfast commitment to further our affiliates' success while ensuring their independence remains unchanged. Looking ahead.
Tom M. Wojcik: I wanted to take a moment to acknowledge an important milestone in amg's history.
Tom M. Wojcik: Last year, we celebrated 30 years of successfully partnering with independent firms to magnify their advantages and actively preserve their independence.
Tom M. Wojcik: While the investment industry and AMG have evolved significantly over the past three decades.
Our steadfast commitment to further our affiliate's success, while ensuring their independence remains unchanged.
Tom M. Wojcik: Looking ahead.
Jay C. Horgen: We will continue to leverage our decades of experience in offering strategic insights and capabilities to our affiliates to create exceptional value for their clients and our shareholders. Our proven approach and our reputation as a collaborative, engaged partner attract the highest quality firms globally. And as we enter our next decade, we are seeing increasing opportunities to invest for growth and drive shareholder value. And with that, I'll turn it over to Tom. Thank you, Jay, and good morning, everyone.
Tom M. Wojcik: We will continue to leverage our decades of experience and offerings strategic insights and capabilities to our affiliates to create exceptional value for their clients and our shareholders.
Tom M. Wojcik: Our proven approach and our reputation as a collaborative engage partner attracts the highest quality firms globally.
Tom M. Wojcik: And as we enter our next decade.
Tom M. Wojcik: We're seeing increasing opportunities to invest for growth and drive shareholder value.
Tom M. Wojcik: And with that I'll turn it over to Tom.
Tom M. Wojcik: Thank you Jay and good morning, everyone.
Tom M. Wojcik: Our business continued to evolve in 2023, driven by our focus on allocating our resources and capital to areas of secular growth. AMG's strong fourth quarter results illustrate the momentum we are seeing across our business and position us well for 2024. We had our best quarter of the year in the private market, where our affiliates' excellent performance continues to drive strong capital raising and organic growth. In liquid alternatives, outstanding investment performance contributed to approximately $160 million in performance fee earnings for the year, and our differentiated long-only AUM ended 2023 at the highest levels of the year, increasing our forward earnings power. We enter 2024 with fundraising momentum in private markets. A diverse set of affiliates positioned for growth. A strong balance sheet, and Significant Liquidity to Deploy Capital to Drive Long-Term Durable Earnings Growth and Shareholder Value.
Tom M. Wojcik: Our business continue to evolve in 2023.
Tom M. Wojcik: Driven by our focus on allocating our resources and capital to areas of secular growth.
Tom M. Wojcik: Amg's strong fourth quarter results illustrate the momentum, we're seeing across our business and position us well for 2024.
Tom M. Wojcik: We had our best quarter of the year in private markets, where our affiliates excellent performance continued to drive strong capital raising and organic growth.
Tom M. Wojcik: In liquid alternatives outstanding investment performance contributed to approximately $160 million in performance fee earnings for the year.
Tom M. Wojcik: And our differentiated long only a U N ended 2023 at the highest levels of the year, increasing our forward earnings power.
Tom M. Wojcik: We enter 2024 with fund raising momentum in private markets.
Tom M. Wojcik: A diverse set of affiliates positioned for growth.
Tom M. Wojcik: Our strong balance sheet.
Tom M. Wojcik: And significant liquidity to deploy capital to drive long term durable earnings growth and shareholder value.
Tom M. Wojcik: Turning to our fourth-quarter results, Adjusted EBITDA of $296 million included $104 million of net performance fee earnings, reflecting strong affiliate investment performance and the ongoing execution of our strategy to invest in secular growth areas. Performance fee earnings continue to be a valuable and consistent source of earnings and cash flow that further diversifies our earnings profile and enhances our earnings power. Our affiliates' strong investment performance generates performance fee earnings across each of our eligible asset areas. Absolute Return Strategy
Tom M. Wojcik: Turning to our fourth quarter results.
Tom M. Wojcik: Adjusted EBITDA of $296 million included 104 million of net performance fee earnings.
Tom M. Wojcik: Reflecting strong affiliate investment performance and the ongoing execution of our strategy to invest in secular growth areas.
Tom M. Wojcik: Yes.
Tom M. Wojcik: Performance fee earnings continued to be a valuable and consistent source of earnings and cash flow that further diversify our earnings profile and enhance our earnings power.
Our affiliates' strong investment performance generated performance fee earnings across each of our eligible asset areas.
Tom M. Wojcik: Beta Sensitive and Private Market for both the quarter and the year. Today, we have approximately $185 billion of performance fee eligible AUM. And we expect to continue to grow our alternative footprint, further expanding our performance fee earnings opportunity through a combination of organic growth, new affiliate partnerships, and new products. Economic earnings per share of $6.86 benefited from the impact of share repurchases and included approximately $0.60 of discrete tax benefits primarily related to the foreign tax treatment of prior year performance fee earnings. Net client cash outflows, excluding certain quantitative strategies, were $4 billion for the quarter, and an improvement compared to the recent quarter.
Tom M. Wojcik: Absolute return strategies beta sensitive and private markets for both the quarter and the year.
Tom M. Wojcik: Today, we have approximately 185 billion of performance fee eligible AUM.
Tom M. Wojcik: And we expect to continue to grow our alternatives footprint further expanding our performance fee earnings opportunity through a combination of organic growth new affiliate partnerships and new products.
Economic earnings per share of $6.86 benefited from the impact of share repurchases and included approximately 60 cents of discrete tax benefits primarily related to foreign tax treatment of prior year performance fee earnings.
Tom M. Wojcik: These results reflect continued strength in private markets fundraising offset by fundamental equity. Turning to performance across our business and excluding certain quantitative strategies and Alternatives, we again reported strong results, with nearly $4 billion in net inflows in the quarter driven by private markets fundraisers. Private market affiliates raised $7 billion in the fourth quarter, contributing to a 15% organic growth rate for the full year.
Tom M. Wojcik: Net client cash outflows, excluding certain quantitative strategies were 4 billion for the quarter.
Tom M. Wojcik: An improvement compared to recent quarters.
Tom M. Wojcik: These results reflect continued strength in private markets fund raising offset by fundamental equities.
Tom M. Wojcik: Turning to performance across our business and excluding certain quantitative strategies.
Tom M. Wojcik: Our private markets affiliates continue to generate outstanding investment performance, and we expect the strong demand they are seeing from clients to support ongoing fundraising momentum in 2024. AMG is now partnered with eight private markets affiliates. Together, these firms manage approximately $115 billion in assets and operate in areas of significant long-term client demand. Our affiliates manage $40 billion in infrastructure strategies. $40 billion in private market solutions, $20 billion in private credit, and $15 billion in specialty areas including industrial decarbonization, life sciences, and multifamily real estate.
Tom M. Wojcik: In alternatives, we again reported strong results with nearly 4 billion in net inflows in the quarter driven by private markets fundraising.
Private markets affiliates raised 7 billion in the fourth quarter <unk>.
Tom M. Wojcik: Contributing to a 15% organic growth rate for the full year.
Tom M. Wojcik: Our private markets affiliates continue to generate outstanding investment performance and we expect the strong demand that you're seeing from clients to support ongoing fundraising momentum in 2024.
Tom M. Wojcik: AMG has now partnered with eight private markets affiliates.
Tom M. Wojcik: In liquid alternatives, while we saw outflows of $3 billion in the quarter, primarily driven by seasonality and beta-sensitive strategies that generated performance fees in 4Q, we are confident that our affiliates' outstanding investment performance over the last three years across a range of products positions them to benefit from forward demand trends as clients look for differentiated return streams to add diversification and stability to their portfolios. As I mentioned earlier, we generated nearly $160 million of performance fee earnings for the full year 2023 and have delivered nearly $600 million over the last three years. Within differentiated long-only strategies, we saw net outflows of approximately $4 billion in global strategies and $4 billion in U.S. equities in the fourth quarter, while multi-asset and fixed income flows were flat.
Tom M. Wojcik: Together these firms manage approximately $115 billion in assets.
Tom M. Wojcik: And operate in areas of significant long term client demand.
Tom M. Wojcik: Our affiliates manage 40 billion in infrastructure strategies.
Tom M. Wojcik: <unk> 40 billion in private market solutions.
Tom M. Wojcik: 20 billion in private credit.
Tom M. Wojcik: And 15 billion and specialty areas, including industrial de Carbonization life Sciences, and multifamily real estate.
Tom M. Wojcik: And liquid alternatives, while we saw outflows of $3 billion in the quarter, primarily driven by seasonality in beta sensitive strategies that generated performance fees in <unk>.
We are confident that our ability our affiliates outstanding investment performance over the last three years across a range of products positions them to benefit from forward demand trends as clients look for differentiated return streams to add diversification and stability to their portfolios.
Tom M. Wojcik: Overall, we remain confident that our affiliates' strong long-term track records across multiple market cycles position them to capture client demand over time. Now moving to first quarter guidance. We expect Adjusted EBITDA to be between $235 and $245 million based on current AUM levels reflecting our market blend, which was flat quarter to date as of Friday, and including net performance fee earnings of $30 to $40 million and $10 million of catch-up and other fees from private markets affiliates. We expect first quarter economic earnings per share in the range of $5.03 to $5.24, assuming an adjusted weighted average share count of 34.5 million shares for the quarter.
Tom M. Wojcik: As I mentioned earlier, we generated nearly $160 million of performance fee earnings for the full year 2023.
Tom M. Wojcik: And have delivered nearly $600 million over the last three years.
Within differentiated long only strategies, we saw net outflows of approximately $4 billion in global strategies, and 4 billion in U S equities in the fourth quarter.
Tom M. Wojcik: While multi asset and fixed income flows were flat.
Tom M. Wojcik: Overall, we remain confident that our affiliates' strong long term track records across multiple market cycles position them to capture client demand over time.
Speaker Change: Now moving to first quarter guidance.
Tom M. Wojcik: Consistent with last quarter, we posted a guidance reconciliation to the investor relations section of our website, where you can find the detailed modeling items, including interest expense, amortization, and impairments, income taxes, and other economic items. Turning to Performance Fee Earnings Estimates for the Full Year. Over the past five years, our net performance-to-earnings has averaged roughly $150 million annually, and we believe that is a good baseline for thinking about performance fee earnings in a normalized year.
Speaker Change: We expect adjusted EBITDA to be between 235 and $245 million based on current AUM levels, reflecting our market blend, which was flat quarter to date as of Friday.
Speaker Change: And including net performance fee earnings of $30 million to $40 million.
Speaker Change: And $10 million of catch up and other fees from private markets affiliates.
Speaker Change: We expect first quarter economic earnings per share in the range of $5 three <unk> to $5.24, assuming an adjusted weighted average share count of $34 5 million shares for the quarter.
Tom M. Wojcik: Finally, turning to our balance sheet and capital allocation. Our balance sheet is in an excellent position, with nearly $500 million of liquidity, net of potential debt paydown, and the full capacity of our $1.25 billion undrawn revolver. As I mentioned last quarter, we are holding short-term treasuries against our upcoming 2024 institutional bond maturity and have the option to pay down that debt in the near term while we opportunistically look to refinance depending on market conditions. We actively manage our liquidity and our capital allocation by running all decision-making through a common framework to ensure we are earning appropriate risk-adjusted returns for our shareholders over the long term, In the fourth quarter, we repurchased $133 million of shares, bringing our total repurchases for 2023 to $574 million, inclusive of the $225 million ASR completed earlier in the year.
Speaker Change: Consistent with last quarter, we posted a guidance reconciliation to the Investor Relations section of our website, where you can find the detailed modeling items, including interest expense amortization and impairments income taxes and other economic items.
Speaker Change: Turning to performance fee earnings expectations for the full year.
Speaker Change: Over the past five years, our net performance fee earnings have averaged roughly $150 million annually.
Speaker Change: And we believe that as a good baseline for thinking about performance fee earnings in a normalized year.
Speaker Change: Finally, turning to our balance sheet and capital allocation.
Speaker Change: Our balance sheet is in an excellent position with nearly $500 million of liquidity net of potential debt paydown and the full capacity of our 1.25 billion Undrawn revolver.
Speaker Change: As I mentioned last quarter, we are holding short term treasuries against our upcoming 2020 for institutional bond maturity.
Operator: We repurchased approximately 10% of our shares outstanding in 2023 and expect to continue returning excess capital to shareholders through share repurchase. For full year 2024, we expect to repurchase at least $400 million of shares, subject to market conditions and new investment activity. We enter 2024 in a position of strength, with a strong capital position and a growing opportunity set to deploy capital across Investments and New Affiliates. Innovating alongside our existing affiliates, including through seeding new products and investing in AMG's capabilities, and then returning excess capital through share repurchase. Looking ahead, given our disciplined capital allocation framework and distinct competitive advantages, we are excited about the opportunities ahead of us and are well-positioned to create significant value for our shareholders over time.
Speaker Change: And had the option to pay down that debt in the near term, while we opportunistically look to refinance depending on market conditions.
Speaker Change: We actively manage our liquidity and our capital allocation by running all decision, making through a common framework to ensure we are earning appropriate risk adjusted returns for our shareholders over the long term <unk>.
Speaker Change: Including managing net leverage investing for growth.
Speaker Change: And returning excess capital to shareholders.
Speaker Change: In the fourth quarter, we repurchased $133 million of shares, bringing our total repurchases in 2000 $23 million to $574 million <unk>.
Speaker Change: Inclusive of the $225 million ASR completed earlier in the year.
Speaker Change: We repurchased approximately 10% of our shares outstanding in 2023.
Speaker Change: And expect to continue returning excess capital to shareholders through share repurchases.
Operator: And now, we're happy to take your questions. Thank you. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue.
Speaker Change: For full year 2024, we expect to repurchase at least $400 million of shares subject to market conditions and new investment activity.
Speaker Change: We enter 2024 and a position of strength.
Speaker Change: With a strong capital position and a growing opportunity set to deploy capital.
Speaker Change: Across investments in new affiliates.
Speaker Change: Innovating alongside our existing affiliates, including through seeding new products.
Bill Katz: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. In the interest of time, we request that you keep to one question each. Thank you. Our first question comes from the line of Bill Katz with TD Cowen. Please proceed with your question. Okay, thank you very much.
Speaker Change: Investing in Amg's capabilities.
Speaker Change: And then returning excess capital through share repurchases.
Speaker Change: Looking ahead, given our disciplined capital allocation framework and distinct competitive advantages.
Speaker Change: We are excited about the opportunities ahead of us and are well positioned to create significant value for our shareholders over time.
Bill Katz: I've taken a question. Thanks for the guidance. Maybe a two-part question, if I could cheat.
Speaker Change: And now we're happy to take your questions.
Jay C. Horgen: The first part is, where do you think you are in terms of the New Deal pipeline and how do you think some of the recent deal multiples are affecting that, if at all? And then, within the LiquidAuth discussion, how much of this discussion about things getting better is just your expectation and subject to view, versus just real-time conversations with the consultant community in terms of those allocations? Thank you.
Speaker Change: Thank you.
Speaker Change: At this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.
Speaker Change: In the interest of time, we request that you keep to one question each thank you.
Jay C. Horgen: Yeah, well, thanks, Bill. And nice to hear from you. Maybe I'll start with the New Deal pipeline question, address valuation, and then I'll have Tom talk about liquid alts and our expectations there. The framework, what I'll start here with new investments is just to, again, remind you of our strategy with new investments and then maybe talk about the market environment and the dynamics there. Our strategy, as you know, is to invest in areas of secular growth within private markets, liquid alternatives, and differentiated long-only strategies. In addition to that, we are focused on certain themes that cut across all three areas, including sustainable investing, wealth, and other themes.
Speaker Change: Our first question comes from the line of Bill Katz with TD Cowen. Please proceed with your question.
Bill Katz: Thank you very much of taking the question. Thanks for the guidance, maybe a two part if I could cheat or the first part is what do you think you are in terms of the new deal pipeline and how do you think some of the recent deal multiples are affecting that if at all and then within the liquid alts discussion how much of this discussion about things getting better is just.
Bill Katz: Your expectation is subject to view or versus just real time conversations with the consultant community in terms of those allocations. Thank you.
Speaker Change: Yeah, well, thanks, Bill and nice to hear from you.
Speaker Change: Maybe I'll start with the new deal.
Speaker Change: Pipeline question.
Speaker Change: Address valuation and then I'll have Tom talk about liquid alts and our expectations there.
Jay C. Horgen: We have made several investments this year, last year, and the year before in these areas, and we expect to continue to do so. Maybe to put a finer point on it, this strategic investing for us is really, as I said in my prepared remarks, changing our business composition. Today, alternatives generate about half of our EBITDA, and we see that continuing to grow. As a result, the focus has been on private markets and liquid alternatives on the new investment side.
Speaker Change: The framework, what I'll start here with new investments is just to again remind you of our strategy with new investments and then maybe talk about the market environment and the dynamics there.
Speaker Change: Our strategy as you know is to invest in areas of secular growth within private markets liquid alternatives and differentiated long only strategies. In addition to that we are focused on certain themes that cut across all.
Speaker Change: All three areas and that includes sustainable investing wealth and other themes.
Jay C. Horgen: Within private markets, we are focused on a number of areas, and have been for some time, that have structural tailwinds like infrastructure, like private market solutions, private credit, and some other specialty strategies. And if you think about the new investments that we've made over the last five years, the benefit that we have is we can help these affiliates grow, and we are increasingly looking for opportunities where we can partner with a new affiliate, not only one that's growing on its own but then to magnify their advantages as they grow. And the way we do that is through our scaled resources, both on the wealth side and on the institutional side. We've been targeting firms that are kind of in the $5 to $20 billion in AUM range, you know, enterprise values between $250 and, say, $1 billion. And that range, we think, is a really good range for us to not only help them in areas that they need help but also to triple a firm of that size than it is to triple one that's already at $50 or $100.
Speaker Change: We have made several investments this year last year and the year before in these areas. We expect to continue to do so.
Speaker Change: Maybe to.
Speaker Change: Put a finer point on it this sort of strategic investing for US is really as I said in my prepared remarks is changing our business composition and today alternatives generate about half of our EBITDA and we see that continuing to grow.
Speaker Change: And as a result.
Speaker Change: Focus has been in private markets and liquid alternatives on the new investment side and within private markets. We're focused on a number of areas and have been for some time that have structural tailwind like infrastructure like private market solutions private credit and some other specialty strategies.
Speaker Change: And if you think about the new investments that we've made over the last five years.
Speaker Change: The benefit that we have is we can help these affiliates grow and we are increasingly looking for opportunities where we can partner with.
Speaker Change: Our new affiliate.
Speaker Change: Not only one that's growing on their own but then to magnify their advantages.
Jay C. Horgen: So, private markets are very active there, and our pipeline reflects that. In the case of liquid alternatives, they are also very active there. As I mentioned in my prepared remarks, we also talk about the nature of liquid alternatives and how that's complementary to both private markets and the long-only, differentiated long-only strategies because, in fact, they act in a dynamic way, and, generally speaking, perform well in flat, choppy, or down markets precisely when the other two are facing headwinds. So, we're excited to continue to look to partner with liquid alternative managers. We've had a lot of success over time.
Speaker Change: As they as they grow and the way we do that is through our scaled resources, both on the wealth side and on the institutional side.
Speaker Change: We've been targeting firms that are kind of in that $5 to $20 billion and AUM range.
Speaker Change: Enterprise values between $2 50, and save Dalian and that in that range. We think is a really good range for us not to not only help them.
Speaker Change: In areas that they they need help but also easier to triple affirm of that size and it is one that's already at 50 or 100.
Jay C. Horgen: We're sort of unique in the marketplace because there aren't very many buyers for those types of businesses, so we see our competitive advantages to be high there. We are really looking for absolute return and opportunistic strategies within liquid alternatives, and given the diverse range of liquid alternative managers that we already have, they slot in nicely in that regard. So, that's sort of what we're looking for.
Speaker Change: So private markets are very active there and our pipeline reflects it.
Speaker Change: In the case of liquid alternatives again very active there as I mentioned in my prepared remarks, we also talk about the nature of liquid alternatives and how thats complementary to both private markets and the long only.
Speaker Change: <unk> had long only strategies because in fact, they they act.
Speaker Change: In a dynamic way generally speaking performed well in flat choppy or down markets precisely when the other two are facing headwinds. So we're excited to continue to look to partner with liquid alternatives managers, we've had a lot of success over time.
Jay C. Horgen: Obviously, these are areas that are fast-growing and that really are areas that have the opportunity for client allocations to increase over time. Maybe taking the market backdrop and describing that, you know, we have several competitive advantages when we look at the market environment. We have our 30-year track record, our proven partnership model, and we are known for our ability to both magnify the success of our affiliates but also actively support their independence. So, for prospective affiliates, those that are in our target universe, they do want a strategic partner, but they also want to remain independent, and that really is our target universe. That does set us apart, both uniquely and positively, from the more passive financial-oriented buyers, and it also sets us apart from those who want to consolidate or take control because the ability to strategically benefit from AMG and remain independent is in stark contrast to a consolidator who requires those partner-owned firms to relinquish their independence.
Speaker Change: We're sort of unique in the marketplace because.
Speaker Change: There arent very many buyers for those types of businesses. So we see our competitive advantages to be high there we are.
Speaker Change: We're really looking for absolute return and opportunistic strategies within liquid alternatives and given our diverse range of liquid alternative managers that we already have they thought it nicely.
Speaker Change: In that regard so that's sort of what we're looking for obviously these are areas that are fast growing that that really are areas that have the opportunity for client allocations to increase overtime, maybe taking the market backdrop.
Speaker Change: In describing that we have several competitive advantages.
Speaker Change: When we look at the market environment.
Speaker Change: We have our 30 year track record a proven partnership model and we are known for our ability to both magnify the success of our affiliates, but we also active actively support their independence. So for prospective affiliates those that are in our target universe. They do want a strategic partner and they also want to remain independent and that really is our target universe.
Jay C. Horgen: So, that gives us a really unique advantage in the market to be both strategic and actively support independence. We have also enhanced here our origination capabilities over the last several years. And so we're originating more new affiliates, both from an organic perspective and from a proprietary perspective, but we just are canvassing the world in a much more rigorous and systematic way. That is increasing our pipeline. And I guess I would say, finally, the transaction environment, you know, is very attractive for AMG. You've seen a few transactions in the market recently that have come at high prices, but those are extremely large-scale firms.
Speaker Change: That does set us apart both unique uniquely and positively from the more passive financial oriented buyers and it also sets us apart from though those who want to consolidate or take control.
Speaker Change: Does the ability to.
Speaker Change: Strategically benefit from AMG and remain independent is in Stark contrast to a consolidator who requires those partner owned firms to relinquish their independence.
Speaker Change: So that gives us a really unique advantage in the market to be both strategic and actively support independence.
Jay C. Horgen: I think the opportunity for the mid-market firms and those firms where we can help, you know, it's moderated somewhat. I would say over the last 12 to 24 months, we've seen pricing moderate, and also structures benefit both parties from a risk-sharing perspective.
Speaker Change: We have also enhanced here our origination capabilities over the last several years and so we're originating more new affiliates both from an organic perspective, a proprietary perspective, but we just are are canvassing the world and a much more rigorous and systematic way that is increasing our pipeline.
Jay C. Horgen: So we're constructive about the environment, both for private markets and liquid alternatives, and we see the opportunity to invest in 2024. Maybe I'll just reflect on 2023 for a moment.
Speaker Change: And I guess I would say finally, the transaction environment is very attractive for AMG, you've seen a few transactions in the market.
Speaker Change: Recently that have come at high prices, but those are extremely large scaled firms I think the opportunity for the the mid market firms and those firms where we can help you.
Jay C. Horgen: We had two highly attractive new investments, new partners that we added this year, Forbian and Aura Partners, both in private markets, both in sustainable investing, one being in the life sciences area and the other being in industrial decarbonization. When we look back at 2023, it could have been an even more significant year from a new investment perspective. We entered the final stages with two additional firms that ultimately did not meet our expectations and due diligence.
Speaker Change: It's it's moderated somewhat I would say over the last 12 months to 24 months we've seen.
Speaker Change: Reising moderate and also structures benefit both parties from a risk sharing perspective, so we're constructive on the environment, both for private markets and liquid alternatives and we see the opportunity to invest in 2024, maybe I will just reflect on 2023 for a moment we had two.
Jay C. Horgen: But here I would say it demonstrated our financial discipline. So when we look at 2024, you know, our pipeline is strong, maybe stronger than it was this time last year. We continue to see opportunities in these areas of secular growth, and what we need to do from here is to make sure that these transactions fit within our new investment parameters and are in keeping with our disciplined approach. So, we're looking forward to this year to making new investments, and we are very constructive with our pipeline. So, now, let me turn it over to Tom to talk about Liquid Alt. Thanks, Jay, and thanks for your question, Bill. I'll be brief.
Speaker Change: <unk>.
Speaker Change: Highly attractive new investments.
Speaker Change: New partners that we added this year for being in our our partners both in private markets both.
And sustainable investing one being in the life Sciences area and the other being in industrial the carbonization.
Speaker Change: When we look back at 2023, it could have been an even more significant year from a new investment perspective.
Speaker Change: We entered the final stages with two additional firms that we own that ultimately did not meet our expectations in due diligence.
Speaker Change: But here I would say it demonstrated our financial discipline. So when we look at 2024, our pipeline is strong may be stronger than it was this time last year, we continue to see opportunities in these areas of secular growth and what we need to do from here is to make sure that these transactions fit within our new investment parameters and in <unk>.
Tom M. Wojcik: I think Jay actually touched on a number of the drivers when he talked about the new investment opportunities we're seeing on the Liquid Alt side. But, Bill, I'd like to break your question into two parts. The first, sort of what's happening real time, and the second, what that means for our expectations around Liquid Alternatives for the future. What's happening now is excellent performance and performance that's really delivering on the value proposition that clients are looking for when they invest in Liquid Alternatives strategies. As I talked about in my prepared remarks, we delivered $160 million in performance earnings this year, $600 million over the last three years, and more than $1.2 billion over the last 10 years, primarily driven by liquid alternative strategies across a really diverse group.
Speaker Change: With our disciplined approach. So we're looking forward this year to making new investments and we are very constructive on our pipeline. So now let me turn it over to Tom to talk about liquid alts.
Tom M. Wojcik: Thanks, Jay and thanks for your question Bill I'll be brief I think Jay actually touched on a number of the drivers when he talked about the new investment opportunities, we're seeing on the liquid alt side, but bill maybe to break.
Tom M. Wojcik: Your question into two parts, the first sort of what's happening real time, and the second what that means for our expectations around liquid alternatives for the future.
Tom M. Wojcik: What's happening now is excellent performance and performance, that's really delivering on the value proposition that clients are looking for when they invest in liquid alternative strategies.
Tom M. Wojcik: And we use that cash to invest in our growth strategy and to drive some of the new investment opportunities that Jay just went through. If you think about the strategies that are at play here, we have relative value strategies at firms like Garda and Capila that are performing extremely well on both a relative and absolute basis in delivering high-sharp ratios across market cycles.
Tom M. Wojcik: As I talked about in my prepared remarks, we delivered $160 million in performance fee earnings this year $600 million over the last three years and more than $1 2 billion over the last 10 years, primarily driven by liquid alternative strategies across a really diverse group and.
Tom M. Wojcik: We have trend-following strategies at firms like Winton, AQR, and Systematica that have extremely strong long-term track records and have performed very well over the volatile period we've seen over the last several years. We see really strong absolute return performance at firms like AQR. So all of that is contributing to a combination of strong performance for clients, strong performance for earnings, and importantly, also growing AUM to continue to contribute to the performance for earnings opportunity over time. In terms of the future, and I think the core of your question, what does this mean for client demand?, I think it's a combination of both. One, we've seen cycles over time where clients sort of move in and out of liquid alternative products, and there are a lot of things that are well set up in the environment today as we look to the next 10 years in terms of expectations for the volatility picture that play very well into the value proposition for liquid alternatives.
Tom M. Wojcik: And we use that cash to invest in our growth strategy and to drive some of the new investment opportunities that Jay just went through if you think about the strategies that are at play here.
Tom M. Wojcik: Relative value strategies at firms like Garda and <unk> that are performing extremely well on both a relative and absolute basis and delivering high sharpe ratios across market cycles.
Tom M. Wojcik: We have trend following strategies at firms like Wynton AQR and systematic Ah that have extremely strong long term track records and it performed very well over the volatile period, we've seen over the last several years.
Tom M. Wojcik: And we see really strong absolute return performance at firms like AQR. So all of that is contributing to a combination of strong performance for clients strong performance fee earnings and importantly, also growing AUM to continue.
Tom M. Wojcik: To contribute to the performance fee earnings opportunity over time in terms of the future.
Tom M. Wojcik: And I think the core of your question what does this mean for client demand I think it's a combination of both one we've seen cycles over time.
Tom M. Wojcik: Where clients sort of move in and out of liquid alternative products and there are a lot of things that are well set up in the environment today as we look to the next 10 years in terms of expectations for the volatility picture that play very well into the value proposition for liquid alternatives and we are seeing lots of really strong client conversations in terms of that opportunity.
Tom M. Wojcik: And we are seeing lots of really strong client conversations in terms of that opportunity and populating and, in some cases, repopulating portfolios with the types of strategies that can really deliver strong risk-adjusted returns and stability and diversification in more volatile times. So we're excited about the liquid-alts opportunity, both in terms of the affiliates we have today and, to Jay's point, those that may join us in the future. Thank
And populating and in some cases repopulating portfolios with the types of strategies that can really deliver strong risk adjusted returns and stability and diversification in more volatile time. So we're excited about the liquid alts opportunity. Both in terms of the affiliates, we have today and to Jay's point those that may join us in the future.
Alex Blostein: Our next question comes from the line of Alex Blostein with Goldman Sachs. Please proceed with your question. Hey, good morning, everybody.
Tom M. Wojcik: Yeah.
Tom M. Wojcik: Okay.
Tom M. Wojcik: Thank you. Our next question comes from the line of Alex Boston with Goldman Sachs. Please proceed with your question.
Jay C. Horgen: Thanks for taking the questions. Well, Jay, you guys have been pivoting the business towards alternative energy for a couple years now, and you know, I've highlighted a number of times that over 50% of EBITDA now comes from alternatives. Can you talk a little bit about the expectations for EBITDA growth over the next couple of years for both the private side and the liquid alt side, as we're thinking about continued improvement and flows for both of these categories? Thanks. Yeah, thanks, Alex. Good morning to you.
Tom M. Wojcik: Okay.
Alex Blostein: Hey, good morning, everybody. Thanks for taking the question as well.
Alex Blostein: So Jay you guys have been pivoting the business towards alts for for a couple of years now and highlighted a number of times that over 50% of EBITDA. Now comes comes from alternatives can you talk a little bit about the expectations for EBITDA growth over the next couple of years for both the private side and the liquid Alt side as we're thinking about continued improvement in flows for both of these.
Jay: <unk>. Thanks.
Jay: Yes, Thanks, Alex good morning to you.
Jay C. Horgen: Maybe Tom and I will each give you some perspective on this. From a top-down perspective, I would say that, just through fundraising alone on the private market side this year, you know, we didn't own Aura and Forbian the whole year, but if you look at all of their fundraising activity through the course of the year, it was $16 billion on a base of about $100 billion. So it gives you a sense of their fundraising capabilities. And look, I think when we look out in the next couple years, we think that, in some cases, they're ahead of it. I mean, we have a number of infrastructure-related managers, including Pantheon, which has a very sizable infrastructure business. But we also have Pepper Tree, which is an infrastructure company.
Speaker Change: Maybe Tom and I will each give you some perspective on this.
Tom M. Wojcik: From a top down perspective, I would say that we just through fundraising alone on the private market side this year.
Tom M. Wojcik: If you look at we didnt own or and for being the whole year, but but if you look at all of their fund raising activity through the course of the year. It was $16 billion on a base of about 100 billion.
Tom M. Wojcik: So it gives you a sense for.
Tom M. Wojcik: Fund raising capabilities.
Tom M. Wojcik: And look I think when we look out.
Tom M. Wojcik: In the next.
Tom M. Wojcik: A couple of years, we think that the.
Tom M. Wojcik: In some cases they are ahead of it I mean, we have a number of infrastructure related managers, including pantheon, which has this very sizable infrastructure business.
Tom M. Wojcik: But we also have pepper tree, which is an infrastructure.
Jay C. Horgen: We have EIG, which is an infrastructure company. And we have Aura Partners, which is an infrastructure company. So I think we're sort of ahead of these trends, we think. And so we actually expect, you know, that these trends will continue, maybe even accelerate. The other area where I would say we're still seeing, you know, extraordinary growth. I don't know how to otherwise characterize it as on the direct lending side with ComBest.
Tom M. Wojcik: We have <unk>, which is an infrastructure and we have.
Tom M. Wojcik: Alright partners, which is an infrastructure. So I think we were sort of ahead of these trends, we think and so we actually expect.
Tom M. Wojcik: These trends will continue maybe even accelerate.
Tom M. Wojcik: Other area, where I would say, we're still seeing you know.
Tom M. Wojcik: Extraordinarily.
Tom M. Wojcik: Larry growth I don't know how to otherwise characterize it is on the direct lending side with <unk> and as you heard pantheon has.
Jay C. Horgen: And as you heard, Pantheon has created a secondaries credit strategy where we think that's going to be meaningful as the secondaries business really develops around the primary direct lending area. So we're very excited about, you know, some of these trends. We think we're ahead of them.
Tom M. Wojcik: Created our secondaries credit strategy, where we think thats going to be meaningful as the secondaries business really develops around the primaries direct lending area. So we're very excited about.
Tom M. Wojcik: Some of these trends we think we're ahead of them. So in addition to what we saw a strong this year, we see it.
Jay C. Horgen: So in addition to what we saw as strong this year, we see it, you know, potentially increasing. On the liquid alt side, I would say that we have seen here at AMG very clearly the benefits of these businesses in choppy times. So in 2022, we had a terrific year in liquid alts.
Tom M. Wojcik: Potentially increasing on the liquid Alt side, I would say that.
Tom M. Wojcik: We have seen here at AMG.
Tom M. Wojcik: Very clearly the benefits of these businesses in choppy time, So 2022, we had a.
Tom M. Wojcik: A terrific year and liquid alts, and I think clients have noticed.
Jay C. Horgen: And I think clients have noticed, and as Tom said, they're repopulating with these strategies. I do think that, if you're looking out several years, it is our expectation that clients will turn to these liquid alternatives to supplement what they're doing in their portfolios. The first thing that's important to note is that they are liquid.
Tom M. Wojcik: And as Tom said, there Repopulating with these strategies I do think that.
Tom M. Wojcik: If youre looking out several years.
Tom M. Wojcik: It is our expectation that clients will turn to these liquid alternatives to supplement what theyre doing in their portfolio is the first thing thats important to note as they are liquid and then the second thing to note is that there generally speaking either absolute return or have lower or no.
Jay C. Horgen: And then the second thing to note is that they're generally speaking either absolute return or have lower or, you know, no correlation to markets. And we think that's very important, especially as we're headed for a different kind of period than what we've had in the past. So, yeah, I think that 50 percent we do see growing both as a percentage of AMG and also driving our EVDA growth. You know, I would say that we're somewhere in the middle of this journey, having started it three to five years ago. So I do think in the next three to five years, we could see alternatives being two-thirds of our business and driven by a balance of both of those. And maybe I'll let Tom add more. If you'd like, Tom,
Tom M. Wojcik: No correlation to markets and we think that's very important, especially as we are headed for a different kind of period than what we've had in the past. So yes, I think that 50%, we do see growing both as a percentage of AMG and also driving our our EBITDA growth.
Tom M. Wojcik: I would say that we're somewhere in the middle of this journey.
Tom M. Wojcik: We started at three to five years ago. So I do think in the next three to five years, we could see alternatives being two thirds of our business and driven by a balance of both of those and maybe I'll, let Tom add.
Tom M. Wojcik: Yeah, maybe just a couple of quick things to add to the points that Jay made. You know, if you think about sort of why, you know, why it matters, right, to continue moving our business more toward alternatives, one, I think it's very important, you know, as we approach that two-thirds level and, you know, maybe even get, you know, beyond that to a three-quarters level over a longer period of time, that's going to change pretty dramatically the nature of the duration of the locked-up It's going to continue to change the fee structure that we have. It's going to continue to change the performance and carry the opportunity that we have. And all of that should contribute to the overall AMG fundraising and flow profile.
Tom M. Wojcik: Like Tom Yes, maybe just a couple of quick things to add to the point that Jay made.
If you think about sort of why.
Tom M. Wojcik: Why it matters right to continue moving our business more toward alternatives. One I think it's very important as we approach that two thirds level and maybe even get.
Tom M. Wojcik: And that two or three quarters level over a longer period of time, that's going to change pretty dramatically the nature of the duration of the locked up capital that we have.
Tom M. Wojcik: It's going to continue to change the fee profile that we have it's going to continue to change the performance fee and carry opportunity that we have and all of that should contribute to the overall AMG fund raising and flow profile. So those things are all I think incredibly important in terms of what our business mix look like to Jay's 0.5 years ago, and what our business mix look like.
Tom M. Wojcik: So those things are all, I think, incredibly important in terms of what our business mix looked like at Jay's point five years ago and what our business mix looks like today, as well as what it may look like in the future. The only other point that I'd add is, you know, what's also really important are the things that we bring to the table that help to attract not just private markets or liquid alternatives firms but the highest quality, fastest-growing, best-positioned private markets and liquid alternatives firms. And that's where something like what we're doing on the U.S. wealth side is a real differentiator for us, helping some of these firms to get into the highest growth space in the industry, helping Pantheon to not only launch new products but also continue to drive growth, working with firms like Systematica and Combest on new product opportunities. One that helps us to really differentiate ourselves in the market as firms are looking for a strategic partner. And two, once those firms become part of the overall AMG ecosystem, they can help to drive outsized growth relative to what they may be able to do on their own.
Tom M. Wojcik: Looks like today as well as what it may look like in the future.
Tom M. Wojcik: The only other point that I'd add is what's also really important are the things that we bring to the table that helped to attract not just private markets or liquid alternatives firms, but the highest quality fastest growing best positioned private markets and liquid alternatives firms.
Tom M. Wojcik: That's where something like what we're doing on the U S. Wealth side is a real differentiator for us helping some of these firms to get into the highest growth space in the industry, helping pantheon to not only launch new products, but also continued to drive growth working with firms like systematic and combat on new product opportunities one that helps us to <unk>.
Tom M. Wojcik: Differentiate ourselves in the market as firms are looking for a strategic partner and two once those firms become part of the overall AMG ecosystem can help to drive outsized growth relative to what they may be able to do on their own. So I think all of those things are a really important part of our strategy.
Jay C. Horgen: So I think all of those things are a really important part of our strategy and ultimately driving our business mix and the overall health and growth profile of our business higher over time. I think one other thing I would say, and it actually relates to the capital allocation strategy, is that we remain disciplined in getting to our destination. It is the case that we see a lot of opportunities, and, you know, we could change our business mix really quickly, but in order to do so, we would have to lose our discipline. So the one thing I would mention here is that patience is a virtue, and we are exercising that patience, but make no mistake about it; we believe that we're making good new investments that are changing the composition of our business. And when we can't find new investments that meet our return thresholds, we're fortunate to be able to repurchase our shares at the level that we're repurchasing them, and therefore, we're just planning for, you know, more growth in the future when we have fewer shares. Thank you.
Tom M. Wojcik: And ultimately driving our business mix and the overall health and growth profile of our business higher overtime, Yes, I think one other thing I would say and it actually relates to the capital allocation strategy is like we remain disciplined in getting to our destination.
Tom M. Wojcik: It is the case that we see a lot of opportunities and we could change our business mix really quickly, but in order to do so we would have to lose our discipline. So are the one thing I would mention here is that patience is a virtue and we are exercising that patients, but we make no mistake about it. We are we believe that we are.
Tom M. Wojcik: Making good new investments that are changing the composition of our for our business and when we can't.
Tom M. Wojcik: Find new investments that meet our return thresholds, we're fortunate to be able to repurchase our shares at the level that we're repurchasing yet and therefore, we're just planning for more more growth in the future, where we have fewer shares.
Craig Siegenthaler: Our next question comes from the line of Craig Siegenthaler with Bank of America. Please proceed with your question. Good morning, Jay, and Tom. I hope you're both doing well.
Tom M. Wojcik: Thank you. Our next question comes from the line of Craig Siegenthaler with Bank of America. Please proceed with your question.
Tom M. Wojcik: Yes.
Craig Siegenthaler: Good morning, Jay Tom Hope, you're both doing well.
Tom M. Wojcik: Morning. Also, want to congratulate you on 30 years of employee status. Yeah, well, thank you. Thanks. Thanks for saying that, Craig.
Craig Siegenthaler: <unk>.
Craig Siegenthaler: I also want to congratulate you on the on the 30 years into your voice, though yes.
Jay Tom: Well. Thank you thanks, thanks for saying that Craig.
Craig Siegenthaler: My question is on net flows. So, you know, it's nice to see the improvement. And that's actually despite the fact that sometimes there's negative seasonality in 4Q, but it looks like we didn't see any of that in that number. But I think the math is pretty simple going forward. It's improving private market flows, and then there are less outflows in active equities. But my question is kind of based on what we've seen. I mean, we've seen flows improve and a lower exit rate heading into 24. Where do you think flows are heading versus the $30 billion-ish of net outflows we saw over the last two years? And then just a follow-up question. How do the EBITDA flows look underlying the net flow number just given the much stronger contribution from private equity where fees are higher? So, Craig, maybe I'll take that, and I'm sure Jay may want to add some thoughts as well.
Speaker Change: My question is on net flows so it's nice to see the improvement.
Speaker Change: And Thats actually despite the fact that sometimes there is negative seasonality in fourth Q, but it looks like we didn't see any of that in that number but I think the math is pretty simple going forward, it's improving private market flows and then it's less outflows in active equities, but my question is kind of based on what we've seen and we've seen flows in <unk>.
Speaker Change: <unk>.
Speaker Change: And then a lower exit rate heading into 'twenty four.
Where do you think flows are heading versus the 30 billion ish of net outflows. We saw over the last two years and then just a follow up is.
Speaker Change: How did the EBIT DOF flows luck underlying the net flow number just given the much stronger contribution from privates where fees are higher.
Speaker Change: So Craig maybe I'll take that and I'm sure Jamie may want to add some thoughts as well.
Tom M. Wojcik: But the biggest point of uncertainty for us is what's happening on the overall active equity side. We have a number of extremely strong affiliate brands there with very strong long-term performance track records. But obviously, that's where we've seen some of the variability. And I think some of that variability will likely continue. But your point is exactly right.
But the biggest point of uncertainty for us is what's happening on the overall active equity side.
Speaker Change: We have a number of extremely strong.
Speaker Change: Filiate brands, there with very strong long term performance track records, but obviously, that's where we've seen some of the variability and I think some of that variability will likely continue but your point is exactly right. When you think about our core strategy. We're really driving this evolution of our business mix more toward secular growth areas, and especially with a focus on alternatives.
Tom M. Wojcik: When you think about our core strategy, we're really driving this evolution of our business mix more towards secular growth areas, and especially with a focus on alternatives in private markets. And as we execute against that, we do expect to continue to enhance the long-term organic growth and earnings growth of the business. And you've seen the evidence of that over the course of the last several years.
Speaker Change: In private markets.
Speaker Change: And as we execute against that we do expect to continue to enhance the long term organic growth and earnings growth of the business and you've seen the evidence of that over the course of the last several years.
Tom M. Wojcik: So, if you think about what that means, you know, to your question about the $30 billion that we saw this year, as the business mix continues to move, right, a higher and higher percentage of our business is going to be in areas that are experiencing growth. And those areas that are seeing headwinds, one, should continue to be a smaller part of overall business, but two, we're also entering into an environment where we think the opportunity for active management continues to improve and where the highest quality franchises, like AMG's affiliates, have the best opportunity, ultimately, to drive growth longer term. So, we feel like we're very long on the opportunity on the alternatives and secular growth side, but we also think that we have a real opportunity on the long-only side for those businesses to recover and ultimately be big contributors.
Speaker Change: So if you think about what that means to your question on the $30 billion that we saw this year as the business mix continues to move higher and higher percentage of our business is going to be in areas that are experiencing growth and those areas that are seeing headwinds one should continue to be a smaller part of overall business, but too.
Speaker Change: We're also entering into an environment, where we think the opportunity for active management continues to improve and we're at the highest quality franchises like Amg's affiliates have the best opportunity ultimately to drive growth longer term. So we feel like we're very long the opportunity on the alternatives and secular growth side, but we also think that we have a real opportunity.
Speaker Change: <unk> on the long only side for those businesses to recover and ultimately be big contributors.
Tom M. Wojcik: In terms of the underlying EBITDA story, I think it's really important when you think about AMG to think about it in a couple of ways. One, on the alternative side, certainly those are higher-fee businesses. In general, we tend to own a minority stake in those businesses, although there's a mix. There are a handful where we own a majority as well.
Speaker Change: In terms of the underlying EBITDA story I think it's really important when you think about AMG to think about it in a couple of ways.
Speaker Change: One.
Speaker Change: On the alternative side, certainly those are higher fee businesses.
Speaker Change: In general we tend to own a minority stake in those businesses. Although there's a mix there are a handful where we own a majority as well, but importantly, it's not only the fee rate on the underlying management fee business, but also the opportunity on performance fees with respect to the alternatives firms on the liquid side and then the longer term carry opportunity on private markets.
Tom M. Wojcik: But importantly, it's not only the fee rate on the underlying management fee business but also the opportunity on performance fees with respect to the alternative firms on the liquid side, and then the longer-term carry opportunity in private markets. So the underlying EBITDA on the new fundraising that we're bringing in, you're seeing some of it on day one in terms of management fee EBITDA, but a lot of it is building over the course of the next four, five, six, seven years, as we'll experience carry there as well. So there are a number of different ways that this business mix shift is going to improve both our flow profile over time, but also our overall earnings growth profile over time, and the cash that we generate. And to Jay's point on the last question, there are a lot of ways for us to use that cash to ultimately drive earnings growth. Yeah, and I'll just say Tom did a nice job.
Speaker Change: So the underlying EBITDA on the new fund raising that we're bringing in youre seeing some of it on day one in terms of management fee EBITDA, but a lot of it is building over the course of the next 4567 years as ultimately will experience carry there as well. So there are a number of different ways that this business mix shift is going to improve both our flow profile.
Speaker Change: Over time, but also our overall earnings growth profile over time, and the cash that we generate and to Jay's point on the last question. There are a lot of ways for us to use that cash to ultimately drive earnings growth, yes, and.
Speaker Change: And I'll just add.
Jay C. Horgen: I'll just summarize by saying there are challenges and there are opportunities. I think, obviously, the challenge with respect to AUM and flows for us really relates to long-only active investing, but we don't think it's going away. Long-only active investing is not going away, and I think the way some of the attitudes are towards that part of businesses in our industry, not just ours, but those who have more legacy sizable businesses, we don't believe it's going away. We think it's been right-sized.
Speaker Change: Tom did a nice job I'll, just summarize by saying that there are challenges and their opportunities I think obviously the challenge with respect to AUM and flows for us really relate to the.
Speaker Change: Our long only active investing but we don't think it's going away as long only active investing is not going away and I think the way some of the.
Speaker Change: The attitudes are towards towards that part of businesses in our industry, not just ours, but those who have more.
Speaker Change: Our legacy sizable businesses, we don't believe it's going away. We think it's been right size, we think the quality has gone up.
Jay C. Horgen: We think the quality has gone up. And ultimately, we do think that, whether it's product structures or it's just the evolution of technology, we think the delivery of active management is going to improve and therefore be successful in client portfolios. So, that's the challenge, right?
And ultimately, we do think that whether it's product structures.
Speaker Change: Or it's just the evolution of the technology, we think that delivery of active management is going to improve and therefore be successful and client portfolio. So that's the challenge right Thats a challenge on the opportunity on AUM as all the alternatives businesses that we keep describing.
Jay C. Horgen: That's the challenge with AUM. The opportunity with AUM is all the alternative businesses that we keep describing. And where we're seeing – we had a good year this year. We had a good year the prior year. We had a good year the year before.
Speaker Change: And where we're seeing we had a good year. This year, we had a good year in the prior year, we had a good year the year before and we expect those to continue maybe even increase so it really is a mix shift question for us and as Tom said underlying that mix shift we think that the <unk>.
Daniel T. Fannon: And we expect those to continue, maybe even increase. So, it really is a mixed-shift question for us. And as Tom said, underlying that mixed shift, we think that the quality, stability, length, and average fee rates are just going up because of that mixture. Thank you. Our next question comes from the line of Dan Fannon with Jeffreys. Please proceed with your question. Thanks. Good morning.
Speaker Change: Quality stability length, and the average fee rates are just going up.
Speaker Change: Cause of that mix shift.
Speaker Change: Thank you. Our next question comes from the line of Dan Fannon with Jefferies. Please proceed with your question.
Daniel T. Fannon: Thanks, Good morning wanted to ask about.
Tom M. Wojcik: I wanted to ask about liquid alts and specifically, do you think 2024 is when we can stop saying X quant or X certain quant strategies in terms of the flows? And specifically, how do you think about those affiliates in terms of prospects, given some of the performance has been good, and performance feeds have been good? How do you think about growth in specifically those affiliates? So thanks for the question, Dan.
Daniel T. Fannon: Liquid alts and specifically do you think 2024 is where we can where you will stop saying X or X certain quant strategies.
Daniel T. Fannon: In terms of our flows and specifically how do you think about those affiliates and the prospects given some of the performance has been good performance fees have been good how do you think about growth and specifically those affiliates.
Speaker Change: So thanks for the question Dan If you go back in history, just to maybe remind others why we started reporting ex quant.
Jay C. Horgen: If you go back in history a bit, just to maybe remind others why we started reporting ex-quant, you know, we did have a situation where we had large outflows on the quant side at an affiliate or a couple of affiliates who ultimately weren't delivering a substantial amount of earnings. So there was a pretty big disconnect between the quantum of AUM that was leaving the system, which was not really having a material impact on our overall earnings and our overall EBITDA profile. So we thought it was a much more transparent way to communicate with shareholders to help them to understand the overall earnings profile of the business. We do think that we're at a point now where that has normalized.
Speaker Change: We did have a situation, where we had large outflows on the quant side.
Speaker Change: AD and affiliate or a couple of affiliates, who ultimately werent delivering a substantial amount of earnings. So there was a pretty big disconnect between the quantum of AUM that was leaving the system.
Speaker Change: Which was not really having a material impact on our overall earnings in our overall EBITDA profile. So we thought it was a much more transparent way to communicate with shareholders to help them to understand the overall earnings profile of the business.
Speaker Change: We do think that we're at a point now where that is normalized.
Jay C. Horgen: So we're going to continue to evaluate the way that we've been reporting ex quant, but I do think a combination of the normalization of where we are on AUM and earnings contribution, as well as the really strong performance we're seeing in a number of those businesses, probably does put us in a position where it's time to rethink that. Yeah, I would say that sometime this past year, in 2023, we probably crossed over that point where we saw normalization.
Speaker Change: So we're going to continue to evaluate the way that we've been reporting ex quant, but I do think a combination of the normalization of where we are on AUM and earnings contribution.
Speaker Change: As well as the really strong performance, we're seeing in a number of those businesses, probably does put us in a position where it's time to rethink that.
Speaker Change: I would say that some time this past year in 2020, we probably crossed over that point, where we saw the normalization.
Tom M. Wojcik: And so looking forward, it probably is time for us to change that. And maybe making one specific point here, there were a number of firms that were in that bucket, the most notable being AQR. And AQR, I guess, was increasingly optimistic about their forward prospects and had very strong results in 2023 and 2022, particularly in the liquid alternative area, excellent performance, performance fees, and even seeing some organic growth. We think that businesses will regain momentum. And again, because it's normalized, the size is normalized relative to the contribution.
Speaker Change: And so looking forward it probably is time for us to change that and maybe making one specific point here. There were a number of firms that were in that bucket. The most notable being AQR and AQR.
Speaker Change: We are increasingly optimistic about their forward prospects and they had very strong results in 'twenty three and 'twenty two.
Speaker Change: Particularly in the liquid alternatives area.
Speaker Change: Excellent performance performance fees, and even seeing some organic growth, we think that business has regained momentum and again because it's normalized the size is normalize relative to the contribution that that is the real reason that we think that we can pivot back to just showing it straight flows.
Jay C. Horgen: That is the real reason that we think that we can pivot back to just showing it in straight flows. Thank you. Our next question comes from the line of Brian Bedell with Deutsche Bank. Please proceed with your question. Great. Good morning, folks.
Speaker Change: Thank you. Our next question comes from the line of Brian Bedell with Deutsche Bank. Please proceed with your question.
Brian Bedell: Thanks for taking my question. Perhaps just sort of summing up a lot of the commentary that you've just discussed in the Q&A section and also in your prepared remarks. It sounds like you're definitely positioning the firm for a stronger organic growth profile in the future, certainly from a, let's say, predictability perspective, given the pipeline of fundraising that you'll potentially have and maybe if you could comment on the diversity of that fundraising pipeline. But also, I'd like to touch on just the distribution angle in terms of your partnership and your contribution to distribution across your firms. Have you noticed that that is improving, and that it can also help that profile if you can just basically talk about that?
Brian Bedell: Great. Good morning, Thanks for taking my question.
Maybe just through.
Brian Bedell: Summing up a lot of the commentary that you just discussed in the Q&A section and you also in your prepared remarks, it sounds like Youre definitely positioning the firm for a stronger organic growth profile in the future.
Brian Bedell: Certainly from a.
Brian Bedell: Let's say predictability perspective.
Brian Bedell: Given the pipeline of fund raising that.
Brian Bedell: That you'll potentially have and maybe if you can comment on the diversity of that of that fund raising pipeline, but also I'd like to touch on just the.
Brian Bedell: The distribution angle in terms of your partnership and your and your contribution.
Brian Bedell: Two distribution across your firms have you noticed that theirs is improving and that can also help that that profile.
If you can just basically talk to talk about that.
Jay C. Horgen: Yeah, so, I think you're right in the summary, but I'll summarize it too by saying... We ultimately think long-term flows are an output of our strategy, and our strategy is to invest in areas of secular growth, and to the extent that we're correct, then we will see flows turn. Whether that happened this quarter or it happened some other quarter, it seems to us, as long as we have conviction and execution on that strategy, we will see positive flows in the future as an aggregate. What we've faced recently is just the cross-currents of the traditional business versus the alternative business, which is fast-growing, and we're at kind of 50-50 now. So I think that is the summary statement there.
Speaker Change: Yes so.
Speaker Change: Yes, so I think youre right in the summary, but I'll summarize it to by saying.
Speaker Change: We ultimately think long term flows are an output of our strategy and our strategy is to invest in areas of secular growth and to the extent that were correct that we will see flows turn whether that happened this quarter. It happened to some other quarter.
Speaker Change: It seems to us as long as we.
Speaker Change: We have conviction and execution on that strategy, we will see positive flows in the future.
Speaker Change: As in aggregate what we've faced recently is just the cross current of the traditional business versus the alternatives business, which is fast growing and where it kind of 50 50 now. So I think that is the summary statement there maybe I'll turn it to Tom to talk about what we're seeing on the distribution side.
Tom M. Wojcik: Maybe I'll turn it to Tom to talk about what we're seeing on the distribution side. Yeah, so if you kind of take a look at our distribution, Brian, at a high level, we do really two primary things. On the global institutional side, we look to magnify the efforts that our existing affiliates already have today, helping them get into new geographies and meet with new clients that they haven't had access to historically. That's been a long-term part of our business. We've raised more than $100 billion for our affiliates over the course of time, and I think it continues to be a really good opportunity for us. The one where we're seeing, you know, a real sort of change in the pace of growth is on the U.S. wealth side. And I mentioned some of this earlier.
Tom M. Wojcik: Yes, so if you kind of take a look at our distribution Brian at a high level, we do really two primary things on the global institutional side, we look to magnify the efforts that our existing affiliates already have today, helping them get into new geographies and meet with new clients that they haven't had access to historically.
Tom M. Wojcik: That's been a long term part of our business.
Tom M. Wojcik: We've raised more than $100 billion for our affiliates over the course of time and I think continues to be a really good opportunity for us.
Tom M. Wojcik: One where we're seeing a real sort of change in the pace of growth is on the U S wealth side and I mentioned some of this earlier, we have about a $40 billion U S. Wealth platform comprised of a combination of mutual funds separately managed accounts.
Tom M. Wojcik: We have about a $40 billion U.S. wealth platform comprised of a combination of mutual funds, separately managed accounts, and increasingly limited liquidity vehicles on the private market side. And we've really been leaning in over the course of the past 18 months or so toward new opportunities on that limited liquidity front. So we see that as an important opportunity for two reasons. One, it's the single largest growth market in the world, you know, the alternative market in the U.S. wealth space.
Tom M. Wojcik: And increasingly limited liquidity vehicles on the private market side.
Tom M. Wojcik: And we've really been leaning in over the course of the past 18 months or so towards new opportunities on that limited liquidity front. So we see that as an important opportunity for two reasons. One it's the single largest growth market in the world.
Tom M. Wojcik: Is the alternatives market in the U S wealth space and.
Tom M. Wojcik: And two, as I mentioned earlier, it not only helps us to drive growth at existing affiliates, similar to the success that we've seen with the AMG Pantheon Fund, which is now approaching $3 billion, but it also helps us to attract the next new affiliate who's looking to break into that area but really doesn't have the scale or the ability to do it on their own. So we think AMG distribution and what we do broadly in capital formation, including thinking about product strategy and really working with our affiliates on how to launch the right new product in the right wrapper into the right geography, is going to be an increasingly differentiating part of our value proposition. It's something we've had a lot of success with over the long term, but we also do see it as an accelerant as we shift the strategy now more and more toward alternatives Thank you. Our next question comes from the line of Patrick Davitt with Autonomous Research. Please proceed with your question. Hey, good morning.
Tom M. Wojcik: And two as I mentioned earlier it not only helps us to drive growth at existing affiliates similar to the success that we've seen with the AMG Pantheon fund, which is now approaching $3 billion, but it also helps us to attract the next new affiliate who is looking to break into that area and really doesn't have the scale or the ability to.
Tom M. Wojcik: Do it on their own so we think AMG distribution and what we do broadly in capital formation, including thinking about product strategy and really working with our affiliates on how to launch the right new product in the right wrapper into the right geography.
Tom M. Wojcik: Is going to be an increasingly differentiating part of our value proposition. It's something we've had a lot of success on over the long term, but we also do see it as an accelerant as we shift our strategy now more and more toward alternatives.
Tom M. Wojcik: Yes.
Tom M. Wojcik: Thank you. Our next question comes from the line of Patrick Davitt with Autonomous Research. Please proceed with your question.
Patrick Davitt: Hey, good morning, Thank you.
Patrick Davitt: Thank you. I have a follow-up on that in Illiquid Alt. I know you don't like to talk about specific strategies, but maybe looking over the fundraising calendars of all your Illiquid Alt managers, layering on the plan, limited liquidity wealth products to the point you just made. Could you maybe at a higher level try to frame how the volume of Illiquid Flows is looking versus what we saw maybe last year or the year before? Thank you. Yeah, Patrick, thanks for your question. You know, we certainly aren't going to project flows for a specific part of the business.
Patrick Davitt: I have a follow up on that in a liquid alts I know you don't like to talk about specific strategies, but maybe looking over the fundraising calendars of all your liquid Alt managers.
Layering on the planned limited liquidity wealth products to the point you just made could you maybe at a higher level try to frame how the volume of illiquid flows is looking versus what we've seen maybe last year or the year before thank you.
Speaker Change: Yes, Patrick Thanks for your question.
Speaker Change: We certainly arent going to project flows for a specific part of the business, but I think if you think about the overall shape.
Tom M. Wojcik: But I think if you think about the overall shape, you know, as Jay mentioned, on a pro forma basis, last year for the new investments that we made in both Aura Partners and Forbian, we were at about $16-17 billion of fundraising for the full year. And we're continuing to add to the diversification and the overall group of affiliates. I mentioned in some of my prepared remarks that we're now partnered with eight private markets affiliates across about $115 billion of AUM, with the big buckets being infrastructure, private market solutions, private credit, and then a variety of really specialized and exciting areas. So one of the things that I think will set us apart in a very difficult fundraising environment in 2023 was the fact that we have a series of managers who have highly in demand products that are not And that's enabled us to find places in client portfolios where we can really add value and where there's a scarcity value to a lot of what we do. I think that the outlook for us going forward will be a function of a couple of things, right?
Speaker Change: As Jay mentioned on a pro forma basis last year for the new investments that we made in both are our partners in <unk>, we were at about $16 $17 billion of fund raising for the full year.
Speaker Change: And we're continuing to add to the diversification in the overall group of affiliates I mentioned in some of my prepared remarks, we're now partnering with eight private markets affiliates across about $115 billion of AUM with the big buckets being infrastructure private market solutions private credit and then a variety of really specialized in <unk>.
Speaker Change: Lighting areas. So one of the things that I think set us apart in a very difficult fundraising environment. In 2023 was the fact that we are we have a series of managers who have highly.
Speaker Change: In demand products that are not necessarily the big mainstream large cap LBO type products.
Speaker Change: And that's enabled us to find places in client portfolios, where we can really add value and where there is a scarcity value to a lot of what we do.
Speaker Change: I think that the outlook for us going forward will be a function of a couple of things one the existing affiliates, we have today and what they're doing in their flagship products in new Adjacencies that they are working to launch two to your point the efforts that we're putting forth in the U S wealth space, which is really opening up an entire new client channel a new leg of the.
Tom M. Wojcik: One, the existing affiliates we have today and what they're doing with their flagship products and new adjacencies that they're working to launch. Two, to your point, the efforts that we're putting forth in the U.S. wealth space, which is really opening up an entire new client channel, a new leg of the stool, if you will, for a number of these affiliates. And then all of that great news helped us to partner with the next new affiliate. So we think the long-term trajectory in terms of flows on the private market side continues to be very positive for us. And we're looking to continue to add to that in a number of different ways. Yeah, I'll just round out the alternatives by just talking about LiquidAlts as well.
Speaker Change: Stool, if you will for a number of these affiliates.
Speaker Change: And then all of that Great news, helping us to partner with the next new affiliates. So we think the long term trajectory in terms of flows on the private market side continues to be very positive for us and we're looking to continue to add to that in a number of different ways. Yes, I'll just round out alternatives by just talking about liquid alts as.
Tom M. Wojcik: Look, we have really good performance in LiquidAlts. Just the obvious statement is that the performance has led to higher asset levels, has led to above high watermarks, and has led to more ability, I guess, to generate performance fees. But it has also attracted more inquiry, and more interest by large pools of capital in adding these to the portfolio. I have already mentioned AQR and its sort of positive momentum, and in particular, its liquid alternative strategies.
Speaker Change: Well look we have really good performance in liquid alts.
Speaker Change: The obvious statement as the performance has led to higher asset levels has led to.
Speaker Change: Above high Watermarks has led to.
Speaker Change: More ability I guess to a greater ability to generate performance fees, but it also has.
Speaker Change: Attracted more inquiry more.
Speaker Change: Interest by <unk>.
Speaker Change: A large pools of capital and adding those to the portfolio.
Speaker Change: Our already mentioned AQR, and it's sort of positive.
Speaker Change: Our momentum and in particular in its liquid alternative strategies, we have a number of <unk>.
Jay C. Horgen: We have a number of sizable affiliates in LiquidAlts that can really generate organic growth over time. So we see growth both on the private market side as well as on the LiquidAlt side, in part because the performance is just so good. Thank you. Ladies and gentlemen, that concludes our question and answer session. I'll turn the floor back to Mr. Horgen for any final comments. Thank you all again for joining us this morning. We look forward to speaking with you next quarter. Thanks. Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.
Speaker Change: Sizable one.
Speaker Change: Affiliates in liquid alts that can really generate organic growth over time, so we see growth both on the private market side as well as the liquid alt side in part because of the performance is just so good.
Jay C. Horgen: Thank you, ladies and gentlemen that concludes our question and answer session I will turn the floor back to Mr. Hogan for any final comments.
Jay C. Horgen: Thank you all again for joining us. This morning, we look forward to speaking with you next quarter.
Okay.
Speaker Change: Thank you. This concludes today's conference call you may disconnect. Your lines at this time. Thank you for your participation.