Q1 2024 Westwood Holdings Group Inc Earnings Call
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Okay.
Speaker Change: Good day, and thank you for steady Bosch walking through the first quarter 2020 for Westwood Holdings Group earnings Conference call. At this time, all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During the session you need to press star one on your telephone you all didn't hear an automated message device in your hand is raised to withdraw your question. Please press star one again.
Thank you and welcome to our first quarter, 2024 earnings conference call. The following discussion will include forward-looking statements that are subject to known and unknown risks, uncertainties, and other factors, which may cause actual results to be materially different from those contemplated by the forward-looking statements.
Additional information concerning the factors that could cause such a difference is included in our press release issued earlier today, as well as in our Form 10-Q for the quarter-ended March 31st, 2024.
Speaker Change: Be advised that this conference is being recorded I would now hand, the call over to your speaker today Jo Mira SPP Director Fiduciary services. Please go ahead.
Jo Mira: Thank you and welcome to our first quarter 'twenty 'twenty four earnings conference call. The following discussion will include forward looking statements that are subject to known and unknown risks uncertainties and other factors, which may cause actual results to be materially different from those contemplated by the forward looking statements.
that will be filed with the Securities and Exchange Commission. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. You are cautioned not to place undue reliance on forward-looking statements.
Jo Mira: Additional information concerning the factors that could cause such a difference is included in our press release issued earlier today as well as in our Form 10-Q for the quarter ended March 31, 'twenty 'twenty four that will be filed with the securities and Exchange Commission, we undertake no obligation to publicly update or.
In addition, in accordance with SEC rules concerning non-gap- GAAP financial measures, the reconciliation of our economic earnings and economic earnings per share to the most comparable GAAP measures is included at the end of our press release issued earlier today.
On the call today we have Brian Casey, our Chief Executive Officer, and Terry Forbes, our Chief Financial Officer. I will now turn the call over to Brian Casey.
Jo Mira: Or revise any forward looking statements, whether as a result of new information future events or otherwise you are cautioned not to place undue reliance on forward looking statements in.
Good afternoon and thanks for listening to our first quarter earnings call. First I'll start with some highlights for the quarter. AUN and AUA reached just over 17.1 billion, the highest we've seen in six years.
Jo Mira: In addition in accordance with SEC rules concerning non-GAAP financial measures a reconciliation of our economic earnings and economic earnings per share to the most comparable GAAP measures is included at the end of our press release issued earlier today.
We achieved positive new flows in our institutional channel. We launched our managed investment solutions, and feedback on the team and their capabilities has been very positive.
Jo Mira: On the call today, we have Brian Casey, our Chief Executive Officer, and Terry Forbes, Our Chief Financial Officer, I will now turn the call over to Brian Casey.
Lastly, our first active ETF was launched on April the night. It's called the Westwood Salient Enhanced Midstream Income Fund, and it trades on the New York Stock Exchange under the ticker symbol MDST.
Brian O'Connor Casey: Good afternoon, and thanks for listening to our first quarter earnings call first I'll start with some highlights for the quarter.
Brian O'Connor Casey: AUM reached just over $17 1 billion the highest we've seen in six years, we achieved positive net flows in our institutional channel, we launched our managed investment solutions and feedback on the team and their capabilities has been very positive.
It seeks to deliver current income and capital appreciation by investing in midstream energy companies by combining a high conviction, actively managed, midstream energy-focused equity portfolio with an options overlay to produce enhanced income distributions for investors.
Brian O'Connor Casey: Lastly, our first active ETF was launched on April denied it's called the Westwood salient enhanced midstream income funds and it trades on the New York stock exchange under the ticker symbol <unk>.
Based on current dividend yields and option premium income, the fund targets a double-digit yield for investors, and we've priced it competitively with an all-in expense ratio of 80 basis points.
Brian O'Connor Casey: P S T.
Trading in the ETS is off to a good start with volumes exceeding expectations and tight trading spreads.
Brian O'Connor Casey: It seeks to deliver current income and capital appreciation by investing in midstream energy companies by combining our high conviction actively managed midstream energy focused equity portfolio with an options overlay to produce enhanced income distributions for investors based on current dividend yields and option pre.
It's available via Fidelity, Schwab, Vanguard, and on other platforms.
Our intermediary sales team held lots of meetings over the past month to introduce our ETF to the RIA community, and the team has seen an encouraging level of interest.
Brian O'Connor Casey: Income the fund targets of double digit yield for investors and with price to competitively with an all in expense ratio of 80 basis points.
Several large RIAs are in the process of conducting due diligence to enable the ETF to be added to their approved list of investment.
Due to our efforts, coupled with the attractive features of the fund, we expect trading volume and assets to grow in the weeks and months ahead.
Brian O'Connor Casey: Trading in Etfs is off to a good start with volumes exceeding expectations and tight trading spreads it's available via fidelity Schwab Vanguard and on other platforms.
As part of this process, we've built a very solid infrastructure to support future ETF offerings, and the next one, enhanced energy income, will begin trading any day.
Brian O'Connor Casey: Our intermediary sales team helped lots of meetings over the past month to introduce our ETF to the RIAA community and the team has seen an encouraging level of interest several large <unk> are in the process of conducting due diligence to enable the ETF to be added to their approved list of investments.
Looking back over the quarter, equities carried their year-end momentum into the new year, but debt markets experience mixed performance.
Investors remain keenly focused on the trajectory of interest rates following one of the most aggressive monetary tightening cycles in history.
Brian O'Connor Casey: Due to our efforts coupled with the attractive features of the funds, we expect trading volume and assets to grow in the weeks and months ahead.
Fixed income yields are at attractive levels,
Brian O'Connor Casey: As part of this process, we've built a very solid infrastructure to support future ETF offerings and the next one enhanced energy income will begin trading any day.
and an end or easing in the Fed's rate hikes would cause bonds to rally. On the equity side, large and mega-cap stocks, especially those involved with artificial intelligence or AI, led performance across the board.
Brian O'Connor Casey: Looking back over the quarter equities carried their yearend momentum into the new year, but that market has experienced mixed performance investors remain keenly focused on the trajectory of interest rates. Following one of the most aggressive monetary tightening cycles in history.
Company participation began to widen late last year, and this trend has continued into 2024, setting the stage for an improved investment environment for our strategies.
Equity markets will also benefit from an end to the Fed's rate hikes, and with equity evaluations elevated relative to history, multiple expansion is less likely, and high beta names may lose their luster as earnings growth again propels returns. Businesses with underappreciated earning potential, our sweet spot, should be rewarded.
Brian O'Connor Casey: Fixed income yields are at attractive levels.
Brian O'Connor Casey: And or easing in the fed's rate hikes would cause bonds to rally on the equity side large and Mega cap stocks, especially those involved with artificial intelligence or AI led performance across the board company.
Brian O'Connor Casey: Company participation began to widen late last year and this trend has continued into 2020 for setting the stage for an improved investment environment for our strategies.
Within our equity strategies, our U.S. value strategies with relevant track records are all outperforming their benchmarks over the three, five, and ten-year periods, and also outperforming their benchmarks since inception.
Brian O'Connor Casey: Equity markets will also benefit from an end to the fed's rate hikes and with the equity evaluations elevated relative to history multiple expansion is less likely and high beta names may lose their luster as earnings growth again propels returns.
Among our peers, SmidCap and SmallCap continue to post strong Morning Star rankings, top third for SmallCap, and top 10% for SmidCap over trailing three-year periods.
Brian O'Connor Casey: Businesses with underappreciated, earning potential our sweet spot should be rewarded.
I'm gonnae.
Relative performance for our multi-asset strategies strengthened as equity market participation continued to broaden out.
Brian O'Connor Casey: Within our equity strategies, our U S value strategies with relevant track records are all outperforming their benchmarks over the three five and 10 year periods and also outperforming their benchmarks since inception.
Half of our multi-asset strategies are better than top 50% Morning Star rankings for the trailing three-year period, and three-quarters of them hold top quartile rankings over the trailing five-year period.
Brian O'Connor Casey: Among our peers smid cap and small cap continue to post strong Morningstar rankings top third for small cap and top 10% for smid cap over trailing three year periods.
Our largest multi-asset strategy, income opportunity, was in the top third of its moderately conservative allocation category this quarter and beat similar asset allocator peers with an income bias.
Brian O'Connor Casey: Relative performance for our multi asset strategies strengthened as equity market participation continued to broaden out half of our multi asset strategies are better than top 50% Morningstar rankings for the trailing three year period, and three quarters of them hold top quartile rankings over the trailing five year period.
Over trailing five, seven, ten-year periods and since inception, income opportunity is a top quartile morning star performer and holds a top 5% ranking since inception.
Absolute returns for energy infrastructure were weak early on, but staged an impressive rally in the second half of the quarter to finish with double-digit returns.
Brian O'Connor Casey: Our largest multi asset strategy income opportunity was in the top third of its moderately conservative allocation category this quarter and similar asset allocator peers with an income bias.
Over the past three years, the category has posted annualized returns exceeding 20% as measured by the Illyrian Midstream Energy Index, and our MLP-SMA strategy has achieved returns far ahead of the Illyrian Index.
Brian O'Connor Casey: Over trailing five 710 year periods and since inception income opportunity as a top quartile Morningstar performer and holds the top 5% ranking since inception.
We have conviction in the energy sector given its strong yields, positive earnings growth, and healthy balance sheets.
Brian O'Connor Casey: Absolute returns for energy infrastructure were weak early on but staged an impressive rally in the second half of the quarter to finished with double digit returns.
Our fundamental approach to portfolio construction in this sector can add alpha to client portfolios.
Global real estate and real estate income are both strategies that offer an attractive option for investors.
Brian O'Connor Casey: Over the past three years the category has posted annualized returns exceeding 20% as measured by the <unk> Midstream energy index and to our MLP SMA strategy has achieved returns far ahead of the whole area of index, we have conviction in the energy sector, given its strong yields positive earnings growth and healthy balance sheet.
No doubt, absolute returns in the category have been disappointing recently, but we firmly believe that REIT common stock and REIT preferred securities offer investors an attractive value proposition.
REITS are paying robust dividends on their common and preferred shares, which means that our real estate investments are delivering consistent, durable income.
Brian O'Connor Casey: <unk>.
Brian O'Connor Casey: Our fundamental approach to portfolio construction in this sector can add alpha to client portfolios.
Over trailing three, five, seven, ten-year periods and since inception in 2001, our real estate income strategy has outperformed its benchmark, the ICE B of A fixed rate preferred securities index.
Global real estate and real estate income are both strategies that offer an attractive option for investors no doubt absolute returns in the category have been disappointing recently, but we firmly believe that REIT common stock and REIT preferred securities offer investors an attractive value proposition.
Global Real Estate is similarly outperforming its benchmark, the FTSE, EPRA, Neyte developed index since inception in 2018 and over trailing three and five-year periods. And among its e-vestment institutional peers, global real estate ranks at the very top of the group over the same time periods.
Brian O'Connor Casey: Reits are paying robust dividends on their common and preferred shares which means that our real estate investments are delivering consistent durable income.
Brian O'Connor Casey: Over trailing 357, 10 year periods and since inception in 2001, our real estate income strategy has outperformed its benchmark the ICD bofa fixed rate preferred Securities index.
Turning to wealth management, client events and targeted engagement efforts contributed to keep client retention at 97% while our new business efforts continue to gain traction. Gross inflows declined modestly while net outflows rose due to normal seasonality, as clients typically make withdrawals at this time of the year to fund tax payments, required distributions, and pension payments.
Brian O'Connor Casey: Global real estate is similarly, outperforming its benchmark the FTC.
Brian O'Connor Casey: NAREIT developed index.
Brian O'Connor Casey: Since inception in 2018 and over trailing three and five year periods and among its investment institutional peers global real estate ranks at the very top of the group over the same time periods.
On the new business front, our focus on providing broader services to our clients and not just money management solutions.
is producing significant wins for the team. Our pipeline also looks promising with many multi-million dollar opportunities in the Wings.
Turning to wealth management client events and targeted engagement efforts contributed to keep client retention at 97%, while our new business efforts continue to gain traction.
I wanted to take a couple of minutes to share a success story in our wealth group that highlights how our team works to establish trust, help clients solve problems, and create estate plans.
Brian O'Connor Casey: Gross inflows declined modestly while net outflows rose due to normal seasonality as clients typically make withdrawals at this time of the year to fund tax payments required distributions and pension payments on the new business front, our focus on providing broader services to our clients and not just money management solutions is producing significant wins for the team.
We onboarded a new client recently, a younger entrepreneur in his 50s, who recently experienced a liquidity event from the sale of his business. Naturally, he'd spent most of his time building this business with little time left to focus on estate planning.
Over the years, he had placed money with several investment managers without coordinated planning, and he lacked a collaborative approach to manage overall portfolio risk and optimized tax management.
Brian O'Connor Casey: Our pipeline also looks promising with many multimillion dollar opportunities in the wings.
Speaker Change: I wanted to take a couple of minutes to share our success story in our wealth group.
Speaker Change: It highlights our team works to establish trust help clients solve problems and create the state plans.
Our wealth team offered him a holistic approach, going beyond just money management, and assisted with estate tax savings, wealth transfer strategies for his children, and asset protection strategies.
Speaker Change: We on boarded a new client recently, a younger entrepreneur in his fifties.
Speaker Change: Recently experienced a liquidity event from the sale of his business naturally. It spent most of his time building this business with little time left to focus on a state planning.
Our relationship with Vista Bank enabled us to match rates for his line of credit. Knowing he has a competitive line of credit available for future use gives him comfort to add additional assets to his Westwood account.
Speaker Change: Over the years he at place money with several investment managers without coordinated planning any lacked a collaborative approach to manage overall portfolio risk and optimize tax management.
As his level of trust with us has grown, he has consolidated his family assets at Westwood, and we look forward to receiving additional asset flows this year as he liquidates additional businesses.
Speaker Change: Our wealth team offered them a holistic approach going beyond just money management and assistant with a state tax savings wealth transfer strategies for his children and asset protection strategies.
Our wealth team will continue to target improvements that can enhance the overall client experience.
Our relationship with Vista Bank enabled us to match rates, where his line of credit.
Moving to our institutional and intermediary distribution activities,
Our institutional team delivered our first net positive quarter since the first quarter of 2022. Infoes were driven by both new smid cap client accounts funding and client rebalances into our smid cap and small cap strategies.
Speaker Change: Knowing he has a competitive line of credit available for future use give some comfort to add additional assets to as Westwood account.
Speaker Change: As his level of trust with US has grown he has consolidated its family assets at Westwood and we look forward to receiving additional asset flows this year as we liquidate additional businesses.
Conversely, on the outflow side, client rebalances, led by large-cap in our sub-advisory business, were the primary contributor to institutional outflows for the quarter. We had just one client loss during the quarter following a plan restructuring in which all of the clients' equity managers were terminated.
Speaker Change: Our wealth team will continue to target improvements that can enhance the overall client experience.
Speaker Change: Moving to our institutional and intermediary distribution activities, our institutional team delivered our first net positive quarter since the first quarter of 2022.
Our institutional pipeline remains healthy with over 1.3 billion in business opportunities. In addition to our newly funded SmidCap accounts, several other accounts that we won in late 2023 are expected to fund in the coming weeks and months.
Speaker Change: Inflows were driven by both new smid cap client accounts funding and client rebalancing into our smid cap and small cap strategies.
Speaker Change: Conversely on the outflow side client rebalancing led by large cap in our sub advisory business were the primary contributor to institutional outflows for the quarter. We had just one client loss during the quarter. Following a planned restructuring in which all of the clients equity managers were terminated.
All our key consultant approvals remain in place for Smallcap and SmidCap.
Fortunately, search activity and placements continue to stem from these important approvals.
Moving through the rest of the year, we aim to maintain our current good levels of stability with existing clients. In addition, we've also held constructive meetings with numerous prospects and consultants to introduce our managed investment solutions team.
Speaker Change: Our institutional pipeline remains healthy with over one 3 billion and business opportunities.
Speaker Change: In addition to our newly funded smid cap accounts. Several other accounts that we won in late 2023 are expected to fund in the coming weeks and months.
Our internal teams have been hard at work building the analytical and operational systems needed to support the group, and we fully expect our new MIS capabilities to open significant new pools of capital for us.
Speaker Change: All of our key consultant approvals remain in place for small cap and mid cap.
Speaker Change: Fortunately search activity in placements continue to stem from these important approvals.
In the intermediary channel, the combination of economic uncertainty, paired with a trend of risk-averse investors seeking higher cash yields, continues to drive net outflows. However, outflows are stabilizing for most of our strategies. Our domestic equity strategies had positive net flows during the quarter, and despite strong evidence of outflows in Morningstar's small-cap category, our small-cap mutual fund had positive net flows.
Speaker Change: Moving through the rest of the year, we aim to maintain our current good levels of stability with existing clients. In addition, we've also held constructive meetings with numerous prospects and consultants to introduce our managed investment solutions team.
Speaker Change: Our internal teams have been hard at work building, the analytical and operational systems needed to support the group and we fully expect our new mis capabilities to open significant new pools of capital for us.
Our intermediary team is emphasizing several initiatives designed to foster new sales and focused on client retention.
Speaker Change: In the intermediary channel the combination of economic uncertainty paired with a trend of risk averse investors seeking higher cash yields continues to drive net outflows.
We anticipate continued opportunities in our intermediary channel, especially for multi-asset, real estate, and energy strategies, all of which offer compelling options for yield-conscious investors.
Speaker Change: However, outflows are stabilizing for most of our strategies, our domestic equity strategies had positive net flows during the quarter and despite strong evidence of outflows in Morningstar small cap category, our smallcap mutual fund had positive net flows.
In addition, small market cap valuations are attractive relative to other equities, and many broker dealers are highlighting this as a viable investment option. As this trend continues, it is expected to benefit our smaller market cap strategies.
Speaker Change: Our intermediary team is emphasizing several initiatives designed to foster new sales and focused on client retention we.
To recap, we firmly believe that our expanding suite of strategies is poised for a successful year, and our sales teams are hard at work promoting our products.
Speaker Change: We anticipate continued opportunities in our intermediary channel, especially for multi asset real estate and energy strategies, all of which offer compelling options for yield conscious investors. In addition, small market cap valuations are attractive relative to other equities and many broker dealers are highlighting this as a viable investment.
On last quarter's call, I told you about 400 million in wins that had not yet funded. For those updating models, just over 200 million funded in the first quarter, and nearly 300 million of additional capital is expected to fund in the coming weeks and months.
Speaker Change: Option.
Speaker Change: As this trend continues it is expected to benefit our smaller market cap strategies.
Exact dates are out of our control, but many are likely to fund in June .
Notably, several of these no accounts will go into our collective investment trust vehicle, which is an attractive option for defined contribution plans.
Speaker Change: To recap, we firmly believe that our expanding suite of strategies is poised for a successful year and our sales teams are hard at work promoting our products.
It often takes longer for record keepers to onboard a CIT versus a mutual fund, but the good news is that CITs frequently receive inflows as participants consistently contribute via 401k deductions from their paychecks.
Speaker Change: On last quarter's call I told you about $400 million in wins that had not yet funded.
For those updating models just over 200 million funded in the first quarter and nearly $300 million of additional capital is expected to fund in the coming weeks and months.
We submitted two large RFPs for our small cap and energy products recently.
Speaker Change: <unk> are out of our control, but many are likely to fund in June.
and a Tier 1 consultant has added SmidCAP to its select list.
Speaker Change: Notably several of these new accounts will go into our collective investment Trust vehicle, which is an attractive option for defined contribution plans.
Select is the highest rating and as a result our Smidcap strategy becomes the default option for the consultant's clients and we are very encouraged to see the related pipeline build. Many of these searches are replacements in the OCIO or outsourced chief investment officer area, so the status as a default option in the category bodes well for Westwood.
Speaker Change: It often takes longer for record keepers to onboard a city versus a mutual fund, but the good news is that cit's frequently receive inflows as participants consistently contribute via 401K deductions from their paychecks.
We submitted two large rfps for our small cap and energy products recently and a tier one consultant has added smid cap two at select list.
I am also pleased to report that we have five pending approvals from Tier 2 consultants. These can take a bit longer to implement, but should yield positive search results for smaller plan providers. In addition, we've had several good meetings with family offices who are showing interest in small cap and energy.
Speaker Change: Select is the highest rating and as a result, our smid cap strategy becomes the default option for the consultants clients and we are very encouraged to see the related pipeline build.
In summary, our traditional strategies are performing well, our pipelines filling up nicely, and we're excited about our new investment offers, namely managed investment solutions and our ETF strategies.
Speaker Change: Many of these searches are replacements, and the OCI or outsourced chief investment officer area. So the status as the default option in the category bodes well for Westwood.
Speaker Change: I'm also pleased to report that we have five pending approvals from tier two consoles. These can take a bit longer to implement but should yield positive search results for smaller plan providers. In addition, we've had several good meetings with family offices, who are showing interest in small cap and energy.
We are particularly eager to see how our ETS grow as we appeal to a different audience and build awareness efficiently via digital marketing efforts. We're working hard to build out the infrastructure to support our managed investment solutions team, and we recently added another team member who was a former colleague.
The reception from clients and prospects to our new MIS capabilities has been nothing short of exceptional. We are 12 for 12 on meeting requests and are making sure to update our potential clients on the progress we are making.
Speaker Change: In summary, our traditional strategies are performing well our pipeline is filling up nicely and we're excited about our new investment offerings, namely managed investment solutions and our ETF strategies.
Speaker Change: We are particularly eager to see how our etfs grow as we appeal to a different audience and build awareness sufficiently via digital marketing efforts. We are working hard to build out the infrastructure to support our managed investment solutions team and we recently added another team member who was a former colleague.
We expect to finish the basic infrastructure in the third quarter and hope to onboard a new client in the fourth quarter for the MIS strategies.
I'll now turn the call over to Terry Forbes, our CFO .
Thanks, Brian , and good afternoon, everyone. Today we reported total revenues of 22.7 million for the first quarter of 2024 compared to 23.2 million in the fourth quarter and 22.7 million in the prior year's first quarter. Revenues were comparable to both the fourth quarter and last year's first quarter.
Speaker Change: The reception from clients and prospects to our new Ams capabilities has been nothing short of exceptional were 12 for 12 on meeting requests and are making sure to update our potential clients on the progress we are making.
Speaker Change: We expect to finish the basic infrastructure in the third quarter and hope to onboard a new client in the fourth quarter for the MIF strategies.
Our first quarter comprehensive income of 2.3 million or 27 cents per share compared with 2.6 million or 32 cents per share in the fourth quarter due to higher employee compensation and benefits expenses, partially due to seasonality of incentive compensation, offset by changes in the fair value of contingent consideration. Non-gap economic earnings were 3 million or 36 cents per share in the current quarter versus 3.6 million or 43 cents per share in the fourth quarter.
Speaker Change: I'll now turn the call over to Terry Forbes our CFO.
Murray Forbes: Thanks, Brian and good afternoon, everyone. Today, we reported total revenues of $22 7 million for the first quarter of 2024 compared to $23 2 million in the fourth quarter and $22 7 million in the prior year's first quarter revenues were comparable to both the fourth quarter and last year's first quarter.
Our first quarter comprehensive income of 2.3 million or 27 cents per share compared favorably with last year's first quarter income of 0.7 million or 9 cents per share, primarily due to changes in the fair value of contingent consideration offset by higher income taxes.
Murray Forbes: Our first quarter comprehensive income of $2 3 million or <unk> 27 per share compared with $2 6 million or <unk> 32 per share in the fourth quarter due to higher employee compensation and benefits expenses, partially due to seasonality of incentive compensation offset by changes in the fair value of contingent consideration non-GAAP.
Economic earnings for the quarter were 3 million or 36 cents per share, compared with 1.7 million or 22 cents per share in the first quarter of 2023.
Murray Forbes: Economic earnings of $3 million or <unk> 36 per share in the current quarter versus $3 6 million or <unk> 43 per share in the fourth quarter.
Firm-wide assets under management and advisement totaled $17.2 billion a quarter end, consisting of assets under management of $16.2 billion and assets under advisement of $1 billion.
Murray Forbes: Our first quarter comprehensive income of $2 3 million or 27 per share compared favorably with last year's first quarter income of <unk> 7 million or <unk> <unk> per share primarily due to changes in the fair value of contingent consideration offset by higher income taxes.
Assets under management consisted of institutional assets of 7.7 billion or 48% of the total, wealth management assets of 4.2 billion or 26% of the total, and mutual fund assets of 4.2 billion or 26% of the total.
Murray Forbes: Economic earnings for the quarter were $3 million or <unk> 36 per share compared with $1 7 million or 22 per share in the first quarter of 2023.
Over the quarter, our assets under management experienced market appreciation of 0.9 billion and net outflows of 168 million, and our assets under advisement experienced market appreciation of 45 million, and net outflows of 80 million. Our financial position continues to be very solid, with cash and short-term investments at quarter end, totaling 46.6 million and a debt-free balance sheet.
Murray Forbes: Firm wide assets under management, and advisement totaled $17 2 billion at quarter end.
Murray Forbes: <unk> assets under management of $16 2 billion in assets under advisement of $1 billion.
Murray Forbes: Assets under management consisted of institutional assets of $7 7 billion or 48% of the total wealth management assets of $4 2 billion or 26% of the total and mutual fund assets of $4 2 billion or 26% of the total.
I'm happy to announce that our board of directors approved a regular cash dividend of 15 cents per common share payable on July 1, 2024 to stockholders a record on June 3, 2024.
Murray Forbes: Over the quarter, our assets under management experienced market appreciation of <unk> 9 billion and net outflows of $168 million and our assets under advisement experienced market depreciation of $45 million and net outflows of $80 million.
That brings our prepared comments to a close. We encourage you to review our investor presentation we have posted on our website, reflecting quarterly highlights, as well as the discussion of our business, product development, and longer-term trends in revenues and earnings. We thank you for your interest in our company, and we'll open the line to questions.
Murray Forbes: Our financial position continues to be very solid with cash and short term investments at quarter end totaling $46 6 million and a debt free balance sheet.
Speaker Change: I'm happy to announce that our board of directors approved a regular cash dividend of <unk> 15 per common share payable on July one 2024 to stockholders of record on June 32020 for.
Speaker Change: That brings our prepared comments to a close we encourage you to review our investor presentation, we have posted on our website, reflecting quarterly highlights as well as the discussion of our business product development and longer term trends in revenues and earnings. We thank you for your interest in our company and we will open the line to questions.
I'm gonnae.
Our first question comes from McCrae Sykes with GEMCO. Your line is open. Oh, good afternoon, everyone.
Speaker Change: Ladies and gentlemen, if you have a question or comment at this time. Please press star one on your telephone. If your question has been answered or you wish to move yourself from the queue. Please press star one again, we will pause for a moment, while we compile our Q&A roster.
Hi, Mac.
Two things. First, could you just give me a little more detail on the funded wins in one queue and coming up in two queue? Are they all?
Speaker Change: Our first one moment for our first question.
Most of it is for the CIT. We did have one small cap in there as well, separate account.
Speaker Change: Our first question comes from Macrae Sykes with Gabelli Your line is open.
Okay. And then could you take a little bit more in the ETF launch? Maybe what you learned after sort of going through the process. I mean, obviously it seemed pretty successful, a lot of the gate, good volumes, et cetera.
Macrae Sykes: Good afternoon, everyone.
Macrae Sykes: Hi, Matt.
Macrae Sykes: Two things first could you just give me a little more detail on the the funded wins in <unk> and <unk>.
I was curious to get your little more granular feedback on the process, what you were pleased with, and what was some of the feedback you got from the investors, both on the vehicle approach as well as the strategy.
Macrae Sykes: Up in <unk> are they all.
Macrae Sykes: For the same city I believe in strategy.
Matt: Most of it is for the <unk>, we did have one small cap in there as well separate account.
Sure. So we started this project about eight months ago and we've had a
Matt: Okay, and then could you dig a little bit more on the ETF launch.
team internally that has been studying the space and trying to figure out how can we best play in the ETF space. And what we really wanted was to make sure we didn't come out with something that was similar to what anybody else had. So we're looking for white space and we want to be in the income-oriented part of the market. And there's a lot of those types of ETFs, but what we found is there were none that did what we ended up doing, which is
Matt: Maybe what you've learned after sort of going through the process I mean, obviously it seemed pretty successful out of the gate good volumes et cetera. So I'm just curious as to get you a little more granular feedback on the process. What you were pleased with what was some of the feedback you got from the investors both on the vehicle approach as well as the strategy.
Speaker Change: Sure. So we started this project about eight months ago, and we've had a.
Speaker Change: Team internally that has been studying the space and trying to figure out how can we best play in the ETF space and and what we really wanted was to make sure. We didn't come out with something that was similar to what anybody else had so.
building a midstream energy portfolio and writing covered calls against those positions to take what is normally a 6% or 7% yield and increasing that to north of an 11% yield. The other thing that we learned in the process is that advisors and their customers really appreciate getting a monthly distribution.
Speaker Change: Looking for white space, and we want to be and the income oriented.
Speaker Change: Part of the market and there is there is a lot of those types of Etfs, but what we found is there were none that did what we ended up doing which is.
So we are providing that and producing a monthly, you know, just under 1% a month for people. So it's a very competitive income-oriented strategy. We hired some consultants to help us. We hired another firm to help us market the strategy. So we have, I think, a really good team in place. And we're very, very happy with the launch of the first ETF, which came out a few weeks ago on the New York Stock. exchange.
Speaker Change: Building, a midstream energy portfolio in writing covered calls against those positions.
Speaker Change: Take what is normally a six or 7% yield and increasing that too.
Speaker Change: North of an 11% yield the other thing that we learned in the process is that advisors and their customers really appreciate getting a monthly distribution. So.
Speaker Change: So we are providing that.
Today we launched our second ETF, WEEEI, on NASDAQ. The reason we did NASDAQ is we want to see how each of these ETFs perform on these two exchanges so that as we launch others in the future, we'll have a good feel for what we can expect.
Speaker Change: Producing a monthly just under 1% a month for people. So it's a very competitive income oriented strategy. We hired some consultants to help us we hired another firm to help us market the strategy.
Speaker Change: So we have I think a really good team in place and we're very very happy with with the launch of the first ETF, which came out a few weeks ago on the New York stock exchange.
So we're very pleased. The important thing with ETFs is that you have good consistent volume, which we've been able to see so far with our first ETF. Our team was in New York today and for the launch on the NASDAQ and had a lot of good meetings, a lot of good press around those meetings.
Speaker Change: Day, we launched our second ETF W. E on NASDAQ and the reason, we did NASDAQ as we want to see.
Speaker Change: How each of these Etfs performed on these two exchanges so that as we launch others in the future. We will have a good feel for what we can expect.
So this is a very different approach than we've historically done around here. The marketing is done primarily through media interviews, digital, and really just, you know, word them out through the advisor community. So our guys that have been outselling have had really good reception to the products. I was in with one of our large institutional investors last week.
Speaker Change: So we're very pleased.
Speaker Change: The important thing with Etfs is that you have good consistent volume, which we have been able to see so far with our with our first ETF. Our team was in New York today.
Speaker Change: And for the launch on the NASDAQ.
Speaker Change: <unk> had a lot of good meetings a lot of good press around those meetings. So this is a very different approach than we have historically done around here the marketing is done.
We have the longest conversation on energy that I've had in probably five years.
and they both took down the ticker symbols of our ETFs, and they're going to buy them personally. So I think we may have found a good spot here. Time will tell, and we'll see what the volume looks like and the kind of interest will attract, but we're certainly excited about it.
Speaker Change: Primarily through media interviews digital.
Speaker Change: And really just word of mouth through that through the advisor community. So our guys that had been out selling have had really good reception to.
The other thing I would mention is there were some expenses associated with the launch of the ETF, which was over a quarter million dollars, about $257,000 in the first quarter. We also have expense associated with the launch of our managed investment solutions business, which is about $821,000 for the quarter.
Speaker Change: To the products.
Speaker Change: With one of our large institutional investors last week, we had the longest conversation on energy that I've had in probably five years and they both took down the ticker symbols of our Etfs, then theyre going to buy them personally. So I think we're I think we may have found a good spot here time will tell and we'll see what the volume looks like in that.
And we had some synergies.
Speaker Change: Kind of.
and severance costs of about 572,000. So a lot of things that happened in the first quarter that impacted our earnings. It's also an unusual quarter seasonally because we pay our bonuses in February . So we have taxes of 100,000 and we have a 401k match. Many people take part of their bonus and max out their 401k in the first quarter. So in total, that's about 465,000.
Speaker Change: Interest will attract but we're certainly.
Speaker Change: Certainly excited about it.
Speaker Change: The other thing I would mention is there were some <unk>.
Spencers associated with the launch of the ETF, which was over a quarter million dollars about 257000 in the first quarter.
Speaker Change: Also have expense associated with the launch of our managed investment solutions business.
Speaker Change: Which is about 821000 for the quarter.
Speaker Change: And we have some synergies.
On the positive side, we did receive a revenue sharing payment from InvestCloud and the amount of $512,000. So that was a real positive and we were pleased to see it. So we're happy with the quarter. We're happy with the pipeline. Our AUM is hired and it's been in five years. And we look forward to talking to you guys again next quarter. We appreciate all of you who voted for the proposals in the budget. our proxy today and
Speaker Change: And severance costs of about 572000, so a lot of things that happened in the first quarter that impacted our earnings.
Speaker Change: Also an unusual quarter.
Speaker Change: Seasonally because we pay our bonuses in February so we have taxes of 100000.
Speaker Change: And we have a four one K match, many people take part of their bonus and Max out their 401K in the first quarter. So in total that's about 465000.
Speaker Change: On the positive side, we did receive a revenue sharing payment from invest cloud.
We appreciate your support. So please visit westwood group.com or give Terry or myself a call if you have further questions. Thanks very much. Have a great afternoon.
Speaker Change: And the amount of 512000, so that was a real positive and we were pleased to see it.
Speaker Change: So we're happy with the quarter, we're happy with the pipeline.
Ladies and gentlemen, that's conclude today's presentation. You may now disconnect and have a wonderful day.
Speaker Change: AUM is higher than it's been in five years, and we look forward to.
Speaker Change: Talking to you guys again.
Speaker Change: Next quarter. We appreciate all of you who voted for the proposals and.
Speaker Change: Our proxy today.
Speaker Change: We appreciate your support so please.
Speaker Change: Westwood group Dot com or give terry or myself a call. If you have further questions. Thanks very much have a great afternoon.
Speaker Change: Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.
Speaker Change: Okay.
Okay.
Speaker Change: [music].
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: [music].
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