Q3 2024 Artisan Partners Asset Management Inc Earnings Call
Speaker Change: Good day and welcome to the Artisan Partners third quarter 2024 earnings conference call. Albert Dispens will be in a listen only mode. Should you need assistance please signal a conference specialist by pressing the star key followed by zero.
Speaker Change: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch tone zone. To withdraw your question, please press star then two. Please note, this event is being recorded.
Speaker Change: I would now like to turn the conference over to Brennan Hughes. Head in investor relations. Please go ahead.
Brennan Hughes: Welcome to the Artist and Partners, asset management, business update and earnings call.
Brennan Hughes: Today's call will include remarks from Eric Colson, CEO, Jason Gottlieb, President, and CJ Daley CFO. Following these remarks, we will open the line for questions.
Brennan Hughes: Our Related Source Alps and Investor Presentation are available on the Investor Relations section of our website.
Speaker Change: Before we begin today I would like to remind you that comments may during today's call, including responses to questions may include forward-looking statements.
Speaker Change: These are subject to known and unknown risks on uncertainties, including but not limited to the factors set forth in our earnings release and detailed in our SEC filings.
Speaker Change: These risks and uncertainties may cause actual results to differ materially from those disclosed in the statement and we assume no obligation to update or revise any of these statements following the presentation.
Speaker Change: In addition, some of our remarks today include references to non-gap financial measures. You can find reconciliation of these measures to the most comparable gap measures, and the earnings release and the supplemental materials, which can be found on our investor relations website.
Speaker Change: Also, please note that nothing on this call constitutes an offer or solicitation to purchase, or sell and interest in any artisan investment product or a recommendation for any investment service. I will now turn it over to Eric.
Eric Colson: Thank you, Brennan and thank you everyone for joining the call or reading the transcript.
Eric Colson: Artisan Partners brings together differentiated investment talent, broad opportunity sets, and long-term asset allocation demand. Together, these three elements have tremendous power to compound client wealth and business value over time.
Eric Colson: On these calls, we usually feature metrics showing the amount of wealth we have created and compounded for clients over time.
Eric Colson: This quarter we want to highlight outcomes we have delivered for shareholders.
Eric Colson: Since our IPO in 2013, we have returned to shareholders $36.47 per share in dividends, relative to our IPO price of $30 per share.
Eric Colson: Since the IPO, we have generated an annualized total shareholder return of 12.38% with dividends reinvested.
Eric Colson: That is better than the S&P 500 at 12.05% and the Russell 2000 at 7.8%.
Eric Colson: We have generated those outcomes while investing heavily in thoughtful growth, the third pillar of who we are.
Eric Colson: We have invested in New Talent.
Eric Colson: Expanding the Grease of Freedom and Distribution to access new and growing areas of demand.
Eric Colson: These are long-term investments they may take years to pay off and we pay for them out of operating cash flows.
Eric Colson: The immediately hit our margins and reduce cast distribution to partners and shareholders.
Eric Colson: Investing in a manner that drives long-term shareholder value requires tremendous discipline.
Eric Colson: We are highly selective in investing in new talent and strategies.
Eric Colson: We seek to avoid mistakes, spend wisely and see things through over a long time periods.
Eric Colson: This approach has allowed us to make significant cash distributions to our partners and shareholders.
Eric Colson: While simultaneously building business value.
Eric Colson: Extended duration of existing compounders, thoughtfully build the next generation of compounders, maintain financial discipline and distribute cash flow through time. That is what we do.
Eric Colson: On slide two, I want to place our current phase of growth or to be clear spending into historical context.
Eric Colson: Our earliest investment strategy is launched between 1995 and 2002. Our style market cap and geographically oriented.
Eric Colson: They were designed and launched in an era in which institutional allocators were focused on filling their nine boxes.
Eric Colson: Manager Selection sought sources of alpha, but alpha delivered inside of relatively constrained boxes.
Eric Colson: Our first generation strategies have done and continue to do what we intend them to do. Compound Capital within a Greed Upon Guidelines.
Eric Colson: 1 million invested in each of these five strategies at inception would be worth 80 million today after fees.
Eric Colson: had the same dollars been invested on the same dates in the corresponding indexes. The outcome would be a portfolio worth 41 million, about half as much as the artist had outcome.
Speaker Change: In the early 2000s, we expanded the Greece of Freedom, focusing on global mandates that provide our investment talent with more ways to generate returns and manage risk.
Speaker Change: Global Strategies, also aligned with institutional allocators of all being away from the style box approach and allocating on the basis of deconstructed risk factors or more purely on risk return optimization.
Speaker Change: Our first generation strategies were aimed at U.S. institutional investors.
Speaker Change: Our second generation strategies targeted non-US clients and we expanded our global distribution and vehicles in order to better reach those clients.
Speaker Change: Today, the strategies we launched between 2005 and 2011 represent nearly 59 billion of AUM.
Speaker Change: and we now manage over 40 billion in assets from clients outside of the US, approximately 26% of our total AUM.
Speaker Change: Our latest current phase of growth has focused on even greater degrees of freedom, with more of an absolute return or outcome orientation, and more aligned with demand from the growing wealth channel.
Speaker Change: Since 2013, we have established five new investment teams.
The artist and credit team, which takes a differentiated approach to high yield and long short credit, mixing bonds and loans.
Folks seem less on hard assets and more on business value and opportunistically navigating the credit quality and liquidity spectrum.
The Artisan Developing World Team, which takes a differentiated view on emerging markets investing to generate EM returns via large opportunities set of issuers whose growth is linked to those markets.
Speaker Change: The Ontario Peak Group whose leader Chris Smith was our first portfolio manager hired from a long short hedge fund background.
The International Small Mid team, which invest in inefficient and less liquid issuers across global markets.
Speaker Change: and our newest team, the MCICE Capital Group, which invests in local and hard currency debt across emerging and frontier markets and also runs a global macro strategy that uses derivatives extensively to isolate, take and manage risk.
This current phase of growth includes all four of our 16 come strategies and all five of our alternative strategies
These strategies have performed for clients and generated a meaningful business outcome for the firm.
System Sception, our four fixed income strategies have generated 239 basis points of average annualized alpha, net of fees.
Speaker Change: and our five alternative strategies have generated 331 basis points of average annualized alpha net of fees.
Speaker Change: Our business model in approach to thought folkroath is working in fixed income and alternatives, but we have a lot more work to do.
Speaker Change: and as Jason will discuss as we think about new teams we remain focused on degrees of freedom and increasing our access to the global wealth market.
Jason Gottlieb: Thank you, Eric. The data on slide three is well known. We have used it before on these calls.
It bears repeating in order to understand why we are focused on the areas Eric described.
The US Public Equity Market looks very different today than it did when Artisan Partners was founded in 1994.
The number of U.S. public companies peed in 1996 at over 8,000.
That number has since declined by over 40% to just over 4,600 in 2022.
In the broader development market, the number of public companies peaked in 2007 at over 26,000.
and has since declined by nearly 20% to just over 21,000 in 2022.
As the opportunity set has shrunk, allocators are increasingly accessing public equity returns, using low cost exposure and thematic ETFs.
Speaker Change: There are now more than twice as many ETFs as are publicly traded U.S. stocks.
Speaker Change: I want to be clear that these trends do not mean that the developed markets public equity investing is a thing of the past
Trillions of dollars sit inside of style box strategies, and many allocators will continue to use style boxes long into the future.
On an absolute basis, there may be more dollars in actively managed to develop market public equity strategies than ever before.
But the public equity opportunity that has been shrinking. Competition for alpha has been increasing. Differentiation is more difficult and incremental demand for active management in different areas of the market.
Meanwhile, alternatives are here to stay. Quality of investment talent matters and sophisticated institutions, RIAs, and the individuals will pay a premium fee for a premium outcome.
At Artisan, we remain consistent with who we are as a high-value added talent-oriented investment firm.
Speaker Change: We have historically operated in spaces where talent matters, clients recognize it.
Premium Investment Outcomes are realized and attractive financial outcomes follow.
What has been changing is the location of the most attractive opportunity sets for Alpha and in-commettled demand for active management.
That is why we have been and continue to invest our incremental time and capital towards fixed income and alternatives.
Speaker Change: Slide 4 shows the outcome we have achieved today with our 4 fixed income strategies and 2 of our 5 alternative strategies.
Senses section the credit team's flagship high-income strategy has generated 171 basis points of annual outperformance versus a benchmark net of fees. And the strategy's high-income fund is ranked number four of 302 funds in its liprac category.
Speaker Change: We have raised $9.7 billion of net inflows for the high income strategy sense inception.
and you're today at the strategy has seen that inflows of nearly 1.4 billion.
In 2017, the credit team broadened its degrees of freedom. We structured the credit opportunity strategy to allow the team to invest in a broad universe of instruments and take advantage of opportunities in less liquid, distressed, and other special situations.
The credit team is used those degrees of freedom effect effectively, generating an average annual return of 10.29% since inception and after fees.
Speaker Change: That performance compares well to other credit hedge funds as well as to private credit and direct lending funds, which are typically far less liquid.
We continue to focus on marketing, credit opportunities and our seeing promising pipeline of opportunities.
Our second credit oriented team, the NCI MCI's cap of group, is similarly using degrees of freedom to generate return and manage risk.
Across the teams three strategies, they're invested in 66 countries, they own local currency positions in 32 countries, and they use derivatives extensively.
Speaker Change: In addition to the excellent absolute and relative performance shown on the slide.
Speaker Change: Global Unconstrained has been highly efficient in delivering return for Unit of Risk.
Census exception is sharp ratio is 1.88.
We think that speaks for itself.
The MCITS Capital Group now manages over $2.3 billion in AUM.
with a high quality institutional anchors in each of the three strategies.
Two of the team strategies will pass the three-year mark with with artists in the first half of next year, which historically has been an important milestone for our teams, increasing the addressable market of investors and allocators.
Speaker Change: We believe the near-medium and long-term business opportunities are very promising.
The credit team and the M-Sites Capital Group are just two examples of what we have been doing and what we expect to continue to do. Great talent, high degrees of freedom, solid demand for active management.
I will now hand the call back to Eric for some closing remarks on Topical Growth.
Thanks Jason, let's come back to the compounding power of talent for our opportunities that's in long-term demands.
Well, we've added only one new standalone team in the past five years. We have spent significantly to bring on new talent and build new capabilities across our platform.
Speaker Change: which includes investing in talent and degrees of freedom for first and second generation strategies.
We have done so through market volatility with discipline and we are confident that this spend will contribute meaningfully to our financial outcomes over time.
Speaker Change: While we have invested the compounding power of our existing businesses has fueled a healthy return for shareholders. Through steady cash dividends and a competitive total shareholder return.
Speaker Change: 5 years ago on September 30, 2019, our stock price closed at $28.24 per share.
Since then, we have distributed cumulative dividends of $16.94 per share, representing over 60% of our beginning market valuation.
Speaker Change: We have done that while spending significantly to build underlining business value and the next generation of wealth compounders.
On September 30, 2024, our stock price closed at $43.32 per share.
Speaker Change: which has resulted in an annualized total shareholder return over the past five years of over 18% with dividends reinvested. More than the S&P 500, Acquay or Russell 2000 indices.
Speaker Change: We stay true to who we are as an investment firm. We focus on high value added investing.
We maintain a high-quality home for entrepreneurial talent. We invest in thoughtful growth while maintaining a partnership mindset.
We believe the outcomes for clients, talent and shareholders validate our approach and you can expect us to continue to execute as we have in the past But they focus on the areas we highlighted today I will now turn it over to CJ to discuss our most recent financial results
Thanks Eric, and overview of financial results begins on slide 7.
CJ Daley: Third quarter results reflect the quality of our business model, which drives durable growth and long-term returns for clients and shareholders.
Speaker Change: Comparative the June quarter revenues rose 3%. The just-adoperating income was up 12% and our just-adoperating margin improved by 280 basis points.
Speaker Change: More specifically, assets under management ended the September quarter at $168 billion, up 6% from last quarter, and up 23% from the September 2023 quarter.
Nick Klein, Cash Outflowers, during the quarter, we're approximately $750 million.
Speaker Change: Third quarter net outflows were lumpy and partially offset by previously disclosed $860 million in flow into our emerging market state opportunity strategy.
Average A, you are on for the quarter, was up 3% sequentially, and up 14% compared to the September 2020's Requ order.
In the fourth quarter, we expect the equity artists and funds to complete their annual incoming capital gain distributions.
Based on our current estimates and assumptions, we expect four-quarter distributions to result in approximately $600 million of net client cash outflows from investors who choose not to reinvest their distributions.
Speaker Change: Our complete gap and adjusted results are presented in our earnings release.
Revenue for the quarter increased in line with average AUM. Up 3% compared to the June 2024 quarter, and up 12% compared to the prior year third quarter.
Speaker Change: Both periods benefited from higher average AUS.
Our average recurring free rate for the quarter was 69 basis points consistent with last quarter.
Looking ahead, we are on track to record some performance fee revenue in the fourth quarter. The amount remains relatively small as a percentage of total revenues.
Speaker Change: As a reminder, approximately 3% of total AOM across 14 accounts are performance feed component to their feed structure.
Performance fees are recorded when earned on the measurement date, which in the fourth quarter, the OAS opportunities are at December 31, 2024.
Speaker Change: Just at Operating Expenses for the Quarter, we're down from the second quarter of 2024.
by Marrile from the Seasonal Decline in certain compensation-related expenses.
Partly off setting decline is a charge for the acceleration of a lease for office space no longer in use.
Speaker Change: In comparison to the same quarter last year, but just at operating expenses were up $14 million or 8% by merely from higher revenue based incentive compensation.
Just to offer any income increased 12% sequentially and 21% compared to last year's September quarter.
Justin Nettingcom per adjusted chair improved 12% compared to last quarter and 23% compared to the September 2023 quarter.
Here today, revenues are up 12% compared to the same period in 2023 when higher average AUM.
Joseph operating expenses increased 10% from the 2023 9 month year-to-date period, primarily from higher incentive compensation on elevator revenues.
Also contributing to the increase in compensation of benefits, our higher fixed compensation expenses from a 4% increase in the number of full-time associates and annual salary increases.
Speaker Change: Emerdization of long-term incentive compensation increased primarily from the $5 million impact of the retirement acceleration clause to discuss during the first quarter call.
Speaker Change: We expect LTI amortization to be $16 million in the fourth quarter of this year, excluding the Markter Marker Impact.
Hi, I'm Revenue's Year Today, led to a 17% improvement in adjusted operating income and an 18% improvement in adjusted net income for adjusted share over the comparable prior year period.
Speaker Change: and calculating our non-gab measures, not operating income includes only interest expense and interest income.
Although the income generated on our seat-investance ads to share older economics, we fully exclude these from investment gains from our just results to provide transparency into our core business operations.
Speaker Change: Turning to Sita 11, our balance sheet remains strong. We currently have 158 million of seed capital and our investment products with significant amounts of reliable capacity.
As those products begin to scale, we will redeem the seed capital to deploy into new products, reinvest in the business, or return it to shareholders.
Speaker Change: In addition, at $100 million, revolving credit facility remains unused.
We continue to return capitalist shareholders on a consistent and predictable basis through quarterly cash dividend payments and a year-end special dividend.
Speaker Change: In system with our dividend policy, our board of directors declared a quarterly dividend of 82 cents per share, with respect to the September 2024 quarter, which represents approximately 80 percent of the cash generated in the quarter.
Speaker Change: Our variable dividend is up 15% over the prior quarter and 26% over the same quarter last year reflecting strong growth in our earnings since those previous periods.
that concludes my prepared remarks and I will now turn the call back to the operator.
Speaker Change: i
We will now begin the question and answer session.
To ask a question, you may press star, then one on your touch tone phone.
If you are using a speaker phone, please pick up your hands at before pressing the keys.
Speaker Change: If at any time your question has been addressed and you would like to withdraw your question, please press star and 2
Speaker Change: In the interest of time, we ask that you please limit yourself to two questions.
Speaker Change: At this time we will pause momentarily to assemble our roster.
Speaker Change: I'm
The first question today comes from Alex Blasstein with Goldman Sachs. Please go ahead.
Hey, good afternoon everybody. Thank you for taking the question. First, wanted to just touch base on margins and expense outlook.
But really in light of kind of the structural changes you guys are kind of pursuing with the business and the way you sort of outline adding
You know, incremental strategies and incremental capabilities to the existing teams.
Um, you know, perhaps instead of like adding, you know, new teams like you may be done, you know, over the last decade or so. So how does that change the margin profile of the business, does the incremental margin?
Look better, look worse, look about the same, and maybe you're kind of updated thoughts and where operating margins could go in this business over the next couple years. And I guess as far as the TG may be just kind of hit on your early expectations for 2025 expenses, that would be great. Thanks.
Speaker Change: yeah
Thanks, I'll take that. So as you know, we part of our financial model in principles is, you know, having a high percentage of variable expenses that percentage fluctuates anywhere between 50 and 60 percent we're currently in the low 50s.
So a large amount of...
Speaker Change: Our margin expansion is predicated upon revenue growth. From a fixed expense side, I'd say over the last three years we've invested very heavily in new teams, new capabilities. Our expenses have grown.
Speaker Change: Pretty rapidly over the last three years, I think you should see a pause on that. I think we'll still have inflationary expense increase pressures just like everybody else, but I think we've largely built out.
The infrastructure to support our new MCI team as well as additional capabilities. With respect to guidance going into fourth quarter and the next year,
Speaker Change: You know the fourth quarter we do have an opportunity you know
to add performance fees that are greatest opportunity to add those performance fees were.
Currently tracking pretty well with about five of our 14th.
Performance Accounts in the Money.
But we're always very cautious on guiding to performance fees because the measurement date is the end of the year and so they're still more than two months left to go before we actually crystallize that. It's on the expense side. You saw some.
Speaker Change: and some improvement on the expenses relative to revenues, especially on the the comprehensive side.
Speaker Change: We would expect that to continue into the fourth quarter.
That was primarily the benefit of higher revenues.
Speaker Change: and the expansion that we get on the fixed expense base.
So, you know, as well as, you know, some of our newer teams, which, you know, we've been carrying their expenses have started to add some accounts in the third quarter, which helps reduce the subsidies on the Red Share.
Speaker Change: and I'll go to the next one.
And when you look at what we've done since atty non the credit team in 2014 and created operational leverage then to add other credit teams and then provide other degrees of freedom to our existing teams.
and the extent that to what we did with China, with the China Post Venture Team and their ability to do private and other teams will be able to look at private. We've created the operational footprint for that and as we've created the global macro, each one of these add-ons does give
Speaker Change: Operational leverage and by adding on a few individuals to enhance the existing teams. I think it's definitely more powerful to margin expansion.
Speaker Change: Perfect. And one strategy related question we got as well. When we look at some of the growth sales trends in a national value has been an important driver of growth over a lot several years.
It looks like things started to slow there a bit from, again, grow sales perspective and you know, that's obviously impacting that net flows as well. Anything, you know, you can point to underneath the surface what's driving that. I don't know if it's a capacity common or something else that's impacting flows and other business.
Now I think that we've always been cautious of capacity. We think the number one driver for revenue growth.
is our ability to compound performance at an absolute and a relative rate. And so we've always been very cautious on how we manage flows for our more mature strategies. And when you break down the flow spectrum.
I know everybody wants to.
CSGO at all cost and all means to put up a net flow, but the power of compounding of revenue growth is amazing and we've seen it over the last five years.
and was regards international value. We just have a capacity management and flow management and delivering for clients mentality. So there'll be a little bit more lumpy and flows.
as we manage that on a go-forward basis.
Speaker Change: i
The next question comes from John Dunn with Evercore ISI. Please go ahead.
Speaker Change: [inaudible]
Speaker Change: i
The Nine U.S. Institutional Business
has been fairly strong for us. You can see, you know, since we...
Speaker Change: really in the mid 2000s added on our global equity strategies and built out the appropriate strategies for that marketplace of increasing non-US clients. Our institutional business translated well due to the consultant marketplace.
This year it's been slightly by single-digit positive. We have a large client base of over 200 plus client relationships there.
Speaker Change: and the...
The emerging market debt has more recently been adding to that and we think that's a very strong story on a go forward basis when you look at the premise of the M-site team.
Speaker Change: Big part of the premise was institutional clients.
Looking at their emerging market allocation, you saw downtick in allocations about two, three years ago. Over the last couple of years, you've seen heavy outflows in the whole category. We're approaching our three-year track record. We have a...
Speaker Change: and Asset Base that meets all searches. And so we're in that foundational growth mode, and we think the institutional business outside the US is strong, and is growing. It will be growing with the...
Speaker Change: Greater Opportunities with MSites in the emerging market debt strategy.
Speaker Change: and then maybe going back to capacity but looking at it from the different direction, you know, what areas would you highlight as having the most capacity?
Rob, see the emerging market, that team and insights we just brought on and we have
Under 3 billion in that strategy and that can handle 10 times that. So, from an opportunity set, your more recent teams you bought on, have to have quite a bit of scale opportunity.
Speaker Change: Um...
Speaker Change: Good to pass the emotional strategies. Jason, when do you add anything else? No, I think those are the main ones, really the three key areas where we've...
and then maybe a little bit more limited in our ability is international value. As people recall, we have soft clothes, the high income fund that the strategy is still open as Brian and me.
The Credit team seek to broaden out their institutional client base And then you know, inevitably small cap will always be a more capacity constrained area within the The growth franchise, but for the most part we still have a fair bit of capacity across the remainder of the platform.
Speaker Change: yeah
The next question comes from Bill Katz with TD Cowan. Please go ahead.
Okay, thank you very much for having everybody appreciate taking the question. Maybe a conceptual question for you guys. I'm slowly looking back to page three and your comments around the migration of the franchise and the market structure of the equity market.
Many of us on the call of cover-all-all-year-old Turner manages and they speak to just the import.
of having a origination and global footprints from a deal sourcing perspective as
It will keys to drive Alpha.
across a lot of the buckets that you sort of laid out on the right hand chart of the magic dispersion. So as you think about where you do need to spend looking ahead, is there a need to build up any origination capacity or is it really just a function of stock picking allocation, this sort of the key sort of area of expertise for ours? Thank you.
I think it's primarily the latter, so I think it's all about security selection and stockpicking
Obviously, you have to have the right time rise in when you're evaluating your companies.
Speaker Change: but it also comes back to the one comment that we've been highlighting for a little while now which is
Speaker Change: Continuing to broaden out the toolkit as well and that can come in many different forms, securities, countries.
What have you and it also comes in the form of making sure we have the right talent embedded on each of the teams to expand that opportunity set So I think it is, it does come back to the basics of you got to pick the right stocks in order to...
To perform, I think the good news is we feel like we've got strong capabilities and it bears itself out in the numbers.
Speaker Change: But we're continuously trying to evolve the teams to make sure that we can stay once that we've had.
and that's what I think you've heard from us and you'll continue to hear from us on the existing franchises that are deep into the equity markets and then as you think about other areas, there might be the need for that but certainly not with our existing franchises today.
Great thanks to that and this is a follow up CJ maybe one or maybe two poor few facts make it in Do you come in a little bit about just the the fee rate dynamics on the fixing comes side was that influence just particular just giving either the timing of the EM sites win when a few waves associated with
with those kind of mandates and then you'd mention that some of the subsidies that you've been providing, if somebody's new at teams is abating, which particular line would we see that most? Is that more the incentive of compensation line, the LTI line or a combination of all that? Thank you.
Sure Bill. So the latter question that the substance you know when we bring on a new team such as M sites and we provide compensation guarantees for the first several years.
Speaker Change: and so they earn into the 25% repshare. So you're starting to see, you know, M-site earn into the, to the repshare as they bring on accounts.
which improves our sort of our comprehensive.
with respect to the incentive comp line.
Speaker Change: and then on the fixed income side, you know, the fee rate is really, I mean, you know, I know you noted in your note that you were off by, you know, three tenths of a basis point. Some of that is rounding just, you know, a more precise calculation on our end.
but the overall, you know, actual decline is related to sort of just a change of kicks between.
Speaker Change: Outflows in our higher Fee Equity, you know, Porter Counts.
and bringing on large institutional counts.
The next question comes from Kenneth Lee with RBC Capital Markets. Please go ahead.
Hey, good afternoon and thanks for taking my question. Just one around seed seed capital needs.
Over the New Turn There, what's the latest outlook around the needs there? And one of you just give us a little bit of an update in terms of new product development, you know, in terms of, especially within the private market side, you know, what was that?
Service Strategies, could we see being introduced next?
So I'll start with seed, and see capital side, you know, we continue to have
A very large amount of seed out with respect to our historical levels, about 158 million. We are starting to recoup some of that seed as we gain.
and some of our strategies. And to the extent we need further seed for the foreseeable future, we believe we have enough dry powder on the balance sheet to take care of that over the foreseeable future.
On your on the second part of your question, it's Jason. At a high level, we're having really productive conversations pretty much across every asset class right now, both in the...
Speaker Change: Traditional World of Liftouts as well as in the M&A.
Speaker Change: category, so private equity, secondary, private equity, we're in conversations with some quant, market neutral activity, fixed income.
Speaker Change: and Real Estate. I'd say that the most productive area that we have focused on, where we have a little bit more traction in the real estate space.
We're in some later stage conversations as you've heard from us repeatedly. Later stage conversations, so Nest really mean materialization. A lot of things can happen and break down, but I would say that's probably the key area focus for us right now is in the world of private real estate.
Speaker Change: and
and I'm just very helpful color there. And just one follow-up if I'm a bit of housekeeping. In terms of the...
The International Value Team, the new PM edition there, should we expect any kind of expense or cost implications as the team ramps up or as a sort of like the capabilities and infrastructure has largely already been built there. Thanks.
Yeah, there's gonna be some
Some costs and some expense just from the acquisition of talent but to the latter half of the question I think we are building in a lot of efficiency and scale having gone from 1-6-0-0 to now our second team having.
to very big operating systems in place. We can now utilize one of those two, so it's not a complete novel.
Bill. So we are definitely going to get the benefit of the foundational work that's been achieved and completed over the past decade. But there will be some cross-down just the pure talent side as we continue to think about ways to build out talent and depth around Brian.
and the team underneath the International Value Frances.
Speaker Change: i
This concludes our question and answer session and concludes the conference call. Thank you for attending today's presentation, you may now disconnect.